New Jersey is at risk of having to repay the federal government roughly $90 million after a U.S. Treasury review found “unsupported and ineligible” Coronavirus Relief Fund expenditures. State officials say they can prove the money was spent responsibly.
The findings were part of what’s known as a desk review by Castro & Co., a government contractor hired by Treasury’s Office of Inspector General. A desk review can be a prelude to an audit.
The CARES Act assigned Coronavirus Relief Funds oversight to Treasury’s inspector general, which published the first desk review in July 2023. The completed reports appear to have garnished scant public attention. NJ Spotlight came across the online repository during a search for other documents.
The federal Pandemic Response Accountability Committee, an oversight hub that works with government inspectors general and law enforcement around the country, as of June 2025 recovered more than $215 million in misspent Coronavirus Relief Fund resources. It will continue analyzing data until 2034.
Castro’s New Jersey desk review flagged $1.11 billion in aid for which it said the state didn’t account. The data were maintained by “dozens of state agencies” rather than collected centrally, Castro noted.
“New Jersey’s risk of unallowable use of funds is high,” Castro concluded in the report, dated Feb. 7, 2025.
‘Cooperatively and transparently’
The New Jersey Governor’s Disaster Recovery Office, in a statement to NJ Spotlight News, said it’s working “cooperatively and transparently” with the inspector general to provide all documents.
“The supporting data does exist,” the office said.
The nation’s $150 billion Coronavirus Relief Fund was part of the $2.2 trillion March 2020 CARES Act, signed in the early days of a pandemic that would claim more than 1.2 million American lives.
In the years since, at least 40 state and local governments were ordered by Treasury to account for sampled uses of their funding. While the New Jersey matter remains outstanding, many other inquiries are resolved.
For the $15.2 billion that California received, for instance, the desk review analyzed 268 transactions. It found just one questionable expenditure, totaling $6,952, that Treasury later deemed appropriate. Mississippi returned $1.3 million, including $4,066 for what was categorized as a “medical cart transaction.” Nebraska, with $14.6 million flagged, sent back $1.2 million.
In New Jersey, Bergen County returned $57,000 in extra-duty pay for government workers that it failed to substantiate.
Tight deadline
For its 28-page New Jersey desk review, Castro accountants sampled 25 contracts, grants, transfers and direct payments. It suggested that Treasury look deeper at expenditures of $1.1 billion – about half New Jersey’s total grant – in areas including state worker pay, a temporary Atlantic City hospital and child nutrition programs.
The Governor’s Disaster Recovery Office told NJ Spotlight that “there is currently no basis to conclude that repayment of funds will be required.” More than 91% of its questioned costs were cleared, it said, “leaving only approximately $90 million remaining to be addressed.”
“The $1.1 billion figure cited in the initial desk review was generated without affording the State of New Jersey adequate time to respond or submit supporting documentation,” the office said. That was because Castro “was operating under an extremely tight deadline due to its contract expiring.”
The U.S. Treasury says it has no timeline to resolve outstanding inquiries nationwide.
“Treasury Inspector General auditors are continuing to review documentation provided by prime recipients selected for further review,” the inspection office said in a statement to NJ Spotlight News. “Upon completion of each review, a summary of the results will be made available on our website.”
