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One-Off Funding for Human Services in Federal Relief Packages is Insufficient

September 1, 2020

Analysis of NYC Human Services Programs from Federal Relief Packages

Derek Thomas, Senior Fiscal Policy Analyst | Gaurav Gupta-Casale, Fiscal Policy Analyst | Matan Diner, Former Fiscal Policy Fellow

The future of New York City hinges on sufficient support from the federal government. The COVID-19 pandemic and resulting deep economic downturn are wreaking havoc on the city’s budget and the health and economic well-being of millions of its people.

The four relief packages that passed Congress back in March and April provided short-term economic relief with the expectation that nationwide public health measures would be implemented to control the virus.

Tragically, in the five months since the passage of the stimulus package, the CARES (Coronavirus Aid, Relief, and Economic Security) Act, the President mismanaged the national public health response by minimizing the serious threat it posed, state and local economies prematurely reopened, and the virus swept the nation. The number of confirmed cases and deaths has grown by 5,564,031 (4,889 percent) and 167,082 (9,408 percent) respectively since the CARES Act.

From these relief packages, we estimate that New York City will receive $831 million for human services programs, such as child care, housing, homelessness prevention, food assistance, mental health, support for older adults, and more. While this analysis excludes direct assistance – such as economic stimulus checks and unemployment insurance – public health spending, aid to state and local governments, and other forms of federal fiscal and monetary aid, federal support for already-underfunded human services programs is woefully insufficient given the duration of the crisis.

A Deadly Tradeoff and Unnecessarily Catastrophic Economic Suffering

Here in New York City, public health measures were taken seriously and over time, the number of COVID-related deaths fell precipitously, but the inadequate federal response has led to a scenario in which economic devastation is the trade-off for saving lives.

The City’s unemployment rate shot up more than sixteen percentage points (from 4 percent in June 2019 to 19.4 percent in July 2020). Measuring unemployment, however, by the percent of the workforce receiving unemployment benefits, one-third of New York City’s workforce were unemployed in June, according to the The New School’s Center for New York City Affairs.

Through no fault of their own, 1.25 million New Yorkers abruptly lost their jobs by May and an astounding 58 percent of New York’s households included someone who lost employment income between March 13th and July 21st.

An estimated 50,000 renters in New York City are at risk of eviction; hunger has surged, and; thousands of local businesses have already shuttered.

As is historically the case, this economic pain has been and will continue to be disproportionately inflicted on communities of color because racist institutions left them vulnerable.

Restricting economic activity to protect the public’s health has led to plummeting tax revenues. Largely due to dips in sales and income tax revenue, the City’s revenue shortfall is expected to be $2.9 billion (a 4.6 percent decline) in fiscal year (FY) 2020 and $6.9 billion (a 11 percent decline) in FY 2021.

In turn, austerity choices imposed by both the City and State will exacerbate the City’s inability to ensure that human services, healthcare, education, transportation, first responders, and other services continue uninterrupted. As was the case in the Great Recession, Blacks and women will disproportionately pay the price for public sector layoffs caused by austerity and congressional dysfunction.

In the private sector, the greatest decline in jobs occurred within the leisure and hospitality industry, which had 193,300 fewer jobs (46.5 percent) in July 2020 than in March 2020.

Timeline of Relief Packages

The four relief packages that passed Congress back in March and April provided short-term relief with the expectation that nationwide public health measures would be implemented to control the virus. The following is a timeline of these packages:

March 6, 2020  – The Coronavirus Preparedness and Response Supplemental Appropriations Act (P.L. 116-123): P.L. 116-123 was an $8.3 billion package that focused on tests, treatment, vaccines, and telehealth provisions.

