The Workforce Alliance Washington Update September 2005 Special Hurricane Relief Report

Transcription

1 The Workforce Alliance Washington Update September 2005 Special Hurricane Relief Report The Alliance is sending out this special interim update regarding dramatic new developments in Washington in the wake of efforts by Congress and the Administration to respond to the human and economic devastation wrought in the Gulf Coast region by Hurricane Katrina (and, later, Hurricane Rita). Workforce Funding Budget Reconciliation Process Delayed; Advocates Renew Efforts to Prevent Cuts to Anti- Poverty Programs Tax Package Unveiled to Issue 17 Temporary Tax Breaks to Assist Katrina Victims Louisiana Senators Introduce Broad Relief Package for Hurricane Region Workforce Programs Congress Passes H.R. 3761, the Flexibility for Displaced Workers Act, to Aid Workers Displaced by Hurricane Katrina USDOL Launches Efforts to Assist Workers Impacted by Hurricane Katrina; Implications for Current DOLETA programs Not Clear USDOL Issues TEGL Informing Hurricane-affected States of additional new Waiver Options President Bush Proposes Additional Katrina Relief in Televised Address Administration Suspends the Requirements of the Davis-Bacon Law for Areas Affected by Hurricane Katrina Higher Education Programs Congress Passes Bills Granting Secretary of Education Authority to Waive Penalties for Students Impacted by Katrina Senate Committee Marks Up HEA Bill, but Further Progress Now Delayed; House and Senate extend current HEA through December 2005 Welfare Programs House and Senate Extend TANF through December 2005 Senators Introduce New Health Package, S. 1716, To Aid Victims of Katrina Announcements National Network of Sector Partners (NNSP) 2005 Conference Approaching

2 Workforce Funding Budget Reconciliation Process Delayed; Advocates Renew Efforts to Prevent Cuts to Anti-Poverty Programs Congressional authorizing committees overseeing key federal entitlement programs (including Medicaid, food stamps, and student loans) have been given an additional month, in light of new economic pressures presented by the Gulf Coast hurricanes, to propose how to implement or possibly to reconsider dramatic cuts in such programs in order to meet the spending targets imposed by the FY2006 Budget Resolution passed earlier this year. Originally scheduled for September 16 th, authorizing committees must now provide their spending cuts to the budget committees by mid-october. The House budget committee is thereafter scheduled to report its final cuts on October 24th, and the Senate is scheduled to follow with their numbers on the 26 th. Many in Washington believe that the increased costs brought on by Katrina relief aid will lead to greater cuts in reconciliation numbers, specifically to be felt in highway funding and additional cuts across the board. However, in light of both the increased need for such poverty relief programs along the Gulf Coast and the more general public attention now being paid to poverty issues, post- Katrina advocates and a number of leaders on Capitol Hill are renewing a call for a suspension of such cuts for the FY06 Budget. For example, in a letter to Finance Committee Chairman Charles Grassley (R-IA), four senators Jeff Bingaman (D-NM), Blanche Lincoln (D-AR), Gordon Smith (R-OR) and Olympia Snowe (R-ME) urged the Chairman not to go through with cuts to entitlement programs that would directly hurt many of those whose lives were destroyed by Katrina. Additional information about the renewed effort by advocates to push for the elimination of the proposed cuts can be found from the Coalition on Human Needs, by visiting: Tax Package Unveiled to Issue 17 Temporary Tax Breaks to Assist Katrina Victims On September 13 th, Senate Finance Chairman Grassley (R-IA) and Ranking Member Baucus (D- MT) introduced a Katrina-related tax relief package, S. 1696, entitled the Hurricane Katrina Tax Relief Act of The vast majority of the proposed tax initiatives from the bill focus on reducing businesses expenses, or providing incentives to businesses to re-start within / re-locate to the region. The few tax relief provisions related directly to individuals include allowing early withdrawal from retirement plans, a personal exemption for housing aid of up to $500 in addition to current law levels, as well as additional taxpayer assistance provisions designed to ease the financial burden on those in the disaster area. Among the few provisions related to the hiring of workers, the bill would extend the Work Opportunity Tax Credit (WOTC) to employers hiring a much broader range of hurricane victims than would typically qualify for the credit. Under current law, WOTC allows employers to claim a credit against wages paid to new low-income workers who face barriers to employment (e.g., people transitioning off of public assistance). Under the proposed revision, Katrina WOTC could be claimed for the hire of any worker who lived within the disaster area and who lost his or her job as a result of damage to his or her workplace. In addition, the Grassley-Baucus bill would establish an employee retention tax credit, which would provide, for employers in the disaster zone, a 40% tax credit for wages paid up to $6,000 if paid after August 28, 2005 and before December 31 st, Page 2

