COVID-19 stimulus bill analysis: Were the funds divided up fairly?

Our research team dives deep into the 800+ page CARES Act to analyze how funds were distributed across states.

Last Updated: Apr 6, 2020

Cares Act Covid-19 Stimulus bill review and analysis

On Friday, March 27th, 2020, President Donald Trump signed a roughly $2 trillion stimulus package into law. This is the largest financial aid package in U.S. history and is aimed at helping American workers, small businesses and industries crippled by the COVID-19 pandemic.

The $2 trillion is divided and distributed to a variety of groups impacted by coronavirus, including individuals (estimated $560 billion), public health ($153.5 billion), big and small businesses ($877 billion) and state and local governments ($339.8 billion).

The Innerbody Research team took a deep dive into the details of the stimulus legislation, closely analyzing how much each state is set to receive on a per person (vs. per state) basis.

Were the COVID-19 stimulus funds divided up fairly among states?

Deep within the COVID-19 relief bill (Section 601), our government specifies that each state will receive a minimum of $1.25 billion in aid from the funds earmarked for state and local governments. The remaining relief funds will be allocated to states based on population numbers as recorded in the 2019 Census, which means that states with larger populations will receive more total funding.

However, the $1.25 billion per state minimum causes the dollar amount of relief per person to swing drastically by state. The federal government clearly recognizes that aid should be based on a state’s population, but establishing a minimum negates much of the benefit for the more populous states.

Although states with larger populations are receiving more total funding, the aid given is not proportionally equivalent to that of states with fewer residents. New York, for example, will receive $388 per person, while Wyoming gets $2,160 per person.

Not only is the per person federal aid from this stimulus package inequitable from state to state, many of the states receiving the lowest funding are those that are currently hardest-hit by Covid-19.

New York, New Jersey and California currently rank highest in documented Covid-19 cases. New York and Washington have the most Covid-19-related deaths. New York, in fact, has over five times more Covid-19 deaths than any other state. Nevertheless, all of these states will receive the minimum funding per resident - only $388.

CARES Act losers by state

These aid allocations seem short-sighted at best and biased towards states with smaller populations at worst. While it’s clear Covid-19 is continuing to spread and every state will likely face challenges treating local cases, it seems that, at a minimum, states currently behind in resources and overloaded with cases right now should be made a priority when determining how best to divvy up funds.

It’s clear that the federal aid package does not take into account states’ current needs. It also does not seem to consider a state’s projected long-term vulnerability.

In a previous study, we examined which states are the most vulnerable during the COVID-19 pandemic. None of the states on our top ten most vulnerable list overlap with our list of states receiving the most federal funding from this stimulus package. Some of the states we identified as most vulnerable are set to receive more than the $388 per person minimum, but none of them will receive the most funding.

If neither the states most in need right now nor the states that are likely to be most vulnerable in the future are getting the most funding per resident, which states are?

Our Findings

The 29 U.S. states with the largest populations are set to receive approximately $388 per person for COVID-19 relief. The remaining 21 states, which qualify for the $1.25 billion minimum in federal relief, will receive more aid per person, with some getting over 6 times what the majority of states will collect.

How much more money the relief package delivers to each of these 21 states varies drastically by population numbers – anywhere from $388 up to $2,160 per person.

  1. Wyoming $2,160 / person
  2. Vermont $2,003 / person
  3. Alaska $1,709 / person
  4. North Dakota $1,640 / person
  5. South Dakota $1,413 / person
  6. Delaware $1,284 / person
  7. Rhode Island $1,180 / person
  8. Montana $1,170 / person
  9. Maine $930 / person
  10. New Hampshire $919 / person

Hawaii, Idaho, West Virginia, Nebraska, New Mexico, Kansas, Mississippi, Arkansas, Nevada, Iowa, and Utah are also receiving significantly more funding compared to the rest of the U.S, averaging $543 vs. the $388 per person most states are expecting.

Only 5 of the 21 states listed above were found to be the most vulnerable in this COVID-19 pandemic according to a recent Innerbody Research study: West Virginia, New Mexico, Mississippi, Arkansas and Nevada. These states have lower populations relative to other states, which is the metric that secured them the additional funding. Although our prior study concludes that they will likely need the additional funding as Coronavirus continues to spread, it’s unfortunate that their likely future need is not the reason for this supplementary aid.

States like New York, California, and Washington - among others - that desperately need relief now are losing in this deal because of the structure of the stimulus package. More money per person is going to the least-populated states, apportioning essential funding to areas that have the lowest current demand.