March 11, 2020  – Families First Coronavirus Response Act (P.L. 116-127): P.L. 116-127 was an $8.3 billion spending package that provided free coronavirus testing, increased funding for states’ Medicaid costs, strengthened food security initiatives, enhanced unemployment insurance, and provided paid sick leave and paid family and medical leave through refundable payroll tax credits.[1]

March 27, 2020 – Coronavirus Aid, Relief, and Economic Security (CARES) Act: The CARES Act was a $2.2 trillion economic stimulus bill that provided significant support for people, states, the health care system, small and big businesses, as well as nonprofits.[2]

April 21, 2020 – Paycheck Protection Program and Health Care Enhancement Act (COVID-19 3.5): COVID-19 3.5 was a $484 billion stopgap measure that provided additional funding to support small businesses and hospitals and enhanced COVID-19 testing.

Passed by U.S. House on May 15, 2020 – Health and Economic Recovery Omnibus Emergency Solutions (HEROES) Act: The HEROES Act passed the U.S. House on May 15. The $3 trillion package includes an extension of the extra $600 in weekly unemployment benefits, another round of stimulus checks, the creation of a HEROES Fund to provide hazard pay to essential workers, over $1 trillion in state and local relief, and greater funding for key social safety net programs like SNAP.

Three months after House Democrats passed a fourth relief package, the HEROES Act – an imperfect but comprehensive package – and just when critical lifelines were expiring that, for example, ensured incomes remain intact, provided housing stability, kept the power on during a heat wave, and put food on the table, Republican leadership submitted their own relief package. But their severely inadequate proposal is one-third the size of the bipartisan CARES Act that passed before cases surged and the economy tumbled.

See our policy recommendations at the end of this report for more on the provisions included in the HEROES Act, and how Congress can ensure that this package is sufficiently robust.

Analysis of Human Services Programs in Congressional Relief Packages

From the Families First Coronavirus Response Act and the CARES Act, we estimate that New York City received approximately $831 million for human services programs. While this analysis excludes direct assistance – such as economic stimulus checks and unemployment insurance – public health spending, aid to state and local governments, and other forms of federal fiscal and monetary aid, federal support for already-underfunded human services programs is woefully insufficient given the duration of the crisis.

Among the top ten human services programs that provided the most federal relief to NYC, the three largest programs supported in the relief packages are the Emergency Solutions Grant (ESG), the Community Development Block Grant (CDBG), and the Child Care and Development Block Grant (CCDBG).

Emergency Solutions Grant (ESG): New York City is estimated to receive $382 million of ESG funding. Four in ten low-income New Yorkers are homeless or severely rent burdened, and individuals who are homeless are dying at a rate that’s 61 percent higher than the general population. ESG prevents evictions, provides short-term rental assistance, and supports homeless services.

Community Development Block Grant (CDBG): New York City is estimated to receive $102 million of CDBG funding. Like ESG, CDBG funds are flexible and can be used for rental assistance, housing development and rehabilitation, and public services. New York City, however, only received 7 percent of the total grant despite having a quarter of national cases and a third of national deaths in the spring.

Child Care and Development Block Grant (CCDBG). New York City is expected to receive $88.3 million. This funding will be pivotal in not only helping New York’s child care providers stay open but also providing critical support to frontline and essential workers who need safe and reliable care for their children while they work.

Our Economy Was Vulnerable Prior to the Crisis

Even prior to COVID-19, recent actions from the Trump administration and structural weaknesses – such as low-quality jobs, weak labor relations, a culture of long hours, gendered and racialized disinvestment in the care economy, growing inequality, a decimated public sector, disinvestment in human services funding, and trickle down policy making – were warning signs that our ongoing recovery from the Great Recession was vulnerable. Enter COVID-19 and these weaknesses have been laid bare.

Here at FPWA, we have illustrated the extent to which austerity that occurred following the Great Recession – and which contributed to a slogging national recovery – led to the disinvestment in human services programs in New York City. From FY 2010 to FY 2018, social services fell by 8 percent ($320 million) after adjusting for inflation.[3]

While COVID-relief packages make whole, relative to 2010 levels, many of the federal programs included in the relief packages in federal fiscal year (FFY) 2020, it is imperative that during the FFY 2021 budget negotiations, Congress ensures these critical human services programs are fully restored and strengthened to reflect the needs that existed prior to, and certainly after, the current crisis.

