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Safety Net, Low-Income Services And Job Training

Approximately $129 billion in spending and $24 billion in tax expenditures

The Recovery Act has numerous provisions designed to help low-income and unemployed individuals and their families. Some of this funding is for programs that go directly to individuals, and other provisions involve funds that flow through state and local governments.

Direct Federal Assistance to Individuals:

Nutrition Assistance

$19.3 billion is made available to increase the money benefit in the Supplemental Nutrition Assistance Program (formerly the Food Stamp program) by 13.6 percent.

Subsidies for Health Insurance Coverage

$24.7 billion is made available in subsidies to help laid-off workers maintain their health insurance coverage through the COBRA system. Workers involuntarily terminated between September 1, 2008 and December 31, 2009 may receive a 65 percent subsidy for COBRA premiums, which typically are quite expensive.

Social Security

$14.2 billion is made available for one-time additional payments of $250 to recipients of Social Security retirement and disability benefits.

Pell Grants

$15.7 billion is made available for increases in Pell Grants to low-income college students to offset the costs of an undergraduate education. The funding makes possible a $500 increase in the maximum grants for two years.

Trade Adjustment Assistance

$1.6 billion is made available to extend the Trade Adjustment Assistance program in ways that include establishing eligibility to service-sector workers affected by offshore outsourcing.

Direct State Assistance to Individuals:

Unemployment Insurance

$8.7 billion is made available to states to provide a $25 increase in weekly benefits through 2009. Another $23.7 billion is made available to states to extend through the end of 2009 the Emergency Unemployment Compensation Program, which provides up to 33 weeks of additional payments to workers who have exhausted their regular benefits. An additional $7 billion is made available in one-time grants to encourage states to improve coverage for low-wage, part-time and other categories of jobless workers.

State and Local Programs:

Workforce Investment Act

$3 billion in increased formula funding to states for Youth, Adult and Dislocated Worker employment and training activities. The states allocate the funds to local entities. Another $200 million is made available for the Dislocated Workers National Reserve, $50 million for the YouthBuild training program for disadvantaged youth, and $750 million in competitive grants for worker training and placement in high growth and emerging industry sectors. These plus additional funds for administrative functions put the total appropriations for workforce investment in the Recovery Act at $4.8 billion.

TANF Emergency Fund

$5 billion in increased formula funding to states to create a new emergency contingency fund for increased recession-related costs in the Temporary Assistance to Needy Families (TANF) program.

Child Care

$2 billion in increased formula funding to states for Child Care and Development Block Grants, which pay for child care services for low-income families.

Head Start

$2.1 billion in additional funding for Head Start early childhood development services for low-income children. Of that amount, $1 billion is to be distributed through the regular formula to local public and private agencies. The remaining $1.1 billion is to be used for the expansion of Early Head Start programs, which assist low-income pregnant women and families with infants and toddlers.

Community Services Block Grants

$1 billion in additional formula funding to states for Community Services Block Grants, which fund a variety of anti-poverty programs at the local level.

Tax Provisions Limited to Low-Income Families and the Unemployed:

Earned Income Tax Credit

Increase in credits for families with three or more children and an increase in marriage penalty relief. Cost: $4.7 billion.

Child Tax Credit

Changes in Child Tax Credit to make it available to families with very low income. Cost: $14.8 billion.

Taxation of Unemployment Compensation

The first $2,400 in unemployment compensation received in 2009 is excluded from gross income. Cost: $4.7 billion.

 

Policy Issues

The provisions regarding unemployment insurance (UI) modernization turned out to be some of the most controversial aspects of ARRA. There was not much dispute over the $8.7 billion appropriation to add $25 to the weekly benefits of UI recipients nor did anyone complain about the $23.7 billion made available to extend emergency benefits through the end of 2009.

What generated anger in some quarters was the pressure Congress put on states with significant gaps in UI coverage to modernize their systems. The pressure took the form of a carrot rather than a stick. ARRA provides for up to $7 billion in incentive payments to states if they extend coverage to more workers such as laid-off part-timers. Conservative governors and business groups in some of the affected states voiced opposition to the changes, saying that they would end up raising employer UI premiums in the future.