Why are low-population states receiving more funding per person than states with more people?

The COVID-19 relief bill allocates aid based on a combination of the minimum relief amount of $1.25 billion and 2019 Census population data, which creates an inequitable distribution of funds. This is bound to confuse many people who wonder why the distribution of funds isn’t based strictly on a state’s population, the magnitude of its existing crisis or an analysis of relative vulnerability.

So why did this happen?

Per-capita inequity

Often in our system of government, the people who live in states with relatively small populations sometimes get outsized representation. In Congress, Wyoming and California each have two senators representing them in the Senate, despite having wildly different populations.

In certain ways, the inequities of this relief bill are strikingly similar to how our Electoral College works. Census population data partially determines how funds are allocated in this relief bill or how many Electoral College votes a state wields. But just as the relief bill mandates a minimum of $1.25 billion per state regardless of population, COVID-19 infection rates or perceived vulnerability, so the Electoral College gives each state a minimum of three electoral votes, no matter how small its population is. The effect in both cases is a per-capita inequity.

Magnitude matters less than a person might think

And when it comes to questions of magnitude, there is another interesting parallel with electoral politics. Think of a state like California, where a presidential candidate winning 51% of the vote wins all of its 55 Electoral College votes, rather than just a proportionate amount of them. A candidate who wins by a larger magnitude – say, 80% of the vote – still wins 55 electoral votes, which can explain why there are multiple instances of presidential candidates winning the popular vote but losing in the deciding Electoral College. Magnitude of victory in a state doesn’t matter.

Similarly in this case, states with huge COVID-19 outbreaks are not getting proportionate COVID-19 stimulus relief. Small states with low levels of outbreak were able to negotiate a big minimum amount of aid – $1.25 billion – leaving a proportionally small amount of funds per case load for overwhelmed states.

Per-case funding

While we recognize that coronavirus testing has lagged dramatically and there are certainly many unconfirmed cases throughout the country, looking at the documented case data gives insight to why the stimulus aid is so inequitable. So our experts looked deeper into the distribution of funds based on the magnitude of the crisis.

New York – one of the states hit hardest by COVID-19 at the time of this writing – will receive the lowest per-case funding. For every documented coronavirus case as of March 27th (the day the CARES Act was passed), New York will receive just over $190,000 in aid – the least of any state. Washington, another hotspot for the virus, doesn’t fare much better at just over $920,000 per documented case.

South Dakota, on the other hand, which has only 46 cases documented, gets over $27 million for each of those cases.

New hotspots are emerging daily, the most recent being Detroit, Chicago and New Orleans. Each of their respective states are also at the bottom of the list for federal aid per documented COVID-19 case.