Impact on Nonprofits 

Nonprofit organizations are on the front lines of fighting this crisis. While the CARES act provided some support to nonprofits the support has been insufficient.

Facing revenue losses, the economic crisis has hindered the ability of nonprofits to provide services at a time when they are most needed. For example, one study estimated that 1.6 million nonprofit jobs were lost between March and May of 2020, nationally. Another study, looking at 110 different mid- to large-size non-profits found that 83 percent saw a decline in revenue due to the pandemic and as a result, 71 percent of organizations reported that they had scaled back operations.

The primary support that nonprofits received from the CARES Act was access to loan programs run by the Small Business Administration and the Department of the Treasury, such as the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL). The CARES Act allotted $349 billion to PPP funding, to provide loans to small businesses and nonprofit organizations, with fewer than 500 employees, to keep their staff on payroll. The terms of the PPP allowed for nonprofits to receive up to 2.5 times their average monthly payroll costs, with a cap at $10 million. Despite the amount allotted, funding for PPP ran out by April 16th, less than a month after its creation. While an extra $310 billion was added in April, this did not address the key underlying issues that non-profits face in gaining access to PPP funding.

According to The Alliance for Strong Families and Communities and The NonProfit Times, only 59 percent of all nonprofits that applied for PPP loans received them. Within the 41 percent of organizations that were rejected, 24 percent responded immediately with furloughs and layoffs. In addition, according to a Reuters article, nonprofits “have faced numerous bureaucratic obstacles to getting the funding, including requests for federal forms they are not required to file, inaccessible bankers, and a general lack of transparency during the process.” As pointed out by The National Council of Nonprofits, the PPP program does not include a stream of funding exclusively dedicated to nonprofit organizations. As a result, nonprofits have had to compete with small businesses for the same pool of funding, receiving only 4 percent of all PPP funding. Furthermore, in failing to make this distinction, nonprofits are also subject to the 500-employee limit, preventing larger nonprofits from accessing this funding.

In addition to loans, the CARES act also provided non-profits with tax credits. The CARES act gave nonprofits access to an employee retention credit, where employers, including nonprofits, can get up to $5,000 in refundable credits per employee for suspended work and payroll tax deferral, allowing nonprofits to defer payments of the employer share of social security taxes.

While the 2017 Tax Cuts and Jobs Act disincentivized charitable donations to nonprofits by increasing the standard deduction, the CARES Act allowed individuals who have taken the deduction to write off up to $300 of charitable donations. In doing this, congress aimed to incentivize contributions to nonprofit organizations.

Despite this positive step, The National Council of Nonprofits has further called for raising the cap above $300, as more donations are needed. This comes as nonprofits are already seeing a pandemic-induced decline in giving; in just the first quarter of the year, nonprofit giving went down by 6 percent ($25 billion in lost revenue) when compared with the first quarter of 2019.

Like nonprofits throughout the rest of the country, nonprofits in New York City face the intersecting trends of being under-resourced due to the economic fallout of COVID-19 and overburdened due to the high need of their services at this critical moment. A report from the Center for an Urban Future, which interviewed leaders from New York City nonprofits, found that local nonprofits are now facing deficits, of “millions of dollars in unexpected costs and lost revenue.” This includes losses incurred from donation shortfalls due to the cancellation of spring fundraisers, and unexpected costs brought on by the pandemic such as: greater demand for services; cleaning and other steps necessary to make their facilities safe; an influx of temporary staffing to meet the unprecedented high demands; and increased IT needs. For example, the organization CAMBA “expects over $1 million in unanticipated costs, including $150,000 for cleaning services and $200,000 in IT costs [and]… The Catholic Charities of the Archdiocese of New York expects $3 million in revenue losses because of canceled and postponed spring fundraising events alone.”

