$79.8 million in federal funds for low-income Nebraska children yet to be used in COVID-19 crisis

TANF rainy day funds must be spent to help Nebraska kids weather the COVID-19 crisis

Nebraska families are suffering. Some have lost loved ones, and many more who have lost their jobs are unsure if they can afford food, rent, and other necessities. The Nebraskans most impacted by the pandemic—particularly American Indian, Black, Latinx, low-income, and immigrant communities—were already facing greater barriers to quality health care, fair jobs, stable housing, healthy food, and reliable transportation before the crisis.[xi]

Workers in lower-wage industries are disproportionately among those affected by layoffs and furloughs, and many have reported waiting over a month to receive unemployment benefits.[xii] Meanwhile, Nebraskans who have continued to show up in workplaces where physical distancing is not implemented by employers, like meat and poultry processing workers, are forced to choose between keeping their jobs and being able to feed their families, or falling ill and putting their family’s health in danger.[xiii] At the same time, workers who would choose to stay home for fear of infecting themselves and their families are likely ineligible for paid sick leave protections or unemployment insurance.[xiv]

This moment is beyond a rainy day; it is a storm that calls on Nebraska leaders to make sure that everyone, especially children, can weather it. Nebraska can start by deploying the nearly $80 million in federal TANF reserve funds intended to help children and families living in poverty. Restarting our state’s economy begins with ensuring that all families can meet their children’s basic needs.

Recommendation 1: Provide additional assistance to families already receiving ADC

State leaders should make every effort to immediately deploy TANF funds by strengthening benefits to families already receiving ADC by:

• Providing a temporary increase in benefits, such as a one-time payment of $500 per child. A temporary boost in benefits to current recipients would be administratively simple, and effective in helping children living in poverty. West Virginia and North Carolina both issued a one-time payment to TANF families in April.[xv] DHHS should reevaluate continued disbursements as the effects of the pandemic continue.
• Temporarily suspending work requirements, sanctions, and terminations for participants. Nebraska families receiving ADC should not have to worry about losing benefits during this crisis if they are unable to meet work requirements or are concerned about risking their health to seek employment. Many states adopted broad flexibilities at the start of the crisis to ensure that families do not lose benefits for keeping their family safe and healthy.[xvi]
• Temporarily suspending the clock for families subject to a 60-month lifetime limit on benefits. Families lose eligibility for ADC when they receive benefits for the lifetime limit of 60 months, affecting an estimated 36 families each year.[xvii] Several states have acted to prevent loss of benefits,[xviii] and Nebraska should freeze the clock for those families and halt terminations for those who have reached their limit retroactively to the start of the emergency.

Recommendation 2: Provide emergency assistance to non-ADC families in crisis

During an emergency or crisis, states can use TANF funds to help families that would not otherwise be eligible for direct assistance by providing a non-recurrent, short-term (NRST) benefit. Federal law allows for the use of TANF funds for an NRST so long as it is designed to deal with a specific crisis, is not intended to meet recurrent or ongoing needs, and will not extend beyond four months. [xix] State leaders should provide emergency assistance to families in crisis that are not currently eligible for ADC by:

• Prioritizing families in crisis. Nebraska should prioritize NRST benefits for low-income families impacted by the crisis. Eligibility should be closely aligned with the cost of living. Setting eligibility at 213% of FPL, for example, would mirror eligibility for the Children’s Health Insurance Program (CHIP) and create additional opportunities to enroll any newly uninsured children. To demonstrate need, some states have prioritized NRST benefits for families that have experienced a loss of income.[xx] Eligibility should not require an asset test to ensure that families can move quickly from crisis to stability.
• Minimizing administrative requirements for processing. Direct financial relief to low-income Nebraskans must be distributed quickly to be effective. The application for benefits should require only basic information and allow for electronic submission. The state should require minimal verification and allow for self-attestation where possible. Additionally, DHHS should use household data matching from other means-tested programs including the Supplemental Nutrition Assistance Program (SNAP) or Medicaid and CHIP to identify eligible families and streamline their applications.
• Providing benefits to families in need. Nebraska should use TANF reserve funds generously to protect children from the effects of this crisis. State leaders should think boldly today as the full economic impact of the pandemic is yet to be seen. Other states have structured NRST benefits to be fixed based on household size, or to be based on specific needs that the family is unable to pay, such as rent, security deposits, or property tax bills.[xxi] In Appendix 1, we propose 3 income eligibility options that would provide relief to families but still leave the TANF reserve fund in a strong position to continue to support families receiving ADC.

