Audit shows state agencies received more than $1.6B of North Carolina's direct CARES Act funding

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North Carolina spent more than $1.6 billion from its first round of federal coronavirus relief on supporting state agencies, a state audit released Tuesday shows.

The North Carolina Office of State Budget and Management disbursed the funding to state agencies from the $3.6 billion the state received in direct aid from last March’s federal Coronavirus Aid, Relief and Economic Security (CARES) Act, the report showed.

The General Assembly passed the 2020 COVID-19 Recovery Act in May, allocating the federal funding to help states respond to the pandemic. The Office of the State Auditor reviewed how the money was “accounted for, allocated, and disbursed” through Dec. 31, 2020.

The North Carolina Department of Health and Human Services (NCDHHS) and the North Carolina Department of Revenue (NCDOR) received most of the funding. The NCDOR used its $440 million allocation for $335 stimulus payments for parents to offset remote learning costs. The NCDHHS received $486 million for its efforts to mitigate the spread of the coronavirus.

NCDHHS officials told lawmakers in January a large portion of the aid was spent on coronavirus testing and contact tracing in North Carolina. About $6.8 million was available to continue the public health services in 2021, officials said. The NCDHHS also received more than $500 million from other federal programs that were bolstered by Congress in response to the pandemic.

North Carolina’s K-12 schools, colleges and universities received more than $520 million from the first tranche of federal relief. The Department of Instruction received more than $300 million for its 115 school districts, the audit showed.

However, a recent state audit, revealed the Department of Instruction issued the funding for schools for nutrition, summer learning and other programs with limited spending safeguards, leaving around $76 million at risk for potential misuse.

According to Tuesday’s audit, North Carolina used another half million dollars to offset expenses from the state’s general fund in response to the pandemic. About 94% of the more than $500 million was allocated to the North Carolina Department of Public Safety.

Nonprofits and local governments also received more than $300 million each from the CARES Act funding, the audit showed.

Lawmakers directed a base allocation of $250,000 to each county that did not receive aid directly from the federal government, plus additional funding based on population. Local governments with more than 500,000 residents received a total of $405 million directly from the U.S. Treasury.

Twenty-nine nonprofits, ranging from health clinics, children advocacy and business development organizations, received nearly $330 million from the state’s relief package. The Golden Leaf Foundation received the most – $75 million – to provide recovery loans for small businesses.

Hospitals received the remainder of the $3.6 billion in aid. More than $93 million has been disbursed to North Carolina hospitals as of December 2020. Rural hospitals, which officials have said face the biggest financial strain, received more than $60 million in CARES Act funding.

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