The economic fallout and lack of a sufficient federal response have compounded these existing funding shortages across many different sectors within the nonprofit community. One area where this is occurring is among food pantries. Since the outbreak of COVID-19 35 percent of all food pantries, soup kitchens, and mobile pantries have closed. Food pantries in New York City are essential institutions to many low-income residents. According to the Office of the Mayor of New York City, before the outbreak 1.4 million New Yorkers relied on them and 1.2 million New Yorkers were food-insecure, which included 1 in 5 children. Demand for these services has gone up as food insecurity in New York City has risen since the outbreak. For example, the Bed-Stuy Campaign Against Hunger’s food pantry has seen their average daily number of families triple, reaching up to 3,500 families. In addition, a study from the CUNY Urban Policy Institute which surveyed New Yorkers about their confidence level in accessing food amid the outbreak found that “half of New Yorkers reported that their ability to get the food they needed had been reduced a lot (18 percent) or somewhat (32 percent).” In addition, the Mayor’s office reports that youth reliant on free school meals, older adults reliant on meal delivery programs, people with disabilities reliant on caregivers, non-citizens eligible for federal support, and low-income residents residing in food deserts are particularly vulnerable to the rise of COVID-19-induced food insecurity.

Policy Recommendations

The next relief package must be robust enough to meet the needs of the moment and build a foundation for a just recovery by: protecting New York City and State’s fiscal solvency and ability to provide services; providing economic security; assisting nonprofits; safeguarding public health; and, addressing structural shortcomings to lay the groundwork for shared prosperity.

We Encourage the Senate to Pass the Following Provisions of the HEROES Act, Passed by the House of Representatives

  • Coronavirus Relief Fund
    • The Senate should pass the state and local relief provision of the HEROES Act which provides $500 billion in state relief, as requested by the National Governors Association and $375 billion for local governments. Furthermore, the Senate should uphold both the funding formula for the aforementioned relief, which in part factors in each state’s share of coronavirus cases and the provision that removes the spending restrictions in the CARES Act’s by allowing for the funds to cover lost, delayed, or decreased revenue stemming from covid19. Without this funding, states and cities which are facing massive revenue shortfalls. Largely due to dips in sales and income tax revenue, New York City’s revenue shortfall is expected to be $2.9 billion (a 4.6 percent decline) in FY 2020 and $6.9 billion (a 11 percent decline) in FY 2021.
  • Housing
    • The Senate should pass the HEROES Act provisions that provide needed housing subsidies; $100 billion in emergency rental assistance, $11.5 billion in Emergency Solutions Grant (ESG) funding, and a broadening of ESG eligibility.
    • The Senate should ensure all renters are subject to the same consistent rental policy by passing the provision in the HEROES Act that provides a 12-month national moratorium on evictions and foreclosures and allows for an automatic 60-day forbearance period for homeowners.
  • SNAP
    • The Senate should pass the provisions in the HEROES Act that expands SNAP by raising the maximum allotment level by 15 percent above the $15.5 billion in funding enacted in the Families First Act, increasing the minimum SNAP benefit from $16 to $30 per month and prohibiting three administrative rules, proposed by the Trump administration that would terminate or weaken benefits.
