State agencies in Iowa have spent about 60 percent of their federal coronavirus-related funds, with Iowa Workforce Development accounting for the lion’s share of those expenditures.
So far, Iowa has been awarded $3.08 billion for costs associated with the Coronavirus Aid, Relief and Economic Security Act. Of that, state agencies have spent more than $2.4 billion, according to the Legislative Services Agency. More than $1.5 billion — 63 percent — has been for worker unemployment benefits.
Workforce Development’s share increases to nearly 84 percent when $490 million that was awarded to the Department of Management is added. Gov. Kim Reynolds put those funds into the Unemployment Trust Fund to ensure that eligible Iowans continue to receive unemployment benefits without causing employers’ unemployment insurance rates to increase.
The Workforce Development funds include money from several federal programs, including the $600-a-week federal supplemental unemployment benefit for workers who have been idled by COVID-19, the LSA said.
The next largest slice of the federal COVID-19 funds — $191.5 million, or nearly 8 percent — has been spent by the Department of Human Services.
Iowa is among eight states where governors have used a portion of the $150 billion CARES fund allocated to states to shore up unemployment funds. Based on population, Iowa received the minimum amount — $1.25 billion.
“As we move forward with recovery, I want to minimize the pandemic’s impact on employers so they can focus on growing and reinvesting in Iowa,” Reynolds said. The $490 million will ensure that the trust fund “remains healthy and in a position to weather any storm.”
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States and the federal government work together to fund unemployment benefits. State trust funds rely on a per-employee tax that’s higher for companies that have laid off a lot of workers recently. The federal trust fund maxes out at $42 per employee per year for companies that pay state taxes on time in states with solvent trust funds. If the trust funds start to run out of money — as they are in several states — state and federal laws trigger increases.
Peter Fisher, research director for the Iowa Policy Project, is among the Democrats and left-leaning groups that say there are better uses for the money, such as direct assistance to workers and local governments, rental assistance and food banks, according to Stateline, a publication of the Pew Charitable Trusts.
Reynolds is spending 40 percent of her $1.25 billion allocation “to keep employer insurance rates from going up in a couple of years” instead of using it to help schools prepare to reopen safely, fund county general assistance programs, or any of several other policy options.
More data on Iowa’s federal funds can be found at https://recovery-finance.iowa.gov/.
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