North Carolina Office of the State Auditor, State Fiscal Recovery Fund Periodic Financial Audit, Office of State Budget and Management Pandemic Recovery Office (Nov. 2025)

Summary

A November 2025 Performance Audit Report of the North Carolina Office of the State Auditor, signed in transmittal by State Auditor Dave Boliek, titled State Fiscal Recovery Fund Periodic Financial Audit of the Office of State Budget and Management Pandemic Recovery Office. The report states that $5.4 billion was appropriated to the State Fiscal Recovery Fund and that, as of June 30, 2024, $2.5 billion (46%) had been disbursed, with $2.95 billion (54%) remaining. It states that during July 1, 2022 through June 30, 2024 the Office of State Budget and Management disbursed $1.2 billion. The finding is that the office accounted for, allocated and disbursed the amounts in accordance with State Fiscal Recovery Fund legislation. The report also states that funds must be expended by December 31, 2026.

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“North Carolina Office of the State Auditor, State Fiscal Recovery Fund Periodic Financial Audit, Office of State Budget and Management Pandemic Recovery Office (Nov. 2025).” Original at www.auditor.nc.gov. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/north-carolina-office-of-the-state-auditor-state-fiscal-recovery-fund-b9b03ec098/, SHA-256 6e9743a0af9ed6cfa08496b5f40b640fd5a0e221fd300046be4c7b657e91cc1e.

Full text

NC Office of State Budget and Management
Pandemic Recovery Office
State Fiscal Recovery Fund Periodic Financial Audit
Raleigh, NC

Performance Audit Report
November 2025
North Carolina Office of the State Auditor
Dave Boliek, State Auditor

Auditor’s Transmittal

The Honorable Josh Stein, Governor
The Honorable Phil Berger, President Pro Tempore
The Honorable Destin Hall, Speaker of the House
Honorable Members of the North Carolina General Assembly
Kristin Walker, State Budget Director
Tommy Clark, North Carolina Pandemic Recovery Office Director

To all:

Billions of tax dollars flowed into North Carolina during and following the COVID-19 public
health emergency. A significant sum of funds – $5.4 billion – were appropriated to the State
Fiscal Recovery Fund for allocation, disbursement, and expense.

In keeping with good governance measures, the North Carolina General Assembly required
the North Carolina Office of the State Auditor to conduct biennial financial audits of the State
Fiscal Recovery Fund.

Our audit shows that, as of June 30, 2024, $2.5 billion (46%) of State Fiscal Recovery Funds
have been disbursed. The $2.95 billion (54%) remaining to be disbursed represents the
balance for which recipients have yet to request distribution.

The bulk of the remaining funds sit with state agencies. For instance, the North Carolina
Department of Environmental Quality has not requested $1.7 billion (89%) of the $1.9 billion
allocated.

The purpose of this audit was not to determine why certain funds have yet to be disbursed,
rather to determine whether the North Carolina Office of State Budget and Management
accounted for, allocated, and disbursed amounts appropriated to the State Fiscal Recovery
Fund in accordance with State Fiscal Recovery Fund legislation. To that end, all matters
were done in accordance with law.

Respectfully submitted,

Dave Boliek
State Auditor
Executive Summary

The Office of the State Auditor (OSA) has completed an audit in
accordance with Chapter 147, Article 5A of the North Carolina General
Statutes regarding the Office of State Budget and Management’s
(OSBM) accounting, allocation, and disbursement of State Fiscal
Recovery Funds.

On May 24, 2021, the North Carolina General Assembly enacted Session Law (S.L.) 2021-25
which established the State Fiscal Recovery Fund. 1 The State Fiscal Recovery Fund was
established to respond to the COVID-19 public health emergency and its negative economic
impacts; to respond to workers performing essential work during the COVID-19 public health
emergency; to provide for government services, including revenue reductions due to the
COVID-19 public health emergency; and to make necessary investments in water, sewer, or
broadband infrastructure. 2

Through a series of legislation, the State Fiscal Recovery Fund provided a total of $5.4 billion
in assistance to various entities across the state.

S.L. 2021-25 required OSBM to administer the State Fiscal Recovery Fund to carry out the
provisions of the law, 3 and to ensure the proper reporting and accounting of the State Fiscal
Recovery Fund. 4

S.L. 2023-134 Section 4.7.(h) requires OSA to conduct biennial financial audits of the State
Fiscal Recovery Fund.

This report details the results of OSA’s second financial audit of the State Fiscal Recovery
Fund. It includes OSBM’s accounting, allocation, and disbursement of State Fiscal Recovery
Funds during the period July 1, 2022, through June 30, 2024.

