Update from Washington DC: Senate Approves Third Major Coronavirus Response Measure
After several days of marathon negotiations, the Senate voted unanimously on March 25 to advance the single largest economic rescue package in U.S. history. All told, the legislation provides $2.2 trillion in federal assistance to respond to the economic and public health crisis caused by the COVID-19 pandemic. Known as the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the bill represents the third phase of coronavirus aid from Congress and dwarfs the approximately $800 billion Obama-era stimulus measure that was approved following the 2008 financial crisis.
While House leaders have signed off on the agreement, they will give their members 24 hours to review the legislation, putting the chamber on track to pass the CARES Act on March 27. With House lawmakers advised to remain in their districts for the time being, the chamber is expected to approve the measure by voice vote, avoiding the need for them to return to the nation’s capital. Any member of the House, however, could demand a recorded vote, which could potentially drag out the process. For his part, President Trump has pledged to sign the legislation as soon as it is presented to him.
Despite the unanimous vote in the Senate, there were a few roadblocks that threatened to delay final passage in the upper chamber. In particular, GOP senators were critical of a provision that adds $600 per week onto usual unemployment payments, which will result in some people being paid more in unemployment benefits than they were (or are currently) receiving from their employer. Believing that this would create a disincentive to employment, Senator Ben Sasse (R-NE) offered an amendment that would have capped benefits at a person’s previous average pay, but it failed to reach the 60-vote threshold. It should be noted that Treasury Secretary Steven Mnuchin defended the provision, believing it to be more feasible and timely than requiring state administrators to use a more complex formula.
The CARES Act was further delayed when Senate Democrats demanded stronger worker protections, as well as stricter guidelines for corporations that benefit from government loans or investments. After a series of talks between Senate Majority Leader Mitch McConnell (R-KY) and Minority Leader Chuck Schumer (D-NY), the final bill included a number of restraints on larger companies, as well as some key transparency and oversight provisions. In addition, the legislation includes language that bars aid to businesses in which President Trump, Vice President Pence, heads of executive departments, and members of Congress hold 20 percent or more ownership. The exclusion also applies to businesses owned by members of their family.
Looking ahead, Majority Leader McConnell has announced that the Senate will recess until April 20, but the chamber could come back for further votes, if needed. In the meantime, lawmakers are expected to work remotely on a fourth package to address the economic and public health implications caused by the pandemic. In fact, House Speaker Nancy Pelosi (D-CA) has already laid out Democratic demands for the next phase of the response. Among other things, she has requested more funds to state and local governments, a 15 percent increase in SNAP benefits, and a better definition of who qualifies for family and medical leave.
To follow is a summary of key provisions of the CARES Act.
Coronavirus Relief Fund (CRF)
A key CSAC advocacy priority for the economic stimulus package was the inclusion of funds for counties to combat the ongoing COVID-19 crisis. Pursuant to the final bill, $150 billion in Treasury Department funding will be available to states, units of local governments, and tribes to cover costs incurred due to the public health emergency.
CRF Payment Formula
Relief fund payments to states will be based on relative population, with the caveat that no state will receive less than $1.25 billion. It is estimated that California will receive over $15 billion in federal CRF aid.
Direct Payment Option for Certain Localities
Local governments with a population of 500,000 or more can elect to receive a direct CRF payment from the Department of the Treasury. Any payment(s) made to a local government(s) would be subtracted from the total amount that is otherwise available to the State. In order to receive such a payment, a unit of local government would need to provide the Treasury Secretary with a certification that the locality’s proposed uses of funds are consistent with the terms of the law.
It should be noted that several interpretations of the local government sub-allocation formula have emerged since the text of the CARES Act was released. Clarification is currently being sought and updated information on this component of the bill is expected to be available soon.
Allowable Costs
Pursuant to HR 748, states, local and tribal governments can only use CRF dollars to cover costs that: (1) are necessary expenditures incurred due to the COVID-19 public health crisis; (2) were not accounted for in the state/local budget most recently approved as of the date of the bill’s enactment; and (3), were incurred between March 1, 2020 and December 30, 2020.
