Last week, nine House Committees acted on their parts of a reconciliation bill that will make up President Biden’s COVID-19 relief measure. Within the package are key CWLA priorities, including more than $39 billion in child care funding, year one of a Children’s Allowance, $350 billion in state and local government relief, $350 million more in child abuse protection and prevention funding, and additional rental and other relief.
Congressman Richard Neal (D-MA), Chairman of the House Ways and Means Committee (which covers more than half of the total funding in the legislation) said, “Our nation is struggling, the virus is still not contained, and the American people are counting on Congress to meet this moment with bold, immediate action…From increasing direct assistance to those who need it most to expanding tax credits for low- and middle-income workers, we deliver substantial solutions in this package.”
Last week’s action began with respective committees, including the House Ways and Means, Education and Labor, and the Energy and Commerce committees separately debating and voting on their pieces. This week, while the full House is not in session, the parts of the bill will be assembled into a single reconciliation measure. The House should debate that bill the week of February 22, with the Senate to take up that measure days after final House action.
Although there is coordination between the House, Senate, and White House, the House approved legislation will not be the last word. The Senate is sure to make some modifications.
There are many political and parliamentary hurdles, especially in the Senate, before a bill gets to the President’s desk, but the goal is to complete action by the March 14, 2021 deadline when current expanded unemployment benefits expire. Below are various pieces of some of the relief package as currently structured:
Child Care Big Boost
CWLA has been supporting, since last spring, the child care community’s call for $50 billion in relief to rescue a child care system under tremendous stress due to multiple challenges created by the pandemic. The current federal fiscal year (2021) for child care is a combined $8.8 billion for the CCDBG, with Head Start receiving $10.7 billion. Child care also draws upon state maintenance-of-effort and matching funds.
The House Education and Labor Committee is including $39 billion in child care funding through the federal Child Care and Development Block Grant (CCDBG); in addition, Head Start will receive another $1 billion. Simultaneously, the House Ways and Means Committee is increasing the funding of child care that flows through the TANF program raising those funds by over $400 million. The state matching requirement for this new TANF/child care is suspended for the next two years, but the increased funding remains. Last March’s Covid-19 package provided $3.5 billion in child care funding, December’s COVID relief measure included $10 billion in child care relief, this $39 billion more would build on those emergency funds.
Child care has been hit first by empty classrooms/facilities costing subsidies. Simultaneously, there has been a need for care for the children of essential workers, combined with the need to function safely under pandemic conditions. Child care is built on a fragile economic structure of underfunded federal and state block grants that help pay for how broadly to cover low and middle-income families, the amount of subsidies to those families covered, salaries for the underpaid workforce, training, and quality improvement costs, special needs such as higher cost infant care or off-hour services and other expenses all paid for from the same federal block grant.
Last Wednesday, CWLA joined national advocates in asking its CWLA members to weigh-in with Congress on the need to rescue the child care industry. If you haven’t contacted your member of Congress, you can do it here.
The new child care funding would be divided with $14.9 billion for the CCDBG program. For these added funds, lead agencies may obligate funds during the current fiscal year or following two fiscal years. The funds may be used to provide child care to essential workers without current income eligibility restrictions.
In addition to this total is another $23.9 billion is for child care stabilization. States will have to apply for these funds with a plan to support providers currently open or closed because of COVID-19. The funds are to support families (subsidies) and the workforce. Providers awarded funds by the state are allowed to use these additional funds for personnel costs, including payroll and salaries, employee benefits, costs for employee recruitment and retention, rent or payment on mortgage utilities, facility maintenance or improvements, or insurance, personal protective equipment, cleaning, and sanitization supplies and services, or training and professional development related to health and safety practices, purchases of or updates to equipment and supplies to respond to the health emergency, goods and services necessary to maintain or resume child care services and mental health support for children and employees.
The Head Start funding is for ensuring families can continue to access the program. The set-asides for the Tribes and Territories are the same as the current child care set asides.
The House Ways and Means Committee’s FY 2021 budget reconciliation bill includes historic tax credit provisions to expand the Child Tax Credit (CTC) with recommendations that the credit is made fully refundable and advanceable. The maximum CTC benefit would be increased from the current level of $2,000 per child for children zero to 16 years old to $3,600 per child under six years old and $3,000 per child ages six through 17. The CTC would cut child poverty in half in 2021 and significantly reduce racial disparities for Black and Hispanic children.
According to the Center on Budget and Policy Priorities, the CTC could lift nearly 10 million children above the poverty line, especially parents who make too little to qualify for the current tax credit. In the National Academy of Science report, A Roadmap to Reducing Child Poverty, the idea of a child allowance is the extension of the Child Tax Credit that would provide “important benefits to some low-income families with children,” and play an important role in successfully reducing child poverty. The child allowance program, if implemented, would be a monthly cash payment of between $166 to $250 per month to families for each child living in the home. Making the child allowance more universal, families with low or no earnings would be eligible for the benefit.
