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Montana could lose a chunk of its federal Emergency Rental Assistance funds next week due to October guidance from the U.S. Department of Treasury that sets minimum expenditure and obligation ratios for states in an effort to speed up the rate of disbursement.
The guidance says states that haven’t obligated 65% of the first round of ERA funds by November 15 could see 10% of their initial allotment reallocated to other states unless they submit a program improvement plan to the feds that shows how they aim to get more funds out the door to renters in need. As of the end of October, the state Department of Commerce told the Daily Montanan it’s trying to understand exactly how to tally up its obligations per the Treasury guidance, but that it can confirm Montana has not met the threshold, which would require obligating $130 million of the state’s original pot of $200 million, the minimum for small states.
It’s also fallen short of another requirement in the guidance, that states demonstrate an expenditure ratio of 30%. Montana, which had awarded $21 million by the end of the month, is at 10.5%, according to the Commerce Department. This all means that unless it works out an arrangement with the federal government, Montana could lose $20 million of its ERA1 funds to other states come next week.
Officials contend that Montana has actually been relatively effective in getting out the funds, but that the rigidity of their eligible uses combined with Montana’s low population are such that the state will have a hard time meeting expenditure goals without changes in federal policy. The funds, said Rep. Llew Jones, R-Conrad, the House Appropriations Committee chair, were designed to fill an immediate need — but in Montana, the housing crisis is a long-term problem, and the funds can’t be used to improve the stock of or access to affordable housing in other ways.
“We will lose that block of money unless we get permeability in that column,” Jones added. “Montana simply does not have the need for $200 million in rent subsidy. While it’s a remarkable soundbyte, we can’t obligate money to somewhere where it’s not allowed to go.”
32 states could lose funding because of low expenditures, according to a new report from the National Low Income Housing Coalition. The report, using Treasury data, concluded that Montana had only served 7% of the state’s 51,780 low-income rent-burdened households with the funds — though not all of those households are necessarily eligible, as to qualify in Montana a renter must have experienced financial hardship due to COVID-19, must demonstrate a risk of homelessness or housing instability and must be at or below 80% of the area median income.
“The federal small state minimum allocation did not take into account factors such as the estimated number of unemployed renters in the state, income-eligible renters, number of delinquent renters, total rent owed, the duration or continuation of lock downs implemented in response to COVID-19 within the state, or other factors that may better demonstrate the actual universe of need in Montana,” Cheryl Cohen, the Montana Housing Division Administrator, told the Daily Montanan. “Based on census data and studies available in the spring, we estimated between 7,000 – 8,000 Montanans may be eligible for the ERA1 program. We’ve received just over 7,000 applications to date and we continue to market the program to reach eligible households.”10.04.2021 How Emergency Rental Assistance Reallocation Works
According to the Census Household Pulse Survey, around 10% of Montana renters were in arrears from August to early October, and around a third of those thought it was somewhat likely that they’d be evicted in the next two months. Based on this, University of Montana economist Bryce Ward said on paper, at least a few thousands households can benefit from the funds, maybe more.
“The problem is that we don’t have perfect knowledge and costless distribution,” Ward said. “Those in need must apply, the state must process those applications, etcetera.”
Montana is not the only small state to struggle to disburse the funds, which were authorized through federal appropriations legislation last year to cover up to 15 months of rental and utility costs for eligible renters across the country. With a minimum allocation of $200 million, several low-population, rural states have accepted the money but warned the feds that they likely couldn’t spend it all in time without greater flexibility. And while Treasury has announced policies to facilitate expenditure of the funds, including allowing applicants to self-attest their eligibility and income (though the latter isn’t allowed in Montana), it hasn’t flat-out let states spend the money on other housing needs.
Kim Abbott, a Democratic lawmaker from Helena and the House Minority Leader, said top state officials need to continue to lobby the feds for more flexibility in the program. But she added that Montana could also do more to make the application for funds more accessible and increase outreach.
“It’s a combination of making the process more accessible, more outreach and requests for flexibility,” she said.
One irony of Montana’s situation is several larger jurisdictions have struggled to meet the need for emergency rental assistance, according to the NLIHC report — in other words, small states received a much higher per-capita allocation than large states. State and local grantees in New York, for example, have expended around 80% of their allocation but only served a fraction of cost-burdened renters.
“The states of New York and Wyoming, for example, house 5.9% and .18% of the country’s population, respectively,” the report reads. “New York’s population is nearly 33 times Wyoming’s population, yet New York received less than seven times the amount of ERA1 than Wyoming. New York received $824 in ERA1 funds per cost-burdened low-income renter household, while Wyoming received $8,188.”
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