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The Senate Finance Committee met on July 11 to hear invited and public testimony on state use of federal COVID-19 relief funds. A link to the hearing notice can be found here and a video archive can be found here.

This report is intended to give you an overview of discussions and highlight the various topics taken up. It is not a verbatim transcript of the discussions but is based upon what was audible or understandable to the observer and the desire to get details out as quickly as possible with few errors or omissions.

Opening Comments

  • Chair Huffman – Nearly $80 billion has been allocated to Texas through six major federal Covid-19 relief bills; went to states, state agencies, and local governments
  • Office of Governor allocated funds
  • In the 3rd call special session, SB 8 appropriated $13.3 billion of federal funds; worked to prioritize one-time funds
  • Tackled priorities such as the unemployed insurance trust fund, provided support to hospitals and health workers, expanded access to mental health care, bolstered states’ broadband infrastructure, and supporting access to healthcare for teachers
  • $20 billion to public education; goes to school districts free and clear of any restrictions
  • Will receive updates from major agencies that received Covid relief funds

 

Reporting on the state use of federal Covid-19 relief funds; examining local use of federal relief funding; evaluating overall fiscal impact of the Covid-19 pandemic on state agencies; identifying barriers to effective utilization of funds and making recommendations on the expenditure of unappropriated funds; and, evaluating and reporting on state agency use of “one-time” federal funding sources.

 

Invited Testimony

Glenn Hegar, Comptroller, Texas Comptroller of Public Accounts

  • Initial Texas broadband initiative drafted based on public response and needs; broadband access can change the lives of Texans
  • State received $500.5 billion under ARPA and $100 million under IIJA; expecting to be eligible for $1 or 4 billion more in IIJA money
  • IIJA has 25% state or local match requirement; recommends state cover this
  • ARPA money needs to be spent on last mile connectivity
  • IIJA funding focuses on digital equity
  • State must apply for initial planning funds, prepare five-year action plan, submit a proposal, and be accepted to receive money; expected to be accepted in 2024-2025
  • Closely reviewing federal requirements for state
  • IIJA Projects must meet strict requirements in areas including speed and availability; must offer low-cost middle class affordable options for broadband
  • BDO working to define low-cost for Texas
  • Federal requires fiber networks, doesn’t work for rural Texas right away
  • ARPA funding also has restrictions such as prohibiting funds to be used for standalone pole replacement projects; cannot use the 70 million appropriated
  • Federal requirements do not entirely support Texas’ needs
  • Chair Huffman – Will the 70 million for pole replacement be eligible under IIJA?
    • Potentially, BEAD under IIJA is both middle and last mile; federal government indicated they would be willing to work with states but unsure if they will follow through
  • Chair Huffman – Will the infrastructure funding help you proceed with the broadband initiative?
    • Definitely; though the restrictions pose challenges the money is helpful
  • Chair Huffman – Will you be monitoring the ongoing financial consequences of the federal requirements?
    • Yes; the requirement for fiber networks is creating challenges due to scarcity
    • We work with getting people access first, having fiber is an ultimate goal
  • Whitmire asks about information sources for presented data
  • Whitmire – Are there areas within the city of Houston that are less covered than suburban areas?
    • There are areas in both urban and suburban areas that either don’t have coverage or don’t have very good coverage
  • Perry – What is your oversight role over duplicity? How are you preventing money from being wasted?
    • We are trying to understand the different dollars coming in and how it is being utilized; I can request information from those participating in our programs to ensure there isn’t duplicity
  • Perry – Rural telecommunication providers are providing fiber, but stop when the funding stops; are you including them in the conversation?
    • Yes, we include everyone
  • This will change peoples’ economic, telehealth, and employment opportunities
  • West – Are subgrantees governmental entities?
    • Yes, and all the grantees participating in programs
  • West – Confirms that digital equities application has been submitted
  • West – Will you continue to gather feedback throughout the state?
    • Yes, we do virtual and in person meetings
  • Nichols – You think the state should pay the 25% match to federal funds?
    • Yes, it is a decision for the senate
  • Nichols – When federal funds “encourage” something, is it required? Will it be required in the future?
    • I don’t think so
  • Hinojosa – How are you standardizing broadband initiatives between public school districts and cities? Will cities using local funds be eligible for state programs?
    • We have not set up all the parameters for our programs; cannot say whether someone would or would not qualify
    • Priority to connect all Texans
  • Hinojosa – Will fiber cost more initially cost more but hold up better?
    • Yes, it’s a bigger long-term investment
  • Kolkhorst – What do you see as the definition of broadband?
    • The internet capability to connect people to people; in state and federal law there is a speed standard, but the actual standard is higher
  • Kolkhorst – How do you balance businesses that haven’t received federal money and have become profitable with those that are dependent on federal funds?
    • It’s complex and complicated; it’s worthwhile to get people broadband access no matter the challenges
  • Kolkhorst – How do you feel about cities using their own money for broadband expansion?
    • The fact that some cities have already been able to identify underserved populations is getting them ahead; not sure if they will be rewarded with federal funds
  • Kolkhorst – 25:3 is really tough
  • Campbell – Will any of the broadband dollars be translated to financial assistance?
    • One of our biggest tasks is to identify each participant; IIJA requires an affordability plan
    • Providers are required to have a low-cost option
    • Doesn’t envision state of Texas writing checks to people to buy broadband coverage
  • Campbell – How are incarcerated individuals considered coverage?
    • We haven’t gotten far enough to have a concrete answer
  • Increase in revenue estimate; economy has outpaced estimations significantly
  • Passed pre-pandemic metrics
  • Drags on economy are labor shortages and supply chain
  • Biggest source of state revenue is sales tax collections; averaging $3.5 billion dollars per month in sales tax collections
  • Last three months of severance tax collections broke records; collected 3.5 billion through state highway fund and ESF
  • Most growth from this fiscal year
  • No one can predict oil prices in 12 months; has conservative estimates
  • In last year, revenues stronger than what is usually gathered over two years
  • The last two years have shown that we can’t predict anything that will happen; need to be cautious
  • Need to abide by spending limit
  • Cash carry over balance is the biggest ever seen under his administration
  • Nelson – Even though we are generating high revenue, is this still a difficult economic time?
    • Yes, there are more important metrics than just revenue
  • Nelson – What should we be focusing on and anticipating other than inflation and rising Medicaid costs?
    • If you adjust the last three months for inflation, we have grown only 3.7%
    • Inflationary pressure is very real and needs focus
  • Commends the Senate for investing in state infrastructure; recommends continuing this investment
  • Kolkhorst – Asks about pension funds
    • We are keeping up with pension funds; in contact with other agencies
  • Kolkhorst – Is Texas in a vacuum or will we follow the trends of other states?
    • The national and global economy is cooling off; we are not immune to this
    • There are 1,012 more people in Texas each day; people and companies are moving to Texas
    • Texas will weather the incoming recession better than other states; needs to continue to invest in infrastructure
  • Kolkhorst – How do you see anti-drilling federal legislation impacting Texas?
    • We have the most rigs; we are increasing rigs but there are constraints due to funding and labor
  • Kolkhorst – What do you anticipate regarding farmers and ranchers?
    • This year is extremely difficult due to the drought and inflation
  • Whitmire – Need to focus on equality; inflation and rising gas prices pushing people out of their jobs and into poverty
  • Chair Huffman – Increase in severance taxes not due to increased productivity, but increased price
  • West – What is our unemployment rate? In which sectors have jobs been created>
    • 2%
    • The biggest sector GDP is the financial sector; retail and hospitals have increased employment the most
  • West – What is the average wage?
    • We can get that to you
  • West – Have increasing wages helped the service industries the most?
    • Yes, they help the lower class more than the middle class
  • West – With people moving here, will there be increasing strain on resources?
    • Yes, ½ of the population increase is natural and ½ is people moving

