Paycheck Protection Program and Health Care Enhancement Act: State and Local Perspective

The new stimulus includes $11 billion for COVID-19 testing and contact tracing dedicated to state and local government (SLG) entities. They must prepare to access these funds and use them effectively.

What Is in the Bill 

On April 24, President Trump signed the Paycheck Protection Program and Health Care Enhancement Act. The bulk of the funds were targeted at small businesses, e.g., $321 billion to replenish the Paycheck Protection Program and $50 billion to replenish the Economic Injury Disaster Loans program. The act also focuses on healthcare (e.g., $75 billion in healthcare and social service provider grants and $25 billion for COVID-19 testing).

Funds for State and Local Government (SLG) Entities: Testing

Within the $25 billion for COVID-19 testing, there’s a substantial allotment of $11 billion for SLG entities.

  • Eligible entities and dollars are still emerging: Which entities are eligible beyond the states is awaiting clarification, as are the dollar amounts that each entity can expect. But some will be allotted via formula (>$2 billion) and others based on need/number of cases (>$4.25 billion). The official list of eligible entities has not been released, but is likely similar to those for the Coronavirus Relief Fund
  • Contact tracing is eligible: The money can be used for contact tracing as well as testing. The combination of contact tracing and testing is seen as key to restoring economic and personal activity.
  • Act fast — strategic plan required: In order to receive the money, SLG entities need a strategic plan for how they will use the testing/tracing money within 30 days of April 24.

  • Other funds for SLG entities: Small business and healthcare

    The allocation of funds for COVID-19 testing funds is by far the largest and most relevant pool of funds for SLG entities. There are a few other streams of money for SLG entities to consider, especially if they are healthcare providers.

  • Small business funds that require disaster declaration: There are two streams of funds — Small Business Disaster Loans and Emergency Economic Injury Disaster Grants — that require state and local entities to secure disaster declarations from the Small Business Administration (SBA) before the funds can be disbursed.
  • Healthcare treatment and lost revenue: The act includes two streams of funding for healthcare that certain state and local entities may access, pending their services. There is $75 billion for hospitals and healthcare providers to treat COVID-19 patients and make up for lost revenue. There is also $825 million for community healthcare centers and rural clinic's funding.

  • Key next steps for state and local government entities
  • Prepare:
    1. Identify relevant funding strategy for your entity;
    2. Secure SBA disaster declaration.
  • Plan:
    1. Create your general recovery plan, including a strategic plan for the use of testing funds;
    2. Apply for funds.
  • Execute:
    1. Stand up and manage these new testing and contact tracing operations;
    2. Ensure compliant management of grants and reimbursements.

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