An Analysis of the American Rescue Plan
American Rescue Plan Analysis
For a detailed breakdown of all the funding, please visit the national conference of state legislatures
The American Rescue Plan was signed into law by President Joe Biden on Thursday, March 11th. The American Rescue Plan builds upon previous COVID-19 relief packages and provides an additional $1.9 trillion in relief funding. Below is a brief overview of the funding provided in the American Rescue Plan.
State and Local Government Support
One of the main provisions of President Biden’s American Rescue Plan is the $350 billion that was allocated to state governments. Pennsylvania is expected to receive $7.293 billion.
PA can use these funds to replenish lost revenue and mitigate economic harm from the COVID-19 pandemic.
Local Fiscal Recovery Fund:
In addition to the $350 billion for states and local governments, the bill provides$130 billion in federal aid for all 19,000 municipal governments across the country via the Coronavirus Local Fiscal Recovery Fund. You can find a list of funding allocations for all Pennsylvania local governments here.
|Philadelphia County||$1.4 billion|
|Montgomery County||$161.15 million|
|Bucks County||$121.85 million|
|Delaware County||$109.92 million|
|Chester County||$101.82 million|
Funds will be released in two payments to local governments, with half following enactment and half paid 12 months following receipt of first payment. A key difference between these funds and previous federal relief is that local governments can use this funding to replace lost revenue. Funds must be used by Dec. 31st, 2024.
- Respond to the COVID-19 emergency and address its economic effects, including through aid to households, small businesses, nonprofits, and industries such as tourism and hospitality.
- Provide premium pay to essential employees or grants to their employers. Premium pay couldn’t exceed $13 per hour or $25,000 per worker.
- Provide government services affected by a revenue reduction resulting from COVID-19.
- Make investments in water, sewer, and broadband infrastructure.
- State and local governments cannot use the funds towards pensions or offset revenue resulting from a tax cut enacted since March 3, 2021.
- State and local governments could transfer funds to private nonprofit groups, public benefit corporations involved in passenger or cargo transportation, and special-purpose units of state or local governments.
These funds can not be used to directly or indirectly offset a tax cut and to replace pension funds.
Critical Infrastructure Projects
This legislation provides a $10 billion Critical Infrastructure Projects program to help States, territories, and Tribal governments carry out critical capital projects directly enabling work, education, and health monitoring, including remote options, in response to COVID-19.
Stimulus Checks, Child allowance, and unemployment:
The American Rescue Plan will initiate an additional cycle of stimulus checks, in the amount of $1,400, for qualifying individuals. The stimulus checks are phased out for individuals making between $75,000 and $80,000.
The Child Tax Credit’s qualifying age is now extended to 17 years old. Furthermore, the tax credit is increased from $2,000 to $3,600 for children under 6 years old and $3,000 for children between the ages of 6 and 17 years old. Similar to the stimulus checks, the Child Tax Credit begins to phase out at $75,000.
The Earned Income Tax Credit was strengthened for individuals with no qualifying children. The applicable minimum age was changed from 25 years old to 19 years old and the maximum age for the tax credit has been removed.
The Child and Dependent Care Tax Credit was bolstered by increasing the percentage of allowable expenses able to be claimed from 35% to 50%. The dollar amount of allowable expenses was also increased from $3,000 for a single dependent to $8,000.
The $300 supplement to unemployment benefits will continue through September 6, 2021. For households that make less than $150,000 annually, the initial $10,200 of unemployment benefits are exempt from taxation.
The Supplemental Nutrition Assistance Program and the Commodity Supplemental Food Program received $1.15 billion and $37 million, respectively, in additional funding. The previously implemented 15% increase in SNAP benefits is extended through September 30th, 2021.
The Women, Infants, and Children Program, in order to increase the amount of cash-value provided by vouchers, is allocated $490 million. Through the funding provided, the secretary, at the request of a state, may increase the value of the vouchers to $35.
The State Small Business Credit Initiative is allocated $10 billion. The business credit shall:
- Provide support to small businesses responding to and recovering from the economic effects of the COVID–19 pandemic;
- Ensure business enterprises owned and controlled by socially and economically disadvantaged individuals have access to credit and investments; and
- Provide technical assistance to help small businesses applying for various support programs.