 

Eduardo Rodriguez, LBB

  • Six major federal covid bills
  • Information self-reported by state agencies to the LBB; updated on a quarterly basis
  • Presentation reflective of funding appropriated or awarded to the state of Texas, not local entities
  • Texas awarded estimated 79 billion; spent 45% so far
  • Most of unspent money from last two acts; due to timing and longer grant performance periods
  • Most performance periods expire before next legislative session
  • Corona Virus Relief Fund gave $8.1 billion to office of governor for allocation; used for Covid-expenses between March 2020 and December 2021
  • Governor’s Emergency Education and Relief Fun; went to local education agencies and institutions of higher education, has until Sept. 2022 to expand second allocation
  • TEA received 19.2 billion to be passed to local education agencies to procure learning resources; must be allocated completely by Sep 30, 2024
  • Not all funding state receives is a grant; some increased federal shares or federal reimbursements
  • Enhanced FMAP; 6.2% increase in January 2020 for public health emergencies; not aware that this has been pulled back as of today
  • FEMA public assistance grants are reimbursements for eligible costs; 11.3 billion
  • Funds used to reimburse PPEs, testing equipment, patient care and support
  • Initially 100% federal cost share, shifted in July 2022 to 90% federal and 10% state
  • Higher education emergency relief funds 13.3 billion; for students and institutions set to expire at end of August 2022
  • 8 billion in Coronavirus state fiscal recovery funds under ARPA; 12.8 billion has been appropriated
  • Intended to cover Covid-19 costs and financial impacts, in addition to infrastructure projects such as broadband
  • Texas challenged CVSFR restrictions in court; still awaiting final decisions
  • Funds awarded to local municipalities
  • SB 8 requires LBB to report all expenditures and uses of Covid-19 funds
  • Effects on agencies
    • Shifting to remote model
    • Not all state agencies could shift their model such as DPS and TDEM
    • Challenges finding PPE and testing equipment
  • Presents IIJA overview
  • Passed November 2021, Texas allocated 36.3 billion for 2022-2026
  • Apportionments for broadband, energy, transportation, cybersecurity, and more
  • IIJA not 36 billion windfall to state; legislation is an advance on future appropriations, will be dispersed in tranches over the next five years
  • New programs created, but most funds will be attributed under existing grant programs
  • Unsure where the 36.3 billion will be allocated; could be to local municipalities and to airports rather than the state treasury
  • Guidance and final allocations still slow-going; information released is slow and sporadic
  • 51 different apportionments made to state of Texas
  • FY2022: national highway performance, surface transportation, clean water and drinking water, airport, oil site plugging and restoration, electric vehicle
  • IIJA mix of appropriations mix of new and existing grant programs
  • Chair Huffman – Will the LBB track appropriations that don’t come through the state treasury?
    • We are currently tracking all incoming appropriations; as more information is released we will have more specific tracking
  • Chair Huffman – Do any of the appropriations have matching requirements?
    • Some of them do; state agencies can decide whether they want to request the appropriations
  • Kolkhorst concerned that there is too much money in the system; creates a fiscal cliff when the money dries up
  • Chair Huffman and Nelson also concerned with the money creating long-term state fiscal responsibility; don’t want to create new programs that the state will have to keep up with
  • Perry – Of the IIJA funding, what is the new money?
    • For a lot of the programs, the state already has existing pipelines where the money is coming through; it’s not new funding but it solidifies reassurance to the state for funding they probably would’ve received otherwise
    • Not sure exactly how much is for new programs
  • Hinojosa – We used to have a rule that federal appropriations cannot create new programs that the state would need to fund