Payment Deadline
The Treasury Department will have 30 days after the bill’s enactment to make payments to each state/local/tribal government.
Exchange Stabilization Fund
The CARES Act provides $500 billion for the Department of the Treasury’s Exchange Stabilization Fund. Of the total funding available, $454 billion is set aside for loans, loan guarantees, and investments in support of facilities established by the Federal Reserve to support lending to states, municipalities, and eligible businesses.
HR 748 gives the Treasury Secretary discretion to make loans for a duration of up to five years and at an interest rate that is not less than prevailing market rates prior to the outbreak of the coronavirus. Pursuant to the bill, the loans cannot be forgiven.
Nutrition
Supplemental Nutrition Assistance Program (SNAP) – HR 748 includes $15.5 billion in funding for SNAP in anticipation of a spike in the need for assistance.
Child Nutrition Programs – The bill provides $8.8 billion in additional funding for Child Nutrition Programs in order to ensure children receive meals while school is not in session.
The Emergency Food Assistance Program (TEFAP) – The bill provides $450 million for TEFAP, including $300 million for commodities and up to $150 for distribution costs. Most of these programs are operated by food banks.
Public Health
The final version of the CARES Act includes $4.3 billion to help federal, state, and local public health agencies respond to the coronavirus. Of the total, $1.5 billion would be available to state and local public health agencies for the purchase of personal protective equipment; surveillance for coronavirus; laboratory testing to detect positive cases; contact tracing to identify additional cases; infection control and mitigation at the local level to prevent the spread of the virus; and, other public health preparedness and response activities.
The legislation also includes $1.5 billion in flexible funding to support CDC’s continuing efforts to contain and combat the coronavirus, including repatriation and quarantine efforts, purchase and distribution of diagnostic test kits (including for state and local public health agencies), support for laboratory testing, workforce training programs, combating antimicrobial resistance and antibiotic resistant bacteria as a result of secondary infections related to COVID-19, and communicating with and informing public, state, local, and tribal governments and healthcare institutions.
In addition, the bill includes $500 million for public health data surveillance and analytics infrastructure modernization.
DSH Payments – The CARES Act delays from May 23, 2020 to November 30, 2020 the scheduled reductions in the disproportionate share payments to hospitals program (DSH) serving large numbers of Medicaid and uninsured patients.
Community Health Center Funding – HR 748 provides an additional $1.32 billion for community health center grantees.
Hospitals and Related Medical Response – The final economic stimulus package provides $100 billion for a new program to provide grants to hospitals, public entities, not-for-profit entities, and Medicare and Medicaid enrolled suppliers and institutional providers to cover unreimbursed health care related expenses or lost revenues attributable to the public health emergency resulting from the coronavirus.
Human Services
Child Care Development Block Grant – The bill includes $3.5 billion to allow child care programs to maintain critical operations – including meeting emergency staffing needs and ensuring access to child care for health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to coronavirus by public officials – without regard to the income-eligibility requirements.
Head Start – HR 748 provides $750 million for Head Start to meet emergency staffing needs.
Community Services Block Grant (CSBG) – The final bill includes $1 billion for CSBG to help communities address the consequences of increasing unemployment and economic disruption.
Low Income Home Energy Assistance Program (LIHEAP) – The CARES Act includes $900 million to help lower income households heat and cool their homes.
Family Violence Prevention Services – The bill provides $45 million to prevent and respond to family and domestic violence, including offering shelter and supportive services to those who need it.
Substance Abuse and Mental Health Services Administration (SAMHSA) – The stimulus package provides $425 million for SAMHSA to increase access to mental health services through Community Behavioral Health Clinics, suicide prevention programs, and emergency response spending that can target support where it is most needed, including outreach to those experiencing homelessness.
Veterans – The bill provides $590 million for the Veterans Administration to support veterans at an increased risk of contracting coronavirus. It includes funding for the Health Care for Homeless Veterans program, the Supportive Services for Veterans Families program, and the Grant and Per Diem program. This funding will help veterans get treatment and will provide support for those who are homeless or at risk of eviction.
