$4.7 billion in federal stimulus dollars has started flowing to State of Minnesota

The Legislative Commission on Planning and Fiscal Policy met again on Wednesday, August 26, to get an update on the American Recovery and Reinvestment Act (ARRA). While the news from Minnesota Management and Budget wasn’t profound, it does give us a picture of how the federal stimulus has been helping Minnesota.

When all is said and done, Minnesota is expected to receive at least $4.7 billion in federal stimulus dollars. But let’s take a closer look at that number:

  • $2.6 billion are funds that we’ve already heard a lot about during the session – these are dollars that will flow to the state’s general fund through state fiscal stabilization money ($816 million, mostly for K-12 or higher education) and an increase in the federal Medicaid matching rate ($1.8 billion). It’s important to note, however, that this $1.8 billion figure doesn’t account for Medicaid spending cuts made during the 2009 Legislative Session and through unallotment. The state stands to lose about $440 million in federal Medicaid matching funds as a result of those decisions. Of that, about $70 million would have been the federal enhanced Medicaid match and should be subtracted from the $1.8 billion. We’ll get more precise figures in the state’s November Forecast.
  • The other roughly $2 billion will flow to existing federally-funded programs (bypassing the state general fund). This includes $502 million for highways and bridges, $300 million for education (Title I/IDEA), $132 million for weatherization, $107 million for clean water, and $73 million for employment and training.

There are some other important resources that aren’t accounted for in that $4.7 billion and will dramatically increase the amount of money flowing to Minnesota as a result of the ARRA:

  • Benefits that flow directly to individuals, such as tax credits, social security payments and food stamps. We don’t have any exact figures yet, but this is likely to amount to billions more in fiscal relief flowing to Minnesota families.
  • Benefits that flow directly to local units of government and school districts. Once, again, we cannot yet calculate the value of these resources, but the impact will be significant.
  • Competitive grants that state agencies will be able to apply for. The federal government is currently finalizing the application process, so we don’t yet know how much that state might be able to raise this way.

Still have questions? Minnesota has a Web site dedicated to providing information on the impact of the ARRA in Minnesota called Recovery.MN. And, of course, there is always the federal Web site: Recovery.gov.

-Christina Wessel

About Christina Wessel

Christina served as the Minnesota Budget Project's deputy director until January 2014.
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