 

Sarah Hicks, Director of Budget and Policy, Office of the Governor

  • CRF came to Governor
  • Worked with legislative leadership on how to allocate those funds
  • Didn’t know how future of state revenue and healthcare costs; needed to protect both
  • $11 billion total, but $8.1 billion to Governor and $3 billion directly to counties and cities with populations over 500,000
  • Needed to address counties and cities that didn’t receive direct funding; created reimbursement program
  • CRF spent for necessary expenditures due to public health; medical expenses, public health expenses, payroll expenses for public health employees, and other similar expenses
  • $4.2 billion went to health and safety expenditures such as surge staff, food banks, and Covid tests; received $3.6 billion back from FEMA reimbursements
  • $2.9 billion to pay for public health and public safety payroll expenses
  • FEMA funds provided $400 million to TRS and $3 billion to payroll expenses
  • Leftover CRF money to go to workforce commission; looking to backout ARPA funds with CRF
  • CRF money freed up GR savings
  • Public health and public safety saving
  • HB 2 relied on 2.4 billion in GR savings
  • 1 billion
  • Received more reimbursements than anticipated
  • When using CRF to pay salaries, not an operational change to agencies, soley a financial change
  • Year 1 and 2 Texas received 441 million; came to Governor’s Office; did some 5% restoration reductions, used rest of money to invest in providing in opportunities that didn’t exist for upskilling and reskilling, investment in TEA for special education
  • 10 million to TEA to help charter schools and data systems
  • ARPA, SB 8 appropriated two tranches to the Governor’s office to administer; three programs, tourism and travel industry recover, grants not to exceed 20,000 dollars, application window for first tranche opened on July 6, 57 applications have been certified
  • Small business credit initiative under ARPA; office authorized to offer programs, 472 million is maximum allocation amount
  • Working to create capital access and loan guarantee programs; working with private lenders
  • Schwertner – 180 million to tourism and travel industry; Can applicants change their application after the tourism and travel grant webinar?
    • Adriana Cruz, Economic Development & Tourism – Industry is so large, we have a a phased application plan
    • Breweries, wineries, distilleries going first; staff making sure applications are proper and we are revising the website to help guide them in the application process
  • Schwertner – Differences in which sectors get certain amounts of funds?
    • Cruz – Allocation takes into account the size and impact and the COVID-19 pandemic; restaurants and food/dining received a larger proportional allocation
  • West – Asks about Texas Small Business Credit Initiatives
    • Cruz – Not solely for those impacted by the pandemic; open to small businesses
  • West – Waiting approval of Treasury? Should put out the requirements prior to approval?
    • Cruz – Yes, but not sure on the approval timeline; will then set a timeline and put out a marketing
  • West – Portal is ready to go? Want to have it up so businesses can take advantage as soon as possible
    • Cruz – Close to being finalized; hoping to have that up in a couple weeks
  • West – State dollars for this program or just ARPA? Deadline to spend these funds?
    • Just federal funds; 2025
  • Kolkhorst – Definition of small business?
    • Follow SBA definition of small businesses those less than 500 employees; does vary by sector
  • Kolkhorst – Funds have been awarded?
    • Cruz – No, are accepting applications now
  • Kolkhorst – Are caps on loans? Do not want large businesses absorbing all of those funds; need a reasonable cap
    • Cruz – Do not believe so
  • $160m for VOCA; federal VOCA funds have been tapering down and legislature has added funds to make FY22 and FY23 equal to FY21’s $216m
    • Huffman – Would have been a good use for Uvalde funds
  • Nelson – Had three principles for these funds during session 1) avoid creating ongoing expenses 2) aware of federal strings 3) maximize use of federal dollars
  • Nelson – Governor’s office will continue to adhere to these principles
    • Yes and have notified agencies about strings attached; are a lot of complicated ones the legislature should look at like one with DIR which requires a lot of local match
  • Hinojosa – Money sent directly to counties and cities caused issues since larger counties did not want to share the funds with smaller cities; did a better job as a state to organize

 

