Treasury Waited 3 Years to Chase Unreported COVID Relief Funds
Summary
A GAO audit found that the Treasury Department required 30,000-plus recipients of $350 billion in pandemic relief funds to report how they spent it, then went three years without trying to recover money from any recipient that never reported at all. By January 2025, 1,012 recipients -- almost entirely small local governments, holding $139 million combined -- still had not filed a single report since 2022. Even after Treasury finally acted, 235 of the 988 it pursued remained unresolved months later, and Treasury's own procedures still do not require it to ever act on time.
A reporting requirement thousands of recipients simply skipped, year after year
Since January 2022, every SLFRF recipient has been required to file a project-and-expenditure (P&E) report⧉ -- quarterly for states and larger localities, annually for smaller ones -- detailing what the money funded and how much had been obligated and spent. It was a condition of the award agreement each recipient signed, not a suggestion. But GAO's year-by-year analysis of Treasury's own data⧉ shows the deadline was missed at scale every single cycle: 3,479 recipients missed the April 30, 2022 deadline (holding $0.9 billion in awards); 4,268 missed it in 2023 ($3.0 billion); 4,272 missed it in 2024 ($2.0 billion). Most of those recipients eventually filed late -- by 2024, 2,259 of the 4,272 who missed the deadline submitted before the next cycle began⧉. Thousands of others didn't: 2,787 in 2022, 3,029 in 2023, 2,013 in 2024.
1,012 recipients never reported at all -- mostly small towns holding modest awards
Zooming out across the full three-year span, GAO found 1,012 SLFRF recipients that had submitted zero P&E reports between January 2022 and January 2025⧉ -- not late, not partial, nothing. All but one were non-entitlement units of local government, the smallest tier of SLFRF recipient: cities, towns, and townships serving fewer than 50,000 people. Their combined awards totaled $139 million, ranging from under $1,000 to a high of $7.8 million; just over half, 520 of the 1,012, held awards under $50,000⧉, averaging about $23,000 apiece. Treasury officials told these smaller recipients often lack prior experience with federal reporting requirements and manage the funds with temporary or volunteer staff facing high turnover.
View data as table
| Under $50,000 | 520 | average award about $23,000 |
|---|---|---|
| $50,000 to <$100,000 | 195 | |
| $100,000 to <$500,000 | 242 | |
| $500,000 to <$1 million | 40 | |
| $1 million or more | 15 |
Treasury said recoupment was next in 2023. It didn't start until 2025.
Treasury wasn't silent about the non-reporters -- it sent notices of noncompliance to thousands of them, beginning in August 2023, and conducted outreach through newsletters, webinars, and hundreds of phone calls⧉ to local-government associations. But notices are not recoupment, and on that front the record is stark: in August 2023, Treasury told GAO that its next remediation step would be recouping awards from non-reporters⧉; by May 2024, after another reporting deadline had come and gone, Treasury officials confirmed recoupment still had not begun. Treasury did not initiate recoupment against any of the 1,012 non-reporters until January 2025 -- three years after the reporting requirement took effect⧉. By then, 24 of the 1,012 had come into compliance entirely on their own, without any enforcement action. Treasury pursued the remaining 988, covering roughly the full $139 million, between January and April 2025.
The pressure worked, for most: 339 of the 988 -- 34% -- filed a P&E report for the first time in three years within weeks of getting the recoupment notice⧉. By June 24, 2025, Treasury's own tally, filed in its formal response to GAO's draft report, put the number at 740 of 988 recipients filed and 13 more who simply returned their awards⧉ rather than report. That leaves 235 -- about a quarter of everyone Treasury pursued -- neither in compliance nor repaid, months after enforcement finally began.