OSA’s December 2022 State Fiscal Recovery Fund Preliminary Financial Audit found that
OSBM allocated a total of $5.4 billion of State Fiscal Recovery Funds as of June 30, 2022, and
disbursed $1.3 billion to recipients. 5

Objective:

To determine whether OSBM accounted for, allocated, and disbursed amounts
appropriated to the State Fiscal Recovery Fund in accordance with State Fiscal
Recovery Fund legislation. 6

1 S.L. 2021-25, Section 2.2.
2 See Appendix C for a summary of the intended purpose and uses of State Fiscal Recovery Funds.
3 S.L. 2021-25, Section 2.2.
4 S.L. 2021-180, Section 4.9.(d), (e), (h), (i).
5 There were adjustments in the categorical presentation of certain disbursements made as of June 30, 2022, for
the purposes of this report that do not change the overall disbursement amount or significantly impact findings
or conclusions.
6 See Appendix B for details regarding legislation affecting the State Fiscal Recovery Fund.
Executive Summary (Concluded)

Finding:

OSBM accounted for, allocated, and disbursed amounts appropriated to the State of
North Carolina’s State Fiscal Recovery Fund in accordance with State Fiscal Recovery
Fund legislation.

During the period July 1, 2022, through June 30, 2024, OSBM disbursed $1.2 billion of State
Fiscal Recovery Funds. Specifically, OSBM disbursed:

• $849 million to state agencies.
• $263 million to public schools and higher education.
• $35 million for local government capacity assistance.
• $10 million to state Indian tribes and associations.
• $15.6 million for continuity of operations.

As of June 30, 2024, OSBM allocated a total of $5.4 billion (100%) of State Fiscal Recovery
Funds and disbursed $2.5 billion (46%) to recipients. See Appendix A.

The $2.95 billion (54%) remaining to be disbursed represents the balance for which recipients
have yet to request distribution. State Fiscal Recovery Funds must have been obligated by
December 31, 2024, and must be expended by December 31, 2026.

According to OSBM management, all (100%) State Fiscal Recovery funds were obligated by
December 31, 2024, in accordance with U.S. Department of the Treasury (U.S. Treasury)
regulations. However, any funds not expended by December 31, 2026, will be returned to
the U.S. Treasury, unless the United States Congress provides for an extension.
Table of Contents
Page

Background .............................................................................................1

Findings
1. Allocations and Disbursements to State Agencies ........................ 5
2. Allocations and Disbursements to Public Schools
and Higher Education .................................................................... 6
3. Allocations and Disbursements for Local Government
Capacity Assistance ...................................................................... 7
4. Allocations and Disbursements to State Indian Tribes
and Associations ........................................................................... 8
5. Allocations and Disbursements for Employee Bonuses
and Benefits .................................................................................. 8
6. Allocations and Disbursements for Continuity of Operations ........ 9

Objectives, Scope, and Methodology ......................................................... 10
Appendices
Appendix A ............................................................................... 12
Appendix B ............................................................................... 14
Appendix C ............................................................................... 15
Appendix D ............................................................................... 17

Response from Office of State Budget and Management………… ........ 18

Ordering Information ............................................................................ 20
Background
Background

On March 11, 2021, the President of the United States signed into law the American Rescue
Plan Act (ARPA). 7 ARPA established the federal Coronavirus State and Local Fiscal Recovery
Fund and appropriated $350 billion to this fund for distribution to state, local, territorial, and
tribal governments. 8
The State of North
The State of North Carolina received a total of $5.4 billion in
financial assistance for the State Fiscal Recovery Fund and Carolina received a total of
$273.6 million for the Coronavirus Capital Projects Fund $5.4 billion in financial
through the federal Coronavirus State and Local Recovery assistance for the State
Fund. Fiscal Recovery Fund.

In addition, eligible North Carolina local governments received a total of $3.4 billion in ARPA
assistance. Of this, the state’s 100 counties and largest 26 municipalities received a total of
$2.7 billion directly from the U.S. Department of the Treasury while the state’s 525 Non-
Entitlement Units 9 were appropriated $705 million to be provided through the state’s Local
Fiscal Recovery Fund. 10

Federal American Rescue Plan
Act

Federal Coronavirus State and Eligible North Carolina
Local Fiscal Recovery Fund Local Governments
$350 Billion $2.7 Billion

$5.4 Billion
Coronavirus Capital
State of North Carolina Local Fiscal Recovery
Projects Fund Fund to Non-
$273.6 Million State Fiscal Recovery Fund Entitlement Units
$5.4 Billion $705 Million