Nim Kidd, Chief Texas Division of Emergency Management

  • Overviews TDEM actions/support provided since the beginning of the pandemic
  • From Disaster Contingency Fund $80m to TDEM before federal funds
    • Was put back in the Contingency Fund dollar-for-dollar
  • $10.5b ARPA went to local governments; anecdotally heard that money did not go to those on the frontlines
    • $1.3b TDEM managed for smaller local governments
  • FEMA Public Assistance $14b; $10.5b has been paid out and returned
  • $3.6b most expenses went to testing, 26% PPE, 17% regional infusion centers, etc.
    • All but $600m has been returned and paid out
  • Huffman – Funds sent directly to local governments, do you know where it was spent?
    • Cannot find any reporting requirements from them on those funds
  • Huffman – Reimbursement rate has fallen to 90%
    • Costs from July 1 going forward is the 90% rate
    • If we had maintained PPE in the state warehouse, FEMA hinted they would charge 10% value of that commodity
    • State agency sub applicants have $350m worth of PPE; shelf-life is 5 years
    • Working to have a commodity-buy-back program
    • $16m COVID-19 tests in the inventory and $1m will expire in the next 60 days
    • Will fight with FEMA for them to charge for that inventory
  • Huffman – Infusion centers still up? Monoclonal antibody treatments are very effective
    • DSHS has a more detailed answer; are doing that at private hospitals and have some mobile units
    • Challenges is the federal is trying to shift to the medication treatments in pharmacies

 

Donna Sheppard, CFO Department of State Health Services

  • DSHS has received over 45 federal awards
  • DSHS has received $16.3b in federal funds for the duration of the COVID-19 response
  • Bulk of funds are for immediate response needs; mostly for medical surge staffing
  • $4b in COVID-related grants from federal stimulus bills related to surge staffing and other long-term projects
  • Majority of awards have been for ELC grants; data is from 2020 to current FY
  • Approach each award as a one-time expense; exception is IT improvements related to response efforts
  • Funds have been a challenge to manage; worker shortage and other factors could lead to fund lapses
    • Have been able to hire temporary staff rather than long-term
  • Are requesting data extensions; CDC has extended many for a year or more
  • Kolkhorst – Appendix in your presentation is helpful regarding the future projects planned; surge staff is largest expenditure, who did the hiring and total?
    • Authorized by FEMA $10.5b on surge staff; have spent $8.5b
    • FEMA has reimbursed $7.3b
    • Hired vendors who hired staffing agencies to place
  • Kolkhorst – Still doing surge staff? Any had to be repaid by hospitals?
    • No; are doing extensive audits but are not seeing large costs to hospitals or nursing facilities
  • Kolkhorst – How many employees added to the agency since pandemic began?
    • Added 378 filled positions and have 378 vacancies
  • Kolkhorst – How long positions can be paid with federal funds?
    • Grants end at different times, but bigger ones end July 2024 and some extend to 2025 and 2025
  • Kolkhorst – How will you size back down?
    • Will size the agency back down; IT staff will be important to keep on as long as possible
  • Kolkhorst – Have to figure out who is essential when these fall off; responsibility would be to the state?
    • Would come to the legislature if need an exceptional item
  • Hinojosa – Received complaints from hospitals that vendors were raiding their nursing staff
    • Cannot say if that was happening; did have a lot of staff out in the state and were competing nationally for nurses
  • Hinojosa – It was happening and discussed with your department on how to change the requirements
  • Perry – $24m WIC and others have been left on the table; $4.4m concerning mental health lapsed?
    • Some grants have already expired like those under CDC and other minor grants
    • HHSC handles the mental health funds
  • Perry – If it something you need, you need to come to the state and tell us
  • Kolkhorst – Paycheck Protection Act $2b and remaining $1.5b; was used for hospitals? Why under your agency?
    • It was a vehicle for the federal government to send grant awards from the CDC
  • Kolkhorst – TDEM handled all PPE given to hospitals, assisted living, etc.?
    • TDEM purchased PPE and we purchased durable medical supplies/equipment
  • Kolkhorst – PPE and medical supplies had to be paid for by hospitals? Were reimbursed?
    • Were granted through TDEM and were not charged
  • Creighton – Examples of the immunization grants vaccine outreach and education? What review is based on that information?
    • Can show the materials used
  • Creighton – Distinction between completed projects and planned projects on vaccine education and outreach
    • Would keep that going until the grant ends
  • Creighton – Would like information for the numbers on the VERS
  • West – System in place to track ARPA spending by counties?
    • Most funds are going through local health departments
  • West – Could send that information to the state?
    • Yes; could get those contracts to you
  • West – Have had issues on getting demographic information on who was being provided services by counties; will talk to you offline
  • Nichols – Federal nursing surge staff program has created a vicious cycle that has not ended and has hurt rural hospitals; need to look at funding nursing slots and is the same issue for teachers
  • West – Agree and need to address slots for psychiatrists and social workers up and down the mental health line
  • Hinojosa – Problem is we do not pay nursing instructors very much

 