The Paycheck Protection Program is expanded to include 501(c) organizations and internet publishing organizations. An eligible 501(c) organization must employ 300 or fewer employees, not spend more than $1 million on lobbying for the most recent tax year, and must not receive more than 15% of its receipts from lobbying activities or spend more than 15% of its time lobbying.
The Economic Injury Disaster Loan Program receives a $15 billion allocation for further loans. Of this $15 billion, $10 billion is set aside for covered entities that did not receive full advance payment through the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act and $5 billion will be utilized for new payments of $5 thousand to covered entities that suffered an economic loss greater than 50% and employs 10 or fewer employees.
The Restaurant Revitalization Fund is established with $28.6 billion. The fund is to provide grants for eligible restaurants, bars, food trucks, and caterers for costs incurred due to the COVID-19 pandemic, such as payroll costs, payments of principal or interest on a mortgage, payment of rent, utilities, and other similar expenses. The grant awards are limited to $10 million in total and $5 million per location.
The Community Navigator Pilot Program is established with $100 million. The purpose of the program is to encourage participation and increase awareness of programs offered by the Small Business Administration.
The Shuttered Venue Operators Grant program is further funded by $1.25 billion.
The American Rescue Plan Act allocates $122.8 billion for K-12 education. The emergency school emergency relief will remain available through September 30, 2023. Pennsylvania is estimated to receive approximately $4.99 billion of the K-12 education funding.
Through the American Rescue Plan funding, President Biden hopes to address the learning loss that has occurred as a result of the pandemic. The funding for K-12 education states that 20% of the funding received by Local Educational Agencies and 5% of the funding received by State Educational Agencies must be used to counteract the learning loss due to the pandemic. In order to achieve this goal, schools will implement evidence-based interventions, such as summer learning or summer enrichment, extended day, comprehensive after-school programs, or extended school year programs. It is estimated that across Pennsylvania approximately $900 million in funding will be devoted to reversing the pandemic learning loss.
The American Rescue Plan also includes approximately $3 billion in IDEA grant funding. The allocation is broken down as follows:
- $2,580,000,000 for grants to states under part B of the Individuals with Disabilities Education Act;
- $200,000,000 for preschool grants under section 619 of the Individuals with Disabilities Education Act; and
- $250,000,000 for programs for infants and toddlers with disabilities under part C of the Individuals with Disabilities Education Act.
Pennsylvania is estimated to receive approximately $109 million through the IDEA grant funding.
Through educational funding, $800 million is set aside for the identification and assistance of homeless children and youth. The assistance will consist of wrap-around services and ensuring that the homeless child can attend school and participate in school activities.
Federal Emergency Management Agency
The FEMA Disaster Relief Fund receives an allotment of $50 billion. The Disaster Relief Fund can be utilized for personal protective equipment; vaccine distribution; sanitization of schools, public transit, and courthouses; health care overtime costs; and other needs.
Health and Human Services
The American Rescue Plan includes an allotment of $14.99 billion for the Child Care and Development Fund Block Grant. This grant funding can be used to provide child care assistance to health care sector employees, emergency responders, sanitation workers, and other workers deemed essential during the response to coronavirus by public officials, without regard to the income eligibility. Pennsylvania is estimated to receive $457 million from the Child Care and Development Fund Block Grant.
The Child Care Stabilization Fund is to receive $23.975 billion. Pennsylvania is estimated to receive $731 million from the Child Care Stabilization Fund. The Child Care Stabilization Fund would permit qualified child care providers to pay for:
- Personnel costs;
- Rent or mortgage costs, facility maintenance, utilities, insurance, etc.;
- Personal protective equipment and other sanitization or migration practices;
- Purchases of or updates to equipment and supplies to respond to the COVID–19 public health emergency;
- Goods and services necessary to maintain or resume child care services; and
- Mental health supports for children and employees.