3 While CBO has not officially scored this package, it is believed that the entire package will cost approximately $5 billion over the next five years. The bill was passed by unanimous consent in the Senate on September 15 th. Information about the Grassley-Baucus bill is available at: Louisiana Senators Introduce Broad Relief Package for Hurricane Region On September 22 nd, Louisiana Senators Mary Landrieu (D) and David Vitter (R) introduced S.1765, the Louisiana Katrina Reconstruction Act a $250 billion proposal that would build emergency housing, provide medical and bankruptcy relief to individuals, establish a wide range of tax breaks and incentives for area businesses and industries, and fund significant new investments in infrastructure largely associated with the region s shipping, fishing and energy industries, among others. The bill offers a few provisions related to the education of workers in the region, including: Creation of a Postsecondary Education Stabilization Board that would receive $5 billion in a new Education Relief Fund to compensate postsecondary education institutions for direct and associated losses due to the impact of Katrina; and Waivers and deferments to eliminate or delay repayment of work-study funds or loans by matriculated students who were unable to attend classes due to the disaster. However, there are more provisions that would support economic development within some key local industries which, if properly structured, could include targeted workforce development and advancement efforts: Use of $10 billion in CDBG funds toward the creation of a Louisiana Business Redevelopment Fund, modeled loosely after the Lower Manhattan Development Corporation, which oversaw rebuilding efforts in NYC after 9/11; Creation of a Gulf of Mexico State Disaster and Economic Education Transition / Recovery / Relocation Fund that would provide $1 billion in aid for impacted Federal and State agencies, businesses, institutions of higher education, and public-private partnerships located in the disaster area; $70 million to expand the Manufacturing Extension Partnership (MEP) presence in the region, to help rebuild the local manufacturing base; and Directs the Secretary of Commerce to pay $35 million each year for five years to create and support an Export Assistance Program in Louisiana, which would serve as a mechanism for training and development assistance for companies in the affected states. The bill was referred to the Senate Finance Committee; no further action has been scheduled. To view a summary of the bill, please visit: Some concern has been raised about the amount of money within the $250 billion package that is geared toward projects long lobbied for by particular industries in the region: Page 3