According to the National Academy of Science report, “the EITC is one of the nation’s most popular and effective poverty-reduction programs.” Also, the EITC can reduce child poverty because it encourages work and supplements low-earning parents’ household incomes. In addition, the bill’s provision includes expanding the Earned Income Tax Credit (EITC), making it available to far more low-paid childless workers, over 17 million adults, including 4 million Latino, 3 million Black, and 746,000 Asian American childless adults. The EITC is a highly successful wage subsidy that largely excludes adults who aren’t raising children in their homes. Some 5.8 childless adults aged 19-65 — including 1.5 million Latino and over 1 million Black childless adults — are taxed into or deeper into poverty. The EITC would expand the age range of childless workers eligible for the tax credit to include younger adults aged 19-24 who aren’t full-time students, as well as people 65 and over. This would benefit cashiers, servers, home health aides, and essential workers like child care and child welfare workers.
If the Child Tax Credit is included in the next relief package, the next move would be to make them permanent. Other modifications needed to ensure that the CTC advances racial equity would be to make the monthly payments for families and automatic, ensure ease to access for families and expand the CTC to all children in need, including children involved in child welfare systems. Between July and December 2021, these advance payments would be provided monthly (or perhaps less frequently, if the IRS has implementation challenges) to the tax filer who claimed the child on a previous year tax return (2020 or, if not available, 2019).
As part of the Child Allowance Coalition, CWLA has signed on to a letter to Congressional leaders urging for critical reforms to the Child Tax Credit. CWLA encourages you to email your Members of Congress to ensure that the expansion of the Child Tax Credit is included in the next relief package. Click here to take action.
$350 Billion for State and Local Government Relief
The new relief package includes a long-elusive state and local aid package of $350 billion. The funding provides $219 billion to the states, territories, and Tribes. Out of this total, $4.5 billion is available to the territories and tribal governments receive $20 billion. State funding is provided this fiscal year until spent.
Separate from these state and tribal funds, an additional $130 billion is for metropolitan cities, non-entitlement units of local government, and counties. Of the $130 billion, $45 billion is designated for metropolitan areas (Department of Housing definitions), $19.5 billion is for non-entitlement local governments and passed through by the state government. The remaining $65 billion will go directly to the counties. California, the biggest state, would receive $26 billion, with local governments receiving an additional $14.9 billion. Another big state, Texas, would receive $16.8 billion with an additional $10.3 billion for local governments. Puerto Rico would receive $2.4 billion-plus $1.9 billion to local governments. For a state-by-state breakout, go to this House Committee breakout.
CAPTA, CB-CAP, and WIC
The Education and Labor Committee included a $350 million increase under the Child Abuse Prevention and Treatment Act (CAPTA). $250 million would be allocated to the Community-Based Child Abuse Prevention program or CB-CAP, while $100 million would go to state grants under CAPTA. Current FY 2021 funding for CB-CAP is $60 million in FY 2021, while CAPTA state grants receive $90 million. The funding also suspends the matching fund requirements under CB-CAP. The funds are available for states to spend through 2023 (through September 30, 2023). Funding for the two-line items can be used for child abuse prevention activities as well as child protection (state grants). Under the existing statute, funds could be used to support workers as well as increase support for families.
The same committee also provided increases in the Woman Infant and Children (WIC) program with new authority to the Agriculture Department to raise the Value Voucher (CVV) in the Special Supplemental Nutrition Program up to $35 per month for women and children for a four-month period during the COVID-19 pandemic. The CVV is used for the purchase of fruits and vegetables. Additionally, a new $390 million is designated for outreach, innovation, and program modernization efforts to improve participation and benefit redemption in the WIC program. Other emergency help includes an increase of $4.5 billion for the Low Income Home Energy Assistance Program (LIHEAP), which is allocated to states to help families afford home heating in the cold weather months and cooling costs during hot spells.
The Family Violence Prevention and Services Act (FVPSA) programs receive a total of $450 million splits between: $180 million in formula grants; $18 million for grants for Indian tribes; $2 million for the national domestic violence hotline; and $49 million for culturally-specific populations; $198 million to support survivors of sexual assault
Home Visiting, TANF
The Ways and Means Committee has included a boost of $150 million to the Home Visiting program or the Maternal, Infant and Early Childhood Home Visiting (MIECHV) program. Current funding for MIECHV is set at $400 million annually (although it has been subject to across-the-board cuts under the just-expired budget caps). The additional funds are to assure there will not be staffing reductions and can be used for emergency supplies to eligible families receiving services, focusing on priority populations, use of virtual visits through the use of electronic information and telecommunications technologies, to provide emergency supplies such as diapers and diapering supplies and to coordinate with diaper banks.
The committee also provides $1 billion in additional TANF funds. Of this total, 7.5 percent is set aside for tribes. States are eligible for funds based on the population of children in the state, and half is based on prior state expenditures on direct cash assistance and non-recurrent benefits (emergency assistance) to low-income families with children. Funds are designed to strengthen efforts to provide cash assistance and emergency relief as opposed to states using funds for various services and program support.
