Why It Matters
New Jersey could be required to return roughly $90 million in federal pandemic relief funds after a Treasury Department contractor identified expenditures it deemed unsupported or ineligible. The finding threatens to claw back a significant portion of the state’s Coronavirus Relief Fund allocation and raises broader questions about how pandemic dollars were tracked and documented across dozens of state agencies.
What Happened
A desk review conducted by Castro & Co., a government contractor working on behalf of the Treasury’s Office of Inspector General, examined New Jersey’s use of Coronavirus Relief Fund dollars distributed under the 2020 CARES Act. The review, dated February 7, 2025, flagged approximately $1.11 billion in aid for which auditors said the state did not provide adequate documentation.
Castro’s report concluded that “New Jersey’s risk of unallowable use of funds is high,” noting that relevant data were spread across dozens of state agencies rather than maintained in a centralized system. A desk review of this nature can serve as a precursor to a full federal audit.
The New Jersey Governor’s Disaster Recovery Office pushed back on the findings, stating it has been working “cooperatively and transparently” with the inspector general’s office to supply documentation. The office said it had already cleared more than 91% of the initially questioned costs, leaving approximately $90 million still under review. Officials maintain there is currently no basis to conclude that repayment will be required.
The state also challenged the process, arguing that Castro was operating under a tight contract deadline that did not allow New Jersey sufficient time to submit supporting records before the initial review was completed.
By the Numbers
- $90 million — amount still under review and potentially subject to repayment
- $1.11 billion — total initially flagged by auditors, representing roughly half of New Jersey’s total Coronavirus Relief Fund grant
- 91% — share of questioned costs the state says it has since substantiated
- $215 million — total Coronavirus Relief Fund dollars recovered nationally by the federal Pandemic Response Accountability Committee as of June 2025
- 25 contracts, grants, transfers, and payments — the sample size examined in the 28-page New Jersey desk review
Zoom Out
New Jersey is not alone in facing scrutiny. At least 40 state and local governments have been directed by Treasury to account for their use of Coronavirus Relief Fund money since the oversight program launched. The $150 billion fund was created as part of the $2.2 trillion CARES Act signed in March 2020, during a pandemic that ultimately claimed more than 1.2 million lives nationally and approximately 35,500 in New Jersey alone.
Outcomes have varied widely. California, which received $15.2 billion, had only a single expenditure of roughly $6,952 questioned — and that was ultimately deemed appropriate. Mississippi returned $1.3 million; Nebraska sent back $1.2 million of the $14.6 million initially flagged. Closer to home, Bergen County returned $57,000 in government worker pay it could not document. New Jersey’s unresolved balance remains among the larger outstanding amounts nationally.
The Pandemic Response Accountability Committee, which coordinates oversight across inspectors general and law enforcement agencies, is authorized to continue analyzing pandemic spending data through 2034. As state and local governments seek new avenues for economic support, unresolved federal clawback obligations could complicate budget planning for years ahead.
What’s Next
The U.S. Treasury has indicated it has no set timeline for resolving outstanding reviews across the country. Auditors are continuing to examine documentation submitted by recipients selected for further scrutiny, with results to be published on the inspector general’s website upon completion of each case.
For New Jersey, the path forward involves continued coordination with federal auditors to document the remaining $90 million in contested expenditures. State officials remain confident the spending can be substantiated, but the final determination rests with Treasury’s inspector general — and no resolution date has been announced.