COVID-19 stimulus funds allocation data for all 50 states

Rank State Population Total COVID-19 Relief Funds Allocated COVID-19 Funds per person Funds per COVID-19 Case (3/27)
1 Wyoming 578,759 $1,250,000,000 $2,160 $22,727,273
2 Vermont 623,989 $1,250,000,000 $2,003 $8,012,821
3 Alaska 731,545 $1,250,000,000 $1,709 $18,115,942
4 North Dakota 762,062 $1,250,000,000 $1,640 $21,551,724
5 South Dakota 884,659 $1,250,000,000 $1,413 $27,173,913
6 Delaware 973,764 $1,250,000,000 $1,284 $8,741,259
7 Rhode Island 1,059,361 $1,250,000,000 $1,180 $6,648,936
8 Montana 1,068,778 $1,250,000,000 $1,170 $13,888,889
9 Maine 1,344,212 $1,250,000,000 $930 $8,064,516
10 New Hampshire 1,359,711 $1,250,000,000 $919 $7,911,392
11 Hawaii 1,415,872 $1,250,000,000 $883 $14,534,884
12 Idaho 1,787,065 $1,250,000,000 $699 $6,613,757
13 West Virginia 1,792,147 $1,250,000,000 $697 $16,447,368
14 Nebraska 1,934,408 $1,250,000,000 $646 $17,123,288
15 New Mexico 2,096,829 $1,250,000,000 $596 $9,191,176
16 Kansas 2,913,314 $1,250,000,000 $429 $7,440,476
17 Mississippi 2,976,149 $1,250,000,000 $420 $2,158,895
18 Arkansas 3,017,804 $1,250,000,000 $414 $3,581,662
19 Nevada 3,080,156 $1,250,000,000 $406 $2,336,449
20 Iowa 3,155,070 $1,250,000,000 $396 $6,983,240
21 Utah 3,205,958 $1,250,000,000 $390 $3,109,453
22 (tie) Alabama 4,903,185 $1,901,262,160 $388 $3,580,531
22 (tie) Arizona 7,278,717 $2,822,399,972 $388 $5,555,905
22 (tie) Colorado 5,758,736 $2,233,011,164 $388 $1,561,546
22 (tie) Connecticut 3,565,287 $1,382,477,973 $388 $1,366,085
22 (tie) Illinois 12,671,821 $4,913,633,437 $388 $1,936,026
22 (tie) Indiana 6,732,219 $2,610,489,557 $388 $4,047,271
22 (tie) Kentucky 4,467,673 $1,732,387,747 $388 $6,985,434
22 (tie) Maryland 6,045,680 $2,344,276,754 $388 $3,028,781
22 (tie) Michigan 9,986,857 $3,872,510,075 $388 $1,355,921
22 (tie) North Carolina 10,488,084 $4,066,866,178 $388 $5,323,123
22 (tie) Oklahoma 3,956,971 $1,534,357,612 $388 $6,186,926
22 (tie) Pennsylvania 12,801,989 $4,964,107,464 $388 $2,940,822
22 (tie) South Carolina 5,148,714 $1,996,468,642 $388 $4,378,221
22 (tie) Texas 28,995,881 $11,243,461,411 $388 $8,054,055
22 (tie) Wisconsin 5,822,434 $2,257,710,742 $388 $3,193,367
22 (tie) California 39,512,223 $15,321,284,928 $388 $4,056,469
22 (tie) Florida 21,477,737 $8,328,221,072 $388 $3,540,910
22 (tie) Georgia 10,617,423 $4,117,018,751 $388 $2,401,995
22 (tie) Louisiana 4,648,794 $1,802,619,343 $388 $782,047
22 (tie) Massachusetts 6,892,503 $2,672,641,383 $388 $1,105,768
22 (tie) Minnesota 5,639,632 $2,186,827,321 $388 $5,480,770
22 (tie) Missouri 6,137,428 $2,379,853,017 $388 $4,740,743
22 (tie) New Jersey 8,882,190 $3,444,163,690 $388 $500,896
22 (tie) New York 19,453,561 $7,543,325,288 $388 $193,533
22 (tie) Ohio 11,689,100 $4,532,572,912 $388 $5,227,881
22 (tie) Oregon 4,217,737 $1,635,472,404 $388 $5,175,546
22 (tie) Virginia 8,535,519 $3,309,738,321 $388 $5,479,699
22 (tie) Washington 7,614,893 $2,952,755,793 $388 $920,722
22 (tie) Tennessee 6,829,174 $2,648,084,890 $388 $2,767,069

Caveats

The data we’ve analyzed tells a compelling story about the inequality of the current $2 trillion stimulus package when it comes to the allocation for state and local governments.

It’s important to acknowledge, however, the limitations of this study:

Access to testing varies by state and it’s clear that most (if not all) states have not been able to conduct timely, comprehensive testing of residents with coronavirus-like symptoms. There are certainly many people who are infected with novel coronavirus but haven’t been tested and consequently are not reflected in the CDC’s tally of COVID-19 cases by state.

The number of documented COVID-19 cases changes daily. This is a moving target and we are analyzing a single point in time – the date the law was passed.

Additionally, this study only examines federal aid funds earmarked specifically for state and local governments; it doesn’t reflect funding allocated to other sectors like public health, education, big and small business, and individuals. It’s possible some of the discrepancies noted here are addressed with aid from these other segments of the stimulus package. Hopefully there will be enough transparency for the public to see how these funds are eventually distributed.

Lastly, it’s possible the U.S. government will work on future stimulus packages that address additional needs. Officials from some states whose current COVID-19 problems are currently severe, such as New York, are already signaling hope that there will be additional relief.

Methodology

Innerbody Research thoroughly analyzed the recent $2 trillion stimulus package in detail to determine what, exactly, each state would receive in federal aid. We compared this to the CDC’s daily report of confirmed coronavirus cases by state as well as the 2019 U.S. Census population data to come up with what each state will collect per person as well as per documented coronavirus case.

As mentioned above, we compared these state-based stimulus packages to our previous study on COVID-19 state vulnerability, which analyzed data from Centers for Disease Control and Prevention, National Health Security Preparedness Index, United States Census Bureau, United States Interagency Council on Homelessness, American Community Survey and the American Hospital Association.

Sources

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