State Auditor Dave Boliek has a New Year’s resolution for state agencies: spend the remaining $1.2 billion in federal COVID funds before they expire at the end of 2026.
In spring 2021, amid the economic fallout of the COVID-19 pandemic, Congress passed a massive stimulus package that sent $5.4 billion to North Carolina’s state government. That money sits in an account called the State Fiscal Recovery Fund and has been allocated to individual agencies by the state legislature.
The Office of the State Auditor released a report on Nov. 17 showing that by the end of the 2024 fiscal year, less than half of those COVID funds had been dispersed.
Most of the remaining money was tied to agencies tasked with large-scale water, sewer and broadband infrastructure projects. The Department of Environmental Quality, for example, had yet to draw down $1.7 billion (89%) of the $1.9 billion allocated to it within the audit’s timeframe.
“State agencies were allocated billions of dollars for COVID, but a lot of that money sat parked,” Boliek said in announcing the report.
“With funds not expended by the end of 2026 going to the U.S. Treasury, state agencies should be proactive in making sure taxpayers realize a return on the investment of these funds.”
The audit was not factually incorrect, but it likely overstated how much ARPA funding was actually sitting unused, Carolina Public Press has found.
The NC Pandemic Recovery Office, housed within the Department of Commerce, maintains a dashboard tracking State Fiscal Recovery Fund spending. It shows that North Carolina’s ARPA spending accelerated in 2025 and that 78% of the fund has now been dispersed — far higher than the audit’s 46% figure, which only covered spending through June 30, 2024.
State auditor spokesperson Randy Brechbiel told CPP the report ended at that date because it reflected the scope set under the previous auditor’s administration.
“The purpose of this audit was not to determine why certain funds have yet to be disbursed,” the report’s introduction stated, “but to determine whether the North Carolina Office of State Budget and Management accounted for, allocated and disbursed amounts appropriated to the State Fiscal Recovery Fund in accordance with State Fiscal Recovery Fund legislation. To that end, all matters were done in accordance with law.”
Still, the audit and Boliek’s comments raised doubts about whether the state could complete its ARPA projects by the end of next year — and risk forfeiting millions of federal dollars in those COVID funds.
Agencies holding large amounts of unspent ARPA money don’t seem alarmed, however. They told CPP they expect to use their full allocations by the December 2026 deadline, with few exceptions.
One reason spending appears behind schedule is that ARPA money is typically reimbursed after expenses occur, meaning agencies draw the COVID funds only once they have already spent money on approved projects.
“Many of the remaining activities are infrastructure-related, including broadband and water and sewer projects, which have higher costs later in the projects than in the early stages,” a spokesperson for the NC Pandemic Recovery Office said.
“Because of these two factors, disbursements are higher in the final years of those projects than in the early stages.”
That’s why agencies like the Department of Environmental Quality and the Department of Information Technology hold the bulk of remaining ARPA funds. They are responsible for seeing major construction and technology projects through from contracting to completion.
DIT spokesperson Cristalle Dickerson said most of the department’s remaining $565 million has already been contracted but not yet expended.
The department plans to funnel the rest into three new grant programs by the end of next year: the Broadband Recovery Program to repair broadband infrastructure destroyed by Tropical Storm Helene, a utility-pole replacement program, and a new broadband line-extension program.
The Department of Environmental Quality, meanwhile, still has $359 million in unexpended funds, although most of it has been obligated to local governments for water and sewer projects. Those grants primarily serve towns and counties with distressed water systems. DEQ awarded the last of its ARPA-funded grants in spring 2024, and reimbursement is expected through next year.
The Department of Health and Human Services’ lead and asbestos remediation program is also one of the state’s major ongoing ARPA projects. The agency received $150 million to inspect and remove asbestos and lead-based paint in public schools and child care facilities, of which $55 million has been spent so far, according to the dashboard.
DHHS has already contracted with RTI International to conduct testing at schools and child care centers which is expected to cost more than $100 million by the end of the project term, program director Jennifer Hoponick Redmon told CPP.
“The objective of the work is to identify and eliminate exposure to lead and asbestos hazards in child-occupied facilities across North Carolina from Spring 2023 through 2026,” she said.
To date, the program has completed water sampling at 1,784 schools, 3,342 child care centers and 1,080 family child care homes, and remediated hazards at nearly 2,000 taps. It has also identified lead-based paint hazards at 224 child care facilities and 68 public schools, and asbestos hazards at 78 child care facilities and 10 public schools.
The remaining money for the program is set aside in a reimbursement fund to help those facilities pay for needed remediation.
For now, agencies insist the remaining COVID funds will move on schedule. State auditors will know soon enough whether the state can turn its obligated dollars into completed projects before time runs out.
This article first appeared on Carolina Public Press and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