4 Workforce Programs Congress Passes H.R. 3761, the Flexibility for Displaced Workers Act, to Aid Workers Displaced by Hurricane Katrina As part of its response to aid workers displaced by Katrina, the House and Senate passed the Flexibility for Displaced Workers Act. The Act allows for National Emergency Grant (NEG) funds to be used for a wider range to disaster activities than might typically be allowed for NEGs. The Act also expands who can qualify for such assistance beyond individuals who would ordinarily meet WIA dislocated worker eligibility requirements, and includes any individuals affected by the hurricane-- including those who have simply relocated from states in the disaster area, as well as those who were unemployed at the time of the disaster or who are without any employment history. Additionally, it authorizes NEG payments to Gulf Coast residents not eligible for unemployment compensation, or whose unemployment compensation has expired and who are participating in reemployment activities. The bill also allows the Secretary to extend the duration of NEG projects from the regular six month time frame to twelve months in cases where it is deemed necessary. To view the bill, please visit: USDOL Launches Efforts to Assist Workers Impacted by Hurricane Katrina; Implications for Current DOLETA programs Not Clear Through the end of September, USDOL has announced approximately $191 million in National Emergency Grants (NEGs) to hurricane affected states and neighboring areas including $62.1 million to Louisiana, $50 million to Mississippi, $4 million to Alabama, and $75 million to Texas. USDOL proposes that such funds be used, in part, to fund the creation of as many as 40,000 temporary public sector jobs in the region. Such jobs could be for as long as six months and pay up to a total of $12,000 per person. (If the entire $191 million were so used for 40,000 public sector jobs, the average pay would be $4,775 roughly the equivalent to a minimum-wage job for six months.) In addition to the NEG allotments, ETA also awarded $30.8 million to Alabama, Louisiana, Mississippi and Texas to expand their capacity to process Unemployment Insurance (UI) and Disaster Unemployment Assistance (DUA) claims. Some analysts are concerned that the $191 million figure represents more money than currently exists in the Department of Labor s NEG account. While there has been no definitive answer offered by DOL about the source of these funds, some are concerned that DOL may be factoring in unexpended funds from other ETA programs. Alternately, it may be that the Department is anticipating funding for these initiatives under future supplemental appropriations bills, though it s not clear if the Department could issue such funds without prior authorization from Congress. Additionally, some analysts have identified problems with the proposed structure of the DUA assistance for hurricane victims. Currently, DUA would be available only to workers in the Gulf Coast region who otherwise would not qualify for regular Unemployment Insurance payments from the disaster-affected states. Given that these Gulf area states offer some of the lowest UI benefits in the nation averaging between $171-$193 per week in Louisiana, Mississippi and Alabama Katrina victims forced to rely on such state-funded support will receive significantly less aid than those helped under DUA. An analysis of the limitations of DUA assistance for the region is available at: Page 4

5 USDOL Issues TEGL Informing Hurricane-affected States of additional new Waiver Options On September 15th, USDOL s Employment and Training Administration (ETA) also issued TEGL 5-05 to provide hurricane-affected states with a list of WIA provisions that had previously been waived for other states, as well as other WIA provisions that had not been previously waived but which DOL feels are within its statutory waiver authority under the WIA regulations at 20 CFR 661,440. The Department proposes that these waivers will provide impacted states with increased flexibility to respond to job-seekers and business needs in hurricane-affected areas and areas receiving an influx of evacuees. The TEGL, addressed to all state workforce administrators, can be viewed at: President Bush Proposes Additional Katrina Relief in Televised Address On September 15 th, in a televised address from New Orleans, President Bush offered a three-part recovery plan for the region, comprised of Gulf Opportunity Zone (GO-Zone) Which would provide tax relief and loans for businesses and entrepreneurs to remain, relocate and / or invest in the region. Until 2007, eligible businesses would be able to collect benefits ranging from aid for improved equipment to other loans and loan guarantees that will help businesses get back on their feet. Urban Homesteading Which would allow evacuees to obtain federally owned property at a favorable mortgage rate, through a lottery system. Those winners of the property must pledge, with the help of a mortgage or a charitable organization, to build on the lots. Worker Recovery Accounts (WRAs) A revised version of the Administration s previously rejected Personal Reemployment Accounts (PRA) proposal. These new WRAs would provide up to $5,000 to certain job seekers to allow them to purchase training or supportive services, such as child care or transportation, to get back to work. If workers find a job within 13 weeks after starting Unemployment Insurance benefits or Disaster Unemployment Assistance, they may keep up to $1,000 from their account as a cash employment bonus. After receiving a WRA, workers would be ineligible to receive WIA intensive or training services for a year, though they would still be able to access core or basic employment services. As with its previous critiques about PRAs, the Alliance is concerned that WRAs are being presented as training accounts when, in fact, they are really small pots of money expected to cover a much wider range of needs e.g., childcare, relocation costs, transportation, cash to pay bills or buy food. As such, given the current desperation of many people in the Gulf region, it seems far more likely that such limited resources will be used for these more immediate needs than toward training for a future, more skilled and better-paying job that could support a family once disaster relief programs go away. Even if recipients were to use the entire WRA for training, TWA is concerned that many could receive less training with the full $5,000 than they could might have received from regular WIA dislocated worker programs, based on past expenditure data. Page 5

