Issue: Coronavirus

As education revenues fall, it’s time to strengthen Alabama’s tax system

By Carol Gundlach

It’s a truism often heard during budget hearings at the Alabama State House: “All the growth taxes go to education.” Legislators commonly say this to bemoan relatively flat revenue for the General Fund (GF), even when the economy is booming. Meanwhile, the Education Trust Fund (ETF) budget grows by comparative leaps and bounds.

There is a downside, however, to how quickly the ETF responds to economic conditions. Education revenue can decline quickly and sharply during hard economic times. And that’s the situation we’re in now, thanks to the COVID-19 recession.

The ETF gets nearly all its money from two major sources. One is income taxes, which are constitutionally earmarked for teacher salaries. The other is sales and use taxes. (Use taxes apply to online and mail-order purchases.) Income taxes account for 63% of state money going to Alabama schools, and sales and use taxes contribute another 30%.

Pie chart of 2019 ETF revenue sources. Income tax 63%, sales tax 27.9%, utility tax 5.6%, use tax 2.6%, other 0.9%.
Source: Alabama Legislative Services Agency

During a strong economy, this is a very good thing for education. Income taxes can grow quickly when more people are working, and sales taxes grow quickly when they spend those earnings. During bad economic times and high unemployment, however, both income and sales taxes suffer. And right now the economic times are some of the worst that Alabamians have ever seen.

ETF revenues plummet as the pandemic hits Alabama

Because of the pandemic and the recession that resulted, Alabama’s unemployment rate shot up from a near-record low of 3% in March to a near-record high of 12.9% in April. Income taxes responded in kind, dropping more than 50% between March and April 2020. May and June’s revenues recovered somewhat but were still more than 12% lower than income tax revenues for the same period in 2019. Altogether, income tax collections from March through June were down more than 20% compared to 2019.

Sales taxes went down, too, though not as dramatically as income taxes. Sales tax collections from March through June were down slightly more than 7% compared to 2019. Overall, income and sales tax revenues during those months were down 16.3% compared to the same period last year.

Bar graphs showing the decrease in Alabama's income and sales tax revenues between March-June 2019 and March-June 2020.
Alabama’s income tax revenues between March and June 2020 were $400 million lower than during the same period in 2019. Sales tax collections were down by more than $60 million.

Despite those declines, the Alabama Legislature passed a 2021 education budget that is larger than this year’s. Both legislators and the governor have expressed confidence that reserve and Rainy Day accounts will be enough to avoid automatic spending cuts known as proration this year and next, even if the economy is slow to recover.

Warning signs on the horizon for the ETF

But ETF revenue trends in recent months have been troubling. Education revenue increased by 8% between October and February, according to a budget presentation that Kirk Fulford, deputy director of the Legislative Services Agency (LSA) Fiscal Division, gave before a Senate budget committee on July 9. When the recession hit between March and June, however, revenues fell 17% compared to the same period in 2019. That reduced total ETF revenue growth fiscal year (FY) 2020 to barely 1%. (Alabama’s fiscal years run from Oct. 1 to Sept. 30.)

By contrast, the news was better for the GF, which funds Medicaid, corrections and other non-education services. Revenue growth remained at a relatively healthy 7% compared to last year. The GF benefited in large part from an earmarked internet sales tax (called the “simplified sellers use tax”) that increased by $16 million from March to June. That growth came on top of a $34 million increase earlier in the fiscal year.

Fulford remained optimistic that neither budget would face proration in 2020, despite worrisome ETF revenue projections. He reassured legislators that healthy beginning balances, debt reduction and savings accounts created under the Rolling Reserve Act would protect the ETF at least through FY 2020.

Alabama Arise trusts the LSA’s expertise but remains concerned, especially about 2021. Our state’s tax system simply may not bring in enough money to fund our schools if the pandemic recession is long or deeper than anticipated.

Better tax policies for a brighter future

Alabama’s experience during the Great Recession a decade ago proves the need for caution. More than a dozen years later, Alabama’s education funding still hasn’t returned to its pre-recession level. And if revenues decline at the same rate as in 2009, the ETF could lose $841 million in state money next year. That would be the equivalent of one-fifth of all state K-12 funding.

It’s not enough to cross our fingers and just hope the economy and revenues recover quickly. Arise encourages state lawmakers to modernize and strengthen Alabama’s tax system to ensure it is both fair and adequate. One good step would be to eliminate the state deduction for federal income tax payments. Another would be to impose a temporary income surtax on millionaires.

These changes and others would generate the revenue needed to help struggling families and protect our schools during tough times. And they would be a needed investment in a brighter, more inclusive future for Alabama. Read our full list of recommendations here.

69,000 Alabama workers lost coverage when they may need it most, new report finds

By Chris Sanders

Job losses during the COVID-19 economic crash kicked 69,000 Alabamians off their health insurance between February and May, according to a new report by Families USA, a nonprofit research organization based in Washington, D.C.

Those coverage losses increased Alabama’s uninsured rate for non-elderly adults to 19%, the report finds. That is the ninth highest rate in the nation and 3 percentage points higher than in 2018. As workers and their families lose comprehensive health insurance, their risk of delayed care and complications from the virus increases. So does their risk of financial devastation.

