The State and Local Fiscal Recovery Funds

Where the money went

Congress split the money among six groups of recipients, and Treasury worked out each recipient's share from population, unemployment and other factors. Treasury paid states, counties, cities, territories and tribes directly; the smallest towns, the "non-entitlement units," got their shares through their states (GAO-26-108587). Treasury's allocation tables cover every group except the tribes (SLFRF data files).

The State of California had the largest allocation, $27.02 billion, followed by Texas at $15.82 billion and New York State at $12.74 billion. The City of New York, the largest local recipient, was allocated $5.88 billion (recipients and states).

Treasury does not publish what each tribe received (Treasury's allocations page), and no tribe appears in its spending files. USAspending, the federal award database, shows $19.96 billion obligated under the program to 585 tribal-government recipients, $35.4 million short of the $20 billion the act set aside for tribes (Treasury's tribal page). The Navajo Nation, at $2.08 billion, and the Cherokee Nation, at $2.00 billion, head the list, together 20.4 percent of the total (tribal obligations).

Much of the money moved on again. Treasury's subaward file, dated June 30, 2023, lists 37,616 subawards worth $59.5 billion; the California Department of Finance passed on the most, $8.36 billion (spending by category).

What the rules allowed

The act listed four uses: responding to the public health emergency or its economic harm, premium pay for essential workers, government services up to the revenue a government lost in the pandemic, and water, sewer and broadband projects. It ruled out two: "funds may not be used for deposit into any pension fund or, for states and territories only, to directly or indirectly offset a reduction in net tax revenue resulting from a change in law, regulation, or administrative interpretation" (final rule).

Treasury filled in the rest. The May 2021 interim final rule came first; the January 2022 final rule loosened it, in its own words: "The final rule provides broader flexibility and greater simplicity in the program, in response to public comments." The final rule also offered a standard allowance for revenue loss of up to $10 million, capped at the award, which a government could claim without calculating any loss and then spend on government services. In the latest file, 28,694 of the 30,694 recipients with an allocation entered, 93.5 percent, had allocations of $10 million or less, so the allowance could cover the whole award.

Congress widened the list in December 2022; Treasury's 2023 rule says the change gave governments more flexibility "to provide emergency relief from natural disasters, build critical infrastructure, and support community development." The 2023 interim final rule capped the new transportation and community-development (Title I) uses at the greater of $10 million and 30 percent of an award (2023 interim final rule). By March 31, 2026 the three added categories together accounted for $566 million of spending (spending by category).

GAO summarized the clock: "Generally, SLFRF recipients had until December 31, 2024, to obligate their SLFRF awards and have until December 31, 2026, to spend their awards." (GAO-26-108587)

What it was spent on, and how fast

Every recipient reports its projects to Treasury under expenditure categories. As of March 31, 2026, recipients had obligated $329.7 billion and spent $303.4 billion, 92.0 percent of the $329.8 billion allocated to them (spending by category).

Revenue replacement took $171.1 billion, nearly all of it in a single category Treasury calls "Provision of Government Services" ($170.8 billion). The second-largest category is contributions to unemployment insurance trust funds: $22.4 billion across 31 projects. Aid for the pandemic's economic harm took 22.2 percent of spending, infrastructure 8.6 percent and public health 7.4 percent. Recipients booked $2.5 billion, 0.8 percent of spending, as administrative costs.

The revenue-replacement share rises down the chain of government. It was 51.3 percent of spending for the states, 53.3 percent for counties and 63.8 percent for metropolitan cities. For the other 26,772 local governments, mostly small towns paid through their states, it was 78.2 percent (recipients and states).

Recipients had spent an estimated $121.6 billion by the end of 2022 and $177.0 billion by the end of 2023; the year-end files cover only the quarterly reporters, so the estimates add the small governments' figures from the preceding March. By the obligation deadline, December 31, 2024, the total was $252.7 billion (spending by category).

What it did

Treasury's files record categories and dollars. For outcomes, Treasury set performance indicators, and officials in some states told GAO those indicators "do not always align with their uses of SLFRF awards" (GAO-24-106027). The same officials said revenue replacement "enhanced spending flexibilities by allowing funding of a broad range of government services" and "made it easier to meet the Department of the Treasury's reporting requirements."

One estimate of the effect comes from the economists Jeffrey Clemens, Philip Hoxie and Stan Veuger. Looking at federal aid to state and local governments under all four pandemic relief laws, through September 2021, they estimated that "the federal government allocated $855,000 for each state or local government job-year preserved," ruled out anything below $433,000, and found effects on income and output "centered on zero" (NBER Working Paper 30168). Their window ends in September 2021, six months after the American Rescue Plan was signed.

The Economic Policy Institute reads the record the other way. Its March 2026 report calls the program "an ambitious and successful program that should serve as a model during future economic downturns" and says it "helped state and local governments recover substantially faster than they did after the Great Recession" (EPI, March 2026). Its evidence is a comparison with the recovery after the Great Recession.