Christopher Matthews, Deputy CFO Health and Human Services Commission

  • HHSC federal funds $8.7b and provider federal funds $12.8b
  • 2% FMAP increase on certain Medicaid expenditures
  • Agency assumes PHE to end in October and drawing down 6.2% match until December
  • Huffman – Thought LBB said it ended today?
    • Expect to receive something today for an extension to extend until October
    • If we do not, it ends on July 15; would start doing redeterminations now
  • Kolkhorst – Has been no notification if the public health declaration is extended?
    • No
  • Kolkhorst – Where is nexus of where we are overspending?
    • Current projections in June is when cost exceeded benefit
  • Kolkhorst – 5.4m on the Medicaid role right now and pre-pandemic was 3m; is the reason for that nexus?
    • Yes
  • Kolkhorst – What is the state says we are no longer in a public health emergency and go back to normal eligibility requirements; how do you scale back from an emergency?
    • Molly Lester, HHSC – Would have been notified in May that the federal government that the PHE would have been ended
    • Lester – Would notify us in August if October is the end of the PHE; if not notified, would assume another extension
    • Lester – Would lose enhanced FMAP in October and would have to unwind for two months without the enhanced FMAP
  • Kolkhorst – What is this costing in GR?
    • Lester – At the beginning is a small increase, but becomes exponential overtime
    • Based on projections is more beneficial to wait for PHE to end than for us to end immediately
    • Will follow up with the committee
  • Huffman – By taking the enhanced FMAP in effect expanded Medicaid without the legislature deciding to do that
    • No; expect caseload to return to normal after PHE ends
  • Huffman – Plan to disenroll?
    • Disenrollment would begin in November if PHE ends in October
  • Kolkhorst – Can the federal government continue to extend PHE?
    • Is not an exit requirement for this; congress has been looking to uncouple this from other aspects
  • Kolkhorst – Is there federal guidance for phasing out of the PHE?
    • Lester – The Build Back Better Act would’ve created a plan for states to phase out of the PHE
  • Chair Huffman – Are more people eligible for Medicaid under these federal guidelines?
    • Yes
  • West – If people are disenrolled, will they still receive some Medicaid?
    • Lester – When the PHE ends, we will complete a reevaluation of their coverage
  • West – What is the cost impact of people disenrolled?
    • Lester – We can get that to you
  • August 2023, all projects will be finalized; projects include internet planning

 