    • The Senate should pass the provision in the HEROES Act that extends the Pandemic Electronic Benefit Transfer (P-EBT) program, which provides nutrition funding to families who have lost access to free or reduced-price school meals due to school closures, through FFY 2021.
    • The Senate should pass the provision in the HEROES Act that provides $1.1 billion in additional funding to the Supplemental Nutrition Program for Women, Infants, and Children (WIC) program.
  • Cash Payments
    • The Senate, as is proposed in the American Citizen Coronavirus Relief Act, should pass the HEROES Act provision that expands eligibility for direct cash payments for low-income families and individuals who were excluded from the first round of cash payments, including tax filers with ITINs as well as Social Security Numbers (SSNs), immigrants, undocumented residents, some members of mixed-status families, individuals who do not file federal income taxes, elderly dependents, adults with disabilities, and all other excluded dependents.
  • Tax Credits
    • The Senate should pass the provisions in the HEROES Act that strengthens the EITC and CTC by expanding eligibility and increasing the amount qualifying workers receive.
  • Paid Leave for Family Caregivers
    • The Senate should pass the HEROES Act provision that expands paid leave to people who are caring for loved ones with a serious medical condition like Alzheimer’s or dementia who have not been quarantined or show symptoms of COVID-19.
  • Incentive Pay for Essential Workers
    • The Senate should pass the HEROES Act provision that establishes a Heroes Fund, through which the federal government would finance “premium pay” of an additional $25,000 (approximately $13 per hour) for essential frontline workers.
    • Congress should include a $15,000 recruitment incentive for health and home care workers and first responders to attract and secure the workforce needed to fight the public health crisis.
    • The Senate should pass the HEROES Act provision that ensures that incentive pay is not limited to health care workers by broadening the definition of an “essential worker” to accurately reflect the composition of the workforce on the frontlines of the crisis.
  • Assist Nonprofits
    • The Senate should pass the HEROES Act provision that improves nonprofit access to PPP loans by creating a stream of funding reserved for nonprofits, 25 percent of PPP funding and removes the 500 employee limit.
    • The Senate should pass the HEROES Act provision that increases funding for state formula grants and programs that can provide a rapid infusion of cash to nonprofit organizations.
  • COVID Care for All
    • The Senate should pass the HEROES Act provision that increases the Medicaid match rate (FMAP) by 14 percentage points. Doing so would be comparable to the increase provided in the Great Recession’s Recovery Act and would compensate New York in its recent surge of unemployment.
    • The Senate should pass the HEROES Act provision that builds on the Families First’s paid sick leave by providing up to 80 hours (or, for part-time employees, the equivalent of two weeks) of emergency paid sick leave and up to 12 weeks of emergency Family and Medical Leave
  • Occupational Safety and Health Standards for Health Care Workers
    • The Senate should pass the HEROES Act provision mandating that OSHA promulgate an Emergency Temporary Standard to ensure that employers protect workers during the COVID-19 pandemic.