“Even before COVID-19, Alabama’s failure to expand Medicaid left more than 220,000 adults uninsured,” Alabama Arise campaign director Jane Adams said. “Further coverage losses during the recession will bring health and financial suffering for even more families across our state. More people will go without needed health care. More hospital bills will go unpaid. And all Alabamians will bear the additional strain on our health care system. This report’s findings should be a blaring emergency siren for our state leaders.”

The number of uninsured adults jumped by 5.4 million nationally between February and May. The increase in those few months was 39% higher than any annual increase ever recorded, Families USA finds. The report also shows a disturbing overlap between states with the highest adult uninsured rates and the worst COVID-19 case trends.

“COVID-19 is putting lives, livelihoods and economic security at risk for thousands of Alabama workers. And many communities face long-term challenges for health care capacity and economic recovery,” Adams said.

“Alabama Arise and Cover Alabama urge Gov. Kay Ivey to save lives and stabilize our local hospitals by expanding Medicaid. We ask the Legislature to provide the needed state share of this pro-family, pro-health, pro-community investment in our future. And we ask Congress to strengthen Medicaid funding and help Alabama shore up our health care infrastructure.”

Adams directs Cover Alabama, a coalition of more than 90 organizations pushing for Medicaid expansion in Alabama. Arise is a founding member of the coalition.

Medicaid expansion would improve life for all Alabamians, new Arise report shows

By Chris Sanders

Expanding Medicaid to cover adults with low incomes would build on the program’s successes and save hundreds of lives every year, according to a new report that Alabama Arise released Wednesday.

Arise’s report, Medicaid Matters: Charting the Course to a Healthier Alabama, illustrates why Medicaid expansion is so critical for the state at this moment in history. Through data, colorful graphics and personal profiles, the report explores Medicaid’s crucial role in Alabama’s health care system. And it reveals how Medicaid expansion would promote racial equity and leave communities better equipped to fight the COVID-19 pandemic.

“Expanding Medicaid would save thousands of lives, create tens of thousands of jobs and help hospitals and clinics across Alabama,” Alabama Arise policy director Jim Carnes said. “As our state continues to struggle with COVID-19, it’s more important than ever for the governor and lawmakers to step up and prove they value the health and well-being of all of our residents.”

Front cover of Alabama Arise's Medicaid Matters report

Medicaid is a health care lifeline for one in four Alabamians and an economic engine for the entire state. Medicaid Matters explains the Medicaid coverage available to more than 1 million children, seniors, and people with disabilities in Alabama. It highlights improvements that new Medicaid changes are promoting in key areas like infant mortality, obesity and substance use disorders. And it shines a spotlight on more than 340,000 uninsured and underinsured Alabamians who would be covered under Medicaid expansion.

Medicaid expansion would save and transform lives across Alabama

So far, 36 states – including Arkansas, Kentucky and Louisiana – have expanded Medicaid to cover adults with low incomes. But Alabama is one of just 14 states that have not. That remains the case even though the state would get $9 in federal money for every $1 of state funding.

Medicaid expansion would bring peace of mind to thousands of Alabamians who recently lost their jobs and health insurance. And it would make life better for many uninsured people who are working on the front lines of the pandemic. This includes workers at grocery stores, hospitals, child care facilities and other essential businesses.

Formeeca Tripp, a behavior specialist who lives in Auburn, explains in Arise’s report how the health of any Alabamian is linked to the health of every Alabamian.

A photo of Formeeca Tripp with her two children.
Formeeca Tripp of Auburn knows firsthand the tough decisions that come with living and working in the coverage gap. (Photo: Julie Bennett)

“It’s the people who are working with the sick and elderly, working with your babies,” Tripp said. “It’s us, out here, hands on, making food, cleaning houses – it’s that gap of people, very important people. People who come into contact with thousands of other people. And you don’t want them to be healthy?”

Click here to read Arise’s full report. Links to each section of the report are below.

Medicaid Matters (Main Section)
How does Medicaid work in Alabama? (Section 1)
How is Medicaid improving coverage? (Section 2)
Who’s still left out of health coverage? (Section 3)
How can we make Alabama healthier? (Section 4)

Alabama should use federal COVID-19 relief funds to heal and protect communities, Arise and partners write

By Alabama Arise

To members of the Alabama Legislature,

Alabama is struggling. Even after Governor Ivey issued an emergency stay-at-home order, the average number of new coronavirus cases continues to rise. And despite those climbing case numbers, Alabama is moving forward with reopening its economy. To accomplish a successful recovery, residents must have confidence that it is safe to be in public and workers must be able to work in safe environments without fear for their health or the health and safety of their families. We are asking that you support the following recommendations so that Alabama will use the $1.9 billion under the Coronavirus Relief Fund to heal and protect the communities who have and will continue to shoulder the high costs of this crisis.

The Alabama Legislature, in consultation with Governor Ivey, has divided these federal funds into large categories of spending. Governor Ivey now has provided a method by which you and your colleagues may request release of the funds for coronavirus-related expenditures.

We recognize that $1.9 billion is inadequate to address the long-term needs of Alabamians as the present economic crisis continues to unfold. Consequently, you and your colleagues will need to find additional revenue sources to ensure that Alabama’s economy does not weaken further and that its residents are sufficiently protected from future spikes in infections. We look forward to working with you on those longer discussions.

