Audit finds Santa Cruz, other small counties received less COVID relief from state – Santa Cruz Sentinel

SANTA CRUZ — Santa Cruz County, and other small counties like it, were short-changed out of coronavirus relief funding in 2020.

According to a published report by the auditor of the State of California, the state’s Department of Finance allocated significantly less funding from the $1.3 billion allocated to the state through the CARES Act to counties with 500,000 residents or fewer than its 16 largest counties.

“Although the U.S. Treasury directly provided a total of $4.5 billion in CRF funds to California’s 16 largest counties, Finance also allocated half of the State’s CRF funds designated for counties, to these large counties,” Auditor Elaine M. Howle wrote. “(The Legislature) directed Finance to take into account prior funding that the U.S. Treasury allocated directly from the federal CARES Act, including CRF funding to counties with populations greater than 500,000.”

The 42 small counties received just $102 per person, while the 16 large counties received $190 to $197 per person from the financing approved in May meant to provide relief to those suffering financial losses from the public health emergency.

Howle said that the Department of Finance indicated its logic behind the division of funds was around the belief that the 16 larger counties would have a higher spread of COVID-19 because of its increased population density. But virus case data maintained through the California Department of Public Health does not support that assertion, according to the report.

“Based on the COVID-19 case data for all counties, the needs of many small counties, as reflected in case rates, were at least the same if not greater than the needs of large counties, which is contrary to Finance’s reason for allocating additional state CRF funds to the large counties,” Howle said.

Howle points out that the U.S. Treasury when discussing the funds in May, recommended states treat local governments equitably regardless of their population size.

“To equitably allocate the $1.3 billion in CRF funds to all counties, given that the U.S. Treasury had already allocated $4.5 billion in CRF funds to the 16 largest counties, Finance should have first allocated $1.1 billion to the 42 smaller counties and the remaining $200 million across all counties on a per-person basis…,” she wrote. “Consequently, by not equitably providing counties with funds, there is greater risk that more small counties’ COVID-19-related funding needs were unmet.”

Howle made recommendations in the event the federal government provides California with similar funding in the future, including that the Department of Finance proposes a method to the Legislature to provide equitable funding to all counties on a per-person basis.

In response to the report, the Department of Finance sent a letter noting that it disagreed with the allegations that the breakdown of funds was not equitable. It claimed that the allocation was consistent with what was presented to the Joint Legislative Budget Committee in July before the revision schedule was considered and the Budget Act was enacted. The department received no notification that it had done anything wrong, the director Keely Martin Bosler said.

But Howle bounced back, stating that the department could have been more equitable in its method. The Department of Finance itself conducts financial analysis for the governor and the legislature, and that should have included an analysis that would have provided a more equitable distribution to all counties, she said.

Salt in the wound

Santa Cruz County Health Services Director Mimi Hall responded to the audit report through a statement that began with the understanding of the Department of Finance’s rationale behind giving more to bigger counties.

Santa Cruz County Health Services Director Mimi Hall, left, and Health Officer Dr. Gail Newel, center, offer a coronavirus update at the Santa Cruz Health Center in March 2020. (Jessica A. York — Santa Cruz Sentinel file)

“From a public health standpoint, it is understandable how more CRF funds would be allocated to large cities, since COVID-19 is a numbers game and the more prevention can be aimed at large, dense populations the more likely that the overall epidemiologic curve for the state can be flattened,” Hall told the Sentinel.

But every local health jurisdiction is being challenged by COVID-19, Hall said. And those jurisdictions have had their funding whittled away at for years, leaving smaller counties with infrastructures that are disproportionately impacted.

“A decade and a half ago, California cleaved off a Department of Public Health from its larger department of health. Since then, the California Department of Public Health budget has declined, while the overall state budget has grown,” Hall said. “During this same time period, the federal government’s funding that trickles down to local health jurisdictions has remained static.  The result has been the basic infrastructure of smaller jurisdictions has suffered, as our already bare-bones communicable disease units, public health emergency programs, community prevention program and public health nursing services have been suffering from the smaller but numerous cuts over the years.”

While the coronavirus relief funds helped, they didn’t solve the problem of the pandemic.

“Suburban and rural local health jurisdictions whose core public health infrastructure has been severely diminished over time have far less comparative capacity to address the pandemic,” Hall said.