In This Week's Edition of Snapshot...
The Paycheck Protection Program and Health Care Enhancement Act - HR 266 (116) passed Congress this week and was signed by President Trump today. The deal replenishes the depleted Paycheck Protection Program (PPP) that provides forgivable loans to small businesses and nonprofits to keep their workers on the payroll. The PPP expansion will add $310 billion to the loan fund. The bill also requires that $60 billion be allocated for loans made by smaller lenders such as credit unions and community financial institutions with assets of less than $50 billion and half of the $60 billion reserved for lenders with less than $10 billion in assets.
HR 266 addresses the complaints that many smaller businesses were crowded out of the PPP fund in favor of larger businesses with existing relationships with banks and appropriates additional funding for health care and vaccine research. Congessional Quarterly has published a helpful Fact Sheet on this fourth coronavirus legislative action. The Council has published its analysis on what is important for the charitable sector to know about this legislative package in our Comprehensive Coronavirus Legislation Guide for the Charitable Sector on our COVID-19 Resource Hub.
The bill will:
- Appropriate an additional $50 billion for the Small Business Administration’s disaster loans program account and $10 billion for Emergency Economic Injury Disaster advance loans, increasing the authorization level for the EIDL advance loans from $10 billion to $20 billion.
- Provide the Small Business Administration with more than $2 billion to cover salaries and expenses for federal employees.
- Allow agricultural enterprises with less than 500 employees to receive EIDL grants and loans
- Provide new funding for target COVID-19 testing for rural areas and for the uninsured. This new wave of funding is in addition to the $100 billion allocated under the CARES Act and will be distributed under the Public Health and Social Services Emergency Fund.
- Provide $25 billion for “necessary expenses to research, develop, validate, manufacture, purchase, administer and expand capacity for COVID–19 tests” to help effectively monitor and suppress the COVID-19 pandemic. Of this, $1 billion is to cover the cost of testing for the uninsured and up to $11 billion will go to states, localities, territories, and tribes.
Missing from this package are funding increases or eligibility expansion of the Supplemental Nutrition Assistance Program (SNAP) benefits and additional funding for state and local governments to offset their losses in revenue. Democrats are looking to include these in the next funding tranche. Congressional champions are proposing forthcoming legislation to create a $500 billion fund for state and local governments, including the US Territories and the District of Columbia to deal with evaporating tax revenue and soaring costs during the pandemic. The National Association of Counties (NACO) estimates that county governments alone face $144 billion in additional costs and revenue shortfalls. Counties operate over 1,000 hospitals and 800 nursing homes in addition to health departments with health inspectors.
The bill requires the Department of Health and Human Services (HHS) to create a strategic plan within 30 days for assisting states and localities with testing and requires each state and locality receiving funds to submit to HHS within 30 days a plan for testing.
CARES 4.0 in June
Democratic and Republican lawmakers and the Trump administration are turning their attention to “Phase 4” legislation targeting the coronavirus crisis although Senate leader Mitch McConnell ( R-KY) said he won’t move any additional relief packages without his chamber in session to fully legislate. Observers say this next “CARES 2” legislation could cost about $1 trillion and is likely not to reach reality for several weeks. A battle appears to be brewing between the growing debt versus the need for more relief as the effects of the pandemic continue. President Trump has indicated his support for a package that includes infrastructure spending and aid to state and local governments.
Action was also taken this week in the House to officially establish the Select Subcommittee on the Coronavirus Crisis within the House Oversight and Reform Committee. The panel will be led by Majority Whip James E. Clyburn (D-SC) and include as many as 12 members appointed by Speaker Pelosi and as many as five appointed by Minority Leader Kevin McCarthy (R-CA). The Select Subcommittee’s purpose is to investigate the use of taxpayer funds for relief and stimulus spending, allegations of price gouging and profiteering, federal programs to expand virus testing and develop vaccines, and disparate effects of the virus on communities in the U.S., among other issues. The panel has the authority to issue subpoenas.
Both the House and Senate are due to return May 4.
On April 16, President Trump released guidelines and measures to be taken to reopening the country’s economy in several phases, depending on location. States are supposed to meet six metrics before they can proceed to a phased opening. The federal government will continue to work with governors across the country to ensure they have the equipment, supplies and testing resources to reopen safely and responsibly. Critical Infrastructure workers who do not need medical-grade personal protective equipment (PPE) for their daily work re intended to be a priority and will include the sectors of food production and distribution, energy, water and wastewater treatment, essential transportation and logistics, first responders, communications, hazardous materials management, manufacturing of medical supplies, and sanitation and disinfection supplies.
Department of Treasury
The IRS on Thursday announced proposed regulations offering guidance to tax-exempt organizations regarding group losses and profits from related business activities to make it easier for them to comply with a change under the 2017 tax act, essentially offering new section 512(a)(6) requirements in REG-106864-18. These proposed regulations provide more generous and comprehensive rules for the calculation of unrelated business income tax for separate unrelated trades or businesses than the interim guidance that was released in 2018. Exempt organizations and employee plans that have unrelated business income should be aware of the changes in the proposed regulations and should consider providing additional comments as requested by Treasury and the IRS. The tax-exempt community needs to know that the rule will reduce but cannot eliminate the administrative burdens. Comments on these proposed rules will be taken until June 23. Submit electronic submissions via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG-106864-18). Hard copy submissions can be sent to: CC:PA:LPD:PR (REG-106864-18), Room 5203, Internal Revenue Service, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044.
