(Bloomberg) -- A surge in emergency Covid-19 funds contributed to the largest increase in federal grants to U.S. states since 2009, when Congress passed the American Recovery and Reinvestment Act.
Federal grants to states rose 37% in fiscal 2020 from the prior year, outpacing the average annual increase of 4% in the prior half-decade, according to a report by The Pew Charitable Trusts. Relative to 2008, the grants climbed 93%, accounting for inflation.
The jump was mostly driven by pandemic-related grants, for needs such as coronavirus testing and housing assistance, but Medicaid and other health spending also contributed, and largely fueled the steady growth in funding to states for the past several years.
In a typical year, Medicaid accounts for about two thirds of states’ federal-grant funding, but the influx of Covid-19 money drove Medicaid’s share down to roughly half, according to the report.
