(The Center Square) – A Republican-led congressional committee report found that states struggling during the COVID-19 pandemic are taking steps to use federal funds to supplant state obligations to service providers and local governments, but it may be the prudent move for taxpayers in some instances.

In a report released in May, the GOP U.S. House Ways and Means Committee said Illinois is one of more than two dozen states that are trying to reduce their payouts due to federal funds being in place.

The report singled out Illinois’ push to have nonprofits apply for Paycheck Protection Program, or PPP, loans. If granted and subsequently forgiven, the state would subtract from their payments the amount of federal money that was forgiven. 

"In Illinois, the state Department of Human Services issued FAQs taking the position that it cannot reimburse its nonprofit contracted partners for payroll expenses covered by Paycheck Protection Program (PPP) loans,” the committee report read. “The state is encouraging nonprofits to apply for the money because ‘[e]very successful application increases state funding.’ One nonprofit that provides foster care services in Illinois told Committee staff that their understanding is that when a PPP loan is forgiven, the state will reduce the amount it pays the nonprofit dollar for dollar. The result will leave the nonprofit in the same position as before it received the PPP loan and would instead directly benefit the state’s budget."

Foster care providers are paid monthly by the state based on how many children they’re caring for.

This, in theory, means a net positive by the state. 

While the committee criticized this as an “effort to circumvent congressional intent,” without it, providers would potentially be paid twice with taxpayer dollars for the same service, said Andrea Durbin, executive director of the Illinois Collaboration on Youth. 

“You can’t claim the same expense for two different funding streams,” she said. “How the loan gets accounted for, if it becomes forgiven in whole or in part, will be complex and unique to that organization.” 

The committee report, Durbin said, was premature to say the state was putting a halt to payments since providers wouldn’t have been able to apply for loan forgiveness as of mid-May.

She had, however, talked to providers who were nervous about being notified by the state months later that they owed thousands of dollars in reimbursements and would be asked to pay the state back.