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POLICY INSIGHT
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Rescue Act’s Pandemic Emergency Assistance Will Help Families With Lowest Incomes

The American Rescue Plan Act includes a new $1 billion Pandemic Emergency Assistance fund for the Temporary Assistance for Needy Families (TANF) program. The new funding will provide much-needed resources to states, tribes, and territories (referred to here as states) to help families with the lowest incomes meet their added expenses or debt due to the pandemic.

With the pandemic’s economic fallout continuing to impose widespread hardship, this funding can play a critical role in helping households with children weather the storm. Hardship is particularly high among families with children, the Census Bureau’s Household Pulse Survey shows, which raises serious concerns about the long-term consequences for children’s health and academic outcomes. More than 4 in 10 children live in households that are having trouble covering usual expenses. And 4 in 10 children living in rental housing live in a household that either isn’t getting enough to eat or isn’t caught up on rent.

States can use Pandemic Emergency Assistance funds to provide households with non-recurrent, short-term benefits, meaning benefits that: (1) deal with a specific crisis situation or episode of need; (2 ) don’t meet recurring or ongoing needs; and (3) don’t extend beyond four months. States can’t use the funds to cover the costs of providing regular monthly TANF cash assistance, which is designed to help families meet recurring and ongoing needs.

States will decide which families most need assistance and direct the funds to them. States need not limit payments to families receiving TANF cash assistance, and in states where few families receive TANF benefits, assisting a broader group of needy families (such as SNAP families with children) would reach more families. States could also use the funds to meet specific needs, such as a diaper benefit for families with very young children. Benefits can be provided to families through a cash payment or through an in-kind, non-cash benefit; for example, a state could provide assistance directly to a utility company to cover back payments for a family that otherwise meets the criteria for the fund.

States could, among other things, use the funds to:

  • Provide extra one-time or short-term cash payments to TANF recipients. The extra costs of weathering the pandemic have made it even harder for TANF recipients to make ends meet on TANF’s extremely low benefits. By using the new funds to provide non-recurring payments to TANF recipients in addition to their regular monthly benefit, states could reduce hardship. At least ten states have already provided such payments, but many did so a number of months ago; North Carolina, for example, issued one-time payments of $265 per child to TANF families in May 2020. Maryland started providing $100 per person to each TANF household in January and plans to do so monthly through June.
  • Provide non-recurring cash payments to SNAP households with children. Few families in need receive monthly cash benefits from TANF because of restrictive rules that make it hard for people to get assistance, so states could reach more families by providing non-recurring cash payments to SNAP households with children with little or no income. This would be an efficient, effective way to reach a large number of households with children, as states could use information they used to determine families’ SNAP eligibility to identify families most in need and use SNAP’s payment systems or an alternative to deliver the cash benefits.
  • Provide emergency assistance to families experiencing a crisis who are ineligible for other relief or for whom other relief measures leave gaps. Other relief measures will inevitably leave out some households with children, but states could help some of them with the Pandemic Emergency Assistance funds. For example, states could use the funds to help families that don’t receive emergency housing assistance to pay their back rent and avoid eviction. Or, they could help cover moving costs for families fleeing domestic violence, including rent for the first several months.
  • Create a worker relief fund to reach families with children that are ineligible for other programs. Some families that lost their jobs may be ineligible for TANF (for example, because they reached a time limit) or for unemployment benefits (for example, because they had to leave their job to care for a family member who has an illness other than COVID-19). States could reach families with children in these situations by creating a temporary income replacement program, although benefits could only last four months under the rules for this kind of benefit. For example, Oregon set up a worker relief fund that provided cash payments to individuals who lost employment due to COVID-19 and weren’t eligible for unemployment insurance or other benefits. These funds could be used to assist families with children that are in need of such a benefit.