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State Emergency Assistance Fund Could Help Families Facing Significant Challenges Avoid Increased Hardship

Amid COVID-19 and the resulting economic fallout, states will need additional resources to provide basic income assistance and emergency aid to families and individuals facing severe economic hardship. A flexible emergency fund targeted to families and individuals with the lowest incomes, modeled on the Temporary Assistance for Needy Families (TANF) Emergency Fund during the Great Recession, could help provide such aid.

People who were already struggling to meet their basic needs before the pandemic — including those who were already unemployed, families with high housing costs compared to their incomes, those experiencing homelessness, immigrants facing unique barriers to accessing assistance, and those released from prison or jail, among others — now face even greater challenges. Most of them likely won’t be eligible for unemployment benefits, and many may not receive the recently enacted stimulus payments, either because they are ineligible or because they cannot navigate the application process.

The pandemic has magnified the challenges that these families and individuals face. Some people are going to face much longer periods of joblessness than they likely would have before the crisis, and when any small savings they may have run out or they can no longer count on help from family members who are also struggling now, they will have trouble affording rent and other necessities.

Others will face higher costs that make it harder to make ends meet. SNAP (food stamp) benefits aren’t sufficient to cover people’s food needs, food is harder for some people to find, prices on some foods are rising, and some families need more food for children who previously ate breakfast and lunch at school or in child care or Head Start programs. Utility costs will go up for some people who are isolated at home and using more energy. Some people will face higher transportation costs because people need to take more shopping trips to find necessities like toilet paper, diapers, and wipes, which often are in short supply. People who used to rely on public transportation may turn to taxis or ride-sharing services to avoid close contact with others. Mobile phone costs will go up for some as they access more services online than in person. Added costs, less help from family, and longer periods out of work will make it harder for people to pay their rent, which already consumes a significant share of their limited income.

A flexible emergency fund that states can use to target help to families and individuals with the lowest incomes facing these kinds of challenges could help prevent extreme hardship by reducing the number who are evicted, have their utilities shut off, become homeless, or otherwise face a downward spiral. Families and individuals with extremely low incomes rarely have savings, but a one-time emergency assistance payment or monthly cash payments could help fill the gap. For example, families with as little as $250 to $749 in savings were 28 percent less likely to miss a housing payment than those with between $1 and $249, an Urban Institute study found.

The TANF Emergency Fund that policymakers created for states during the Great Recession offers a model for such a program. A $10 billion COVID-19 emergency fund could provide: (1) one-time emergency assistance payments for individuals or families to buy essential supplies or pay rent or utilities; (2) monthly cash payments to help individuals or families that have no other income meet basic needs; and (3) subsidized employment, when it is safe to operate such programs.

To ensure that most of the funds go to families and individuals with the fewest resources, policymakers should target them to families and single individuals with incomes below 200 percent of the federal poverty line. Families with children as well as adults who aren’t supporting children should be eligible to receive assistance.

Policymakers should make the funds available for a year and should replenish the emergency fund if unemployment remains high enough for additional unemployment insurance benefits (beyond the basic program) to be extended. Policymakers should make the fund easy for states to access and, while modeling it on the TANF Emergency Fund, create it as a separate program that is more flexible and available to individuals who are not supporting children.