The American Rescue Plan Act of 2021 is a $1.88 trillion package that brings the latest critically needed federal response to the economic devastation and public health crisis caused by the Covid-19 global pandemic. It is also an important step toward a more equitable and fair economy that works for everyone in Louisiana.
Funding for state and local governments
Louisiana will receive $5.18 billion in direct aid to state and local governments. These funds give the state, as well as Louisiana’s cities and parishes, resources that can be used to close budget holes and spur economic recovery.
Unlike previous rounds of aid, the Rescue Plan gives state and local governments great leeway in the best way to use these funds. But the money cannot be used to finance tax cuts or pay for pension obligations. If states make changes to their tax codes that result in revenue losses and use Rescue Plan dollars to fill the gap, they will have to repay the federal government.
Direct Aid to Louisiana Workers and Families
2,189,021 Louisiana households will receive an economic stimulus check, putting a total of $5.7 billion directly into the pockets of Louisiana’s working and middle-class families.
130,512 unemployed Louisianans will continue receiving Pandemic Unemployment benefits of $300 per week until they are able to safely resume working. All unemployed workers will be eligible for benefits through September 6, 2021.
94% of Louisiana’s children – a little over 1 million total – will qualify for an expanded federal Child Tax Credit. The Child Tax Credit (CTC) is being increased from $2,000 to $3,000 per child ($3,600 per child under the age of 6), and made fully refundable. This means that, unlike in previous years, families with children will receive the full value of the tax credit even if they don’t owe money in taxes. Unlike most tax credits, this expanded child credit will be paid in monthly installments, helping to supplement family incomes on a regular basis for all of 2021.
296,000 Louisianans without children will qualify for an expanded federal Earned Income Tax Credit (EITC). The American Rescue Plan Act increased the value of the EITC and broadened eligibility through 2021. Like the child credit, the expanded nEITC is now fully refundable, meaning that all eligible tax filers will receive the full amount of the credit. The maximum credit for adults with children will be raised from about $530 to $1,500, and the cap on qualifying income will be increased from $16,000 per year to $21,000 per year. Additionally, any workers between the ages of 19 and 24 or over the age of 65 will now be eligible for the credit. Because low-wage workers in Louisiana are taxed more than their fair share, and because wages continue to be stagnant, the EITC is an important tool for raising incomes for the people who need that boost most.
Reopening Schools and Investing in Education
Louisiana will receive over $332 million to support early care and education in the state. This includes an additional $8 million from the Child Care Entitlement to States (CCES) program, $298 million for the Child Care and Development Block Grant (CCDBG), and $26.2 million for Head Start. This funding will allow Louisiana to help child care providers reopen and make much-needed investments for early childhood education.
Louisiana will receive more than $2.6 billion for K-12 public education. This money is intended to help make it possible for all students to return safely to schools.
This funding is distributed or must be spent as follows:
90% of K-12 education funding provided by the Rescue Act will be distributed to local school districts, with schools that serve lower-income families receiving more funding;
5% must be spent on “learning recovery,” which can include extending the school year, extending school days, supporting summer learning programs, or implementing targeted interventions to help children with specific academic needs;
A minimum of 1% must be spent on summer enrichment programs;
Up to 0.5% may be spent on administrative expenses; and
Any remaining money can be spent on investments related to safe reopenings, school infrastructure, wraparound programs, and teacher training, recruiting, or retention programs.
As a condition of this education funding, the new law requires states to meet certain funding criteria known as Maintenance of Effort (MOE) – essentially, they may not reduce their education spending below “normal” rates. Like the tax cut language, this aims to ensure that states don’t use the new federal dollars to replace state dollars (which would set the stage for cuts in future years).
The new law also requires states to meet a new “Maintenance of Equity” requirement, which is designed to ensure that states do not cut funding for poor districts. For example, these provisions require: (1) no disproportionate cuts for districts with higher than average poverty rates; (2) no cuts below 2019 funding for the highest poverty 20% of districts; and (3) protections for state and local funding for individual schools with high poverty rates.