Minimum Wage Increase in House Reconciliation
It has been more than a decade since the last federal minimum wage increase. One in nine U.S. workers is paid wages that fail to support them while working full time and year-round, leaving them in poverty. Some Americans cannot afford rent, food, and necessities while working full time and making the current federal minimum wage.
Chairman Bobby Scott (D-VA) stated that the rescue package would gradually raise the federal minimum wage to $15 an hour by 2025, lifting nearly 1 million people out of poverty, including 600,000 children, and put money into the pockets of 27 million workers. The Congressional Budget Office projects that the bill would increase spending for unemployment compensation, Medicare spending, Social Security spending, and employers’ cost to produce goods and services.
The minimum wages will gradually increase by 2025 from the current amount $7.25 to $10.60 (2021), $11.70 (2022), $12.80 (2023), $13.90 (2024), and $15 (2025). The raised minimum wage would then be indexed and adjusted to increase at the same rate as median hourly wages. It guarantees that tipped workers would be paid at least the full federal minimum wage while phasing out subminimum wage. Additionally, the raised minimum wage would guarantee a full federal minimum wage for teen workers, phasing out subminimum wage. Finally, the legislation would end subminimum wage certificates for workers with disabilities, providing them the opportunity to be “competitively employed and participate more fully in their communities.”
Raising the federal minimum wage is projected to give nearly 32 million Americans a raise: “Once fully phased in, this translates into an annual pay increase of about $3,300 for the average affected year-round worker.” Specifically, one-third of Black workers and one-quarter of Latinx workers would receive a raise. The legislation would also increase the pay of 60 percent of women workers. The Congressional Budget Office estimates that employment would be reduced by 1.4 million workers, and the number of people in poverty would be reduced by 900,000. Getting the minimum wage provision through the Senate could be a challenge due to Senate restrictions on the reconciliation process.
Medicaid and the ACA
The reconciliation makes several adjustments to the ACA and Medicaid, but it does not include a second bigger increase in the Medicaid matching rate (FMAP) that governors are seeking. Currently, the Medicaid matching rate continues with a 6.2 percent increase as enacted last spring, but the current House bill does not increase it to the 12 percent level sought by states. The current 6.2 percent continues as long as there is a public health emergency. The bill also extends coverage to 100 percent for certain vaccine and pandemic related expenses.
The bill does allow a 5 percent increase in the Medicaid FMAP to those states that currently have very limited Medicaid coverage. If they expand their Medicaid program by picking up optional Medicaid coverage, they could benefit from an FMAP increase. The House legislation also provides a temporary FMAP increase of 7.35 percentage points for states to improve Medicaid home- and community-based services (HCBS) for one year. This service benefits the elderly and individuals with disabilities population.
The bill does significantly bolster the Affordable Care Act (ACA). It would fully subsidize ACA coverage for people earning up to 150 percent of the federal poverty level, as well as those on unemployment insurance, for two years. It makes adjustments to the ACA costs by increasing the tax credits available through the ACA exchange.
With the new open enrollment starting on February 15, 2021, these new provisions would be very timely. The bill increases the offsetting tax credits so that anyone making 150 percent or less of poverty (roughly $32,000 for a family of three) so that the tax credit would cover all premiums. For families between 150 to 200 percent of poverty, premiums would be limited to two percent of income, for families making between 200 percent to 250 percent a cap of two to four percent of income, for families at 250 to 300 percent poverty a cap of four to six percent on premium costs, for 300 to 400 percent of poverty a tax credit to limit premiums to six to eight and a half percent. Finally, for families making 400 percent of the federal poverty level, no more than eight and a half percent of income would go to pay health insurance premiums.
The reconciliation would add to the December total of $82 billion for education that was split between $54.3 billion is for the Elementary and Secondary Schools (K-12) and $22.7 billion for Higher Education.
This bill would add to that with $128 billion for grants to State educational agencies (SEA), with 90 percent allocated to local educational agencies (LEA), to be made in accordance with the same terms and conditions applicable to funds provided in the fiscal year 2021 for the Elementary and Secondary School Emergency Relief Fund (ESSERF) of the Education Stabilization Fund.
SEAs are required to reserve at least 5 percent of new allocations to carry out activities to address learning loss. LEAs must reserve at least 20 percent of newly allocated ESSERF subgrants to address learning loss. The LEA reservation for learning loss is subject to equitable services.
The Higher Education Emergency Relief Fund provides $39.5 billion for grants to colleges and universities in accordance with the terms and conditions required through December’s relief fund. Public and private non-profit institutions receiving new allocations will be required to spend at least 50 percent of such allocations on emergency financial aid grants to students, while for-profit institutions receiving allocations and institutions receiving allocations due to the enrollment of students enrolled exclusively online will have to spend 100 percent of such allocations on student aid.