Federal Emergency Rental Assistance Program Suffers from Inequitable Funding Distribution, Duplicative Efforts, Study Finds

Washington, D.C. — The federal Emergency Rental Assistance Program (ERAP), which provided financial support to households to pay rent and utilities in response to the pandemic, was fraught with challenges including inequitable distribution of funds and duplicate efforts across government agencies, according to a new report from New America’s Public Interest Technology program.

The study found that ERAP, a $25 billion program established in January 2021, lagged behind in equitable, needs-based distribution because Congress allocated funds using a population-based formula instead of a needs-based strategy. These funds were given without regard to state-specific conditions, such as the ratio of renters to homeowners or individuals’ ratio of income to rent or relative cost of food, transportation, and health care. For example, California received $131 per person in the state while Wyoming received $610. This funding disparity resulted in states with the most need being underfunded and those with less need being overfunded.

Although ERAP funds eventually reached communities in need, success was not even. States did not universally collaborate on program design or administration, resulting in unnecessary service duplication, expenses, and time spent. Researchers also found discrepancies in spending rates; underfunded states spent 75 percent of their funds by December 31, 2021 compared to 52 percent in overfunded states. For future programs, they recommended that Congress incorporate needs-based approaches and introduce outcomes-based metrics, rather than relying on the more conventional approaches such as competitive or formula block grants.  

Despite mixed results at the national level, there were localized successes. ERAP managed to provide funds to every state immediately upon launch. Once states received ERAP money, they wanted to keep it and therefore moved to spend the funds more quickly. By the end of March 2022, the Treasury Department reported grantees (states and localities) had made over 4.7 million payments and had spent or made commitments to spend nearly two-thirds of funds. This incentive should be replicated in future programs, the report said. 

“The lessons learned from ERAP are broadly applicable and serve as an important policy design lesson for new congressionally-funded programs,” said Hana Schank, senior advisor to New America’s Public Interest Technology program and an author of the report. “In an era of increasing polarization, if policymakers and those in charge of implementation get broad take-up from local and state leaders early on and collaborate rather than duplicate efforts, overall distribution will be smoother and more equitable.” 

ERAP was also one of the first federal programs to authorize grantmaking to multiple overlapping jurisdictions. While state and tribal governments were the primary recipients, cities and counties with populations over 200,000 were allowed to access ERAP grants without state approval. The local option proved essential in states where implementation was slow. States overall spent faster on average if they allocated more funds locally, which serves as a lesson for future federal initiatives. 

Other recommendations for future congressional funding programs based on ERAP’s lessons include: 

• Establishing federally shared services to support faster program stand-up and more efficient delivery
• Fighting fraud without creating barriers to access
• Prioritizing state and local delivery over federal oversight to enable more efficient services informed by local strategies and needs

Read report here.

Media Contact: Katherine Shek, shek@newamerica.org, Deputy Director of Communications, Public Interest Technology, New America

New America’s Public Interest Technology program works with partners — including government agencies, nongovernmental organizations, advocacy groups, universities, policymakers, and other mission-driven organizations — to develop the public interest technology ecosystem and make it accessible, transparent, diverse, equitable, accountable, ethical, and effective.