Late reports, unspent money and the audits that stopped

Thousands of recipients filed late or not at all. In 2024, 4,272 recipients holding $2 billion in awards missed Treasury's reporting deadline, and as of January 2025, 1,012 recipients, mostly smaller localities, had never filed a report; those recipients accounted for about $139 million in awards (GAO-25-107909). Treasury began sending recoupment notices that month to 988 of them, and 339 (34 percent) then filed. GAO found that Treasury's procedures "do not require recoupment at any point and time and recoupment efforts have been inconsistent." It recommended rules for when recoupment starts; "Treasury agreed with our recommendation."

Money not obligated by the deadline generally has to go back to Treasury. As of March 31, 2025, states reported $10.4 million of their $195.8 billion unobligated, and localities $101 million of $127.8 billion; by November 2025, $13.7 million had been returned (GAO-26-108587). Treasury's March 2025 file puts the localities' unobligated balance higher, at $144.1 million, of which $102.6 million sits with recipients Treasury lists as administratively closed (SLFRF data files).

The annual single audits were the other check. GAO found in 2023 that "Treasury did not issue timely management decisions pertaining to SLFRF findings in recipients' single audit reports," and concluded that "Treasury does not have reasonable assurance that unallowable uses of funds are identified or remediated" (GAO-24-106027). For tribes, to which Treasury and the Interior Department awarded $32.7 billion in pandemic relief, GAO wrote in 2024: "Interior appropriately designed procedures to identify and track tribal recipients that did not submit required single audit reports or were not required to do so, but Treasury has not." (GAO-25-106741)

On December 4, 2025, Treasury's inspector general closed eight audits of how Treasury set up its pandemic programs, this one among them. It had found Treasury's compliance-monitoring procedures for this program and two housing programs "incomplete throughout most of the programs' periods of performance," and gave two reasons for stopping: the programs were ending, and "We have also experienced resource constraints that prevent us from continuing this work." (OIG-CA-26-006)

In court: the tax-cut clause

The lawsuits were about one sentence. A state that took the money could not use it to "directly or indirectly offset a reduction in the[ir] net tax revenue" after a tax cut (West Virginia v. U.S. Department of the Treasury, No. 22-10168, 59 F.4th 1124 (11th Cir. Jan. 20, 2023), quoting the act).

• West Virginia and twelve other states won a permanent injunction in the Northern District of Alabama. The Eleventh Circuit upheld it on January 20, 2023: "The district court is AFFIRMED." The injunction "applies only to Section 802(c)(2)(A), which is severable from the remaining provisions of the Act" (West Virginia v. Treasury (11th Cir.)).
• Texas, Louisiana and Mississippi won the same in the Northern District of Texas. The Fifth Circuit affirmed on June 25, 2024: "Because the challenged provision is not clear about what it requires of the states, it falls short of that obligation and is impermissibly ambiguous." (Texas v. Yellen, No. 22-10560, 105 F.4th 755 (5th Cir. June 25, 2024))
• Arizona lost at first: the district court dismissed its suit for lack of standing. The Ninth Circuit reversed on May 19, 2022, adding, "We limit our decision to the narrow issue of standing" (Arizona v. Yellen, No. 21-16227, 34 F.4th 841 (9th Cir. May 19, 2022)).
• Ohio won a permanent injunction in the Southern District of Ohio and lost it on appeal. On November 18, 2022, the Sixth Circuit held that "Treasury's credible disavowal of Ohio's broad view of the Offset Provision mooted the case," reversed the ruling that the case could be heard and vacated the injunction (Ohio v. Yellen, No. 21-3787, 53 F.4th 983 (6th Cir. Nov. 18, 2022)). The Supreme Court denied Ohio's petition on June 12, 2023; the docket adds, "Justice Kavanaugh would grant the petition for a writ of certiorari." (Ohio v. Yellen, No. 22-880, Supreme Court docket (certiorari denied June 12, 2023))
• Kentucky and Tennessee sued together in the Eastern District of Kentucky and won a permanent injunction. The Sixth Circuit decided their appeal the same day as Ohio's and split them. Kentucky had offered no evidence of injury beyond the risk that Treasury would act to take the money back, so once Treasury issued its implementing rule, "the Rule mooted its challenge to the Offset Provision," and the injunction was vacated as to Kentucky. Tennessee had also put in evidence that complying with the rule cost it "additional labor and other expenses," and the court affirmed its injunction "on the basis that the Offset Provision is impermissibly vague under the Spending Clause" (Kentucky v. Yellen, No. 21-6108, 54 F.4th 325 (6th Cir. Nov. 18, 2022)). The full court declined to rehear the case on May 3, 2023; four judges dissented (Kentucky v. Yellen, No. 21-6108, order denying rehearing en banc (6th Cir. May 3, 2023)).
• Missouri never got past standing. The district court dismissed its suit for lack of standing and ripeness, and the Eighth Circuit affirmed on July 14, 2022: "Because we conclude that Missouri has not alleged an injury in fact, we need not reach the question of whether its claims are ripe." (Missouri v. Yellen, No. 21-2118, 39 F.4th 1063 (8th Cir. July 14, 2022)) The Supreme Court denied Missouri's petition on January 17, 2023 (Missouri v. Yellen, No. 22-352, Supreme Court docket (certiorari denied Jan. 17, 2023)).