Louisiana will also receive more than $600 million for higher education. This includes funding that will be distributed to all public colleges and universities, with enhanced funding for minority-serving institutions.
For-profit vocational schools in Louisiana (such as cosmetology, beauty, culinary and other trade schools as well as other privately delivered training programs) will also receive $8.3 million in assistance.
Helping Louisiana Families Make Ends Meet
The stimulus plan includes a 15% increase in the maximum monthly benefit offered through the Supplemental Nutrition Assistance Program (SNAP) for July through September of 2021. Louisiana has 976,000 SNAP recipients, and the estimated additional $29 million per month (or $87 million total) will mean an average of a $30 monthly increase for each Louisianan using SNAP. Louisianans will also benefit from an expansion of the Pandemic – Electronic Benefit Transfer (P-EBT), which provides food assistance to school-age children and which the Plan extends through the summer months, and modernization of the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC).
Louisiana will receive $112.7 million to help families pay for utilities, such as water bills, through theLow Income Home Energy Assistance (LIHEAP) Program. This is particularly important as Louisianans and residents of many other Southern states recover from the recent winter storm – causing spikes in energy demand and prices – and for those who have lost jobs and are making up for overdue bills.
Transit Funds to Get the Economy Moving
Louisiana’s cities will receive nearly $98 million to invest in and repair and maintain public transportation systems through the Transit Relief for Urbanized Areas program. Due to occupancy restrictions, mass unemployment, and a dramatic increase in work-at-home policies, many municipal public transit systems have seen revenue drop significantly. This funding will ensure public transportation services will be available once Covid is under control.
Rural communities in Louisiana will also receive support for transit services, with $733,949 through the Rural Transit provisions. While many people may not think of rural areas as relying on public transportation, rural public transit serves a wide variety of needs, whether that means helping people with disabilities or seniors access healthcare or simply run errands.
Cities with paratransit programs will also receive dedicated funding for these services: This includes $92,433 for Baton Rouge; $39,728 for Lafayette; $155,302 for New Orleans; and $49,677 for Shreveport. These programs tend to serve the elderly or disabled, helping them to get around when other transportation options are either insufficient, too expensive, or unaccommodating.
$191 per month for a 45-year-old individual making $60,000 per year
$1,784 per month for a 60-year-old couple making $75,000 per year
$893 per month for a family of four making $120,000 per year
Overall, the Rescue Plan will make private insurance purchased through the exchanges far more affordable for the roughly 87,000 Louisianans who use the marketplace. Additionally, COBRA coverage for unemployed workers will be 100% subsidized by the federal government from April through September, eliminating a significant health care cost for the recently unemployed.
Louisiana has the option to make important strides in addressing maternal health by extending Medicaid and CHIP postpartum coverage from 60 days to 12 months starting April 1, 2022. The option is temporary, lasting five years unless extended by Congress.
Covid-19 vaccine and treatment is now fully federally-funded under Medicaid for people without health insurance.
Eligible Home and Community Based Services (HCBS), such as home health, adult day care and rehabilitative services, receive a one-year 10% increase in federal Medicaid match starting April 1. The additional federal funds must be used to supplement, not supplant state funds and to enhance, expand or strengthen HCBS.
A More Equitable Recovery
The American Rescue Plan Act includes several other programs that will benefit some of the most vulnerable, historically marginalized and too often overlooked residents of our state. For example, the Act includes loan forgiveness and assistance with land-ownership disputes for Black farmers and other farmers of color; investments in rural healthcare; and a boost in financial support for national service programs that can provide meaningful opportunities to Opportunity Youth.
The Covid-19 pandemic and its economic fallout has shown how far we still have to go to achieve meaningful equity across the United States, and especially in Louisiana. Whether we look at job losses or likelihood of contracting and dying from Covid, the pandemic laid bare the racial and economic disparities that have long held us back from reaching our full potential. The American Rescue Plan presents an incredible opportunity for Louisiana to begin its recovery. But it should also serve as a call to do the hard work of fighting for a truly equitable society going forward. This is an opportunity that thousands of Louisianans cannot afford for us to waste.