Cory Green, TEA

  • Administer funds that came directly to the agencies or collaborate on funds that went to other agencies for the purpose of education
  • By statute 90% goes to districts by formula grant
  • 9.5% of funding goes to state level activities, 0.5% for administrative costs
  • Wide variety of allowable activities (broad flexible) use of pandemic funding at district level
  • State level activities align with same type of allowable uses
  • 20% set aside for learning loss and instructional times in districts, state funding also has a special set aside as well
  • Total annual school funding is $69.3 billion and pandemic allowed for $21.4 billion for districts and charter schools
  • $1.98 billion TCLAS, $951 million PPE & Rapid Testing, $602 million, $141 million SSES
  • 98% of ESSER1 funding spent already; expires in September
  • 60% of ESSER2 funding remaining; 78% remaining in ESSER3
  • 68% of total funding still remains
  • Collecting detailed information on how ESSER2, ESSER3, and supplemental funds are being spent by districts
  • Slide 9 in hand out shows how funds were used by LEAs and in addition to 36% going to other; “Additional services to students and additional teachers and teacher pay increases” are the next largest items
  • ESSER funding is one-time federal funding; explained to districts that there will be a funding cliff
  • 28% of programs are recurring activities (districts say they will find a way to keep funding them); 30% are one-time expenditures; 43% unknown
  • Provided guidance to districts on how to spend money in anticipation of funding cliff around 22-23 and again in 23-24
    • Recommend savings in fund balance to help level off the cliff some
  • ESSER money allows for supplanting; able to level out funding cliff
  • Discretionary ESSER level, operation connectivity funded also by GEER funding, devices for low-income students
  • ESSER expanded supplemental special education services
  • Majority of discretionary spending related to TCLAS
  • GEER money used for SSES primarily
  • Other uses of GEER
    • $10 million in charter replication funding, running a charter school incubator program with the intent of building out 25 high-quality charter schools
  • Emergency assistance to non-public schools-private schools, by statute TEA runs program for Governor’s office
    • 1st one under CRRSA had broader flexible serving 350 private schools
    • 2nd one under ARP USD implemented low income % eligibility rules, worked with them to get the lowest % possibility – only 70 eligible who applied in the second round
    • However, in eligibility verification some of the schools cannot provide documentation that they meet the low income % requirement so round 2 will fund much fewer schools than the first round
  • TCLAS is $1.9 billion dollars
    • Grouped funding into grant program that used additional fund sources to accelerate learning strategies regarding strategic planning, rigorous and high-quality materials, enhancing teachers, providing meaningful tutoring, and innovative school models
    • It’s a single grant under HB 1525 to support learning recovery
    • Slide 18 TCALS funds by component includes $42 million in new school models, $103 million for planning supports, $112 million for high quality curriculum supports, $122 million for high quality instructional materials (HQIM) print, $131 million for HQIM coaches, etc
  • 719 LEAs received TCLAS funding
  • Offered 17 programs in a single application process for districts to ease experience; programs based on research
  • Discretionary funding was also used for operation connectivity; offered hot spots and devices to mostly rural districts
  • Operation Connectivity relied on survey data on how to serve population; showed how many families didn’t have connection and/or devices
  • Three phase project with Operation Connectivity, Phase two of Operation Connectivity mapped the availability of broadband throughout the state; based on physical availability and affordability
  • Phase three was mapping highlighted 189,505 most unserved student households and sent to state broadband groups
  • Perry – What is the low-income threshold?
    • 22% low income defined by free and reduced-price lunch or some type of equivalent criteria
  • Kolkhorst – Confirms $21.4 billion of ‘NEW” funding went to LEAs including public school, charter and… some private?
    • A small pieced went to private
  • Kolkhorst asks for clarification on the percentage of funding that went directly to schools regarding the pie chart – $17.9 billion went directly to school and $1.1 billion was ESSER one but it has already been spent so it is not included in the pie chart
  • Kolkhorst – Reiterates $21.4 billion went to districts (LEAs). Can school districts build buildings with this funding? Does it allow for additional staffing?
    • Yes, it is an allowable expense, and many districts are using it for HVAC work
    • Yes, many schools intend to hire additional staffing with ESSER3 funding, but many are reporting they are having difficulty finding staff
  • Kolkhorst – As you hire more staff, how will they be funded in the long term?
    • The funding for staffing ends when the money ends; districts must have a plan to reduce staffing or find alternative funding
  • Kolkhorst – ESSER2s and ESSER3s allow you to supplant?
    • Yes, it is one of the few federal grants that allows supplanting
    • Districts can pick up salary and maintenance costs all the way back to March 2020
    • District must show that it’s a reasonable and necessary cost and it must be related to the pandemic
  • Kolkhorst – have you ever seen this much federal government to the schools?
    • This is the largest influx of federal money ever given to the state for education
  • Chair Huffman – Is there a way to measure if this money is helping?
    • The measure of student performance; tracking how all districts are using the money to compare student performance
  • Chair Huffman – What is the hold up in spending the ESSER2 and ESSER3 funding?
    • It’s mostly due to the volume of money coming in; ESSER3 has more reporting and planning requirements which created a delay in spending
  • Creighton – Are there districts that aren’t participating in operation connectivity that should be? Can information be provided to the committee on the ones not participating and why?
    • Some districts already bought their device equipment, making them ineligible for the program
    • We could collect information on why they didn’t participate, but don’t have it available
    • Creighton – says important for committee members to see which districts did not participate in the program
  • Creighton – What was the cost per hot spot?
    • It depended on the service provider the district chose; but can get that detail back to the committee
  • Creighton – Is there a time frame for spending the $11 million remaining funds? What do you anticipate it will be by January?
    • We expect costs to increase once school starts again; money ends by funding expiration dates but there will be an 18-month liquidation extension
    • The liquidation period allows to continue funding long-term investments such as contracts, but not staffing
    • TEA reached out to the federal government. Waiting for details on the liquidation extension, guardrails not in place on that now but will provide it to the committee when it is released
  • Creighton – For the $304 million for private schools, will this increase or is it set?
    • It is set by ESSER1 for equitable services, ESSER 2 and 3 have a separate EANs program
    • If there is a liquidation extension, it would cover the private school funding as well for any school that did not receive the full value of their service could continue until the end of liquidation period
  • Creighton – Can you provide additional guidance on unspent district funds?
    • It will decrease every month; $4-5 million is spent each month and we expect expenditure to increase with the start of school
    • Schools focusing on learning loss gap
    • Unsure if all the money will be spent
  • Creighton – Are there claw back provisions in the ESSERs?
    • They all have the same claw back provisions; unexpended money will go back to the federal government
  • Creighton – Can the money be clawed back after its used?
    • Not unless it’s found to be an unallowed expense in an audit finding
    • Creighton asked him to look into that as get more details to the committee
  • Creighton – Are the financial offices of school districts provided with the same forecast and information that we are regarding the projected cliff?
    • Yes, some of these slides are the exact same as we presented to school districts
  • Creighton – Is there a way that TEA can provide guidance to districts if invitations are declined to participate in some of the in-person guidance being provided? Would like to see that guidance letter provided to the committee so they have it for future hearings if needed
    • Yes

 

Bobby Wilkinson, Texas Department of Housing and Community Affairs

  • Received $733 million in federal funds
  • Repurposed existing money before federal funds arrived
  • CARE’s act gave 300 million in the areas of ESG, CDBG, CSBG, and LIHCAP
  • Programs overseen by department
  • $1.3 billion used to create programs for housing funding
  • Housing Stability Services Program for rent relief; includes legal services, outreach, and shelter
  • $2 million to Texas Access to Justice
  • Developed Low Income Household Water Assistance Program with 600 million ARPA funds
  • $2.2 billion ARP money to Texas homeowner’s assistance program; to help Texans falling behind on payments
  • Home dollars received from ARP to help homeless populations; 119 million
  • ARPA funds for energy assistance programs
  • Created website on July 7; texasutilityhelp.com
  • 798 vouchers by HUD, 11 million
  • Infrastructure Investment and Jobs Act provided funding for weatherization; will procure statewide vendor to get money out the door
  • Will launch weatherization funding in September; to supplement existing programs
  • Texas Rent Relief largest project; entered into 4 vendors to implement
  • Under TRR 2,000 FTEs; can receive up to 18 months of assistance
  • Program dispersed $2 billion in assistance
  • May receive additional reallocation for TRR funding; may reopen application portal
  • THAP applications on texashomeownersassistance.com
  • Two pilot programs from THAP
  • Eligible households can receive property tax and mortgage payments; up to 65,000
  • Must be spent by 2026
  • Processing times vary
  • 61 million distributed in THAP assistance already
  • Chair Huffman – What was the average rental assistance amount awarded
    • 7,000
  • West – Is THAP for those behind on mortgages? How much do you have?
    • Yes, or property taxes and HOA fees
    • $600 million total left
    • They apply through the website
  • West – How do you distribute vouchers?
    • We operate outside of large cities that have local vouchers; Texas Homeless Network is our partner in that