View data as table
| Filed a report before recoupment began | 24 | self-corrected without any Treasury enforcement action |
|---|---|---|
| Filed after a recoupment notice | 740 | of 988 sent notices; won't have to repay |
| Returned the award instead | 13 | |
| Still unresolved | 235 | neither filed nor returned the award, as of June 24, 2025 |
Even now, Treasury isn't required to ever act -- and admits it still doesn't, for hundreds more
The delay traces to a gap in Treasury's own rules. Treasury's Recipient Noncompliance and Remediation Procedures do not require recoupment at any specific time or under any specific circumstance⧉; an October 2024 update lowered the bar for when Treasury may recoup -- from three or more missed reports down to two or more -- but using that option remains entirely discretionary. Treasury officials told they weigh multiple compliance priorities against the limited staff in the Office of Capital Access, which administers the program, when deciding whether to pursue any given recipient.
The gap isn't hypothetical: GAO found Treasury has not initiated recoupment against recipients that submitted one required report but then skipped at least two more⧉ -- a category the procedures explicitly allow Treasury to act on. In its own written response, Treasury confirmed the gap is still open: 'several hundred additional recipients have submitted at least one P&E report but have failed to submit subsequent reports,' and 'Treasury could initiate recoupment for these recipients but has not yet done so.'⧉
's recommendation is narrow and procedural: develop and document, in writing, the timing and circumstances under which Treasury will initiate recoupment⧉, rather than leaving it to case-by-case discretion. Treasury agreed. In the same July 2025 letter, Treasury noted that recipients have since submitted reports covering 99.99% of SLFRF award dollars⧉ -- a reminder that the compliance gap this audit surfaces is a small slice of a $350 billion program by dollar value, even though the enforcement inconsistency flagged runs through the entire process, not just the recipients caught in this one analysis.
- Treasury took three years to start recovering money from SLFRF recipients that never reported spending it at all -- 1,012 recipients, holding $139 million, went unreported from January 2022 through January 2025 before Treasury sent its first recoupment notice.
- When Treasury finally acted, in January-April 2025, 34% of pursued recipients filed a report within weeks -- suggesting years of notices and outreach hadn't moved them, but the threat of losing the award did.
- Months later, 235 of the 988 recipients Treasury pursued -- about a quarter -- remained unresolved, as of Treasury's own June 24, 2025 count: neither reporting nor returning the money.
- Treasury's procedures still don't set a deadline for when it must act, and in its own July 2025 letter Treasury acknowledged it has identified hundreds more recipients with a similar pattern -- one report filed, then silence -- that it is eligible to pursue but has not.
Figures are drawn entirely from GAO Report GAO-25-107909⧉ (July 22, 2025), read page-by-page. 's review excluded tribal governments and U.S. territories, and focused on Treasury's April 30 annual reporting deadline as the common benchmark across all recipient types. No individual is named in this piece or in the underlying report as responsible for any finding; every figure traces to Treasury's own program-wide reporting data, as independently analyzed by , and to Treasury's own written response to the audit.
Sources(1) ▾
- U.S. Government Accountability Office, COVID-19 Relief: Treasury Could Improve Compliance Procedures and Guidance for State and Local Fiscal Recovery Funds (GAO-25-107909) (2025-07-22) — 's 14-page Q&A-format performance audit of Treasury's oversight of Coronavirus State and Local Fiscal Recovery Funds (SLFRF) reporting compliance, part of a series of reports has issued on the $350 billion program. Fetched directly as a PDF from gao.gov and read page-by-page. Used for every figure in this piece: program allocations (p.2, Figure 1), reporting-deadline compliance by year (p.4-5, Tables 1-2), the never-reported recipient population and award-size distribution (p.6, Figure 2), the recoupment timeline and outcomes (pp.6-8), 's recommendation and Treasury's response (p.8, and Appendix I, pp.11-12). gao.gov · original document
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The Coronavirus State and Local Fiscal Recovery Funds (SLFRF) program sent $350 billion⧉ to more than 30,000 states, territories, tribal governments, and local governments to help pay for pandemic recovery -- on the condition that each recipient report back on how it spent the money. A Government Accountability Office audit⧉ found that the Treasury Department, which administers the program, let that condition go largely unenforced: as of January 2025, 1,012 recipients had never filed a single spending report since reporting began in 2022, holding $139 million in awards -- and Treasury did not try to recover a dollar of it until three years after the requirement took effect.