We Encourage Congress to Improve on the HEROES Act by Adding the Following Provisions into the Final Bill

  • Unemployment: Although the HEROES act extends the CARES Act’s Federal Pandemic Unemployment Compensation (FPUC), which provides an extra $600 to workers receiving state unemployment insurance through Jan 2021 there remain gaps that congress should improve upon in the final version of the bill.
    • Congress should allocate more administrative funding to state unemployment insurance agencies.
    • Congress should ensure that any Unemployment Insurance includes triggers based on the health of the economy in a particular state, rather than being tied to an arbitrary date, as is proposed in the American Workforce Rescue Act.
    • Congress should expand unemployment insurance reimbursement funding to 100 percent for organizations that self-insure. This will be of particular importance to employers, such as nonprofits, who self-insure and currently only receive 50 percent reimbursement for their unemployment insurance claims.
    • Congress should ensure that all immigrant workers are eligible for unemployment insurance.
  • Childcare: The $3.5 billion allocated for childcare in the CARES Act is a fraction of the $50 billion required to continue childcare, aftercare, and early childhood education for poor and low-income children and families. On top of that, the HEROES Act only provides $7 billion for child-care support through the expansion of the Child Care and Development Block Grant.
    • Congress should provide safe childcare options for essential workers by covering the cost and ensuring the availability of safe childcare options for those on the front lines. We encourage Congress to adopt the Child Care for Economic Recovery Act, which would provide a tax credit for low- and middle-income families of up to $3,000 for one child and up to $6,000 per additional child, create a tax credit for child care providers, and provide $10 billion towards childcare facilities and infrastructure.
  • Nationwide Moratorium on Utilities: Although the HEROES Act provides $1.5 billion for water ratepayer assistance, this allocation is insufficient for ensuring all Americans will have access to utilities regardless of household finances.
    • Congress must protect at-risk Americans by instituting a nationwide moratorium on all electricity, water, internet, and other utility-shut-offs, and include a mechanism to avoid being choked off by debt when the recovery begins.
  • Cash Payments: Although the HEROES Act continues the direct cash payments provided in the CARES Act and expands who has access to them, there remain key ways in which this potential second round of payments can be improved:
    • Congress should follow the model of Senators Bennet, Brown, Booker, King Jr., Murphy, and Schatz’s proposal by including another direct impact payment in the next stimulus bill of quarterly payments of $2,000 per American. These payments will phase out over time until unemployment drops to less than half of a percentage point above the levels before the COVID-pandemic damaged the American economy.
    • Congress should ensure these checks reflect the cost of living. For cities such as San Francisco and New York City, where the cost of living is very expensive, the stimulus check for most individuals and families would barely be enough to cover one month’s rent.
    • Congress should also crackdown on exploitative overdraft fees that banks charge consumers during the COVID emergency by adopting, for example, The Stop Overdraft Profiteering Act of 2018 introduced by Senators Booker and Brown.
  • Halting Immigration Enforcement: While the HEROES Act includes a provision that forces US Immigration and Customs Enforcement (ICE) to review the cases of all detained immigrants and subsequently release all immigrants who are not subject to mandatory detention and do not pose a risk to public safety, this does not sufficiently address the underlying fear that deters undocumented immigrants from seeking health services.
    • Congress should mandate that ICE suspend deportations and raids for the duration of the pandemic.
  • Charitable Deductions: While the HEROES Act improves nonprofit access to loans, more incentives are needed to encourage individuals to donate to these organizations, which remains a fundamental source of revenue for them.
    • Congress should increase the cap on the maximum deduction, provide incentives for donations of cash and other financial instruments (e.g., stocks or bonds), and extend enhancements to July 2, 2021.
  • Incentive Pay for Essential Workers: Although the HEROES Act establishes the HEROES fund that provides essential workers with an extra $25,000 and sets up a loan repayment program, more incentives are needed to recruit workers to the frontlines of the crisis.
    • Congress should include a $15,000 recruitment incentive for health and home care workers and first responders to attract and secure the workforce needed to fight the public health crisis, as has been proposed by the Senate Democratic Caucus.
  • Medicaid: While the HEROES Act’s FMAP rate bump is crucial for protecting state Medicaid systems from bankruptcy, more protections are needed to maintain enrollment and expand access.
    • Congress should remove the New York State exclusion from the maintenance of effort (MOE) protections, provided by the HEROES Act and ensure that all states and territories maintain MOE protections in the final version of the bill.
    • Congress should mandate that all testing, diagnosis, and treatment for COVID-19 be covered under the emergency Medicaid program, which covers all economically qualifying people regardless of immigration status.

Appendix

The following charts show national, New York State (NYS), and New York City (NYC) human services relief allocations by federal agency. National and NYS allocation totals are based on the latest data from FFIS State Allocations dataset. NYC relief estimates are based on Independent Budget Office (IBO), Health and Human Services Tracking Accountability in Government Grant Systems (TAGGS), and the Department of Housing and Urban Development (HUD) allocation estimates. When no NYC estimates are available, the estimate is calculated based on the NYS allocation and the share of NYC’s population to NYS. All allocations are in thousands.

[1] See our Mar 19 op-ed in the Gotham Gazette for more on the Families First Act, Passage of Federal Families First Coronavirus Response Act a Key Step; Here’s What Must Come Next

[2] See our Apr 2 op-ed in the Gotham Gazette for more on the CARES Act, The $2.1 Trillion Coronavirus Relief Bill – What’s In, What’s Not, What’s Next?

[3] Social services, as defined by the Comptroller’s Comprehensive Annual Financial Report (CAFR), includes federal funding for seven human services agencies (ACS, DSS, DFTA, DHS, DOHMH, SBS, DYCD). Their total budgets add up to $17.1 billion (21.2% of which is federal funds).

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LIVE COVID-19 UPDATES: FPWA’s fiscal policy team is currently monitoring Congress’s relief response. Be sure to check FPWA’s COVID-19 Resource Page for analysis, calls to action, and more.