March 24, 2021

At Banking and Housing Hearing, Secretary Yellen Confirms Governors Have Authority to Allocate American Rescue Plan Funds to Communities Hard Hit By COVID-19, Treasury Will Issue Further Guidance"

Video of Hearing Exchange (Youtube)

Washington, DC - In a Senate Banking, Housing, and Urban Affairs Committee hearing today, United States Senator Elizabeth Warren (D-Mass.) asked Treasury Secretary Janet Yellen for clarification regarding statutory language in the American Rescue Plan (ARP) that provides states with flexibility to use federal aid to help address "negative economic impacts" in smaller communities hard hit by the COVID-19 pandemic that did not qualify for larger pots of direct funding in the ARP.

Last week, Senators Warren, Edward J. Markey (D-Mass), and Congresswoman Pressley (D-Mass.) along with members of the Massachusetts Congressional delegation, urged Massachusetts Governor Charlie Baker to use the discretion provided by Congress and President Biden in the ARP to immediately target the $4.5 billion in the Commonwealth's direct federal aid to disproportionately affected communities. 

Transcript: Banking and Housing Committee Hearing on Quarterly CARES Act Report
U.S. Senate Committee on Banking, Housing and Urban Affairs
Wednesday March 24, 2021

Senator Warren: Secretary Yellen, I am grateful to you and President Biden for your leadership in enacting the American Rescue Plan. A critical part of this bill is the $350 billion dollar assistance for state and local governments. Some of our hardest-hit communities in Massachusetts are smaller cities under 50,000 in population - places like Chelsea, and Everett, and North Adams. So, I want to ask you, excuse me, about how they get help from this bill.  

Secretary Yellen, in general communities with populations under 50,000 residents receive some direct federal funding as a result of the American Rescue Plan, but they don't receive as much direct help as bigger cities-is that correct? 

Secretary Yellen: Well, I believe there is a formula that determines how much they receive and it's paid to them through states. I believe that that's, 

Senator Warren: Good. That's where I want to go. Because direct funding is not the only money coming into state and local government. In addition, state governments also receive a separate pot of money that was flexibly designed

Secretary Yellen: That's right.

Senator Warren: to help our hardest hit communities. 

Secretary Yellen: Sure 

Senator Warren: And specifically, the statute says that state funding can be used to respond to public health emergency

Secretary Yellen: Sure 

Senator Warren: With respect to the coronavirus disease or its negative economic impacts, including assistance to households, small businesses, and nonprofits, or aid to impacted communities. Is that correct, Madam Secretary?

Secretary Yellen: Yes, it is correct.

Senator Warren: Good. And in Massachusetts, it looks like there will be about $4.5 billion going to the state government. So, Secretary Yellen, just to be clear, this statutory language provides our governor with the flexibility to use state funding to provide extra help to address negative economic impacts in smaller communities that did not qualify for larger pots of direct funding, is that right?

Secretary Yellen: That is my understanding but we will put out guidance and work through all of the legalities. But I believe that what you have said is correct. I want to be very careful about the legalities but I believe that what you said is correct.

Senator Warren: Good