A new report from the State Auditor’s office found that the state failed to properly oversee federal Covid-19 spending money. The recent audit didn’t find “misspending,” but it did find that the North Carolina Pandemic Recovery Office (NCPRO) “did not adequately monitor $159.9 million in federal funds used for expenditures incurred due to the COVID-19 pandemic.”
This is not the first blunder for the state with federal Covid money. In 2020, a similar audit of the Department of Public Instruction found $31 million in CARES Act money was spent on a summer learning program without a proper method to ensure student ability improved. Seventy-six million dollars were allocated without guardrails to detect misuse or take corrective. Misuse may have gone undetected. And the Department’s response to the findings, “made several inaccurate and potentially misleading statements,” according to the audit.
And in 2021, the State Auditor’s office raised similar concerns about the state’s dispensing of Coronavirus Relief Funds. Auditors found that $3.1 billion were distributed without ensuring recipients: had objectives for what they would do with the funds, had goals for how they would accomplish those objectives, and measured their progress towards those goals.
After each of these instances, the auditors recommended that the state agency involved review and revise its monitoring procedures. Even so, a lack of oversight was found in the most recent audit.
Unfortunately, the negligence is not exclusive to North Carolina. Government money (earned by taxpayers) is wrought with moral hazard. Because the person earning it is not the same person spending it, incentives are skewed.
Reports detailing a lack of oversight and responsibility over large amounts of taxpayer money are rightly discouraging. Here are three reasons why:
- Fails to prioritize the greatest need. Emergency funding allowed some families to make basic ends meet. Unfortunately, the nature of such funding means that agencies wrestled with the trade-off of being targeted or timely. I wrote previously about the $800 billion of Paycheck Protection Program (PPP) funds that were essentially untargeted, leaving taxpayers on the hook for the government’s lack of alternative options.
- Fuels inflation. The massive fiscal response to the pandemic created the record inflation that followed. Inefficiencies in spending means more money spent than necessary, which in turn means the inflation is more intense than it otherwise could have been.
- Fosters distrust. We want to have confidence that our tax dollars are going to fruitful purposes: education, infrastructure, and helpful programs. Seeing the repeated errors, taxpayers have reason to ask questions. And government leaders should be held accountable.
For these reasons, emergency programs need to be used for true emergencies, and targeted to those with the most need. This starts with the source of authority for emergencies. In North Carolina, the last biennium budget amended the Emergency Management Act to prevent the Governor from issuing executive orders in emergencies without consent from other state leaders. This went into effect on January 1 of this year.
If the dramatic, forced closures of businesses, schools, etc. could have been avoided, many families would not have needed as much help from the government. The extreme orders from Governor Cooper were not justified. For more on this, see Locke’s resource page here.
Similar action should be taken to limit emergency powers at the federal level, the source of much of the Covid relief funds. Just last week on April 10th, the emergency from the Covid-19 pandemic ended at the federal level. Federal Covid-related emergency programs grew over time, and many overstayed their welcome. Taxpayers would be better served if emergency funds went to those with the most need, during real emergencies, with greater oversight.
