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It’s Time to Cover All Kids

Every child should have every opportunity for a healthy start, and that includes having access to comprehensive health coverage. Unfortunately, roughly 96,500 (4.9%) children in Virginia do not have health coverage according to 2019 census data. This could mean missed opportunities for early medical intervention, absences from school due to illness, and families avoiding medical care due to fear of financial cost. Lack of health insurance could have an outsized impact on the educational, health, and financial wellbeing of children and their families.

While there has been some recent improvement in children's insurance rates in Virginia, the state still ranks 25th in the nation for the number of children who do not have health insurance. A closer look at the data makes it clear that children who are either Latinx, immigrants, or from families with low to moderate incomes face significant barriers to health coverage.

State lawmakers can and should do more to make sure affordable and comprehensive health coverage is available to all children who call Virginia home. Increasing eligibility levels for the state’s health programs and removing barriers related to immigration status would provide an affordable health coverage option to roughly 1 in 3 (31%) children in Virginia who are currently ineligible and uninsured.

Who are Virginia’s uninsured children?

Virginia’s uninsured rate for children dropped from 5.1% in 2018 to 4.9% in 2019. This was largely due to the implementation of Medicaid expansion and what is known as the “welcome mat” effect: when parents become eligible for health coverage, they are more likely to sign their children up as they learn more about eligibility rules.

This small improvement in health coverage for children is a step in the right direction but a closer look reveals unequal access to coverage based on race/ethnicity. Latinx children are significantly overrepresented in the number of uninsured children. While only making up 14% of the child population (aged 0-18) in Virginia, Latinx children account for 35% of all uninsured children in the state.

Children in families with low or moderate incomes are also more likely to be without coverage. While children in families earning above 305% of the federal poverty level ($66,978 for a family of three) have an uninsured rate of just 2.5%, children in families earning less than that level have an uninsured rate of 7.4%. To provide more children with the opportunity of a healthy start, families with low and moderate incomes must have greater access to affordable and comprehensive health coverage options.

A child’s immigration status is also a strong indicator of whether or not they have health coverage. Children who are citizens have an uninsured rate of 4.1%, while children who are non-citizens have an uninsured rate of 31.3%. Non-citizens vary in current immigration status, including lawful permanent residents, refugees and asylees, those with pending immigration cases, those without any status, and many other possible immigration statuses. The stark contrast in uninsured rates is largely because many non-citizens, particularly undocumented immigrants, face several barriers to accessing health insurance.

Lawmakers in Virginia should build on recent progress to provide affordable health coverage options to the youngest Virginians who call the state home. Expanding coverage options for low and moderate income families and children regardless of immigration status is an important next step.

Virginia’s Eligibility Rates Lagging Behind

The maximum income that a family can earn in Virginia and still be eligible for health coverage through Medicaid or the Children’s Health Insurance Program (Medicaid/CHIP) is low. With an income limit set at 205% of the federal poverty level (FPL) – $45,018 for a family of three – Virginia is tied for 44th lowest in the nation along with four other states (AZ, NV, UT, and WY). Only two states, Idaho and North Dakota, have more limited access to their public children’s health insurance programs than Virginia.

Our current eligibility lags behind the national median upper-income limit (255% FPL) and the median limit for states that have expanded Medicaid (266% FPL). Virginia should modernize eligibility standards and join 19 other states that cover children at or above 300% FPL.

Increasing eligibility to 305% FPL ($66,978 for a family of three), would mean roughly 18,650 children who are citizens and currently uninsured and not eligible for Medicaid/CHIP in Virginia could be connected to new affordable health coverage. This represents nearly 1 in 5 (19%) currently uninsured children in Virginia.

While raising income eligibility limits could provide a significant boost in the goal to cover all children in Virginia, efforts to provide affordable coverage to all children regardless of immigration status should also be prioritized.

Covering Children Regardless of Immigration Status

Six states (CA, IL, MA, NY, OR, and WA) and the District of Columbia use state-only funds to cover income-eligible children in Medicaid/CHIP who are otherwise ineligible due to immigration status. These states all have a lower children’s uninsured rate than Virginia (4.9%) ranging from 1.5% to 4.1% and have modeled how this coverage expansion can be effective at lowering uninsured rates for children.

Though funded primarily with state-only dollars, these state coverage programs function just like Medicaid/CHIP for the family, offering the same scope of child-specific benefits. Virginia should follow suit by expanding Medicaid/CHIP coverage to all children regardless of status.

By increasing the Medicaid/CHIP income eligibility cap and expanding the program to all children regardless of status, over 30,200 children currently uninsured and ineligible for Medicaid/CHIP would have new access to affordable and comprehensive coverage. This policy change would provide a new and affordable health coverage option to roughly 1 in 3 (31%) uninsured children in Virginia.

Conclusion

State lawmakers have made recent progress in expanding access to affordable and comprehensive health insurance but more can be done to make sure Virginia’s youth are covered. Investments in Virginia’s children will help make sure more families can meet their health needs without risking their financial well-being. It’s time to cover all kids and become a national leader for children’s health coverage.

– Freddy Mejia, Policy Analyst

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#healthcare #kids #virginia #immigration status #medicaid

Taking Stock and Looking Forward: Virginia’s Economy and Policies to Build a Stronger Future

With many schools resuming in-person classes, an acceleration of vaccine rollout, and positive reports about how many jobs are being added each month, it might feel like everything is getting back to normal. Yet we can’t afford to return to a status quo that was failing too many of our communities, and much more needs to be done. By using available policy tools, we can build a more equitable recovery and economy for the future.