Older Americans – The legislation includes $820 million for Older Americans Act programs, including nutrition programs ($520 million), home and community based services ($200 million), and family caregivers support ($100 million).
TANF Extension – The bill extends the reauthorization of the Temporary Assistance for Needy Families (TANF) program from May 23, 2020 to November 30, 2020.
Housing and Community Development
Community Development Block Grant (CDBG) – Under the CARES Act, $5 billion is provided for the CDBG program to enable nearly 1,240 states, counties, and cities to rapidly respond to COVID-19 and the economic and housing impacts caused by it, including the expansion of community health facilities, child care centers, food banks, and senior services.
Of the amounts provided, $2 billion will be allocated within 30 days to states and units of local governments that received an allocation under the FY 2020 CDBG formula, $1 billion will go directly to states within 45 days to support a coordinated response across entitlement and non-entitlement communities based on COVID-19 impacts, and $2 billion will be allocated to states, counties, and cities based on the prevalence and risk of COVID-19 and related economic and housing disruption. That formula will be created by HUD and will be distributed on a rolling basis.
In order to ensure resources are quickly deployed, the bill eliminates the cap on the amount of funds a grantee can spend on public services, removes the requirement to hold in-person public hearings in order to comply with national and local social gathering requirements, and allows grantees to be reimbursed for COVID-19 response activities regardless of the date the costs were incurred.
It should be noted that the CDBG funding builds on $6.7 billion provided in fiscal years 2019 and 2020 by allowing grantees to combine prior year funds with new funding.
Homelessness/Emergency Solutions Grants – $4 billion is included to address the needs of individuals and families who are homeless or at risk of homelessness, as well as to support additional homeless assistance, prevention, and eviction prevention assistance. Of that amount, $2 billion is to be allocated to CoCs within 30 days. The other $2 billion would be allocated by HUD to states and localities within 90 days. Pursuant to the CARES Act, HUD is responsible for creating a formula that accounts for COVID-19 impacts, high rates of sheltered or unsheltered homeless, and economic and housing market factors. Funding may be used for eviction prevention activities, including rapid rehousing, housing counseling, and rental deposit assistance.
Rental Assistance Protections for Low-Income Americans – HR 748 includes $3 billion for housing providers to help more than 4.5 million low-income households made up of more than 9.6 million individuals currently assisted by HUD to safely remain in their homes or access temporary housing assistance. The funding will help low-income and working class Americans avoid evictions and minimize any impacts caused by loss of employment, child care demands, or other unforeseen circumstances. This includes:
- $1.9 billion to allow public housing agencies (PHAs) to keep over 3.2 million Section 8 voucher and public housing households stably housed;
- $1 billion to allow the continuation of housing assistance contracts with private landlords for over 1.2 million Project-Based Section 8 households;
- $65 million for housing for the elderly and persons with disabilities for rental assistance, service coordinators, and support services for the more than 114,000 affordable households for the elderly and over 30,000 affordable households for low-income persons with disabilities; and,
- $65 million for Housing Opportunities for Persons with AIDS in order to maintain rental assistance and expand operational and administrative flexibilities for housing and supportive service providers to assist nearly 61,000 households.
Renter and Homeowner Protections
Eviction Protection – The CARES Act prevents landlords from bringing legal causes of action to recover possession from tenant for nonpayment of rent or other fees or charges for 120 days if the dwelling is a property insured, guaranteed, supplemented, protected, or assisted in any way by HUD, Fannie Mae, Freddie Mac, the rural housing voucher program, or the Violence Against Women Act.
Foreclosure Moratorium and the Right to Request Forbearance – HR 748 allows a borrower with a federally-backed mortgage loan to request forbearance – regardless of delinquency status and without penalties, fees, or interest – by submitting a request to the borrower’s servicer and affirming financial hardship due to COVID-19. A forbearance must be granted for up to 180 days and extended for an additional period of up to 180 days at the request of the borrower, though the initial or extended forbearance may be shortened. Servicers must notify the borrower in writing of their right to request forbearance throughout the period of a national emergency. Multifamily borrowers with a federally-backed multifamily mortgage loan that was current on February 1, 2020 may also request a forbearance for up to 30 days, with two additional 30-day extensions.
