With Roughly 71% Of Rental Funds Still Unspent, Wide Gaps Emerge Between States

California, New York and Texas are running out of money, while other states like Montana and North Dakota have barely touched their rental assistance funds.

Roughly 71% of rental assistance funds remained unspent by the end of October, but the Biden administration says it’s likely the aid will run dry in several major cities and populous states by the end of the year.

Numbers from the Treasury Department, released Monday night, showed a steady but slow disbursement of rental assistance aid in October, reflecting a program that’s been continuously plagued with bureaucratic delays and processing hiccups.

By the end of October, states and cities reported spending $13.5 billion of the nearly $46 billion rental assistance funds approved by Congress. The individual programs reached just over half a million households in October. The program has made 2.5 million payments to renters and landlords in total.

But the administration says that’s not the whole picture. Densely populated cities and states that did manage to get their rental assistance programs up off the ground say they have “obligated” most of the remaining funds, meaning they’ve approved the applications but have yet to cut the check, or have enough pending applications that once they process them, the funds will be accounted for.

Those states include California, New York, Oregon and Texas, which have more applications than they have leftover funds. Texas and Oregon have stopped accepting applications, as has the city of Atlanta. The city of Miami also announced in November that it too had used up all of the first round of rental funds and was making its way through the second pot of money. (Congress passed two rounds of rental assistance funding, one under former president Donald Trump, and a second under President Joe Biden.)

But still, other cities, states and territories are severely lagging. Per Treasury’s report, West Virginia has only dispersed 16% of its first round of rental assistance, reaching less than 2,000 households. Other states, like Montana, South Dakota and North Dakota, have barely touched their funds.

The administration says it’s on track to spend $19 billion of the total rental fund by the end of the year. That number is higher (between $25 and 30 billion) with what they are considering as “obligated funds.”

Increasingly the story of the rental assistance fund is one of wide disparities nationwide. Because Congress instructed each state and locality to disperse the funds on their own, wide gaps have emerged between states with robust programs, and cities that continue to lag or refuse to build up programs.

Congress did give the administration the power to reallocate money away from states that haven’t used their funds to states with backlogs. But the Treasury is already tempering expectations, and housing advocates have cautioned against taking money away from already cash-poor localities.

“The rapid pace of improvement in ERA programs —including the overwhelming share of funds estimated to be spent or obligated by year-end —means that Treasury expects only a limited amount will be available for reallocation,” the Treasury Department said in a statement Monday.

The Biden administration is encouraging states to use the state and local funds, also allocated to them in the American Rescue Plan and passed earlier this year, to cover any additional need.

Even so there’s an understanding that not every case will be met. While the administration is quick to tout that the country has so far avoided a large eviction spike, even after COVID-response eviction protections for Americans were lifted at the end of the summer, historic averages are still high.

“While emergency policies have so far helped prevent the feared eviction tsunami from materializing, building back to even below historic averages just does not feel that good if it means returning to a status quo that allows so many families to face devastating evictions that could be avoided with more humane and long-lasting reform,” Gene Sperling, who has been overseeing the implementation of the American Rescue Plan, said.

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