Department of Agriculture
The US Department of Agriculture announced the Coronavirus Food Assistance Program (CFAP), using the funding and authorities provided in the Coronavirus Aid, Relief, and Economic Security Act (CARES), the Families First Coronavirus Response Act (FFCRA), and other USDA existing authorities.
In these actions, the government will purchase of $3 billion in fresh produce, dairy, and meat from farmers and producers hit hard by the closure of restaurants, hotels, and schools during the pandemic response. Distributors and wholesalers will be selected to create boxes of fresh produce, dairy, and meat products for distribution to food banks, community and faith-based organizations, and other non-profits serving Americans in need. Specifics on how the program will work will be forthcoming. Stay informed about this new program and other USDA pandemic food assistance actions through USDA’s Media Center announcements.
Other USDA Resources related to food security:
- A site finder to locate where Meals for Kids are being offered when schools are closed.
- USDA National Hunger Hotline remains a helpful resource for people seeking food assistance. The hotline, operated by Hunger Free America, can be reached Monday through Friday between 7 a.m. to 10 p.m. ET. at 1-866-3-HUNGRY (1-866-348-6479) or 1-877-8-HAMBRE (1-877-842-6273) (for Spanish).
- USDA Farmers to Families Food Box Program
Department of Labor
The U.S. Department of Labor distributed the first installment of 26 Dislocated Worker Grants (DWGs) totaling $131,384,557 to help address the workforce-related impacts of the coronavirus public health emergency. DOL’s dislocated worker grants program (DWG) received $345 million from the Coronavirus Aid, Relief and Economic Security (CARES) Act. The federal declaration of the national disaster emergency enables the Secretary of Labor to award Disaster Recovery DWGs to help address the workforce-related impacts of this public health emergency. DWGs may provide eligible participants disaster-relief employment to address the coronavirus’ impacts within their communities, as well as employment and training activities.
Department of Education
Secretary Betsy DeVos on Wednesday encouraged colleges and universities considered to be "elite, wealthy institutions" to forgo the aid provided to them in the Coronavirus Aid, Relief and Economic Security (CARES) Act, freeing the money up for other institutions that need the assistance more. She signaled to schools with large endowments that they should not apply for funds so more can be given to students who need support the most and it is her intention to ask Congress to change the law to make sure no more taxpayer funds go to elite, wealthy institutions. (See Harvard University’s response in the Inside Scoop.)
The Department also announced the availability of more than $13.2 billion in emergency funds for state and local education agencies to help K-12 students whose schools were closed due to the coronavirus. The emergency aid can also be used to help meet immediate needs, such as ensuring students’ health and safety. State education agencies must distribute most of the funding — 90 percent — to local education agencies, including public charter schools.
Department of Health and Human Services
On April 21, HHS announced $955 million in grants from the Administration for Community Living (ACL) to help meet the needs of older adults and people with disabilities as communities implement measures to prevent the spread of COVID-19. The grants will fund home-delivered meals; care services in the home; respite care and other support to families and caregivers; information about and referral to supports; and more.
Small Business Administration
The SBA has updated the FAQ's document regarding the Paycheck Protection Program authorized by the CARES Act after intense criticism that big businesses were crowding out the applications of smaller businesses, the latter being the intended constituency for the federal assistance. The SBA said all borrowers should review carefully the required certification that “[c]urrent economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant. Borrowers must make this certification in good faith, taking into account their current business activity and their ability to access other sources of liquidity sufficient to support their ongoing operations in a manner that is not significantly detrimental to the business.” (See Q. #31.)
Exclusive from our colleagues at the National Council of Nonprofits.
Unemployment Insurance and Nonprofits
Some states have taken steps to provide relief from unemployment reimbursements that self-insured nonprofits desperately need in order to remain viable. Federal and state laws enable nonprofits to opt out of their state unemployment insurance pools and in normal times pay back the unemployment benefits claimed by their former employees. A few states are recognizing that these are not normal times. For instance, a proclamation by the Louisiana Governor suspends reimbursements related to emergency-related claims during the coronavirus crisis; the benefits workers collect will not be charged to nonprofits. Similarly, Emergency Order #5 in New Hampshire declares that benefits will be paid out of the unemployment compensation trust fund and prohibits the state from seeking reimbursement from employers, regardless of whether they pay into the state system or self-insure. The broad language in emergency rulemaking in Georgia appears to include nonprofits in the declaration that employers “not be charged certain benefits paid for unemployment.”
Elsewhere, the nuances of state laws make solutions more difficult. Pennsylvania law allows nonprofits to choose to pay a solvency fee to access unemployment benefits. Recently enacted legislation provides nonprofits 100 percent relief from benefit charges if they elected to pay the solvency fee; those that did not will be charged 50 percent of the charges within 120 days. The statute permits interest-free repayment plans, a grace period, and extensions. In Utah, guidelines eliminated one of two rates normally imposed on employers and greatly reduced the remaining rate during the pandemic. Nonprofit and for-profit employers in Kentucky with fewer than 100 employees are held harmless for their reserve ratio. Orders and guidance in Delaware and Utah automatically defer payments for nonprofits and other reimbursable organizations by 90 and 30 days, respectively.