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As the COVID-19 pandemic continues to affect special districts and the communities they serve, CSDA’s advocacy efforts grow stronger in both Sacramento and Washington D.C. with over one hundred special districts submitting CSDA’s letter requesting relief. Get updated below on the latest news regarding the fourth federal relief package, the legislative hearings now underway in Sacramento, and the results from CSDA’s member survey.

The Latest on the Fourth Federal Relief Package

Congressman Joe Neguse of Colorado introduced last week HR 6467, the Coronavirus Community Relief Act, which would give “local units of government” serving fewer than 500,000 residents direct access to the Coronavirus Relief Fund. Currently, local governments serving fewer than 500,000 must apply through the State for reimbursement of unbudgeted “necessary expenditures” pertaining to COVID-19. The bill would also cover revenue loss for these governments due to COVID-19.

Since the bill was introduced on April 7, 31 California members of Congress have cosponsored the bill, due in part to special districts’ advocacy. Further, Senators Dianne Feinstein and Kamala Harris announced Wednesday that they would cosponsor the Senate’s HR 6467 companion legislation.

With the announcement of companion Senate legislation, districts that have not yet sent a letter to their federal representatives can download this template letter for use.

Congressman TJ Cox sent his bipartisan letter to congressional leadership urging local/state agencies be included for COVID-19 payroll tax credit for providing additional paid emergency leave. Congressman Brad Schneider of Illinois will be leading a bill addressing the matter and will be introducing it soon. CSDA is among the endorsing organizations on the letter. Once the bill is introduced, CSDA will update its district sample letter and re-send its own letter to congressional leaders to reflect the need to add the bill to the upcoming fourth package.

As advocacy continues for direct access to the Coronavirus Relief Fund, the U.S. Department of Treasury issued guidance on how the funds should be distributed directly to local government serving more than 500,000. Although the Department of Treasury guidelines exclude specific mention of special districts, it may be possible that special districts are eligible for the Fund according to the CARES Act definitions. Districts who potentially fit the criteria sent certifications to Treasury before the Friday deadline. CSDA sent a letter to Treasury Secretary Steven Mnuchin requesting the Department revisit the guidance and provide further clarity to ensure special districts have access to the Fund.

CSDA will continue advocating for special districts as the fourth federal COVID-19 relief package is negotiated. For the latest, stay tuned to the COVID-19 Community and the COVID-19 Take Action webpage.

State Legislative Hearings Commence

The State Legislature held its first remote hearings with the return of select budget committees in both houses to convene oversight informational hearings on COVID-19 response efforts and expenditures to date.

Thursday, April 16, the Senate Budget Special Subcommittee on COVID-19 Response held its first hearing, which was followed Monday, April 20, by the Assembly Budget Committee Sub 6 on Budget Process, Oversight, And Program Evaluation.

Remote participation by committee members, panelists, press, and the public was highly encouraged for both hearings. The structure of the hearings included a live feed available on the Senate/Assembly website, panelists who participated remotely via video-conference, and a teleconference line for public comment. Limited public and press access was granted in the committee chambers, with sergeants and medical staff on site to take temperature of any individuals entering the State Capitol.  In the Senate only the Chair and Vice-Chair participated by being physically in the committee room, with the remainder of members and committee members taking part remotely, while in the Assembly all committee members were present and occupied a committee room at half capacity to allow for physical distancing. Aside from early technical difficulties on the Senate side, the hearings flowed smoothly and allowed for public participation and transparency.  

These hearings provide a preview of how legislative business is likely to be conducted over the coming weeks, with Assembly Sub 6 already scheduled to meet in a similar manner on Monday, April 27, 2020 to discuss COVID-19 recovery and economic stimulus ideas.

California Special Districts Association (CSDA) staff monitored the hearings remotely, submitted a comment letter to the committees in advance, and provided public comment via phone. CSDA commented to the fiscal, operational, and administrative challenges facing special districts as a result of COVID-19 response and let the committee members know that CSDA and our members continue to stand ready to work with the Legislature and Administration to seek solutions and fiscal relief for local government.

Hearing Overview

Panelists and Legislators both framed the discussion by noting California is more prepared than ever to navigate this abrupt turndown due to prudent fiscal reserves, while acknowledging this preparation will not insulate us from impacts and that the federal government must step in to offer needed relief to state and local governments in order to manage the economic implications over the long term. Many assembly members expressed frustrations regarding the level of transparency and partnership happening between the Administration, the legislature, and legislative staff while simultaneously praising the Governor for his decisive and thoughtful leadership to get California well positioned to handle the crisis. The discussion in both houses indicated a desire to shift from the necessary initial reactionary response to one that is more proactive and strategic, with greater oversight and partnership. 

The State is looking at the beginning of a recession, possibly a severe one, with COVID-19 impacts anticipated to have significant negative effects on State revenues. The impact is expected to be immediate, affecting fiscal year 2019-20, and will continue into fiscal year 2020-21 and beyond. The lingering questions continue to be how deep the downturn will be, for how long, and what the shape of recovery will be.