The Head Start agencies will be permitted to draw upon a one-time grant disbursement. This disbursement will be funded by the American Rescue Plan at $1 billion. Pennsylvania is estimated to receive $34.7 million of this funding.
The Community Health Centers will receive an additional $7.6 billion in federal funding, while the Community Mental Health Services Block Grant will receive an additional $1.5 billion. Pennsylvania is estimated to receive approximately $46.8 million in funding for the Community Mental Health Services Block Grant.
The Substance Abuse Prevention and Treatment Block Grant will receive an additional $1.5 billion with Pennsylvania estimated to receive $47.7 million.
For programs originating under the Older Americans Act, the American Rescue Plan allocates $1.434 billion. This includes $750 million for nutrition services and $460 for supportive services. Pennsylvania is estimated to receive $31.7 in nutritional service funding and $19.5 in supportive service funding.
In order to safeguard against future COVID-19 outbreaks in nursing homes, The American Rescue Plan provides $250 million for the use of nursing home “strike teams.” These teams will be sent to nursing homes with suspected cases of COVID-19. The team will then help to mitigate the disease and assist the facility.
The American Rescue Plan will also provide additional funding, such as an additional 10% FMAP, for home and community-based services.
Emergency Rental Assistance is further funded by $21.55 billion. Out of the $21.55 billion, Pennsylvania is estimated to receive $670 in funding. These grants can be used to pay for:
- Rental arrears;
- Utilities and home energy costs;
- Utilities and home energy costs arrears; and
- Other expenses related to housing, as defined by the Secretary.
Emergency Housing Vouchers will receive an additional $5 billion in order to individuals:
- Who are or at risk of experiencing homelessness;
- Who are fleeing, or attempting to flee, domestic violence, dating violence, sexual assault, stalking, or human trafficking; or
- Those who are recently homeless and the emergency voucher will help prevent homelessness or having a high risk of housing instability.
The Department of Housing and Urban Development will receive $5 billion in order to establish the Homelessness Assistance and Supportive Services Program. The program is open to individuals and families who are homeless, at-risk of becoming homeless or satisfy other stated criteria. Funds received through the program can be used for tenant-based rental assistance, the development and support of affordable housing, supportive services, and the acquisition and development of non-congregate shelter units.
An additional $20 million will be used to ensure that fair housing organizations have additional resources to address fair housing issues, conduct outreach activities, and account for the costs of delivering or adapting services, during or relating to the COVID-19 pandemic.
$1.66 billion is allocated for Amtrak services to ensure that the train transit is continued. The allocation serves both a logistical and economical function, as not only will communities be connected through regularly scheduled services but also the funding will help replace the 1,230 workers involuntarily furloughed during the pandemic.
$8 billion is allocated to provide relief for the airline industry. The airline industry, which drives 5 percent of U.S. gross domestic product and supports over 10 million U.S. jobs, has been devastated by the pandemic. The relief funding seeks to buoy the industry and avoid a further reduction in the industry’s workforce.
The American Rescue Plan provides $30.46 billion for Federal Transit Administration Grants. These grants are to ensure that public transportation is provided at an adequate level, employees of transportation authorities are not laid off, and that ongoing transportation projects are not unduly delayed due to the pandemic. Notable grants funded by the allocation are:
- $26 billion allocated for the Urbanized Area Formula Grants
Pennsylvania estimated to receive $1.25 billion
- $25 million allocated for Planning Grants to Restore Service
- $50 million allocated for Formula Grants for Enhanced Mobility of Seniors & Individuals with Disabilities
- Pennsylvania estimated to receive based on area population
- PA areas with a population of 200,000 or more – $1.74 million
- PA areas with population 50,000 to 199,999 – $379,645
- PA areas with population less than 50,000 – $424,442
- Pennsylvania estimated to receive based on area population
- $317.2 million allocated for Rural Area Formula Grants
Pennsylvania estimated to receive $5.42 million
- $100 million allocated for Grants for Partnership with Bus Operators
- $1.67 billion allocated for Fixed Guideway Capital Investment Grants
- $1.42 billion allocated for New Start and Core Capacity Projects
- $250 million allocated for Smart Start Projects