American Rescue Plan to Provide Additional Support for Head Start Programs, Families
The American Rescue Plan (ARP) was signed into law early last month by President Joe Biden, and will provide direct support and greater access to benefits for children and families struggling financially during the pandemic. Out of the $1.9 trillion passed through legislation, $1 billion will go to Head Start and Early Head Start programs to provide funding for continued operations that have led to increased costs from measures taken for health and safety, along with distance learning materials. Additional funding will also be available for individual families such as stimulus payments, tax credits, nutrition assistance, housing and utility assistance, and renewed unemployment benefits.
The National Head Start Association (NHSA) put together a comprehensive guide on ARP benefits and their availability to Head Start families. We recommend that all Head Start staff take some time to learn about the ARP so that they can help educate families on the new or updated benefits available to them.
Additional $1 Billion in Head Start Funding
The $1 billion for Head Start programs will be distributed based on funded enrollment and should be used to cover service costs such as staffing and payroll, mental health support, purchasing sanitation supplies and covering fixed costs like rent. This assistance became available on April 1, 2021 and will be available through September 30, 2022.
Increase and Changes in the Child Tax Credit
One of the most significant changes to come from the ARP is the increase to the Child Tax Credit (CTC) as well as changes to eligibility and how it is administered. The child tax credit provides a credit of up to $3,000 per child under age 17 (increased from $2,000), and $3,600 for children under age 6 (increased from $2,000). Previously, the CTC was only available to families that had income that reached a high enough threshold to be taxed by the federal government. The ARP changed that to make the CTC fully refundable, meaning that low-income parents will qualify for full benefits even if it is more than what they owe in taxes or if they owe no taxes at all. The ARP authorizes advance payments to begin starting July 1, 2021. For example, monthly payments of the CTC would amount to $300 or $350 per month per child (depending on age). The IRS will use tax returns to determine distribution of these tax credits.
Other Tax Changes for Families
In addition, the American Rescue Plan includes increases to benefits from the Child and Dependent Care Tax Credit (CDTC) and the Earned Income Tax Credit (EITC). The CDTC is a qualified child care expenses refund for families with a working parent, and the EITC provides a tax break to low-income workers and families. If you qualify, you can use the credit to reduce the taxes you owe and potentially increase your tax refund.
Temporary Increases in SNAP, EBT, and WIC
To mitigate growing food insecurity and hunger the ARP also will invest $12 billion in food programs like SNAP, Pandemic EBT, and the WIC Program. A temporary increase of 15% in SNAP benefits will be extended through September 30, 2021 for those who qualify, and an extension of Pandemic-EBT through the end of summer 2021 and for the duration of the public health emergency.
For renters, homeowners, and those experiencing homelessness, the ARP provides a wide range of supports to secure and stabilize housing. The NHSA reports an additional $4.5 billion will be provided to the Low-Income Home Energy Assistance Program (LIHEAP), $20 million for fair housing organizations, and $500 million for water utility bill assistance. Funding will be disseminated to utility companies and used to offset costs in low-income neighborhoods and may be used to cancel debt or reduce the rates for low-income households. Those who have qualified for unemployment insurance, experienced financial hardship due to COVID-19, can demonstrate risk of housing instability are able to get further emergency rental assistance.
Encouraging Medicaid Expansion
The ARP contains a number of provisions designed to increase coverage, expand benefits, and adjust federal financing for state Medicaid programs. The Kaiser Family Foundation reports that the ARP provides an additional temporary fiscal incentive to encourage states that have not yet adopted the Affordable Care Act (ACA) Medicaid expansion to do so. As you probably know, many states declined to accept Medicaid expansion under President Obama when the ACA was first enacted.
Direct Cash Support
Last but not least, direct financial support in the form of $1400 stimulus payments began being disseminated in March 2021 to all eligible individuals earning less than $75,000/year or $150,000/year joint. To track or manage your stimulus payment, or to find more information on the economic impact payments the IRS has provided these tools.