Our recommendations aim to provide support where it is most needed, reflecting the disparate impact of the crisis. Highly educated workers have largely been able to work from home. Low-wage and many essential workers have not. Unemployment rates are highest for workers who have less than a bachelor’s degree and are higher in our Latinx and Black communities. We have also seen the largest gender gap in unemployment, where women experience unemployment at a nearly 3% higher rate than men. Our response to the pandemic and our use of the Coronavirus Relief Funds need to heal this harm, not exacerbate the disparities that already exist.

However the taxpayer-funded payments are distributed, they must be openly accounted with reasonable but sufficient detail. In addition to public reporting of expenditures, the Department of Examiners of Public Accounts must be authorized to audit receipts and expenditures of all agencies within its purview and to request accounting from other CARES Act funding recipients.

Ensuring safe workplaces and families

As Florida and Georgia have shown, merely reopening the economy does not bring back customers or jobs. Both states have seen ongoing unemployment claims at rates higher than other states in the nation. Alabama must ensure that workplaces are safe, that workers’ families are cared for, and that state and local services are ready for people to come back before the more than 500,000 newly unemployed can return to work. These recommendations focus mostly on needs that can be met with the $300 million earmarked for supporting businesses, nonprofits, and faith-based organizations.

Working

Working outside the home brings with it the very real risk that you will become infected. The primary concern of many workers is that they will become infected on the job and, in turn, infect their family.

To make work safe, we must fund testing and contact tracing, provide protective and sanitary equipment, and create new workspaces that minimize the possibility of transmission.

High-risk and essential workplaces, such as poultry plants, warehouses, grocery stores, child care centers, nursing homes and hospitals, require repeated and random testing for workers who do not appear ill, immediate testing of anyone who has symptoms of the novel coronavirus, and contact tracing for employees, their families, and the public who have come in contact with an employee who has tested positive.

Alabama should use a portion of the $300 million earmarked for the support of citizens, businesses, nonprofits, and faith-based organizations directly impacted by the pandemic or providing assistance to those affected to provide:

  • The tests necessary for business and government agencies that have reopened;
  • Contact tracing of positive test results;
  • Personal protective equipment for employees of those business and government agencies; and
  • Increased sanitary stations within essential workplaces.

Alabama also needs to develop or adopt technical assistance on workplace safety detailing how employers test for COVID-19, use PPE, and create safer workspaces.

In exchange for providing these supplies and equipment, Alabama must require businesses to adopt paid sick leave requirements for all employees to protect other employees and the public from transmission of the virus and allow employees to get tested without fear of losing their jobs.

When allocating these funds, Alabama should prioritize supporting minority-owned and woman-owned local businesses and provide small business loans or grants to these businesses to retain employees or make workplaces safer. Minority-owned businesses received fewer Small Business Administration loans under the CARES Act, and because the business owners have less access to credit, they rely on personal funds more than white-owned businesses to finance their work.[1]

In addition, Alabama should follow Congress’ example and provide a one-time tax rebate to low-income households to assist families who are unemployed and underemployed.

Families

One of the largest hurdles for families who are prepared to go to work is finding affordable and safe child care. Approximately one in four working adults has a child under age 18 and in two-thirds of two-parent families with children, both parents work. However, not every family can afford child care. Low-income families who pay for child care spend around 35% of their income on that care. To ensure parents are able to return to work, Alabama needs to provide child care for low-income families. This includes supporting low-income families by making child care affordable and supporting child care centers that are at risk of closing.

Stable families need stable homes. While Governor Ivey’s April 3 proclamation alleviated the immediate threat of eviction and foreclosure, it does not solve the long-term problem for Alabamians unable to pay rent or mortgages now that the emergency order has expired. Many families will not be able to pay the back rent that has accumulated. About a third of low-income and nearly two-thirds of extremely low-income households in Alabama pay more than half of their income on rent and utilities every month. The total cost of rent support needed in Alabama for the duration of this crisis is estimated at a little over $1 billion.[2]

These families and their landlords urgently need rent relief. To meet this significant need, Alabama must:

  • Allocate and leverage Coronavirus Relief Fund money in coordination with other sources of federal and private housing assistance funds; and
  • Provide emergency relief, through homeless and other nonprofit agencies, for families at risk of eviction, foreclosure or loss of utility service.

Other states have already taken this important step. Montana used $50 million of the Coronavirus Relief Funds it received to provide tenant and homeowner relief. The Pennsylvania Legislature reserved $150 million for emergency rental assistance from its federal funding. Likewise, Illinois allocated $396 million of its funds for housing assistance. It reserved $100 million specifically to meet the needs of people in disproportionately impacted areas based on COVID-19 cases and $79 million for counties that did not receive direct allotments from the federal Coronavirus Relief Funds. Alabama needs to take similar steps to protect its families who rent.

These solutions do not address the overwhelming need for more affordable housing in Alabama. To address this long-term goal, Alabama needs to increase its stock of affordable housing by funding the Housing Trust Fund administered by the Alabama Department of Economic and Community Affairs.

As more Alabama families lose jobs or work hours, hunger is growing in the state. In the last week of May, the Census Bureau’s Household Pulse Survey found that over 10% of Alabama households are experiencing food insecurity–a significant increase from the first week of the crisis. Therefore, we must greatly increase our support to Alabama-based food banks that provide emergency food to hungry families.

