Harrisburg, PA – A federal watchdog review found more than $61 million in Pennsylvania coronavirus relief spending lacked sufficient documentation or included potentially ineligible costs, raising concerns over how the state managed portions of nearly $4 billion in CARES Act funding during the pandemic.
The U.S. Department of the Treasury Office of Inspector General said a desk review of Pennsylvania’s Coronavirus Relief Fund spending identified $61,282,912 in “questioned costs,” including unsupported grant payments, undocumented transfers to counties, and expenses that auditors said may have fallen outside federal eligibility rules. The review covered spending between March 2020 and June 2023 and concluded the state faced a “high” risk of unallowable use of funds.
The findings centered largely on documentation failures rather than confirmed fraud, but auditors recommended the Treasury Department pursue follow-up reviews and potentially recoup unsupported expenditures if Pennsylvania cannot later provide records.
Federal Review Targets Grants, County Transfers and Nursing Home Payments
The review, conducted by accounting firm Castro & Company under Treasury OIG oversight, examined 25 selected transactions tied to Pennsylvania’s $3.94 billion Coronavirus Relief Fund allocation. Auditors found unsupported questioned costs totaling $55.97 million and ineligible questioned costs of another $258,465. Additional reconciliation issues pushed the total beyond $61 million.
Among the largest concerns were nursing home-related payments and small business relief grants.
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Auditors questioned $27.96 million tied to grants and hazard payments to nursing homes because Pennsylvania relied on estimated payroll calculations instead of actual payroll records documenting pandemic-related expenses. Another $22.17 million connected to Nursing Home Assistance COVID Community Health Choices organizations lacked formal grant agreements and detailed expenditure support, according to the report.
The review also highlighted issues involving Pennsylvania’s $225 million COVID-19 Relief Statewide Small Business Assistance Grant Program. In one tested transaction, the state could only document $8.6 million of a $10 million administrative expense payment tied to impact reports, media outreach and related services. Auditors questioned the remaining $1.37 million as unsupported.
Key Points
• Treasury watchdog questioned $61.3 million in Pennsylvania COVID relief spending
• Auditors cited missing documentation, reporting errors and potentially ineligible expenses
• Review labeled Pennsylvania’s risk of unallowable use of funds as “high”
County Relief Programs Also Drew Scrutiny
Several county-level transfers also failed to meet federal documentation standards, according to auditors.
The report questioned nearly $2 million connected to York County COVID-19 expenditures because Pennsylvania did not provide invoice-level records showing how relief funds were ultimately spent. Another $1.29 million transferred to Cumberland County for a COVID-19 County Relief Block Grant lacked underlying expenditure documentation such as invoices and payroll reports.
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In Forest County, auditors reviewed a $784,028 transfer related to telework equipment and IT services. The review found Pennsylvania could only reconcile a small portion of the spending and identified $2,250 in bonuses paid to a county employee tied to a DUI program. Treasury guidance barred most workforce bonuses except hazard pay and overtime, making those payments ineligible under CARES Act rules, auditors said.
The report also cited widespread reporting classification problems inside Pennsylvania’s financial tracking system. Auditors found that more than $1.57 billion that should have been reported as “Aggregate Payments to Individuals” had instead been misclassified elsewhere in reporting submissions before the state later corrected the errors.
Pennsylvania Declined Follow-Up Meeting During Review
Treasury OIG said Pennsylvania officials chose not to meet with federal reviewers and Castro & Company to discuss questioned costs during the desk review process.
According to the memorandum, state officials told auditors they had gathered supporting documentation for expenditures flagged as unsupported and planned to provide it during a future Treasury OIG follow-up review scheduled for 2025.
Despite the issues identified in multiple categories, auditors also noted that Pennsylvania’s “Aggregate Payments to Individuals” category — which included more than $1.57 billion in payroll and direct assistance spending — complied with CARES Act requirements and Treasury guidance after testing.
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The review stopped short of accusing Pennsylvania of fraud or intentional misuse of funds. Instead, the report repeatedly emphasized that questioned costs often stemmed from missing records, unsupported calculations, or insufficient evidence showing expenditures met CARES Act eligibility requirements.
Treasury OIG recommended federal officials determine whether to launch a broader audit focused on grants, transfers and direct payment programs if Pennsylvania cannot provide adequate support for the questioned spending. The watchdog also recommended potential recovery of unsupported or ineligible funds if documentation deficiencies remain unresolved.
Pennsylvania had fully expended its $3.94 billion Coronavirus Relief Fund allocation by June 30, 2023, according to the review.
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