 

Chris Nelson, Workforce Commission

  • TWC appropriate billions of federal funds; largest amount for childcare
  • Not appropriated is 43.2 billion of federal unemployment insurance benefits and 7.2 funding that went into trust fund from ARPA
  • Received grants to administer programs and received fraud prevention grants
  • Received plenty of fraud purchase orders; will all be spent shortly
  • Federal unemployment insurance benefits under PUC; received other additional grants
  • SB 8 funds appropriated money to TWC to pay off loans; $5.8 billion immediately paid off, $1.175 billion put into trust fund to bring up floor
  • Returned leftover SB 8 money to Governor’s office
  • In 2019, trust fund at 2.19 billion; projecting 2022 to be 2.157 billion
  • SB 8 brought trust fund back to pre-pandemic levels
  • HB 7 and SB 8 kept tax rates stable from 2020-2022
  • Childcare is the largest source of funding received, 5.9 billion; 4.5 billion already committed
  • Leftover money budgeted for future budget year
  • Oldest funding must be committed by September 2023
  • Goals for childcare funds:
    • Serve more children in care
    • Stabilize childcare industry
    • Improve quality of care
    • Support childcare workforce
  • Met all goals
  • Monitors childcare staff to inform new programs and initiatives
  • 582 million to stabilize the childcare industry; sent to providers they usually don’t work with directly
  • 2022, committed $2.8 billion for more stabilization funding; 10,700 providers awarded as of April
  • Chair Huffman – What are you paying providers for?
    • The intent is to stabilize; we developed a portal with HHSC to determine eligibility
    • If providers can document eligible operating costs, they can receive funding
    • 2022 funding is paid out in quarterly increments
  • Chair Huffman – Does this funding mean they were serving more children? How does this funding stabilize?
    • Perry – There weren’t a lot of children in day care during the pandemic
    • Childcare providers don’t have as many kids as they want enrolled; have the same operation costs but aren’t collected the same tuition
    • One-time funds allow for hiring and retention bonuses
  • Perry – Will employers have chargebacks on their records if they have terminations of employees due to the pandemic?
    • You wouldn’t get a chargeback if you confirmed that you did fire someone because of Covid
    • There is no blanket immunity; it follows the same rules
  • Unemployment claims increased when Covid hit; paying out 10x as many benefits as normal
  • $52.9 million identified as fraud payments; in proportion to normal fraud payments
  • Realized need to beef up fraud prevention
  • Actively examining cost of business for unemployment insurance payments due to handling fraud claims
  • Kolkhorst – Is the fraud money gone? Can we know how much stays in the country and how much leaves?
    • For the most part yes; if we can identify the person will prosecute but usually can’t
    • We don’t know where it goes
  • We have prevented giving out $4.7 billion to fraud claims
  • West – What new childcare programs are being developed?
    • Reagan Miller – Funding the development of new childcare programs in areas with not enough capacity; just rolled this out at the end of May
    • 200 entities have shown interest in expansion funding
  • West – What are early childhood apprenticeship programs?
    • Miller – Tarrant county, Dallas, and Waco are building these programs
    • Individuals would work in childcare; work with a mentor and take courses
    • Funding is one-time
  • Kolkhorst – Has 53.1 billion been paid out in unemployment benefits in Texas?
    • Yes, both state and federal benefits
    • Usually, we pay out 2-2.5 billion a year
    • Kolkhorst – These benefits created the workforce shortage
    • That is why Texas pulled out of the federal program in June 2021
  • Kolkhorst – Is it true that if there is a PHE, unemployment benefits continue?
    • Federal benefits have ended and state benefits only last 26 weeks
  • Chair Huffman – If we had not cut off the federal supplement, the pay out would’ve been higher than 54 billion right?
    • The federal program ended in September or October, so it wouldn’t have been that much more but yes
  • Hinojosa – When the pandemic started, were you updating your software program?
    • Yes, we were about to start the project when Covid hit so we put it on hold for a year
  • Hinojosa – Will the new program minimize fraud?
    • That is the hope; we are working to develop other fraud prevention methods

 

