President Signs the American Rescue Plan Act, Promising Critical Funding to Institutions of Higher Education and Additional Relief to Public Employees

On March 11, 2021, President Biden signed House Resolution (HR) 1319, the American Rescue Plan Act of 2021, a $1.9 dollar trillion legislative package intended to address the economic damage caused by COVID-19.

For institutions of higher education, the passage of the American Rescue Plan Act promises much-needed funding and imposes few, if any, unfunded obligations on districts. While there are numerous provisions in the Plan that may affect public employers and their employees, this special bulletin focuses on provisions in the Plan that will provide financial assistance to public community college districts and extends federal assistance to public employees and former employees.

Funding for Higher Education

Most importantly, the American Rescue Plan Act sets aside $39,584,570,000 through September 30, 2023, for making allocations to institutions of higher education in accordance with the same terms and conditions of section 314 of the Coronavirus Response and Relief Supplemental Appropriations Act, passed on December 27, 2020.  Districts must apply for the funding, which is allocated to institutions of higher education based on several measures of an institution’s enrollment, including the number of Pell and non-Pell students; full-time enrollment and headcount; and students who were or were not exclusively online at the start of the pandemic.

Districts can use the funds to defray expenses associated with coronavirus (including lost revenue, reimbursement for expenses already incurred, technology costs associated with a transition to distance education, faculty and staff trainings, and payroll) and to provide financial aid grants to students (including students exclusively enrolled in distance education), which may be used for any component of student attendance or for emergency costs that arise due to coronavirus, such as tuition, food, housing, health care (including mental health care), or child care. Districts should prioritize financial aid grants to students with exceptional needs, such as students who receive Pell Grants.  Depending on how money is allocated to the institution, it is possible that a district may be required to use at least 50 percent of the allocation to provide emergency financial aid grants to students.

Districts must use a portion of the funds to implement evidence-based practices to monitor and suppress coronavirus in accordance with public health guidelines, and to conduct direct outreach to financial aid applicants about the opportunity to receive financial aid adjustments due to the recent unemployment of a family member or independent student, or other special need circumstances.  The funds cannot be used for pre-enrollment recruitment activities; marketing or recruitment; endowments; capital outlays associated with facilities related to athletics, sectarian instruction, or religious worship; senior administrator or executive salaries, benefits, bonuses, contracts, incentives; or any other cash or other benefit for a senior administrator or executive.

Funding For Child Care Providers

The Plan provides approximately $24 billion in Child Care Stabilization Funding (CCSF) for grants allotted to the states in accordance with the Child Care and Development Block Grant Act of 1990.[1]  The funding will be used by State agencies to provide sub-grants to qualified child care providers in order to support the stability of the child care sector during and after the COVID–19 public health emergency.

Qualified child care providers include a child care provider that, as of the date of the submission of the application for the sub-grant, was either: (1) Open and available to provide child care services; or (2) Closed due to public health, financial hardship, or other reasons relating to the COVID–19 public health emergency.

The amount of the sub-grant provided to a qualified child care provider will be based on the provider’s stated current operating expenses, including costs associated with providing or preparing to provide child care services during the COVID–19 public health emergency, and, to the extent practicable, will provide sufficient funding to cover the provider’s operating expenses to ensure continuous operations for the duration of the coverage period.

State lead agencies are required to make available on the lead agency’s website an application for qualified child care providers for these sub-grants.  In order to apply for a sub-grant, the child care provider must certify that it will adhere to the following for the duration of the sub-grant:

1. 1. The provider will, when open and available to provide child care services, implement policies in line with guidance from the corresponding state and local authorities, and in accordance with State and local orders, and, to the greatest extent possible, implement policies in line with guidance from the Centers for Disease Control and Prevention (CDC);
   2. For each employee, the provider will pay not less than the full compensation, including any benefits, which was provided to the employee as of the date of submission of the application for the sub-grant. Further, the provider will not take any action that reduces the weekly amount of the employee’s compensation below the weekly amount of full compensation, or that reduces the employee’s rate of compensation below the rate of full compensation, including the involuntary furloughing of any employee employed on the date of submission of the application for the sub-grant; and
   3. The provider will provide relief from co-payments and tuition payments for the families enrolled in the provider’s program, to the extent possible, and will prioritize such relief for families struggling to make either type of payment.

The Plan provides that child care providers may only use funding provided through these sub-grants for the following purposes:

1. 1. Personnel costs, including payroll and salaries or similar compensation for an employee (including any sole proprietor or independent contractor), employee benefits, premium pay, or costs for employee recruitment and retention;
   2. Rent (including rent under a lease agreement) or payment on any mortgage obligation, utilities, facility maintenance or improvements, or insurance;
   3. Personal protective equipment, cleaning and sanitization supplies and services, or training and professional development related to health and safety practices;
   4. Purchases of or updates to equipment and supplies to respond to the COVID–19 public health emergency;
   5. Goods and services necessary to maintain or resume child care services; or
   6. Mental health supports for children and employees.