On May 24, 2021, the North Carolina General Assembly enacted Session Law 2021-25 which
established the State Fiscal Recovery Fund. 11 The State Fiscal Recovery Fund is a special
fund administered by the North Carolina Office of Budget and Management (OSBM), to carry
out the provisions of the law and subsequent acts necessitated as a result of the COVID-19
public health emergency. The funds are to be used to:

1. Respond to the COVID-19 public health emergency and its negative economic impacts.

2. Respond to workers performing essential work during the COVID-19 public health
emergency.

7 U.S. Public Law 117-2.
8 https://home.treasury.gov/policy-issues/coronavirus/assistance-for-state-local-and-tribal-governments/state-
and-local-fiscal-recovery-funds.
9 Towns and cities of 50,000 residents or fewer.
10 https://files.nc.gov/ncgov/documents/files/ncpro/Funding-totals-SLFRF_final.pdf.
11 S.L. 2021-25, Section 2.2.

1
Background

3. Provide for government services, including revenue reductions due to the COVID-19
public health emergency.

4. Make necessary investments in water, sewer, or broadband infrastructure. 12

North Carolina’s State Fiscal Recovery Fund does not include amounts received directly from
the U.S. Department of the Treasury by eligible North Carolina local governments, amounts
received through the state’s Local Fiscal Recovery Fund by the state’s Non-Entitlement
Units, 13 or the State’s Coronavirus Capital Projects Fund. Accordingly, these funds are not
included within the scope of this audit.

Through a series of legislation, 14 the state appropriated approximately $5.4 billion to various
entities across the state through the State Fiscal Recovery Fund as shown in the following
illustration:

State of North Carolina
State Fiscal Recovery Fund
$5.4 Billion

State Agencies Public Local State Indian State Employee Continuity of
Schools and Government Tribes and Bonuses and Operations
$4.4 Billion
Higher Capacity Associations Benefits
Education Assistance $25.3 Million
$10 Million $523.8 Million
$394 Million $54 Million

OSBM disburses State Fiscal Recovery Funds to recipients by request based on timelines
agreed to with each recipient.

State Fiscal Recovery Fund legislation required OSBM to administer the State Fiscal Recovery
Fund, 15 and to ensure the proper reporting and accounting of the State Fiscal Recovery Fund. 16
Specifically, OSBM is required to:

• Allocate and disburse State Fiscal Recovery Funds as directed by the
North Carolina General Assembly.

• Ensure adherence with the compliance requirements established by the
U.S. Department of the Treasury.

• Account for the State Fiscal Recovery Fund in accordance with generally
accepted accounting principles and the requirements established by the
North Carolina Office of the State Controller. 17

12 S.L. 2021-25, Section 2.2.
13 Towns and cities of 50,000 residents or fewer.
14 See Appendix A for details regarding legislation affecting the State Fiscal Recovery Fund.
15 S.L. 2021-25, section 2.2.
16 S.L. 2021-180, Section 4.9.(d), (e), (h), (i).
17 North Carolina Office of State Budget and Management, Memorandum Budgeting American Rescue Plan Act

State Fiscal Recovery Funds.

2
Background

• Adhere to the reporting requirements established by federal and state law.

The 2020 COVID-19 Recovery Act created the “temporary North Carolina Pandemic Recovery
Office (NCPRO) to oversee and coordinate funds made available under COVID-19 recovery
legislation.” NCPRO is responsible for:

• Providing technical assistance.
• Ensuring coordination of federal funds received by state agencies and local
governments.
• Ensuring proper reporting and accounting of all funds. 18

Unless stated otherwise, references to OSBM in this report also encompass the responsibilities
and activities of NCPRO.

Session Law 2023-134, Section 4.7.(h) requires the Office of the State Auditor to conduct
biennial financial audits of the State Fiscal Recovery Fund.

Key terms discussed in this report include:

ARPA – The federal American Rescue Plan Act (U.S. Public Law 117-2) that established
the federal Coronavirus State and Local Fiscal Recovery Fund.

State Fiscal Recovery Fund legislation 20 – The series of legislation enacted by the State
of North Carolina to establish the State Fiscal Recovery Fund and provide assistance to
various entities across the state in response to the COVID-19 public health emergency
and its negative economic impacts.

