By David Lawder

WASHINGTON (Reuters) – State and local governments disbursed over $2.3 billion in Emergency Rental Assistance Program funds in August, up from $1.7 billion in July, the U.S. Treasury said on Friday, well behind the pace needed to keep up with mounting evictions after a moratorium expired.

The Treasury Department said total disbursements under the program aimed at keeping families struggling through the coronavirus pandemic in their homes reached $7.7 billion this year, out of $46.5 billion approved by Congress in December and March.

Funds from the program assisted 420,600 households in August, compared with 364,600 in July and bringing the year-to-date total to 1.4 million.

The rental assistance program relies on state and local agencies to administer the funds and verify the eligibility of tenants and landlords. The program has been slow to launch amid a lack of initial infrastructure and staff to distribute aid, onerous documentation requirements and political resistance in some jurisdictions.

Treasury has sought to speed up the availability of rental aid funds, urging communities to adopt practices developed by higher-performing cities and states and follow the department’s guidelines for minimizing documentation.

Deputy U.S. Treasury Secretary Wally Adeyemo on Friday sent a letter notifying state and local governments that on Sept. 30, Treasury will begin the process to reallocate some funds from communities that fail to meet a certain disbursement ratio.

But the reallocation process will be gradual, with an initial determination of expenditure data on Oct. 15, and reallocations finalized in the spring of 2022, Adeyemo said.

Jurisdictions that have obligated at least 65% of their initial round of funding stand to receive more reallocated funds, Adeyemo said.

“Reallocation as required by the statute is an important step to ensure that resources are available in areas with the greatest needs and the highest capacity to deliver these resources,” Adeyemo said in the letter.

U.S. Treasury officials told reporters on a conference call that they hoped to be able to keep reallocated funds within the same state where they were originally allocated.

At the current pace of disbursements, the Treasury estimates that the program would disburse some $16.5 billion in payments for all of 2021, aiding some 3 million households and 60% of households at the highest risk of eviction.

A U.S. Treasury official said that with more communities adopting best practices, it may be possible to increase disbursements closer to $20 billion for all of 2021. The rental assistance program runs through September 2025.