Improving Alabama’s health

COVID-19 is exposing chronic and deadly inequities in Alabama’s health care system. The virus’s disproportionately high mortality rate for African Americans reflects deep structural barriers to health care, economic opportunity, transportation, and other assets of the common good. These same barriers have impeded the state’s response to the pandemic by limiting the delivery system for mitigation, testing, and treatment in historically underserved communities. In light of these challenges borne of both active exclusion and passive neglect, Alabama’s COVID-19 response should prioritize interventions that explicitly address health disparities.

Allocation of federal COVID-19 relief funds does not occur in a vacuum. These funds will have their biggest impact when they flow through or alongside state programs designed to provide basic protections for all Alabamians. The single biggest action Alabama can take to maximize the impact of current and future federal COVID-19 relief funding on historic health disparities in our state is to expand Medicaid. Lack of health coverage for low-income adults creates an “outsider class,” distancing many of our most vulnerable neighbors from emergency resources that could buffer the pandemic’s toll. We recognize that the state cannot use COVID-19 relief funding for the state share of expansion costs.

Thus far, Alabama has set aside $5 million to support the Department of Health and an additional $250 million to support delivery of health care and related services related to the pandemic. Alabama should use these funds to:

  • Ensure that there is adequate testing for new infections, including funding for testing supplies;
  • Provide contact tracing after new infections are discovered;
  • Supply PPE to areas that have been most impacted by COVID-19; and
  • Strengthen public health surveillance systems to facilitate rapid response to local infection upsurges as economic activity increases.

Adequate testing for the virus is the most urgent tactical need. A primary tool for targeting finite (and admittedly inadequate) resources is accurate information. The state must evaluate the extent and adequacy of testing in each Public Health District in order to prioritize additional resources for underserved districts and facilitate partnerships between local health departments, private testing providers and local community and faith groups to ensure assistance for all who need it.

Another barrier to both testing and treatment is lack of transportation, especially in rural areas. To address this concern, Alabama should appropriate a portion of COVID-19 relief funds to the Public Transportation Trust Fund to mitigate coronavirus-related drops in local agencies’ farebox recovery rates.

Safely reopening state and local services

Reopening our courts

The Alabama Supreme Court has authorized the presiding circuit judge in each circuit to continue court closures until August 15 for all courts within the circuit, including municipal courts, to preserve the safety and welfare of court personnel and the public. We would encourage delaying non-essential hearings for as long as possible, so long as the delays do not affect the rights of litigants.  However, when courts reopen, they will need to take special precautions to protect people with disabilities or with family members who are vulnerable to infection. Funding to courts should require that they develop, and make accessible, a comprehensive reasonable accommodation policy for civil and criminal cases that addresses the individual needs of lawyers, litigants, defendants, and witnesses who cannot physically come to court due to disability.

These accommodations could be as simple as continuances or remote video proceedings for people who have access to technology necessary to participate in the proceedings remotely. If remote proceedings are used, funding should be used to allow for technology that permits video to enhance credibility determinations by fact finders, that allows the introduction and viewing of documentary evidence by remote participants, and that provides access, or education about the requisite technology for participants prior to their hearing.

Alabama also should increase funding to support ADA coordinators within courts that individuals with disabilities can contact in the event that an accommodation is needed.

In addition to delaying court reopenings and taking necessary steps to protect people with disabilities, a portion of the $10 million set aside for court services should fund personal protective equipment for all people required to attend court functions, including court personnel, attorneys, witnesses, victims, and litigants. Additionally, a portion of those same funds should be used to promptly notify individuals with court dates of delays, cancellations, and rescheduled hearings. Not only should these notices be sent to individuals, but as the hours and operating conditions of the courts evolve and change, the court should ensure that the public is aware of current court policies and how people seeking emergency relief may access the courts. These notices should be prominently posted at the courthouse, online, and in any other location likely to inform the public.

Improving state services

The pandemic caused a groundswell of need for services administered by Alabama, including the Supplemental Nutrition Assistance Program (SNAP), Medicaid, Temporary Assistance for Needy Families, Unemployment Insurance benefits, and subsidized housing programs (which are primarily run at a local level). As more residents need these supports to make it through the pandemic, Alabama should prioritize the $300 million it has set aside for state agencies to increase the numbers of case handlers they employ to respond to the increased demand, provide those workers with resources they need to work from home or with the same testing and PPE that we recommend for all essential workers when they engage with the public, and collectively improve access to their services using mobile technology.

When an individual is going through a crisis or the entire state is in a pandemic, these disparate services need to be accessible in one place with minimal barriers to applying for benefits, receiving important correspondence about deadlines or reporting obligations, and communicating with case workers about the services. Applying and maintaining these services comes at a high opportunity cost to families. Currently, to apply for and communicate about each service takes hours, often at different agencies and with different case workers. That is time that people need to take care of their children, their elderly parents or neighbors, or to look for employment. Improving capacity and access now both responds to the current crisis and inoculates these agencies for future crises.

Voting

In addition to improving access to state services, Alabama must protect our citizens’ health and fundamental  right to vote. A portion of the $300 million set aside for state services should be used to provide absentee ballot applications to every registered voter or, at a minimum, allow every registered voter to request and vote by absentee ballot during the pandemic. In addition, because many voters require or prefer in-person voting, the state must work to improve the safety and accessibility of in-person voting and permit curbside voting. To ensure voters know how to vote safely during the COVID-19 pandemic, Alabama will need to increase its spending to educate voters in coordination with local election officials.