State Fiscal Recovery Fund – The fund established by the State of North Carolina to
respond to the COVID-19 public health emergency and its negative economic impacts; to
respond to workers performing essential work during the COVID-19 public health
emergency; to provide for government services, including revenue reductions due to the
COVID-19 public health emergency; and to make necessary investments in water, sewer,
or broadband infrastructure. 21

18 S.L. 2020-4, Section 4.3.
19 There were adjustments in the categorical presentation of certain disbursements made as of June 30, 2022, for
the purposes of this report that do not change the overall disbursement amount or significantly impact findings
or conclusions.
20 See Appendix B for details regarding legislation affecting the State Fiscal Recovery Fund.
21 See Appendix C for summary of the intended purpose and uses of the State Fiscal Recovery Fund.

3
Background
COVID-19 – The severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) that
emerged in December 2019.

Allocated funds – Funds that are specifically designated for certain programs, services, or
projects to ensure funds are used within limits.

Obligated funds – Funds that are encumbered through a signed purchase order or
contract for the purchase of goods or services. There is a legal commitment to disburse
these funds either immediately or at a later date as a result of specific actions taken.

Disbursements or Disbursed Funds – Funds that have released and transferred by NCPRO
to a recipient entity for a project, services, or goods as requested by the recipient entity
and after any necessary requirements have been met (such as providing any required
documentation).

Expenditures or Expended funds – Disbursed funds spent by recipient entities on
authorized projects, services, or goods.

Responsible parties discussed in this report include:

North Carolina Office of State Budget and Management (OSBM) – OSBM delivers budget
development and management services for the state. Session Law 2021-25 established
the State Fiscal Recovery Fund that is to be maintained as a special fund and
administered by OSBM to carry out the provisions of the law.

North Carolina Pandemic Recovery Office (NCPRO) – The temporary North Carolina
Pandemic Recovery Office created to oversee and coordinate funds made available under
COVID-19 recovery legislation.

4
Findings
Findings

1. Allocations And Disbursements to State Agencies

The Office of State Budget and Management (OSBM) allocated $4.4 billion of State Fiscal
Recovery Funds to state agencies in accordance with State Fiscal Recovery Fund legislation.
Of this amount, $849 million (19%) was disbursed during the period July 1, 2022, through June
30, 2024. As of June 30, 2024, a total of $1.6 billion (36%) has been disbursed.

State Fiscal Recovery Fund legislation required OSBM to allocate $4.4 billion to state agencies
as shown in the table below. State Fiscal Recovery Fund legislation required that funds only
be disbursed from the State Fiscal Recovery Fund to state agencies upon justification from the
agency and only as needed to implement the provisions of state law. 22

The following table illustrates the total amounts allocated, disbursed, and remaining to be
disbursed to state agencies as of June 30, 2024.

Table 1 – Allocations and Disbursements to State Agencies 23

The $2.8 billion remaining to be disbursed represents the balance for which recipients have
yet to request distribution. For example:

• The Department of Environmental Quality has not requested $1.7 billion (89%) of the
$1.9 billion allocated, with $528 million in remaining funds for the State Drinking

22 S.L. 2021-180, Section 4.9.(e).
23 Total State Fiscal Recovery Fund allocations and certain allocations to specific recipients changed during the

period July 1, 2022, through June 30, 2024, due to legislative recaptures and reallocations within the State Fiscal
Recovery Fund and changes in reporting presentation. See specific footnotes within Table 1 for additional
information.

5
Findings

Water/Wastewater Reserve Infrastructure Grants and $326 million in remaining funds
for the Viable Utility Reserve.

• The Department of Information Technology has not requested $687 million (94%) of
the $734 million allocated, with $326 million in remaining funds for the NC GREAT
Grant – Federal Broadband Funds and $126 million in remaining funds for Completing
Access to Broadband.

• The Department of Health and Human Services has not requested $201 million (40%)
of the $503 million allocated, with $120 million in remaining funds for the Lead &
Asbestos – Remediation of Lead Paint and Asbestos in Schools & Childcare Facilities.

• The Department of Commerce has not requested $54 million (43%) of the $126 million
allocated, with $39 million of remaining funds related to Rural Downtown
Transformation Grants.

2. Allocations And Disbursements to Public Schools and Higher Education

OSBM allocated $394 million of State Fiscal Recovery Funds to public schools and institutions
of higher education in accordance with State Fiscal Recovery Fund legislation. Of this amount,
$263 million (67%) was disbursed during the period July 1, 2022, through June 30, 2024. As
of June 30, 2024, $301 million (76%) has been disbursed.

State Fiscal Recovery Fund legislation required that OSBM allocate $394 million to public
schools and institutions of higher education as shown in the table below. State Fiscal Recovery
Fund legislation required that funds only be disbursed from the State Fiscal Recovery Fund to
public schools and higher education agencies upon justification from the applicable agency
and only as needed to implement the provisions of state law. 24

The following table illustrates the total amounts allocated, disbursed, and remaining to be
disbursed to public schools and institutions of higher education as of June 30, 2024.

