The Consolidated Appropriations Act, 2021 – Direct Aid To Education, Healthcare And Other Sectors May Indirectly Benefit State And Local Governments

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The Consolidated Appropriations Act, 2021 (the “Act”) supplements the Coronavirus Aid, Relief, and Economic Security Act of 2020 (the “CARES Act”) by providing approximately $900 billion in additional federal aid to combat the COVID-19 pandemic.  The Act excludes state and local governments from direct financial relief, a major sticking point in the final weeks of negotiation.  Nevertheless, the Act’s targeted aid to particular sectors, including K-12 and higher education, healthcare, transportation and housing, should provide some aid to state and local governments, albeit indirectly, as highlighted below.

Deadline Extension

  • The Act extends the deadline for expenditures from the $150 billion Coronavirus Relief Fund, a CARES Act grant program for state and local governments, from December 30, 2020 to December 31, 2021. The Act does not broaden the use of funds beyond necessary expenditures incurred due to COVID-19, however, a CARES Act requirement.

Healthcare

  • $8.75 billion to the Centers for Disease Control and Prevention (CDC) for activities to plan, prepare for, promote, distribute, administer, monitor and track COVID-19 vaccination efforts, including:
    • $4.5 billion for state and local governments, territories and tribal organizations; and
    • $300 million dedicated to high-risk and underserved populations, including racial and ethnic minority populations and rural communities.
    • Such funding is to remain available until September 30, 2024.
  • $25.4 billion to the Public Health and Social Services Emergency Fund, a CARES Act grant program for hospitals and healthcare providers administered by the U.S. Department of Health and Human Services (HHS), including:
    • $22.4 billion for testing, contact tracing, surveillance, containment, and mitigation to monitor and suppress COVID-19, including $2.5 billion to improve testing capabilities and contact tracing in high-risk and underserved populations, including racial and ethnic minority populations and rural communities, to remain available until September 30, 2022.
    • $3 billion to reimburse eligible healthcare providers for healthcare-related expenses or lost revenues attributable to COVID-19, to remain available until expended.
  • The Act also allocates not less than 85% of unobligated balances in the Fund to reimburse eligible healthcare providers for financial losses and changes in operating expenses occurring during the third or fourth quarters of 2020 or the first quarter of 2021 due to COVID-19.

Nutrition and Food Appropriations

  • $100 million to the U.S. Department of Agriculture for grants to states to fund fiscal year 2021 administrative costs associated with administering the federal supplemental nutrition assistance program (SNAP) during the COVID-19 pandemic.

Transportation

  • Approximately $9.8 billion for the Surface Transportation Block Grant Program (STBGP), a federal grant program administered by the U.S. Department of Transportation. The STBGP provides funding to state departments of transportation to address state and local transportation needs.  The funding is to remain available until September 30, 2024.
  • $14 billion in transit infrastructure grants for public transportation projects, to remain available until expended.
  • $2 billion for airports (with the bulk of the funding dedicated to large commercial service airports).

Education

  • Approximately $82 billion to the Education Stabilization Fund, a multi-fund CARES Act grant program for states, K-12 schools and higher education institutions administered by the U.S. Department of Education, to remain available through September 30, 2022, including:
    • Approximately $54.3 billion dedicated to state educational agencies through the Elementary and Secondary School Emergency Relief Fund, to assist public schools in addressing learning loss, improving and repairing school facilities in order to reduce the risk of COVID-19 transmission, and purchasing education technology, among other eligible costs.
    • Approximately $4.1 billion dedicated to state governors through the Governors Emergency Education Relief Fund, to assist K-12 schools and higher education institutions in providing educational services and supporting ongoing functionality, with $2.75 billion set aside for private schools. The funding of vouchers or scholarship programs is prohibited.
    • Approximately $22.7 billion dedicated to higher education institutions through the Higher Education Emergency Relief Fund, to fund lost revenue, reimbursement for expenses, technology costs due to the shift to online learning, faculty and staff training, payroll, student support activities, and financial aid programs, among other eligible costs. The funding of recruitment activities, athletics facilities, religious instruction or senior administrator or executive salaries, benefits or bonuses is prohibited.
  • States and state educational agencies receiving funding from the Elementary and Secondary School Emergency Relief Fund or the Governors Emergency Education Relief Fund must agree to maintain spending for both elementary and secondary education and higher education in fiscal year 2022 at least at the proportional levels of such state’s spending for elementary and secondary education and higher education relative to such state’s overall spending, averaged over fiscal years 2017, 2018 and 2019. The Secretary of Education may waive this requirement for states experiencing a precipitous decline in financial resources.
  • States, local educational agencies and higher education institutions must continue to pay their employees and contractors during the period of any disruptions or closures due to COVID-19, to the greatest extent practicable.

Broadband

  • Approximately $7.5 billion to expand broadband internet access, including the establishment of an Emergency Broadband Benefit Program to fund a maximum $50-per-month internet service discount for low-income households.

Housing

  • The Act extends the CDC’s residential eviction moratorium until January 31, 2021 and provides $25 billion in additional emergency rental assistance.
  • The Act also establishes a 4% floor rate for calculating the low income housing tax credit (LIHTC), a federal subsidy used in financing the acquisition, construction and rehabilitation of affordable rental housing for low- and moderate-income tenants.

With the changing political headwinds in Washington, D.C., a renewed push for direct aid to state and local governments is gaining momentum.  We will continue to monitor these developments and provide further updates as warranted.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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