Taking responsibility for people in our custody

Alabama has both a legal and a moral responsibility for the safety and well-being of the people it incarcerates. There are tens of thousands of individuals housed in state prisons, local jails, and ICE detention facilities — all places where it is impossible to practice social distancing. To date, less than 1% of those incarcerated in Alabama’s prisons have been tested for COVID-19.

Governor Ivey with approval from the Legislature has set aside $200 million for the Department of Corrections to help meet Alabama’s moral and legal obligations during this pandemic. We recommend that Alabama prioritize its use of the funds to:

  • Release all incarcerated people who do not pose a threat to public safety, who are pregnant, and people who are at a higher risk if infected with COVID-19;
  • Assist with reentry services to enable successful reintegration for returning persons;
  • Test people in Alabama jails and prisons prior to release and while incarcerated; and
  • Provide PPE, soap, sanitizer, and other supplies necessary to maintain a safe and hygienic environment for the remaining incarcerated people and correctional staff.

The fastest way to reduce the threat of infection in jails and prisons is to test and release as many people as possible to reduce the number of people within the facilities. However, decarceration requires more than releasing someone from jail or prison. We also must prioritize a successful reentry into communities to prevent recidivism. A portion of the funds allocated for the Department of Corrections must go to increasing reentry services to ensure successful and safe transitions into the community. Particularly important to this transition are ensuring that people are tested for the coronavirus before reentering and that they are provided with the housing, employment, and medical services necessary once they are in the community. Some states have reduced their populations by nearly 20%. Alabama must do more.

In addition to expediting reentry and funding reentry services, Alabama needs to ensure that people are not set up to fail with onerous fines and fees used to fund the criminal justice system and reentry monitoring. Unemployment is already at record highs, and we know that the effects of racial bias in the hiring process increase the already negative effects of criminal records for people of color. Studies have shown that Black applicants with a criminal record had only a 5% chance of receiving a call back, less than one-third of white applicants with a criminal record. Reentering into this economy will be tough. Having paid for reentry with federal funds, Alabama should waive the fines and fees for people who are struggling to reintegrate into our communities, giving them a clean start and a better chance for success.

Even with fewer people in facilities, we will still need to dramatically increase testing of employees who work in prisons and jails and for the people who are incarcerated therein. Only four in every 100 residents in Alabama have been tested for COVID-19. Alabama has tested fewer than 1% of people incarcerated in its prisons. This is wholly inadequate to slow, let alone stop, the spread of COVID-19 within Alabama’s facilities.

Securing our children’s futures

The pandemic radically impacted education and threatens to worsen future education outcomes in Alabama for the many students who already did not have the benefit of an equitable opportunity to learn before it began. Alabama must focus its attention on addressing the inequities exacerbated by access to technology, space to learn, and caretakers to support their learning and those for whom specialized services are not available, including for students with disabilities. If it does not, the opportunity gap will widen with significant economic impacts for students and their families far into the future.

The opportunity gap experienced by low-income children and children of color begins early in life. We must intervene and use a portion of the dedicated $300 million for expenditures related to technology and infrastructure for remote instruction and learning to provide support to organizations offering early intervention programs for at-risk children so that these services can be provided safely and, as necessary, remotely.

Alabama also should prioritize the use of the $300 million to fund public schools with the highest proportion of students who are low-income children, children of color, children with disabilities, English-language learner children, children in immigrant families, children in foster care, migrant children, children experiencing homelessness, LGBTQ children, and children in the juvenile justice system. Public schools likely will need to hire additional staff, including counselors, to provide necessary education, social and emotional, and health and safety services and increase salaries to remain competitive for educators who now take greater risks to their own health and are required to master more technological skills to teach their kids.

We recognize that the $300 million allocated by the Legislature will not be enough. Additional funding could also be taken from the $250 million fund for local government expenditures directly related to the pandemic to provide these disproportionately affected school systems and their local communities with funding for after-school, summer school, and community programs for youth.

Finally, where there are competing priorities for funding, the Legislature has set aside an additional $118 million that can be used to supplement the funds required for these recommendations. If you have any questions or concerns about any of these recommendations, please contact Robyn Hyden (Robyn@alarise.org or 334-832-9060) or Katie Glenn (katie.glenn@splcenter.org or 334-531-7638).