Mark Williams, TxDOT

  • Programs related to transportation infrastructure
  • From three grants received 155 million, 972.7 million, 4 million for ARPA and 15.5 million from SB 8
  • IIJA is a standard five-year federal highway authorization act; formula funds that are an extension of the FAST Act
  • IIJA increased funds coming to the state by 21%
  • Majority of IIJA funds are continuation of typical transportation funding
  • Received 1.2 billion in funds total
  • Predicts five-year total IIJA allocation
  • 5% of IIJA funds create new programs
  • Significant IIJA funds distributed through existing and new grant programs but no awards havee been announced; federal government states most should go to local authorities
  • Educating entities on potential grants
  • 40 grant programs now administered through the federal government; presenting challenges for federal and state governments
  • Transportation policies encouraged by grants do not help highway capacity; does not help Texas
  • TEXDOT saw an increase in state funding under TMF; increased 2023 unified transportation program
  • Inflation causing issues for highway construction costs; cost increased by 12.5%
  • November 7, 2000, was the last deathless day on Texas roads
  • Hinojosa – How much of IIJA funding will we receive over 5 years?
    • TEXDOT expects to receive $27 billion
  • Nichols – Is the federal money increase less than inflation?
    • Yes
  • Nichols – Does the aviation funding go toward the large airports like DFW and IAH?
    • No, they received different funding
    • This went to 300 general aviation
    • Expected to receive 173 million over 5 years; proportional to what is usually allocated
  • Nichols – Need to increase funding for general aviation; hasn’t increased enough
  • Nichols – IIJA funding cannot be used for maintenance or increasing capacity on roadways, correct?
    • A lot of the programs are consistent with past programs, but the administration is increasing policy leverage to make it more challenging for states to add capacity
    • Federal government disincentivizing programs adding capacity
  • Kolkhorst – Who else is IIJA money going to?
    • Metropolitan transportation authorities and larger airports
    • There are some non-transportation related provisions that go to other entities
  • Kolkhorst – What is the carbon reduction plan?
    • Four new programs introduced by Congress in IIJA; waiting for federal agency to come out with rules
    • Anticipate plan will incentivize projects aimed at reducing carbon footprint; similar to CMAC program
    • Projects such as bike trails, sidewalks, and non-carbon transportation initiatives
  • Kolkhorst – What will Texas use the 1 billion in carbon reduction funds for?
    • Deployment of electric vehicle charging stations; creating a public-private partnership to account for state match
  • Kolkhorst – What if we don’t want these dollars? Would any money decrease highway congestion?
    • We did receive an increase in our typical funding
    • We also received bridge construction money
    • For the carbon reduction program, we are looking at current projects that would be eligible for these funds
  • West – What is the bridge construction money?
    • It’s new grant money; there is a discretionary grant program for bridges not currently in the system and we are applying for these grants as are local communities

 

 

Public Testimony

David Wheaton, Texas Housers

  • Texas has opportunity to increase housing under ARPA
  • Recommends investing in affordable housing through emergency rental assistance
  • Dallas and Houston are in the top five cities in the U.S. for eviction rates; need to invest in state eviction protection programs
  • 161,000 Texas households in fear of being evicted within a month
  • Half of ARPA money would support over 200,000 households; would eliminate fear of eviction

 

Eric Samuels, Texas Homeless Network

  • Supports allocating ARPA funds to prevent homelessness
  • In June 2022, 500k Texans behind on rent
  • Nearly 50,000 Texans experienced homelessness for the first time in 2021
  • Texas homelessness response programs are struggling to keep up
  • Need to open more housing opportunities
  • Recommends allocation of 1.5 billion to Texas Rent Relief program
  • Recommends adding 50 million to add housing and stability specialists in school districts

 

Tanya Lavelle, Disability Rights Texas

  • Housing matter of life and death
  • Pandemic increased volatility of housing market; high rent increases
  • Supports significant investment in Texas Rent Relief program
  • Recommends increasing rental assistance programs; 20-million-dollar increase

 

Tara Bevlah, Self

  • Balanced budget is biblically correct
  • By taking this money, we are compliant to the federal government
  • Doesn’t want government dependency
  • Wants to teach a man to fish rather than give him fish
  • Federal money is rewarding people for not paying their bills
  • Shouldn’t invest in public education because this generation does not know if they are boys or girls
  • Harris County judges using funds to pay for abortions and counties cannot be trusted because they have agendas

 

Jessica Boston, Texas Association for Home Care & Hospice

  • Home care critical part of healthcare continuum
  • Need to prioritize supporting home health; received temporary increase through ARPA
  • Need more permanent investment; recommends rate increases
  • HCBS process for rate increase inconsistent and unclear
  • Some providers have received funding while others have not
  • Need more clarity on federal and state support for home care workers

 

Jeff Humber, AccentCare

  • Not enough funding for acute care and personal care services
  • Appreciates temporary increase in funding
  • Private duty nursing left out of state plan even though critical to healthcare industry
  • Personal home care agencies are unable to provide enough support to patients and can’t take on more patients; increases the cost of healthcare because patients must rely on expensive hospitals

 

Dennis Borel, Coalition of Texans with Disabilities

  • ARPA benefits for community attendants
  • SB 8 attendants in consumer directed services will never receive bonuses without creating IRS tax fraud
  • Medicaid benefits are taxable income, so they will get IRS fraud charges
  • Medicaid beneficiaries do not have bank accounts so there is no way to send them the money; should add this money to their paycheck

 

Eva Castro, Every Texan

  • Need a budget system that is fair and responsive to the state’s growing needs
  • Usually, services supported by taxes
  • State is in better shape because of federal aid

 

Sheila Hemphill, Texas Right to Know

  • Requests a legislative Lonestar shield
  • Need to create a shield around Texas that protects us from the federal government and its decisions that put us in the pandemic
  • Assembled a medical team to get Ozone treatment FDA approved; denied even though Moderna vaccine approved