The CARES Act also prohibits the servicer of a federally-backed mortgage loan, except for a vacant or abandoned property, to initiate any foreclosure process, move for a foreclosure judgment or order of sale, or execute a foreclosure-related eviction or foreclosure sale for at least 60 days beginning on March 18, 2020.
FEMA Disaster Relief Fund
The final stimulus bill includes $45 billion in Federal Emergency Management Agency (FEMA) funding to provide for the immediate needs of state, local, tribal, and territorial governments to protect citizens and help them recovery from the overwhelming effects of COVID-19. Reimbursable activities include medical response, personal protective equipment, National Guard deployment, coordination of logistics, safety measures, and community services nationwide.
Additional DHS/FEMA Funding
- $200 million for Emergency Food and Shelter Program for shelter, food, and supportive services to individuals and families in sudden economic crisis;
- $100 million for Assistance to Firefighter Grants for personal protective equipment for first responders;
- $100 million for Emergency Management Performance Grants for state, local, territorial, and tribal governments to support coordination, communications, and logistics; and,
- $178 million for the Department of Homeland Security to ensure front line federal employees have personal protective equipment.
Transportation & Infrastructure
Transit Systems – $25 billion is provided to public transit operators to protect public health and safety while ensuring transportation access to jobs, medical treatment, food, and other essential services remain available during the COVID-19 response. This increased federal investment is projected to help sustain over 430,000 transit jobs.
Airport Assistance – HR 748 includes $10 billion in Airport Improvement Program (AIP) funding for publically-owned, commercial airports to address the COVID-19 crisis. Funds will help airport operators meet ongoing needs and manage current construction projects. The legislation also provides $56 million for the Essential Air Service (EAS) and Rural Development Fund.
Local Law Enforcement
Byrne-Justice Assistance Grant (JAG) Program – The bill includes $850 million for the Byrne-JAG program for state and local law enforcement departments and jails for the purchase of personal protective equipment and other needed medical items and to support overtime for officers. Language is included to ensure that the resources are provided to states and localities quickly in order to immediately respond to the COVID-19 crisis.
Other Provisions
Forest Service – The CARES Act includes $70 million across Forest Service programs for prevention, mitigation, and recovery activities associated with the coronavirus outbreak, including funding for equipment and supplies for cleaning buildings and public areas; support for law enforcement and emergency personnel deployed to critical areas; support for scientific needs; and, increased telework capacity.
Election Grants – The final legislation provides $400 million for states to help prevent, prepare for, and respond to the coronavirus in connection with the 2020 federal election cycle. Funding can be used to increase the ability to vote by mail, expand early voting and online registration, and increase the safety of voting in-person by providing additional voting facilities and more poll-workers.
Economic Development Administration – The bill provides $1.5 billion for economic adjustment assistance to help revitalize local communities. EDA assistance can be used to help rebuild impacted industries such as tourism or manufacturing supply chains, capitalize local funds to provide low-interest loans to businesses of all sizes, and support other locally-identified priorities for economic recovery. Based on the impact of prior funding packages, EDA disaster assistance is expected to leverage an additional $20 billion in local and private investment and support more than 100,000 jobs.
Small Business Administration – The CARES Act includes $562 million to ensure that small Business Administration (SBA) has the resources to provide Economic Injury Disaster Loans (EIDL) to businesses that need financial support. The funding is in addition to the assistance provided in the Keeping American Workers Employed and Paid Act, which authorizes $350 billion worth of SBA loans, a portion of which SBA will forgive based on allowable expenses for the borrower. This small business package also includes $10 billion in direct grants for businesses that do not qualify for the EIDL program, and $17 billion to have SBA step in and make six months of principle and interest payments for all SBA backed business loans.
Federal Communications Commission – The bill provides $200 million for the FCC Connected Care Pilot Program. The program will support efforts of health care providers to address COVID-19 by using telehealth to connect with patients.
Extension of REAL ID Deadline for States – The CARES Act extends the deadline for states to meet the requirements of the REAL ID Act to not earlier than September 30, 2021.