Last year’s economic stimulus package included a new Emergency Contingency Fund for states’ TANF programs. The fund was urgently needed because the regular contingency fund was expected to run out of money.
Under the regular contingency fund, states can receive more than their regular federal block grant when they can demonstrate economic need, as measured by their unemployment rates and food stamp enrollments. The federal government matches their increased expenditures based on the same formula that’s used for the federal Medicaid match.
The Emergency Contingency Fund provides an across-the-board 80% federal match for state spending increases on basic assistance such as cash and vouchers, subsidized employment and/or non-recurrent short-term benefits. Reimbursements for basic assistance are limited to states with increased caseloads. This ensures that states don’t take the money and, at the same time, tighten eligibility requirements and/or time limits.
Congress made up to $5 billion available, virtually ensuring that the fund wouldn’t run dry.
States can count a broad range of expenditures as short-term benefits, including certain types of assistance for non-TANF families. Spending and in-kind contributions by third parties can count toward a state’s maintenance of effort, i.e., the minimum amount the state has to spend to qualify for its federal funds.
This means that states have many options for qualifying. And, indeed, CLASP reports that, as of mid-February, 39 states and the District of Columbia had had their applications for grants from the Emergency Fund approved. None of them had received its maximum allocation, and additional applications were under review. So more support from the fund is possible.
But the fund will expire at the end of September unless Congress extends it. And it won’t do for Congress to wait until it approves the whole budget for the U.S. Department of Health and Human Services–especially not in these contentious times.
Most states begin their fiscal years on July 1, and all but a handful are facing budget shortfalls. As the Center on Budget and Policy Priorities explains, subsidized jobs programs generally involve six-month placements. So states will soon begin scaling back or phasing out their programs unless they know they’ll have funding after September 30. Other states have at least tentatively decided not to start programs because they’d have to be shut down so soon.
States may curtail their their TANF programs in other ways. CBPP warns of “harsh cutbacks” in basic cash assistance. Governor Schwartznegger is again threatening to abolish California’s program altogether. Governor Jan Brewer of Arizona proposes to reduce the number of months families can receive cash assistance.
Other safety net programs are at high risk too. They’ll be short on funds when unemployment rates will still be extraordinarily high and more people jobless long enough to have exhausted their unemployment benefits.
A range of cutbacks governors have already proposed are likely to offset whatever jobs the private sector creates. Funds for short-term help with expenses and longer-term cash assistance, education and training will be more needed than ever.
Like CBPP, CLASP is calling on Congress to extend the Emergency Fund now, with a bigger “overall pot.”
A key opportunity is a bill now pending in the Senate that would, among other things, extend expanded unemployment benefits and COBRA subsidies till the end of this year. It would also extend a vast number of expiring tax breaks, mostly for businesses. So, in some form, it’s almost certain to pass.
Senator John Kerry (D-MA) has introduced an amendment to fold a six-month extension of the Emergency Fund into this package. It would give the fund an additional $1.3 billion and add reimbursements for work subsidies lasting more than four months. The funding is less and the extension shorter than what the President proposed. But the amendment would avert the imminent crisis and buy time to build support.
Those of you who have Senators can urgent them to vote for the Emergency Fund extension. Just sign on to a letter I’ve created on Change.org.
You who live in the District can help by passing the word along. Recall that the Department of Human Services is counting on the Emergency Fund to sustain our severely-stressed homeless services.
CLASP expects a vote on the amendment next Tuesday, March 9. So time is of the essence here.