The National Employment Law Project (NELP), which played a key role in getting the modernization provisions included in ARRA, has been active since the enactment of the law promoting the adopting of UI reforms around the country. A NELP update issued on June 16 reports that 25  states have already enacted UI reforms to qualify for incentive funding.

The provision in ARRA to subsidize COBRA health coverage extensions turned out to be unavailable to many workers in small firms that were not covered by COBRA. According to a May 13 Stateline article, since ARRA was enacted 17 states and the District of Columbia have changed their laws to enable employees of small business qualify for the federal COBRA help. This brought to 39 the number of states with so-called mini-COBRA laws.  Other states are considering legislation that would do the same.

 

Resources

Programs for Low-Income Families

Center on Budget and Policy Priorities, Stimulus Keeping 6 Million Americans Out of Poverty in 2009, Estimates Show, September 9, 2009; online here.

U.S. Department of Health and Human Services Recovery Act webpage

Center for Law and Social Policy, Preliminary Summary of Key Provisions of the American Recovery and Reinvestment Act Aimed at Improving the Lives of Low-Income Americans, February 13, 2009; online here.

Congressional Research Services, Human Services Provisions of the American Recovery and Reinvestment Act, February 23, 2009; obtained via LexisNexis Congressional Publications database.

Congressional Research Service, Agriculture, Nutrition and Rural Provisions in the American Recovery and Reinvestment Act (ARRA) of 2009, February 23, 2009; online here.

Center on Budget and Policy Priorities, American Recovery and Reinvestment Act of 2009: State-by-State Estimates of Key Provisions Affecting Low- and Moderate-Income Individuals, March 3, 2009; online here.

Center on Budget and Policy Priorities, Overview of the TANF Provisions in the Economic Recovery Act, February 25, 2009; online here.

Center for Law and Social Policy, How Much Restored Support Funding will Each State Receive Under the American Recovery and Reinvestment Act? February 13, 2009; online here.

Center for Law and Social Policy, Questions and Answers about the TANF Emergency Fund, updated April 3, 2009; online here.

Center on Budget and Policy Priorities, Medicaid and CHIP Eligibility is Protected for Jobless Families that Receive Boost in Unemployment Benefits, March 20, 2009; online here.

Job Opportunities Task Force, The Facts on the Federal Recovery Act: The Impact on Low-Wage Marylanders & Principles for Implementation, March 23, 2009; online here.

Unemployment Compensation and Job Training

U.S. Department of Labor Recovery Act webpage

Congressional Research Service, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009, February 27, 2009; online here.

Congressional Research Service, Health Insurance Premium Assistance for the Unemployed: The American Recovery and Reinvestment Act of 2009, March 6, 2009; obtained via LexisNexis Congressional Publications database.

Congressional Research Service, Funding for Workforce Development in the American Recovery and Reinvestment Act (ARRA) of 2009, February 19, 2009; online here.

National Employment Law Project, Federal Stimulus Funding Produces Unprecdented Wave of State Unemployment Insurance Reforms, June 16, 2009; online here.

National Employment Law Project, Testimony before the House Ways and Means Committee on Unemployment Insurance and the Stimulus Bill, April 23, 2009; online here.

National Employment Law Project, Concise Guide to Assistance for Jobless Workers in the American Recovery and Reinvestment Act, March 2009; online here.

Center on Budget and Policy Priorities, Medicaid and CHIP Eligibility is Protected for Jobless Families that Receive Boost in Unemployment Benefits, March 20, 2009; online here.

Progressive States Network page on ARRA and the unemployed

The Workforce Alliance Recovery Act page

Economic Policy Institute, Testimony on implementation of the unemployment insurance provisions in the Recovery Act before the House Ways and Means Committee, April 23, 2009; online here.

Center for Law and Social Policy, From Stimulus to System: Using the ARRA to Serve Disadvantaged Jobseekers, April 2009; online here.

Policy Matters Ohio, Stimulus for Ohio: U.S. Unemployment Compensation Aid, July 2009; online here.