6 To read TWA s and NELP s statement on the WRA proposal, please visit: Administration Suspends the Requirements of the Davis-Bacon Law for Areas Affected by Hurricane Katrina On September 8, President Bush suspended the Davis-Bacon Act s prevailing wage rules on all construction in the hurricane disaster area. Citing powers granted under federal procurement laws, the President claimed the authority to suspend prevailing wage laws in a time of national emergency like Hurricane Katrina. Davis-Bacon rules will be suspended on all contracts signed beginning Sept. 8, and until otherwise determined, in six Alabama counties, three Florida counties, 55 Louisiana parishes and 81 counties in Mississippi. The President s decision has been harshly criticized in some quarters as unfair to local workers and potentially illegal under federal law (see while supporters of the suspension claim purport that it will help more people get jobs as part of the reconstruction effort. Rep. George Miller (D-CA), introduced the Fair Wages for Hurricane Victims Act, that would rescind the executive order signed by the President. The bill was referred to the House Education and Workforce Committee; no further action has been scheduled. Higher Education Programs Congress Passes Bills Granting Secretary of Education Authority to Waive Penalties on Students Impacted by Katrina In the week immediately following Katrina, the House passed two bills (H.R and H.R. 3169) that give the Secretary of Education flexibility to waive penalties for students who may be forced to withdraw from higher education due to a natural disaster. Under the bills, such students would not be forced to repay Pell Grants and other aid awarded under Title IV of HEA. The Senate, following House passage, passed the same bills with no changes. Senate Committee Marks Up HEA Bill, but Final Passage via Budget Reconciliation now Delayed; House and Senate extend current HEA through December 2005 On September 8th, the Senate HELP Committee marked up S.1614, the Higher Education Amendments of 2005, its long-awaited Higher Education Act reauthorization bill. This bill contains a number of priorities supported by TWA in its efforts to increase federal support for low-income working adults seeking to attend courses part-time in order to advance their careers. Among the provisions supported by TWA are: Year-round Pell - authorizes up to 2 Pell grants for BA and AA students during a single year for students attending at least half-time Less than half-time Pell adds room and board to be included in the need analysis for Pell (limits this to up to 3 semesters, 2 of which may be consecutive) (approx. $25 mil yearly) Business Workforce Partnerships - authorizes partnership grants between higher education institutions and local WIBs to provide training, outreach, and other services for individuals in high-growth industries (such sums as the Secretary provides for 5 years) Page 6

