What’s in the COVID Relief Bill for Public and Private Construction Investment?

Short Answer: It’s Not Clear

Congress passed on March 10 and the president signed into law on March 11 the $1.9 trillion COVID-relief bill, which provides $350 billion for state and local governments, $168 billion for K-12 schools and higher education, $30.5 billion for public transit and $8 billion for airports. The bill, however, appears to dedicate little, if any, funding to new public or private construction investment projects—infrastructure or buildings. Generally speaking, the entities receiving these funds have broad discretion to use them however they see fit. It is unclear, consequently, how the vast majority of these funds will be used, and those debates will undoubtedly happen in ongoing or special state, county or municipal government legislative sessions. At a minimum, this funding could help prevent public owners from delaying or canceling construction projects.

State and Local Funding ($350B)

• Funding Distribution
  • Provides $219.8 billion for states, territories, and tribal governments
  • Provides $130.2 billion to local governments
    • $65.1 billion to counties
    • $45.6 billion to metropolitan cities
    • $19.5 billion for towns with fewer than 50,000 people
  • For the best state-by-state and county-by-county representation of how these funds will be allocated we know of, click here.
• Allowable Uses for Funds
  • Respond to the COVID-19 public health emergency or its negative economic impacts:
    • Including assistance to households, small businesses, and nonprofits, or aid to impacted industries such as tourism, travel, and hospitality; and
    • Including premium pay to eligible workers of the state, territory, or tribal government.
  • Provide government services affected by a revenue reduction resulting from COVID-19.
  • Make investments in water, sewer, and broadband infrastructure.
• Prohibited Uses for Funds
  • Restricts funding to be used towards pensions or to offset a tax cut enacted since March 3, 2021.
  • State and local governments can transfer funds to private nonprofit groups, public benefit corporations involved in passenger or cargo transportation, and special purpose units of state or local governments.

Education Funding ($168B)

• Funding Distribution and Uses for Funds
  • Provides $122.7 billion in funding for K-12 education.
    • Ninety percent of the K-12 funding will be distributed to local education agencies (LEAs) using the Title IA formula from the Elementary and Secondary Education Act (ESEA), which, generally, distributes funding based on the number of low-income students in the school.  LEAs must reserve 20 percent of their funding to address “learning loss” but the remaining funding is flexible, and can be used to address upgrading ventilation systems, or measures to reduce class sizes to meet social distancing requirements. 
    • The remaining ten percent of funding is reserved for State Education Agencies (SEAs), which they are required to spend within one year.  Much of this funding is also reserved for learning loss, after school programs, or summer learning programs, but states will have similar flexibility to spend the remaining funding, possibly on capital improvements.
  • Provides $40 billion for higher education
    • $36 billion will be distributed to public and private non-profit institutions of higher learning through September 30, 2023, with institutions receiving more funding based on the percentage of their student population that are Pell Grant recipients.  Fifty percent of the funding is reserved for financial aid grants for students.  The remaining 50 percent of funding is reserved for the institutions themselves to spend on things such as lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll. 
    • An additional $3 billion is allocated to historically Black colleges and universities, tribal colleges and minority-serving institutions.
  • The remaining funds are provided through other grant programs.
  • For information on how these funds may be broken down at a state-by-state level, click here.

Public Transit Funding ($30.5B)

• Funding Distribution and Uses for Funds
  • Provides $30.5 billion in funding for grants to transit agencies for use for operating expenses, including payroll and personal protective equipment costs with a bulk of the funding going to urbanized areas.
    • While most of the funding is for operating assistance, it does provide $1.7 billion for Capital Investment Grants however it is mostly limited to project sponsors that have an existing Full Funding Grant Agreement and received a FY2019 or FY2020 allocation.
    • NOTE: From what we can tell from the initial analysis by AGC staff, there is very little funding dedicated for capital construction and what is will be for existing projects.

Airport Funding ($8B)

• Funding Distribution and Uses for Funds
  • Provides $8 billion in funding for airports and airport concessions, however, $6.4 billion of that is distributed for costs related to operations, personnel, and combating the spread of COVID-19 at airports.