Rules released for new COVID aid – now NJ needs its $6.4B plan
TRENTON – State and local governments will have fairly wide latitude in how they spend their latest installment of federal coronavirus aid, which in New Jersey amounts to about $6.4 billion for the state.
Interim rules were issued Monday by the U.S. Treasury Department for what amounts to $350 billion in spending nationally. That has state lawmakers even more eager to hear what the plans are for the money from the Murphy administration, which has sidestepped questions as it awaited guidance.
“The new CRF money, too early to tell,” Murphy said Monday. “I think literally the U.S. Treasury just came out just now I believe. So bear with us, we have to parse through that.”
The money can be used to support public health expenditures; address the economic impacts of the pandemic; replace lost public sector revenue; provide premium pay for essential workers; and invest in water, sewer and broadband infrastructure, among other uses.
It cannot be used to offset tax cuts, deposit money into a pension fund, pay off principal or interest on borrowing, settle lawsuits and increase a surplus.
Lawmakers have been asking at each budget hearing about plans for the money but have gotten no details. That was still the case Monday afternoon at the first hearing after the 151-page rule was put out, at which state education leaders went before the Assembly.
“It seems like the front office is unprepared. I mean, you’d think there would at least be a Plan A, a Plan B, a Plan C,” said Assemblyman Hal Wirths, R-Sussex. “I mean, this is an amount of money. We know the crisis. We know what we’re dealing with.”
“It’s not that we want you to spend the money, but if you had some plan in place,” said Assemblywoman Serena DiMaso, R-Monmouth. “So, now we have a 151-page document – a little bit of light reading – to know how we could spend the dollars.”
Assemblyman John McKeon, D-Essex, said it’s not realistic to expect a plan to already be prepared, given that 151 pages of complicated rules were just released. He urged that the state just not “fritter it away” in one fell swoop.
“I know for certain that part of the guidance is that it could be utilized over a three-year period,” McKeon said. “So, as much as we might be enticed to jump in and just throw a lot of money out there in one year, I don’t think that would be very prudent.”
New Jersey is likely to receive all of its funding this month, qualifying for a single payment rather than two installments because its unemployment rate is at least 2 percentage points higher than it was pre-pandemic – at 7.7% in March, up from 3.7% in February 2020.
In addition to $6.4 billion for the state, New Jersey will also receive $192 million for broadband. Counties will receive $1.823 billion combined, and municipalities will receive $1.741 billion combined.
Half the money being distributed to local governments is expected to arrive this month, with the other half arriving in a year.
In addition to the overall increase in state funding to school districts budgeted for the 2021-22 school year, the state and its school districts have also been eligible for three installments of Elementary and Secondary School Emergency Relief – or ESSER – funds: $310 million in the first wave, $1.23 billion in the second and $2.76 billion in the third.
Lawmakers pressed Education Commissioner Angelica Allen-McMillan to assure that funds are spent well.
“Are we going to flood these places with so much money that they can’t manage it in an effective way?” said Assemblyman John Burzichelli, D-Gloucester. “We’ve got to get this right. If not, money’s going to be spent in not the most efficient way. And the bottom line is, it’s got to reach the kids.”
Burzichelli said the Legislature already passed a law at the school districts’ urging that allows them to retain up to 4% of their spending in a surplus account, up from 2%, which he said “tells us that they were from where the school districts are, they’re sitting on too much money.”
“Superintendents across the state, if they weren’t working in our school districts they could easily work in Hollywood with creative accounting because those people know how to hide money,” he said.
Assemblywoman Eliana Pintor Marin, D-Essex, who heads the budget committee, said the Department of Education needs to instruct districts to use the money on short-term responses to recover from the COVID-19 impacts, not long-term programs that aren’t sustainable.
“What we don’t want to do is in another two to three years, have districts that have received money, right, and come back to the table and say that they need more. Because we cannot continue to pay for things that in the long run, we will not have money to continue this process,” Pintor Marin said.
“They need to be careful of hiring. They need to be careful of programming,” she said. “Because what we don’t want is a district to have something that they’ll want to continue in the long run and then come back and ask us for more money.”
Allen-McMillan said the department is “actually ensuring that the districts understand the 15 allowable uses that are provided by the federal government” and is supporting them as the complete applications.