7 Student Support Services raises the minimum grant level for Student Support Services under TRIO and strengthens language on personal counseling (minimum grants increased from $170,000 to $200,000) Compressed and modular programs - authorizes pilots of compressed and modular programs through existing Experimental Sites authority (funding at the discretion of the Secretary) An analysis of the bill is available from the Center for Law and Social Policy at: The HELP Committee had originally scheduled this mark-up in order to meet the Septebmer 16 th deadline for budget reconciliation recommendations, so that HELP could include the entire HEA bill as part of its package to the Senate Budget committee. If that had gone through, HEA reauthorization might have proceeded without scheduling a full Senate debate or vote on the measure. However, with the new month-long delay in reconciliation recommendations, future action on the bill is now uncertain. In the interim, on September 27 th, the Senate approved H.R. 3784, the "Higher Education Extension Act of 2005", to extend programs under the Higher Education Act of 1965 through December 31, In July, the House Committee on Education and Workforce passed the Republican-sponsored College Access and Opportunity Act, HR. 609, to reauthorize the Higher Education Act and it is unlikely this will be taken up before the end of Welfare Programs House and Senate Extend TANF through December 2005 Earlier this month, it was anticipated that TANF reauthorization would possibly move forward during September as part of the FY06 budget reconciliation process. Both the House and Senate authorizing committees had been considering whether to include their TANF bills in their reconciliation recommendations, or to bring separate reauthorization bills to the floor before program s latest extension expired on September 30 th. However, with the postponement of the reconciliation process, both chambers have instead opted for another temporary extension of the program. The House passed the TANF Emergency Response and Recovery Act of 2005, which would: extend TANF until December 31 st ; allow states to draw down their next quarter s TANF block grant immediately (otherwise available only after October 1, 2005); make additional TANF funds available to states (LA, MS, and AL) devastated by the hurricane; and allow more states to waive work requirements and time limits for families in need of short-term assistance. As with other Katrina-related legislation, the Senate passed the same bill shortly after the House. Senators Introduce New Health Package, S.1716, To Aid Victims of Katrina Senators Grassley and Baucus, in addition to their tax incentive package, also introduced a new bill, S.1716, Emergency Health Care Relief Act of 2005, to provide additional health assistance to hurricane victims. It would: Page 7

8 Provide Louisiana, Mississippi, and counties in Alabama under a disaster declaration with a100% federal medical assistance percentage (FMAP) for their Medicaid and SCHIP programs until the end of 2006, and delay for one year (but not eliminate) the scheduled drop in federal Medicaid and SCHIP funds for FY 2006 for all states. Provide targeted, temporary Disaster Relief Medicaid (DRM) coverage to those Katrina survivors living in or evacuated from the hardest hit counties. States would be reimbursed at 100% FMAP for medical care and administrative costs provided through DRM. Expanded mental health and home and community-based services beyond those otherwise offered under the hosting state s Medicaid plan would also be reimbursable at 100% FMAP. This stands in contrasts to current efforts by the Administration to rely largely on the issuance of new Medicaid waivers which would hold harmless those states currently sheltering evacuees from additional Medicaid costs, seeking instead that state Medicaid portions be collected from the home states of the evacuees (Louisiana, Mississippi, Alabama). Debate over these contrasting approaches seems to be a primary reason the bill is held up in the Senate. To view the Center on Budget Policy and Priorities summary of the Administration s plans and how they relate to the Senate bill, please visit: While focused mostly on Medicaid issues, the Grassley-Baucus bill also contains several TANFrelated provisions. It would ease restrictions on and increase resources for TANF s Contingency Fund, which is made available to states undergoing fiscal emergencies. The legislation would also increase funds available to Louisiana, Mississippi and Alabama for State Family Assistance Grants, and establishes Katrina Emergency TANF Benefits, available until September 30, 2006 for families and evacuees. Such assistance would not be subject to work requirements and time limits that are usual conditions of TANF assistance. Announcements National Network of Sector Partners (NNSP) 2005 Conference Approaching Bridges to Prosperity: Building the Economy Through Partnerships and Innovation, NNSP's 2005 biennial national conference, is scheduled to take place November 2-5, 2005, at the Drake Hotel in Chicago, Illinois. The conference will bring together a wide range of participants from across the country, who want to better understand the economic and workforce development challenges we face as a nation, and are committed to taking action in response. Please go to NNSP's website for the complete conference agenda, speaker list, and conference agenda information, or contact NNSP at (510) X 130. ***** Contributors: Tim Giattina and Andy Van Kleunen For more information, please contact: Tim Giattina, Policy Associate The Workforce Alliance 1701 K Street NW, Suite 750 Washington, DC (202) timg@workforcealliance.org Page 8