Small California counties received a disproportionately small share of federal coronavirus assistance distributed by the state last year while larger communities took in far more money per resident, according to a report released this week by California State Auditor Elaine Howle.
The funding worked out to $102 per resident for small counties and up to $197 per resident for counties with more than 500,000 residents, according to the report.
The funding did not necessarily follow the hot spots of the state’s coronavirus outbreak, the report noted. At some points during 2020, coronavirus case rates in rural communities such as Imperial and Kings counties outpaced the spread in more populated ones.
“The needs of many small counties, as reflected in case rates, were at least the same if not greater than the needs of large counties,” the report says.
The audit centers on a portion of $15.3 billion California government agencies received from the Coronavirus Aid, Relief and Economic Security, or CARES, Act.
A large portion of the money went directly to local governments, but the state Legislature had discretion in spending the remaining $9.5 billion. Lawmakers divvied the money up to provide aid for schools, housing and cities. Counties received $1.3 billion, distributed through the state Department of Finance.
Auditor Howle, in a letter sent to the governor and legislative leadership, said the way the state distributed money to counties resulted in an uneven amount of funds going to the state’s more populous counties, even though some smaller counties were experiencing higher rates of the coronavirus.
The federal government had already sent $5.8 billion directly to counties and cities, the report said.
Most of it — $4.5 billion — went to California’s 16 largest counties.
When the Legislature was deciding how to distribute the other $1.3 billion for counties, it directed the Department of Finance to distribute based on the county’s population relative to the total population of the state. The lawmakers didn’t specify further, but told the department to take into account the $4.5 billion in funding the federal government had already sent.
Using this method, the 16 largest counties received more than half of the $1.3 billion.
The result was that California’s 42 smallest counties received a total of $102 of CARES Act money per resident, whereas the 16 larger counties received nearly double that amount, $190 to $197 per resident.
“Finance indicated that it believed there was a higher spread of COVID-19 in the 16 larger counties because of their greater population density,” the audit report says. “However, COVID-19 case data maintained by the California Department of Public Health does not support Finance’s assertion.”
Between April and June, there was an indication that some smaller counties were actually experiencing higher rates of coronavirus than more populated areas.
Los Angeles and Riverside counties, for example, had 989 and 776 cases per 100,000 residents, respectively. At the same time, Imperial and Kings counties had 3,215 and 1,525 cases per 100,000 residents.
H.D. Palmer, spokesman for the Department of Finance, said the department was following the directions laid out by lawmakers in distributing the funds.
“The formula Finance used to allocate these funds was approved by the Legislature as part of this year’s Budget Act. Even after the budget was approved, Finance again reaffirmed the Legislature’s intent — on a county-by-county basis,” Palmer said in an email. “If the auditor’s office has concerns over this process, they should take their policy recommendations directly to the Legislature — which voted to approve the specific mechanism that governed our actions.”
Assemblyman James Gallagher, R-Yuba City, said the auditor’s report is a confirmation of earlier concerns that smaller counties were being left behind. All counties, regardless of urban or rural status, need those federal dollars to help them manage a coronavirus response, he said.
“COVID has been felt across the board, whether you’re a rural county or a big urban county. ... It had a pretty serious and significant economic and revenue impact to our economy but also to our local governments,” he said.
Going forward, the state auditor recommended that California provide equitable funding to counties on a per-person basis or other basis that treats counties fairly and equitably. In terms of monitoring local government compliance, the auditor stressed the importance of monitoring how localities spend coronavirus relief funds to stay in line with federal rules for the monies.
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