Signatories

Sincerely,

90 Alabama organizations

ACLU of Alabama
Adelante Alabama Worker Center
AIDS Alabama
AL CURE
Alabama Appleseed
Alabama Arise
Alabama Black Women’s Roundtable
Alabama Civic Engagement Coalition
Alabama Coalition for Immigrant Justice
Alabama Coalition on Black Civic Participation
Alabama Faith Council
Alabama Institute for Social Justice
Alabama Justice Initiative
Alabama NAACP
Alabama Poor People’s Campaign
Alabama Rivers Alliance
Alabama Solutions, A Grassroots Movement
Alabama Youth and College NAACP
Amalgamated Transit Union Local 770
Auburn Unitarian Universalist Fellowship
Baptist Church of the Covenant
Bay Area Women Coalition, Inc.
Beloved Community Church
Birmingham AIDS Outreach (BAO)
Children First Foundation, Inc.
Christian Church in Alabama-Northwest Florida
Christian Methodist Episcopal Church
Church of the Reconciler, UMC (Birmingham)
Church Women United Montgomery
Citizens’ Climate Lobby – Baldwin County, Alabama Chapter
Collaborative Solutions, Inc.
Etowah Visitation Project
Fairhope Unitarian Fellowship
Faith and Works Statewide Civic Engagement Collective
Faith in Action Alabama
Fall Injury Prevention And Rehabilitation Center
First Christian Church – Disciples of Christ (Montgomery)
First Congregational Church, UCC (Birmingham)
Five Horizons Health Services
GASP
Greater Birmingham Ministries
Hispanic Interest Coalition of Alabama
Holiday Transitional Center
Holy Rosary Catholic Church
Human Rights Campaign Alabama
Humanists of North Alabama
Immanuel Presbyterian Church, PCUSA (Montgomery)
Interfaith Montgomery
Jesuit Social Research Institute
Jobs to Move America
Just Faith, Prince of Peace Catholic Church (Birmingham)
Just Faith, Our Lady of the Valley Catholic Church (Birmingham)
League of Women Voters of Alabama
Low Income Housing Coalition of Alabama
Macedonia Missionary Baptist Church (Daphne)
March of Dimes
Mary’s House Catholic Worker
Medical Advocacy & Outreach
Mission Possible Community Services, Inc.
Monte Sano United Methodist Church
Montevallo Progressive Alliance
Montgomery Pride United
National Action Network – Birmingham Chapter
National Lawyers Guild
National MS Society
Nightingale Clinic
North Alabama Conference United Methodist Women
North Alabama Peace Network
Open Table United Church of Christ
People First of Alabama
Planned Parenthood Southeast
Progressive Women of Northeast Alabama
Project Hope to Abolish the Death Penalty
Restorative Strategies, LLC
Saint Junia United Methodist Church
Shelby Roden, Attorneys at Law
Sierra Club, Alabama Chapter
Sisters of Mercy Alabama
Sisters of Mercy of the Americas
Southern AIDS Coalition
SPLC Action Fund
St. Andrew’s Episcopal Church (Birmingham)
The Empowerment Alliance
The Green Kitchen
The Right Place, Inc.
The Women’s Fund of Greater Birmingham
Unitarian Universalist Fellowship of Mobile
URGE: Unite for Reproductive & Gender Equity
Yellowhammer Fund
Youth Towers
YWCA Central Alabama

cc: Governor Kay Ivey and policy staff

[1] The SBA Inspector General found that the SBA failed to instruct lenders to prioritize underserved and rural markets [found at https://www.sba.gov/sites/default/files/2020-05/SBA_OIG_Report_20-14_508.pdf on May 27, 2020]. Disparities in lending between minority-owned and white businesses already existed as documented by the Federal Reserve Bank of Atlanta’s December 2019 Small Business Credit Survey [found at https://www.fedsmallbusiness.org/medialibrary/fedsmallbusiness/files/2019/20191211-ced-minority-owned-firms-report.pdf on May 27, 2020].

[2] Estimate from the National Low Income Housing Coalition.

Arise legislative update: May 21, 2020

By Matt Okarmus

Alabama legislators ended the regular session this week by enacting education and General Fund budgets for 2021. But as the COVID-19 downturn hammers state tax revenues, we fear lawmakers’ optimism surrounding these budgets could be misplaced. Arise’s Carol Gundlach explains why the Legislature likely will return for one or more special sessions later this year to revisit the budgets and address other issues.

 

 

Protection from predatory lenders should be part of Alabama’s COVID-19 response

By Dev Wakeley

While COVID-19 forces Alabamians to deal with health concerns, job losses and drastic disruption of everyday life, predatory lenders stand ready to take advantage of their misfortune. Our state policymakers should act to protect borrowers before these harmful loans make the pandemic’s financial devastation even worse.

The volume of high-cost payday loans, which can carry annual percentage rates (APRs) of 456% in Alabama, has decreased temporarily during the COVID-19 pandemic. But that is simply because payday lenders require a person to have a job to get a loan. The national unemployment rate jumped to nearly 15% in April, and it may be higher than 20% now. In a sad twist, job losses are the only thing separating some Alabamians from financial ruin due to payday loans.

Title loans: A different kind of financial poison

As payday loan numbers have dropped, some borrowers probably have shifted to auto title loans instead. But title loans are just a different, and arguably even worse, kind of financial poison.

Like payday lenders, title lenders can charge triple-digit rates – up to 300% APR. But title lenders also use a borrower’s car title as collateral for the loan. If a borrower can’t repay, the lender can keep the vehicle’s whole value, even if it exceeds the amount owed.

The scope of this problem in our state is unknown. Alabama has a statewide payday loan database, but no similar reporting requirements exist for title lenders. That means the public has no way to know how many people are stuck in title loan debt traps.

Title lenders in Alabama don’t require people to be employed to take out a loan with their vehicle as collateral. People who have lost their jobs and feel they lack other options can find themselves paying exorbitant interest rates. And they can lose the transportation they need to perform daily tasks and provide for their families.

Federal and state governments can and should protect borrowers

Long after people who lost their jobs return to work, the financial damage from the pandemic will linger. Bills will pile up, and temporary protections against evictions and mortgage foreclosures likely will disappear. Some struggling Alabamians will turn to high-cost payday or title loans in desperation to pay for rent or utilities. If nothing changes, many of them will end up pulled into financial quicksand, spiraling into deep debt with no bottom.