Table 2 – Allocations and Disbursements to Public Schools and Higher Education

24 S.L. 2021-180, Section 4.9.(e).

6
Findings
The $93 million remaining to be disbursed represents the balance for which recipients have
yet to request distribution. For example:

• The University of North Carolina System has not requested nearly $70 million (33%) of
the $210 million in funding that was allocated, with $19 million of remaining funds
related to the Innovative Highly Treated Wastewater Pilot and $17 million of remaining
funds related to the NC Policy Collaboratory.

• The North Carolina Community College System has not requested $8 million (7%) of
the $114 million in funding that was allocated, with $7 million of remaining funds related
to the Apprenticeship Program Expansion.

• The Department of Public Instruction has not requested nearly $15 million (80%) of the
$19 million in funding that was allocated, with over $4 million in remaining funds related
to the Smart School Bus Pilot.

3. Allocations And Disbursements to Local Government Capacity Assistance

OSBM allocated $53.5 million of State Fiscal Recovery Funds to local government capacity
assistance in accordance with State Fiscal Recovery Fund legislation. Of this amount,
$36 million (67%) was disbursed as of June 30, 2024.

The State Fiscal Recovery Fund allocated these funds to the North Carolina League of
Municipalities, North Carolina Association of County Commissioners, and North Carolina
Association of Regional Councils of Government to provide guidance and technical assistance
to units of local government in administration of funds from the Local Fiscal Recovery Fund.
Funds were also allocated specifically to the Towns of Apex and Huntersville for the same
purpose.

The following table illustrates the total amounts allocated, disbursed, and remaining to be
disbursed for local government capacity assistance as of June 30, 2024.

Table 3 – Allocations and Disbursements to Local Government Capacity Assistance

The $17.5 million remaining to be disbursed represents the balance for which recipients have
yet to request distribution.

7
Findings

4. Allocations And Disbursements to State Indian Tribes and Associations

OSBM allocated $10 million of State Fiscal Recovery Funds to state Indian tribes and
associations in accordance with State Fiscal Recovery Fund legislation. Of this amount,
$10 million (100%) was disbursed as of June 30, 2024.

State Fiscal Recovery Fund legislation required OSBM to allocate $9 million to provide grants
to the American Indian tribes named in Chapter 71A of the North Carolina General Statutes. 25
State Fiscal Recovery Fund legislation required a base allocation of $715,285 to each tribe,
with the remaining amount allocated to tribes on a per-capita basis using tribal enrollment
totals. 26 An additional $1 million was required to be allocated equally to four Native American
associations. 27

The following table illustrates the total amounts allocated, disbursed, and remaining to be
disbursed to state Indian tribes and associations as of June 30, 2024.

Table 4 – Allocations and Disbursements to State Indian Tribes and Associations

5. Allocations And Disbursements to Employee Bonuses and Benefits

OSBM allocated $545 million of State Fiscal Recovery Funds for employee bonuses and
benefits in accordance with State Fiscal Recovery Fund legislation.

State Fiscal Recovery Fund legislation initially required OSBM to allocate $545 million to
provide bonuses to full-time state and local education employees who worked to continue
government operations and services during the pandemic. 28 Subsequently, Session Law
2023-134, Section 4.8B recaptured $21 million of funds remaining after these bonuses are
awarded.

As of June 30, 2024, $524 million of State Fiscal Recovery Funds were allocated for employee
bonuses and benefits. Of this amount, there were no funds disbursed during the period

25 S.L 2021-189, Section 6.2.
26 State Indian tribe enrollment is based on resolutions from each tribal government.
27 S.L. 2021-189, Section 6.2. included the following associations: 1) Cumberland County Association for Indian

People, 2) Guildford Native American Association, 3) Metrolina Native American Association, and 4) Triangle
Native American Society.
28 S.L. 2021-180, Section 39.2.(a) – (j).

8
Findings
July 1, 2022, through June 30, 2024. As of June 30, 2024, $524 million (100%) has been
disbursed.

The following table illustrates the total amount allocated, disbursed, and remaining to be
disbursed for employee bonuses and benefits as of June 30, 2024. See Appendix D for a
detailed list of entities that were disbursed State Fiscal Recovery Funds for employee bonuses
and benefits.