Lessons the auditors drew

Treasury had been warned about its guidance as the program began. Reviewing the Coronavirus Relief Fund, whose recipients sent it about 500 questions on eligible uses, Treasury's inspector general told the department in May 2021 to "finalize guidance concurrent with funds distribution" and said FAQs "should not be used to establish new guidance." "Treasury management generally agreed with our recommendation," and promised an interim final rule before payments (OIG-CA-21-020).

GAO's recommendations came later. Its 2023 report made four, "including assessing future Contact Center staffing needs and improving the documentation and timeliness of award monitoring processes," and Treasury "generally agreed with the four recommendations" (GAO-24-106027). Its 2025 report added recoupment rules, which Treasury accepted (GAO-25-107909).

The inspector general's closing memorandum dates the fix: "Treasury provided updated policies and procedures covering compliance monitoring in November 2024, when the periods of performance for most of the programs had ended." (OIG-CA-26-006)

Who ran it and who was paid

The final rule named Katharine Richards, director of the program in Treasury's Office of Recovery Programs, as its contact (final rule). That office was renamed the Office of Capital Access in 2023 (GAO-25-106741), and in December 2025 the inspector general addressed its closing memorandum to Jeffrey Stout, the office's acting chief program officer (OIG-CA-26-006). The offset suits named the Treasury secretary, Janet Yellen; West Virginia's was brought "by and through Patrick Morrisey, Attorney General of the State of West Virginia" (West Virginia v. Treasury (11th Cir.)).

The largest recipients were the states. California, Texas and New York together spent $55.4 billion, and the 51 state governments, counting the District of Columbia, spent $177.6 billion of the total (recipients and states).

We have not confirmed a federal prosecution whose charging papers name the program.

Start reading

1. GAO-26-108587, COVID-19 Relief: States' and Localities' Fiscal Recovery Funds Spending Update for 2025 (February 12, 2026)The latest totals: what states and localities obligated, spent and returned.
2. Treasury, Coronavirus State and Local Fiscal Recovery Funds final rule, 87 FR 4338 (January 27, 2022)The rule itself, with the revenue-loss allowance and the tax-cut clause.
3. Treasury, Coronavirus State and Local Fiscal Recovery Funds interim final rule, 88 FR 64986 (September 20, 2023)The 2023 additions: disasters, transportation and community development.
4. GAO-24-106027, COVID-19 Relief: Treasury Could Improve Its Administration and Oversight of State and Local Fiscal Recovery Funds (December 2023)How states and cities ran their awards, and Treasury's single-audit backlog.
5. GAO-25-107909, COVID-19 Relief: Treasury Could Improve Compliance Procedures and Guidance for State and Local Fiscal Recovery Funds (July 22, 2025)The recipients who never reported, and the recoupment notices.
6. Treasury OIG, OIG-CA-21-020, American Rescue Plan: Application of Lessons Learned From the Coronavirus Relief Fund (May 17, 2021)What the Coronavirus Relief Fund taught Treasury before this program paid out.
7. Treasury OIG, OIG-CA-26-006, Termination Memorandum: Audits of the Department of the Treasury's Implementation of Pandemic Programs (December 4, 2025)Why the inspector general stopped its audits.
8. GAO-25-106741, Single Audits: Interior and Treasury Need to Improve Their Oversight of COVID-19 Relief Funds Provided to Tribal Entities (November 2024)Single audits of tribal recipients.
9. Clemens, Hoxie and Veuger, Was Pandemic Fiscal Relief Effective Fiscal Stimulus? Evidence from Aid to State and Local Governments, NBER Working Paper 30168 (June 2022)The cost per job estimate.
10. State and Local Fiscal Recovery Funds data filesTreasury's spending files as tables, with the methods and known differences from GAO.

More of the record: GAO-24-106753, COVID-19 Relief: States' and Localities' Fiscal Recovery Funds Spending as of March 31, 2023; GAO-24-107472, COVID-19 Relief: State and Local Fiscal Recovery Funds Spending as of September 30, 2023; GAO-24-107301, COVID-19 Relief: States' and Localities' Fiscal Recovery Funds Spending as of March 31, 2024; Treasury, Coronavirus State and Local Fiscal Recovery Funds interim final rule, 86 FR 26786 (May 17, 2021); Treasury, Using SLFRF Funds to Replace Lost Revenue and Provide Government Services; Treasury, SLFRF Compliance and Reporting Guidance (October 2025 version); Treasury, SLFRF Final Rule Frequently Asked Questions (March 29, 2024 version); Treasury, notice to SLFRF recipients: Compliance Reviews and Related Recoupment Efforts; CRS Report R46298, General State and Local Fiscal Assistance and COVID-19; North Carolina Office of the State Auditor, State Fiscal Recovery Fund preliminary financial audit, PER-2022-3005 (December 2022); City of Boston, ARPA annual recovery plan, 2024; Economic Policy Institute, How ARPA State and Local Fiscal Recovery Funds helped ensure a swift post-COVID recovery (March 24, 2026).