Recommendation 3: Maximize flexible Coronavirus Relief Funds to increase agency capacity

Nebraska should use available federal funds to increase staff and technology capacity within DHHS to handle increased demand for assistance across all public assistance programs. Nebraska should maximize new federal Coronavirus Relief Funds (CRF), which are designed to provide direct fiscal relief to states for pandemic-related expenditures, towards increasing agency capacity. New guidance materials affirm that increased administrative costs for providing emergency assistance to families in response to the crisis is an eligible CRF expenditure.[xxii]

Recommendation 4: Permanently increase basic assistance to struggling families

Nebraska’s ADC program has failed to meet the needs of children living in poverty for well over a decade. All the while, the state has left tens of millions of federal dollars dedicated to helping children untouched year after year. While it is wise to save some level of reserve for future downturns, Nebraska lawmakers should redesign ADC to ensure that the program does what it is intended to do by:

• Increasing eligibility for ADC and eliminating the asset test. Nebraska should allow more children living in poverty to be eligible for ADC benefits and should not punish families for their own rainy-day savings by eliminating the asset test in the program.[xxiii]
• Increasing the benefit level to better meet basic needs. Benefit levels in ADC, at the minimum, should not leave a family in deep poverty and should be raised to at least 50% of the FPL. Over time, ADC benefits have eroded—in 1996, average ADC benefits would cover 75% of rent for an average two-bedroom apartment in Nebraska, but today, it would only be enough for 56% of rent on the same apartment.[xxiv]

In Appendix 1, we estimate that the cost of Recommendations 1 and 2 above would still leave Nebraska’s TANF reserve fund in a healthy position, at 74-81% of the annual block grant, to consider additional assistance to ADC families as the crisis continues. State leaders should move forward with permanent changes to the ADC program by developing a plan to increase basic assistance, spending down the reserve to 50% of the annual block grant, or $28.3 million.

Direct assistance to families would improve outcomes for children in poverty and stimulate the state economy

All children need stability to thrive, and Nebraska families should be able to meet their children’s basic needs when they fall on hard times. By strengthening the ADC program, we can better shield children from the long-term harms of living in poverty.[xxv] Targeted relief to help low-income families, who are more likely to immediately use the extra income to meet basic needs and pay bills or debts, will provide an added boost to the state’s economy.[xxvi]

Nebraska children and families need relief now. Over the years, the state has saved TANF funds to be spent on low-income Nebraska children during hard times, and the economic impact of the COVID-19 crisis is the rainy day that Nebraska has been saving for.

Methodology

This cost estimate is intended to provide state lawmakers with a framework of what can be accomplished in the strategic use of federal TANF reserve funds. This estimate only captures the cost of benefits provided, and does not reflect an increase in agency administrative costs, which we should be funded using the state’s Coronavirus Relief Fund as a necessary expenditure incurred due to the public health emergency (Recommendation #3).

Assumptions for Recommendation 2

The cost estimate for Recommendation #2, emergency assistance to non-ADC families, is based on several data sets and assumptions:

1. Income eligibility. We recommend that the state apply income eligibility standards that indicate whether a family can meet their children’s basic needs and have offered 3 options that best reflect self-sufficiency for most families in Nebraska. Data on the number of children at each income level are from Table B17024 of the U.S. Census Bureau American Community Survey (2018 1-Year Estimates) and Medicaid/CHIP enrollment FY 2018 averages obtained from the Nebraska Department of Health and Human Services. Both figures are reduced by the number of children currently enrolled in ADC.
2. Job or income loss eligibility. We recommend that the state target families in crisis by making assistance available to those who have recently experienced a job or income loss. State-level estimates of job and income losses, stratified by income level, are not yet available. For this cost estimate, we assume that 52% of income-eligible families will have experienced a qualifying job or income loss based on a recent national survey conducted by the Pew Research Center.[xxvii] Nebraska has generally fared better than national averages in economic downturns and recovery, and early forecasts suggests the same may be true for the ongoing crisis.[xxviii] As a result, eligibility for emergency assistance is likely an overestimate, and the actual cost of emergency assistance may be lower than the estimate provided.
3. Participation rate. Finally, we assume that not all families who meet eligibility requirements will apply for emergency assistance. We apply an 80% participation rate, based on state-level estimates of participation in SNAP among those eligible for the program.[xxix]