State and federal governments both can provide protections to prevent this outcome. At the federal level, Congress should include the Veterans and Consumers Fair Credit Act (VCFCA) in its next COVID-19 response. The VCFCA would cap payday loan rates at 36% APR for veterans and all other consumers. This is the same cap now in effect under the Military Lending Act for active-duty military personnel and their families.

At the state level, Alabama needs to increase transparency and give borrowers more time to repay. A good first step would be to require title lenders to operate under the same reporting duties that payday lenders do. Enacting the 30 Days to Pay bill or a similar measure would be another meaningful consumer protection.

The Legislature had an opportunity before the pandemic hit Alabama this year to pass 30 Days to Pay legislation. SB 58, sponsored by Sen. Arthur Orr, R-Decatur, would have guaranteed borrowers 30 days to repay payday loans, up from as few as 10 days under current law. But the Senate Banking and Insurance Committee, chaired by Shay Shelnutt, R-Trussville, voted 8-6 against the bill early in the session.

That narrow vote came after the committee canceled a planned public hearing without advance notice. It also happened on a day when Orr was unavailable to speak on the bill’s behalf.

Alabamians want consumer protections

Despite the Legislature’s inaction, the people of Alabama strongly support reform of these harmful loans. Nearly three in four Alabamians want to extend payday loan terms and limit their rates. More than half support banning payday lending entirely.

The COVID-19 pandemic has laid bare many deficiencies in past state policy decisions. And Alabama’s lack of meaningful consumer protections continues to harm thousands of people every year. The Legislature has the opportunity and the obligation to fix these past mistakes. Our state officials should protect Alabamians, not the profit margins of abusive out-of-state companies.

Community eligibility ensures future success of Alabama’s child nutrition programs

By Celida Soto Garcia

Even during “normal” times, one in four Alabama children goes to bed each night uncertain where they’ll get their next meal. Sadly, the COVID-19 economic downturn has likely pushed that number higher.

Most days, hungry children can look forward to school meals to help keep them fed. But school closures amid the pandemic have disrupted this lifeline. Fortunately, several changes are helping, and the Community Eligibility Provision (CEP) is making those changes work even better.

How community eligibility helps replace lost school meals

Soon after the closures, schools across Alabama started revamping food plans to provide meals for on-site pickup and even delivery. It’s a job easier said than done. The COVID-19 Child Nutrition Response Act, passed in early March, allowed the U.S. Department of Agriculture (USDA) to loosen its rules for school meal programs. But many communities found it difficult to manage the logistics, especially when it came to confirming family eligibility. As a result, access to the meals was inconsistent from one district to the next.

CEP participation played a big role in determining which programs worked best. CEP is a federal option available to schools and districts where at least 40% of students meet the family income requirement for free and reduced-price meals. Eligible schools can use this option to serve breakfast and lunch at no cost to all of their students.

Alabama schools that implemented CEP before 2020 avoided the time-consuming steps of verifying eligibility for each family and documenting the process for fee-based reimbursement. This allowed them to switch more easily to “non-congregate” food plans, or individual distribution of meals and snacks. With CEP, school child nutrition administrators only have to submit the number of meals served for reimbursement.

Since CEP became available five years ago, 360 Alabama schools have joined the program. Still, in 2019, more than 100 eligible schools had failed to adopt the streamlining. In non-emergency times, CEP eliminates the hurdle of processing school meal applications. And it removes the “free and reduced-price meals” classification from the lunch line altogether. This relieves students from social distinctions that can lead to teasing, stereotyping and outright shaming.

A firm foundation for emergency response

COVID-19 has highlighted the need to strengthen safety net programs supporting health and childhood nutrition throughout Alabama. Pandemic EBT (P-EBT), a newly available option administered by the state Department of Human Resources and Department of Education, addresses the disruption of services by issuing direct cash benefits to families participating in free or reduced-price school meals or the Supplemental Nutrition Assistance Program (SNAP). This includes households in high-poverty schools that provide meals to all students through CEP.

Alabama quickly sought and received federal approval to implement P-EBT. It was a remarkable example of state agencies coming together to fortify safety net programs during turbulent times. P-EBT soon will succeed in supplementing on-site school meal distribution – and even more can be done. Advocates are calling on federal lawmakers to increase SNAP benefits by 15% and extend P-EBT benefits through the summer.

While many of these initiatives are new and trail-blazing, CEP is proving to be a firm foundation for emergency response. What may have just seemed like an option for delivering the National School Lunch Program before this pandemic is now a proven measure for swiftly supporting food-insecure areas during times of greater need.

On the whole, our schools and supporting community organizations have done a remarkable job of continuing food service during an emergency that has blocked access to conventional learning spaces – and for too many children, access to their only guaranteed meal of the day. But we must do more than merely respond to potential emergent tragedies.

Gov. Kay Ivey should use her authority as chairwoman of the State Board of Education to recommend that all eligible schools and districts adopt CEP. Ivey should start by urging superintendents to complete a CEP application for all eligible Alabama schools by Aug. 1, 2020.

Pandemic EBT keeps Alabama children fed when school meals aren’t an option

By Carol Gundlach

The COVID-19 pandemic has disrupted the lives of nearly every Alabama family, including families with school-aged children. All of a sudden, parents have to double as teachers, coaches and lunchroom cooks and servers.

