US wants back millions in COVID relief from local governments over missing reports

JEFFERSON CITY, Mo. (AP) — The U.S. Treasury is seeking to recoup COVID-19 pandemic relief funds from hundreds of local governments that received millions of dollars but never complied with requirements to report how they used the money.

The federal government distributed $350 billion to state, local, territorial and tribal governments as part of the American Rescue Plan approved by Congress and President Joe Biden in 2021. More than 30,000 governments, from the largest state to the tiniest town, were to get a share.

Governments had until the end of 2024 to obligate the money for specific projects and were supposed to file either quarterly or annual progress reports, depending on their population and how much money they received. Most complied. But as of January, about 1,000 mostly smaller governments had failed to file any reports with the Treasury detailing how they used a total of $139 million, according to an analysis by the U.S. Government Accountability Office.

A GAO report released last week said the Treasury sent notices to the local governments seeking to recoup the money.

As of June 24, a total of 740 local governments subsequently filed reports and will no longer be subject to repaying their funds, the Treasury said in a letter attached to the GAO report. Thirteen governments returned their funds to the Treasury. But that still left 235 local governments that had never filed a report nor returned their pandemic relief funds.

The GAO told The Associated Press it does not have list of the specific governments that haven’t complied with the reporting requirements. The Treasury has not responded to an AP request for a list of the 13 governments that returned their funds and those that still haven’t reported how they used it.

This is not the first time concerns have been raised about governments failing to disclose how they used their pandemic relief funds.

The GAO reported in October 2023 that the Treasury had sent noncompliance notices to more than 3,500 local governments that hadn’t filed progress reports on their pandemic relief funds. The Treasury at that time declined to provide the noncompliance letters to the AP. So the AP in January 2024 submitted a Freedom of Information Act request seeking copies of the noncompliance notices and related correspondence. The Treasury still has not fulfilled that request.

In its most recent report, the GAO said the failure of local governments to file regular progress reports is limiting the Treasury’s ability to determine whether they are spending the funds on allowable uses.