Table 5 – Allocations and Disbursements to Employee Bonuses and Benefits

6. Allocations And Disbursements for Continuity of Operations

OSBM allocated $24.5 million (of the appropriated $25.3 million) for State Fiscal Recovery
Funds for Continuity of Operations (COOP) in accordance with State Fiscal Recovery Fund
legislation to provide funds for the continuity of operations across state government impacted
by the COVID-19 pandemic. Of this amount, $16.5 million (67%) was disbursed as of June
30, 2024. 29

The following table illustrates the total amount allocated, disbursed, and remaining to be
disbursed for Continuity of Operations as of June 30, 2024.

Table 6 – Allocations and Disbursements for Continuity of Operations 30

The $8 million remaining to be disbursed represents the balance for which recipients have yet
to request distribution.

29 COOP funds were included and presented as allocations to OSBM in OSA’s December 2022 State Fiscal
Recovery Fund Preliminary Financial Audit. This audit presents COOP funds separately as OSBM did not directly
receive COOP funds itself and the funds were allocated and disbursed to other recipients as presented in Table
6.
30 Ibid.

9
Objectives, Scope, and
Methodology
Objectives, Scope, and Methodology

The audit objective was to determine whether the Office of State Budget and
Management (OSBM) accounted for, allocated, and disbursed amounts
appropriated to the State Fiscal Recovery Fund in accordance with State Fiscal
Recovery Fund legislation. 31

The audit scope included OSBM’s accounting, allocation, and disbursement transactions
related to the State Fiscal Recovery Fund for the period July 1, 2022, through June 30, 2024.

The audit scope did not include funds received by eligible North Carolina local governments
directly from the U.S. Department of the Treasury, funds received through the state’s Local
Fiscal Recovery Fund by the state’s Non-Entitlement Units, 32 or funds received through the
state’s Coronavirus Capital Projects Fund. Further, the following matters were not included
in the audit scope and objective:
• Compliance with requirements established by the U.S. Department of the Treasury.
• Adherence to reporting requirements established by ARPA or state law.
• Whether State Fiscal Recovery Funds were spent in accordance with ARPA.
• Whether programs that received State Fiscal Recovery Funds accomplished their
intended purpose.
• Disbursement of State Fiscal Recovery Funds to subrecipients, beneficiaries,
municipalities, or other secondary entities that did not receive funds directly from
OSBM.

Session Law 2023-134, Section 4.7.(h) required the Office of the State Auditor to conduct
biennial financial audits and a final performance audit of the State Fiscal Recovery Fund.

To accomplish the audit objective, auditors:
• Reviewed relevant laws and regulations.
• Interviewed OSBM and North Carolina Pandemic Recovery Office (NCPRO)
personnel.
• Reperformed 60 randomly selected (out of 596 total) allocations 33 to state agencies,
institutions of higher education, local & tribal governments, using the criteria
established in state law to ensure amounts were allocated in accordance with the law.
This included examining recipient 34 fund requests, memorandums, journal entries, and
other documentation supporting the 60 disbursements from the State Fiscal Recovery
Fund (through June 30, 2024) to ensure the funds were disbursed in accordance State
Fiscal Recovery Fund legislation. Auditors tested 60 disbursments:
o 35 for State Agencies.
o 17 for Public Schools.
o 4 for Local Government Capacity Assistance.

31 See Appendix A for details regarding legislation affecting the State Fiscal Recovery Fund.
32 Towns and cities of 50,000 residents or fewer.
33 Auditors used standardized sampling methods for a large population.
34 Included state agencies, institutions of higher education, local government, and state Indian tribes and

associations.

10
Objectives, Scope, and Methodology
o 4 for Continuity of Operations.

• Reconciled OSBM’s accounting records for allocations and disbursements to the
authorizing legislation and accounting requirements established by the North Carolina
Office of the State Controller 35 to ensure the State Fiscal Recovery Fund was
accounted for, allocated, and disbursed in accordance with ARPA and state law.

Because of the test nature and other inherent limitations of an audit, together with limitations
of any system of internal and management controls, this audit would not necessarily disclose
all performance weaknesses or instances of noncompliance.

This audit was designed to identify, for those programs, activities, or functions included within
the scope of the audit, deficiencies in internal controls significant to our audit objectives. As a
basis for evaluating internal control, auditors applied the internal control guidance contained in
professional auditing standards. However, our audit does not provide a basis for rendering an
opinion on internal control, and consequently, we have not issued such an opinion.

We conducted this performance audit in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
based on our audit objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.

35 Office of State Budget Management, Memorandum Budgeting American Rescue Plan Act State Fiscal Recovery
Funds.

11
APPENDICES
Appendices
Appendix A

As of June 30, 2024, OSBM allocated a total of $5.4 billion (100%) of State Fiscal Recovery Funds
and disbursed $2.5 billion (46%) to recipients.

