In a recent brief, The Pew Charitable Trusts examines trends in federal grants to states, finding that COVID relief funding in 2020 was responsible for the largest increase in federal grants to states since 2009. In fact, in fiscal year 2020, pandemic-related funds made up the largest share of federal grants in eight states and were the second-largest in the rest. COVID-19 assistance—which states spent to meet a diverse set of urgent needs, including coronavirus testing and housing assistance—was in addition to the federal grants that states normally receive. Those grants, which annually help fund things like education, transportation, and social service programs, typically make up about a third of state revenue. 

Federal grants to states fall into a number of different categories, with Medicaid dollars typically dominating federal funds flowing to states. However, in fiscal year 2020 Pew experts found that pandemic-related aid—including funds for the increased Medicaid matching rate—made up a quarter of all federal grant funding going to states in that year. And with additional relief packages passed in fiscal 2021—including the American Rescue Plan, which sent $350 billion in aid to state, local, territorial, and tribal governments—COVID-19 funding is likely to significantly alter state and local revenue and spending for years to come.  

To read the full brief, visit the Pew website.