A child care provider may use the sub-grant funds to reimburse itself for expenses incurred, whether obligated or expended, before the date of enactment of the Plan, so long as the expenditures are for one of the purposes described above related to the provider’s response to the COVID–19 public health emergency. 

Payroll Tax Credits Now Available For Public Employers That Voluntarily Provide FFCRA-Type Leave And Benefits

The Plan does not reinstate the paid leave obligations of the Families First Coronavirus Response Act (FFCRA), including Emergency Paid Sick Leave (EPSL)[2] or Expanded Family and Medical Leave (EFML) which expired on December 31, 2020.  There is currently no legal obligation to continue providing EPSL or EFML.

However, when the obligation to provide leave expired on December 31, 2020, Congress enacted the Consolidated Appropriations Act of 2021 (CAA),[3] which provided tax credits to private employers who voluntarily decided to continue providing employees with EPSL or EFML.  The Plan extends and expands the tax credits from March 31, 2021 through September 31, 2021.  Importantly, the Plan expands the allowable reasons for taking leave and now allows public employers who voluntarily provide these leaves to take tax credits.

Credits for the Provision of Paid Leave Consistent with the FFCRA

Under the expanded credit system, employers that voluntarily provide employees EPSL[4] and EFML[5] for the qualifying reasons provided under the FFCRA may receive credit for paid sick leave and paid family leave equal to leave wages paid.[6]

Expansion of Qualifying Reasons for EPSL to Cover Workplace Exposures and Vaccinations

The American Rescue Plan provides tax credits for providing leave one or more of the following criteria: “[1] [a] the employee is seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID–19 and [b] such employee has been exposed to COVID–19 or the employee’s employer has requested such test or diagnosis, or [2] the employee is obtaining immunization related to COVID–19 or [3] recovering from any injury, disability, illness, or condition related to such immunization’ after ‘medical diagnosis.’”[7]

Expansion of EFML to Cover All Purposes for Which EPSL is Available

The American Rescue Plan Act provides tax credits to employers that expand EFML, extending the tax credit coverage to include EFML provided to employees for any of the qualifying reasons for which an employee would be eligible for EPSL, including those initially provided for under the FFCRA as well as those new qualifying reasons discussed above.[8]  This expansion effectively transforms time-limited EPSL into long-term EFML.

Modifications to Qualification for EFML and the Length of EFML

Finally, the credit system also eliminates the requirement that the first 10 days of EFML leave be unpaid as provided for in the FFCRA[9] and increases eligible wages for which an employer may claim the EFML payroll tax credit to up to $12,000 per employee, rather than $10,000.[10] Collectively, these changes expand the number of weeks an employee may take paid family leave from 12 to 14 weeks.[11]  For employers that provide this expanded benefit, these changes will immediately provide employees who previously exhausted their EFML an additional two weeks of such leave.

Extension of CARES Act Unemployment Provisions

The American Rescue Plan Act extends two important unemployment assistance programs[12]: (1) the Federal Pandemic Unemployment Compensation (FPUC) program[13]; and (2) the Pandemic Emergency Unemployment Compensation (PEUC) program[14], that were initially established under the Coronavirus Aid, Relief, and Economic Security (CARES) Act,[15] but are set to expire on March 14, 2021.[16]

Under the FPUC program, eligible individuals may qualify to receive federal unemployment compensation to supplement the unemployment compensation provided to the individual by the state. Under the PEUC program, individuals who exhausted state unemployment compensation benefits because of the length of their unemployment would receive extended federal unemployment compensation. Collectively, these programs provided much-needed relief to public employees furloughed or laid off by public agencies last year.

Note: For additional information on the operation of the FPUC and PEUC programs and the interplay between the two, employers should review the two-part series that Liebert Cassidy Whitmore published in April 2020. Part I (FPUC) and Part II (PEUC).

Under the CAA, Congress reauthorized both programs before their initial expiration on December 31, 2020, however, the reauthorization provided only a temporary extension which was set to expire on March 14, 2021.[17] The extension passed through the CAA also reduced the benefit payable under the FPUC program from $600 per week to $300 per week. Rather than let these programs lapse, the American Rescue Plan Act extends both programs at their current benefit funding levels through September 6, 2021.

Districts need not undertake any specific action with respect to the extensions of the FPUC and PEUC programs. However, to the extent that the district furloughed or laid off any employees, the district may elect to inform such employees or former employees of the extension of the benefits under these programs.

Conclusion

While the American Rescue Plan Act provides for many other forms relief to individuals and entities, community college districts should be familiar with the relief it provides to institutions of higher education.

LCW attorneys are familiar with the operation of the American Rescue Plan Act and its various provisions, and are available to help your district apply for funds and address any other issues that they may have about this law and the benefits that may be available.