Resource constraints will likely force further prioritization and reduction of expenditures beyond the "workload" budget that the Administration has notified the Legislature that it plans to submit at the May Revision.

The Senate heard updates from the Legislative Analyst's Office (LAO), Department of Finance (DOF), and California Center for Budget Policy. In addition to the general economic overview, discussion focused on:

• The State's use to date of the emergency funding approved by the Legislature prior to taking a recess to help flatten the curve:
  • SB 89 appropriated up to $1 billion for any purpose related to the COVID-19 State of Emergency. To date, the Administration has notified the Joint Legislative Budget Committee regarding the use of approximately $650 million from this appropriation;

SB 117 ensured that local education agencies continue to receive funding for the 2019-20 school year regardless of closure due to COVID-19, contained provisions pertaining to distance learning and funding school nutrition programs for off-site services, and provided $100 million for purchasing personal protective equipment or for supplies and labor costs of cleaning school sites;

• Allocations from the Disaster Response Emergency Operations Account (DREOA):
  • The Governor transferred $1.3 billion to the Disaster Response Emergency Operations Account (DREOA), bringing its balance to $1.4 billion. The DREOA is the source of funds the Administration uses to quickly respond to emergencies. $1 Billion of these funds have been spent on the procurement of medical supplies with the remaining balance to the Governor's Office of Emergency Services (CalOES) to procure N-95 and surgical masks. The Governor's emergency order allows the Governor to tap into any legally available funds to COVID response, and it is possible additional funding will be transferred to the DREOA for this purpose.
• How the federal stimulus funds the State will receive interact with State responses:
  • California is to receive an estimated $26 billion from the first three federal stimulus packages. There is a provision in the Coronavirus Relief Fund that stipulates the funding may not be used for currently budgeted costs. California is projected to receive approximately $15.3 billion for state and local governments from this fund (approximately $6.9 billion of which will go directly to local governments with populations of 500,000 or more), and the Legislature noted the importance of understanding how State actions correspond with the intent of the fund.

The Assembly received similar update from the LAO and DOF, but additionally expanded their scope of discussion to include testimony from the Health and Human Services Agency on California’s COVID-19 infection, hospitalization, and mortality projections and from the Director of the Governor’s Office of Emergency Services (CalOES).

• HHS provided an update on the modeling California is using, noting that all modeling inherently has a high level of uncertainty due to the unknowns and assumptions required. They specified that four weeks ago the State did not have on the ground data and had to rely on modeling to plan responses, but that the State now is using actual data to guide their work, looking to models to help show the potential directionality of the virus, but making decisions based on the rate and change in the real time data being gathered statewide. HHS additionally shared that California is evidencing at the very lower range of the model projections following the stay at home order and physical distancing measures, and that this data will inform decisions in coming weeks as to how and where and at what pace some restrictions may be able to be eased, noting it must be done very thoughtfully and could occur at a local or statewide level depending on the data and situational reality.

• Director Ghilarducci spoke to the unified effort of government, including leadership from every state agency, in response to COVID-19 impacts. There are currently over 300 personnel activated at the emergency operation command center spread across multiple facilities, in the field, or working remotely. It is an all hands-on deck effort that includes a team of federal partners as well. He answered many questions pertaining to the State’s response, personal protective equipment distribution and contracts, commodities procurement, and prioritization.

Additional Resources

• Legislative Analyst's Office (LAO): A copy of the briefing provided to the legislature is available here. The Legislative Analyst's Office fiscal outlooks will be available in May on their website and their analysis of federal funding implications on the state are available now here.
• Department of Finance (DOF): COVID-19 State allocations may be viewed on the DOF's website here:

CSDA Member Survey Results

Recently, CSDA circulated a survey requesting feedback from special districts regarding the ongoing and anticipated effects of the COVID-19 crisis. Over 250 special district officials responded to provide information on the effects of the pandemic and related state and federal actions.

CSDA is using the member survey results and other member input to   guide advocacy efforts. The survey responses offered some key insights concerning the challenges special districts face during this crisis:

• Based on the responses to the COVID-19 survey, special districts throughout California are anticipating the collective loss of over $500 million in annual revenue.
• Slightly over half of respondents indicated that they either did not have an emergency plan, or that they had an emergency plan that was deficient. The average operating revenue of all the districts that had a robust emergency plan that adequately prepared them for the COVID-19 outbreak was slightly over $25 million, compared to roughly $4 million for those with an inadequate emergency response plan and roughly $2 million for those with no plan at all.

• The average operating revenue of respondents that answered that they have readily available access to broadband internet in their community was roughly $18.5 million, whereas the average operating revenue for those districts without access to broadband in some form was approximately $2 million.

In addition to those key points, several other specific insights were made available from the respondents. CSDA has been in talks with both state officials and members of Congress as it presses for additional relief for special districts throughout California.

CSDA would like to thank those districts that took the time to take its survey. The continued support of the special district membership allows CSDA representatives to better advocate on behalf of special districts throughout the state.