Missouri to put more than half of unspent federal aid in unemployment fund

As Missouri officials prepare to receive $2.8 billion from the latest federal aid package, more than half a billion dollars from the last one has remained unspent in state coffers.

Gov. Mike Parson on Monday said he will put $300 million, more than half of what remains, into the state’s unemployment insurance trust fund.

Until the announcement, the state had $569,716,000 unspent from last year’s CARES Act funds, according to a spokeswoman for the state treasurer’s office. That was out of the $2.3 billion Missouri received initially, about $300 million of which went directly to Jackson and St. Louis counties.

About a quarter of the original funds, more than $500 million, went to local governments across the state.

In the new bill, city and county governments in Missouri will directly receive $2.46 billion from the federal government.

Parson’s announcement came amid growing frustration from Democratic lawmakers who since last fall have criticized Parson administration officials for not spending the money quickly enough to respond to the pandemic.

Kansas received more than $1 billion from the CARES Act and as of January had spent $910 million, according to a tracker from the Kansas Office of Recovery.

The remaining funds have all been allocated. The bulk of the remaining money is committed to public health needs, such as testing capacity, according to the tracker.

Rep. Peter Merideth of University City, the highest-ranking Democrat on the Missouri House Budget Committee, said he has “a long list” of potential recipients for the economic aid, including small business grants, school districts figuring out how to safely reopen and child care centers that are struggling to keep their doors open.

Officials nationwide were initially cautious with CARES Act funds last year, unsure of whether certain expenditures would violate federal regulations, which limited the money to be spent on coronavirus-related costs.

As the U.S. Treasury clarified permissible ways to use the money, states began running up against another barrier: a Dec. 30 deadline to spend the money or return it to the federal government.

Last November, Missouri still had $1 billion left and less than two months to spend it. Parson officials were prepared to dump about half a billion dollars into the unemployment fund then to avoid returning it.

Merideth said the decision to do the same several months later with $300 million shows the administration “didn’t have any damn ideas” on how to allocate the money.

The announcement came after The Star made repeated inquiries to the state’s budget department about its plan for allocating the remainder of its CARES Act money.

“We have the funds available that could be used to put together a comprehensive and responsive plan, but we’re not doing that and we don’t really have a good reason why,” said Rep. Ingrid Burnett, a Kansas City Democrat, last week.

Missouri’s upcoming receipt of nearly $3 billion more from the federal government is sure to set up new debates over how to allocate it. Parson has in the past said he wants it to go toward long-term investments for the state.

This month, lawmakers again grilled state officials on their plan to spend federal funds.

At a Budget Committee hearing on March 11, State Budget Director Dan Haug said out of $55 million the federal government has set aside for the state to spend on vaccines, officials are asking to spend $10.2 million between now and July.

That money isn’t needed for the Missouri National Guard to distribute vaccines, which is already being paid for by the federal government, Haug said, but rather will be used for “the long-term infrastructure” of future vaccine rollouts, including for the flu.

Rep. Maggie Nurrenbern, a Kansas City Democrat, argued the ongoing COVID-19 vaccine rollout is more urgent.

“These next few months are so critical,” she said. “I’m frustrated when I see this money sitting here and it’s not getting allocated to the people who could use it to save lives.”

The money in the unemployment trust fund will prevent a tax hike on employers that is triggered when the fund is low, Parson said. Last year, he took executive action to waive those hikes through the end of March.

“We have come a long way since the early days of this pandemic, and an increase in taxes is the last thing Missouri employers need as we continue our recovery,” he said in a news release.

He has also cited a concern for businesses facing those tax hikes as reason for not wanting the state to forgive the roughly $37 million of unemployment benefits it mistakenly paid to thousands of Missourians last year.

More than $112 million that the state paid in error came from the federal government and labor officials have said they will pause collecting it back while a bill to forgive that money awaits debate in the state Senate. But they are continuing to demand recipients repay the smaller amount that came from the state’s unemployment fund.

Asked if after replenishing the fund Parson would change his mind, a spokeswoman said, “This transfer is wholly unrelated to unemployment overpayment forgiveness.”

This story was originally published March 22, 2021 at 1:47 PM.