According to OSBM management, all (100%) State Fiscal Recovery funds were obligated by
December 31, 2024, in accordance with U.S. Department of the Treasury (U.S. Treasury)
regulations. However, any funds not expended by December 31, 2026, will be returned to the
U.S. Treasury, unless the United States Congress provides for an extension.

12
Appendices

The following chart illustrates the cumulative disbursements over time from the State Fiscal
Recovery Fund.

Cumulative SFRF Disbursements Over Time (in Billions)
$3.00

$2.50

$2.00

$1.50

$1.00

$0.50

13
Appendices

Appendix B

The State of North Carolina appropriated approximately $5.4 billion to the State Fiscal Recovery
Fund through the following series of legislation.

14
Appendices

Appendix C
The following table illustrates the total amount allocated to each recipient and the intended
purpose and use of funds (as of June 30, 2024):

Recipient Allocation Intended Purpose and Use of Funds
State Agencies
Provides funds for protective equipment and technology to support
Administrative Office of
$35,389,440 remote access for courts, and funds for the Human Trafficking
the Courts
Commission.
Department of Provides funds for small and historically underutilized businesses and a
$20,750,000
Administration database for tracking the increased number of home schools.
Provides funds for food storage and distributions, food banks, farms, and
Department of
$128,800,000 for agricultural programs impacted by COVID-19, such as the State Fair
Agriculture
and the Western NC agricultural center.
Provides funds for community development, work force solutions, small
Department of
$126,210,000 business development, economic assistance to nonprofits, and tourism
Commerce
recovery.
Provides funds for grant programs for water and sewer utilities and
infrastructure and stormwater infrastructure. Includes grants for projects
Department of to advance economic development or affordable housing as well as
$1,938,275,000
Environmental Quality Viable Utility Reserve and State Drinking Water, Wastewater Reserve
grants for utilities that have been designated as distressed or are at risk
of becoming distressed.

Department of Health Provides funds to DHHS programs and nonprofits directed at
$502,785,232 homelessness, nutrition services, hospitals, hospice care and behavioral
and Human Services
health, as well as bonuses for direct care workers.
Provides grants and funds to increase broadband availability in rural
Department of areas, address local infrastructure needs and connect unserved and
$734,086,891 underserved households. Provides funds for a workforce development
Information Technology
network to meet the talent needs of NC public agencies and private
businesses.
Department of Provides funds for grants to volunteer fire departments due to the loss of
$8,000,000
Insurance revenue from COVID-19.
Department of Natural Provides funds for state parks, museums, historic sites, and other
$96,200,000
and Cultural Resources nonprofits impacted by COVID-19.
Provides funds to update and modernize first responder and law
Department of Public enforcement communication services, to support programs for at-risk
Safety / Department of $108,925,000 youth and community supervision programs, cover medical cost
Adult Corrections increases at state prisons due to the COVID-19 pandemic and to upgrade
HVAC at Department of Public Safety state facilities.
Provides funds for migration of data from the Department of Information
Department of Revenue $502,538,000
Technology's mainframe system, and for business recovery grants.
Department of State Provides funds to reimburse the State Health Plan for COVID-19 testing,
$101,000,000
Treasurer treatment, and vaccine administration.
Department of
$3,000,000
Transportation Provides funds for driver’s license office extended operations.
Provides funds for the Workforce Housing Loan Program to develop
Housing Finance
$0 multi-family affordable housing units across the state. Amount was
Agency
recaptured pursuant to S.L. 2022-74.
North Carolina General Provides funds to address the impact of the COVID-19 pandemic on the
$21,800,000
Assembly operations of the legislature.