Parents with low incomes are also stretching limited grocery dollars to replace meals that their children normally got at school – often at no cost. As a result, the number of families with young children struggling to put food on the table has increased astonishingly. Two in five such households are in that precarious situation nationally.

Children lost more than school when schools closed

When Alabama schools shut down in mid-March, some schools offered drive-through meal service providing several days of sack lunches and snacks. Summer food program providers jumped into gear, starting their meal services months early.

Despite these valiant efforts, grab-and-go lunches and summer food programs simply don’t have the capacity to replace traditional school meals. School meals reach nearly all school-aged children. Grab-and-go lunches and summer food programs, however, offer meals to only around 14% of school-aged children. This leaves parents with additional food costs as the economy tanks and hundreds of thousands of people lose their jobs.

Congress and Alabama acted quickly to feed hungry children

Public school closures threatened to create a hunger epidemic among children living in households with low incomes. Congress responded to this risk by including the Pandemic EBT (P-EBT) program in the Families First Coronavirus Relief Act. Alabama became one of the first states in the South, and seventh in the nation, to apply successfully for P-EBT.

P-EBT is a joint venture of the Alabama Department of Education, which administers school meals, and the Department of Human Resources (DHR), which administers the Supplemental Nutrition Assistance Program (SNAP). P-EBT provides many families of school-aged children with a debit-like card called an electronic benefit transfer, or EBT, card. This card is loaded with the value of each child’s school meals from March 18 to May 31.

Streamlined eligibility means no application is required

P-EBT eligibility is automatic for any family participating in SNAP or with school-aged children getting free or reduced-price school meals. Parents don’t have to apply or go to DHR to get the assistance. If parents receive a letter about P-EBT, they need only to return it with the requested information to receive benefits.

Participants can spend P-EBT benefits at any grocery store or other store that accepts SNAP. They also can use benefits for online orders if the store lets people use SNAP assistance to order groceries online to pick up at the store.

Most families who participate in SNAP already have received an additional deposit onto their SNAP EBT card. Families who don’t participate in SNAP but applied during the school year for free or reduced-price school meals will automatically receive EBT cards in the mail. All the family has to do is activate the card with a PIN number to use it.

Many families who don’t participate in SNAP are still eligible

Some children received free meals because they attended a school where all students received free meals through community eligibility. Their families will get letters from DHR requesting information like the parent’s name or address to send the EBT card. All that is necessary to get P-EBT is to respond to the questions and mail the letter back.

Some families may have made too much to qualify for free or reduced-price meals in March or April but have lost jobs since then. These families can apply for SNAP by May 31 and receive both SNAP and P-EBT benefits retroactively to May 1. They also can apply for free or reduced-price school meals and receive a P-EBT card for May.

Children who get grab-and-go meals at school or participate in a summer food program are still eligible for P-EBT assistance. The last day on which someone can become newly eligible for P-EBT is May 31, but traditional SNAP assistance still will be available. People with questions about P-EBT can call DHR at 800-410-5827.

What do we still need to do to help hungry families?

Children don’t quit eating just because school is out for summer. P-EBT is a vital replacement for lost school meals. But it is still tied to the school calendar and can’t help families during the long summer ahead.

Congress can do two things to help in the next COVID-19 relief package. First, lawmakers can and should increase SNAP benefits by 15% for everyone. This will help families with school-aged children, as well as seniors, people with disabilities, and people who have lost their jobs. And it will particularly help SNAP participants with the lowest incomes. These families already get the maximum benefit and therefore did not get an assistance increase in the previous relief package.

Second, Congress could extend P-EBT assistance throughout the summer. This would allow P-EBT to continue feeding children until schools reopen in the fall. Continuing to deposit the value of school meals on EBT cards would be easy if Congress allows it to happen. And it would go a long way toward ensuring no Alabama child goes hungry during this pandemic.

Alabama Arise urges new federal guidance on return to unsafe working conditions

By Chris Sanders

Workers shouldn’t have to choose between their lives and their livelihoods. That’s why Alabama Arise joined more than 220 organizations across the country Tuesday in a letter urging the U.S. Department of Labor to act aggressively to protect workers who are at higher risk from COVID-19.

Existing federal laws protect workers from losing eligibility for unemployment insurance (UI) or Pandemic Unemployment Assistance (PUA) benefits if they refuse to return to jobs that do not comply with health and safety rules. But the Department of Labor’s recent guidance does not reinforce these protections for workers whose employers are not taking proper precautions against COVID-19.

These shortcomings will force many workers to choose between their family’s health and financial security. And they will increase the pandemic’s toll on black and Latino communities where people are more likely to live in poverty and without health insurance.

The letter urges the Department of Labor to issue new guidance clarifying that workers are not disqualified for UI or PUA benefits if they refuse to work in conditions that do not comply with Centers for Disease Control and Prevention (CDC) guidelines to limit virus spread. The letter also asks the department not to require workers who are older or immunocompromised – or who live with people who are – to return to work under such conditions.

You can read the full letter here.

Arise update: May 1, 2020

By Matt Okarmus

As job losses and business closures mount, state revenues for education, health care and other public services are likely to plummet. Arise’s Carol Gundlach discusses how progressive tax changes would help prevent cuts to these services and help Alabama rebuild its economy after the COVID-19 pandemic.

Read more about our proposals here.