15
Appendices
Provides funds for the continuity of operations across state government,
and for continued operations of the North Carolina Pandemic Recovery
Office through 2023. Provides funds to the CAGC Foundation, Inc. for
construction education programs and a Construction Business Academy
Office of State Budget
$105,375,000 for Historically Underutilized Businesses and to the City of Winston
and Management
Salem and to Dare County for construction of affordable housing.
Provides funds to the NC Trucking Association to address truck driver
shortages, and for grants to YMCA's statewide to assist with economic
impacts of COVID-19.
Office of the State Provides funds to conduct audits of recipients of American Rescue Plan
$0
Auditor funds. Amount was recaptured pursuant to S.L. 2023-134.
Institutions of Higher Education
Department of Public Provides funds for smart school buses and scholarships for students in
$18,648,000
Instruction Forsyth, Rowan and Iredell counties.
Provides funds to assist community colleges that experienced enrollment
North Carolina declines during the COVID -19 pandemic, to improve broadband access
Community College $114,304,422 for rural community colleges, expand apprenticeship programs for high
System demand fields in Tier 1 and Tier 2 counties, and replace lost revenue for
the Cape Fear Botanical Gardens.
Private Colleges and Provides funds to NC private colleges and universities to assist with
$51,000,000
Universities revenue loss mitigation and capital improvements.
Provides funds for many programs including scholarship recovery
programs for children of Armed forces members, need-based grants for
tuition and fees for community college students, research and pilot
University of North programs on Antiviral Drug Development and Innovative Wastewater
$209,584,983
Carolina System Treatment, stabilization funds for the NC Arboretum and for PBS North
Carolina, research grants to monitor and address public health and
economic impacts of the COVID-19 pandemic, and support of 4-H
centers and camps.
Other Governmental Entities
Provides funds for guidance and technical assistance in the
Local Government
$53,500,000 administration of Local Recovery Funds to the towns of Apex and
Capacity Assistance
Huntersville.
State-Recognized
$10,006,995 Funds to the seven state-recognized American Indian Tribes.
Tribes
Employee Bonuses and Benefits
Employee Bonuses and
$523,802,253 Funds for bonuses for state employees and local education employees.
Benefits
Continuity of Operations
Continuity of Operations Provides Continuity of Operations funds from the Coronavirus Relief
$24,532,192
(COOP) Fund to OSBM for the purposes described in S.L. 2021-180.

16
Appendices
Appendix D
The following table illustrates the total amount of Employee Bonuses and Benefits disbursed to each
recipient.
Recipient Disbursed
Administrative Office of the Courts $ 10,207,276
Appalachian State University 4,236,408
Department of Administration 837,466
Department of Agriculture 2,911,529
Department of Commerce 2,412,653
Department of Environmental Quality 2,251,042
Department of Health and Human Services 23,393,085
Department of Information Technology 1,347,918
Department of Insurance 800,216
Department of Justice 1,026,201
Department of Labor 500,037
Department of Military and Veterans Affairs 154,478
Department of Natural and Cultural Resources 2,776,926
Department of Public Instruction 313,615,348
Department of Public Safety 32,733,412
Department of Revenue 1,961,148
Department of State Treasurer 1,307,706
Department of Transportation 13,299,487
East Carolina University 7,345,924
Elizabeth City State University 520,980
Fayetteville State University 1,107,928
NC Agricultural & Technical State University 2,364,532
NC Auctioneer and Licensing Board 2,691
NC Board of Opticians 1,615
NC Community College System Office 25,727,837
NC General Assembly 923,707
NC Governor's Office 85,852
NC Lieutenant Governor 9,689
NC Office of the State Controller 234,679
NC Psychology Board 6,997
NC School of Science and Math 361,153
NC Secretary of State 259,571
NC Wildlife Resources Commission 969,388
North Carolina Central University 1,765,347
North Carolina State University 12,337,585
Office of Administrative Hearings 64,590
Office of State Budget and Management 124,659
Office of the State Auditor 175,750
State Board of Elections 130,795
State Highway Patrol 55,978
UNC Board of Barber Examiners 9,150
UNC Board of Cosmetic Arts 37,139
UNC Chapel Hill 17,481,402
UNC Chapel Hill Hospital 16,870,909
UNC School of the Arts 694,693
UNC System Office 552,432
University of North Carolina at Asheville 973,395
University of North Carolina at Charlotte 4,926,924
University of North Carolina at Greensboro 3,856,005
University of North Carolina at Pembroke 1,329,612
University of North Carolina at Wilmington 3,209,461
Western North Carolina University 2,383,106
Winston Salem State University 1,128,442
Total Employee Bonuses and Benefits $ 523,802,253

17
Response From the
Office of State Budget
and Management
Response From the Office of State Budget and Management

18
Response From the Office of State Budget and Management

19
Ordering Information

Copies of this report may be obtained by contacting:

Office of the State Auditor
State of North Carolina
20601 Mail Service Center
Raleigh, North Carolina 27699

Telephone: 919-807-7500
Fax: 919-807-7647
Internet: www.auditor.nc.gov

To report alleged incidents of fraud, waste or abuse in state government
contact the Office of the State Auditor’s Tipline:

Telephone:1-800-730-8477

Internet: www.auditor.nc.gov/about-us/state-auditors-tipline

This audit required 1,447 hours of auditor effort at an approximate cost of $224,285.

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