Where We Stand

People are the economy, and Virginia’s economy is doing well only when people in Virginia are doing well. Despite the rising stock market, the impact of the pandemic on the real economy is far from over, and too many people in Virginia are still without work. There are still 214,000 people in Virginia who are without a job despite seeking to work -- twice as many as were unemployed a year ago before the major impacts of the pandemic -- and there are another 200,000 people who have dropped out of the labor force, whether because of the challenges of supervising remote schooling or the lack of safe employment options. A number of economists have warned that many of these jobs will not automatically return with the reduction in COVID cases, since employers have found ways to rely less on human labor in their work processes. Further, one lesson of the Great Recession is that a slow recovery harms families and communities, particularly those that face the highest barriers. Job recovery was a long process -- the recession officially ended in 2009 yet it wasn’t until 2014 that Virginia recovered to as many jobs as in 2007. The unemployment rate for Black residents of Virginia rose to 11% in 2009 and stayed that high for two more years before gradually declining to 4.4% in 2019.

Being put out of work means many families are struggling to make ends meet. Nationally, 34% of adults with children and 29% of all adults reported difficulty covering usual household expenses according to Census Bureau data covering March 17-29. In Virginia, 27% of adults reported difficulty covering usual household expenses during the March 3-March 29 period (smaller sample sizes at the state level require pooling more weeks of data).

And not everything was working well before the pandemic. Two basic components of economic well-being are income and wealth. In terms of income, almost 3 in 10 working people in Virginia were being paid less than $15 an hour in 2019, often while doing critical work such as food production and caring for children and elders. That’s less than is needed to affordably rent a typical studio or one-bedroom apartment in Virginia. Because of unequal access to high-quality public schools and ongoing discrimination in seeking employment, Black and Latinx people in Virginia are even more likely to be paid under $15 an hour. And that’s for people who have been able to find jobs -- Black people in Virginia are twice as likely as white people to be looking for work but unable to find it, and in recent years relative unemployment rates have risen for Latinx people in Virginia as well. This February and March, 8% of Black workers in Virginia were still unemployed.

And in terms of wealth, both young and middle-aged adults were already facing high levels of student loans and rising rent costs, even as headlines blared about a rising stock market. This has been particularly true for Virginians from families who weren’t able to help with college costs or making a down payment on a first home. Many of those who were already boxed out before the pandemic are families of color who, because of past and ongoing barriers to wealth-building, are less likely to receive an inheritance or other large monetary transfers from older family members.

Opportunities for a Just and Equitable Recovery

Policymakers at all levels of government have the opportunity to learn from the lessons of the Great Recession and invest in a robust, equitable recovery.

Policies for Virginia

For state policymakers, the federal American Rescue Plan Act provides a historic opportunity to make investments in communities and families who have been shut out for too long. With $3.77 billion in flexible funding for the state of Virginia and another $222 million for capital projects (additional funds will go directly to localities), policymakers can help build a full-employment economy and invest in rectifying past wrongs through investing in labor-intensive, one-time initiatives and seeding wealth-building initiatives for families of color.

To build a full employment economy, the state could make transformative investments in building safe, energy-efficient schools for the current and future generations of children, increased K-12 funding for reading tutors through the Virginia Reading Corps to help children make up for lost instructional time, grants to nonprofit organizations to better help low-income families make home improvements to reduce energy bills, and support for local governments to help young people enter the labor force through summer jobs programs. State policymakers could require that jobs funded through these grants pay wages above a certain threshold (perhaps 150% of the Virginia minimum wage). Alone, these sorts of policies won’t solve every problem, but they would create meaningful improvements in our communities, help address climate change, and provide a decent wage and experience to people who have been shut out of the labor market.

To rectify past and ongoing discriminatory barriers to wealth-building, Virginia could use some money to seed wealth-building programs, whether wealth-based baby bonds for the next generation, meaningful down payment assistance for today’s working families, or undoing some of the harm caused by the locating of highways and toxic industries in communities of color.

Federal Policies

For federal policymakers, low borrowing costs and the opportunity to build an equitable recovery while addressing the climate crisis creates the imperative to make transformative investments in a stronger, healthier future. In addition to building a more resilient and more climate-friendly infrastructure, this should include reducing child poverty (which has long-term benefits both for the individual and society as a whole), strengthening the earned income tax credit, expanding access to affordable housing and health care, strengthening food assistance programs, investing in child and elder care and making sure providers are paid a decent wage, and expanding paid leave. (For more information on how a federal infrastructure package can support a broad-based, long-lasting improvement in family economic security and opportunity, see this recent report by the Center on Budget and Policy Priorities.) And after decades of sharp increases in the real (inflation-adjusted) cost of going to college, federal policymakers should provide broad-based student loan debt forgiveness while addressing college costs going forward so that the next generation of students are not burdened with the same challenges.

Paying for Improvement

Investing in policies that keep families in their homes, workers employed, students enrolled in college, and businesses open -- and focusing those investments to those who have faced the highest barriers -- is both just and smart policy. Right now, state lawmakers have some available federal funds to make a down payment on these initiatives. To scale up to what is needed for a just recovery and maintain it will require everyone to invest in our shared future, including asking the winners of the pandemic economy to pay their fair share. Both state and federal policymakers can clean up the tax code to raise the resources needed to make permanent improvements in public programs that support thriving communities. This should include closing loopholes for multistate corporations through tools like combined reporting at the state level and correcting the Trump-era give-away for pass-through businesses at the federal level, as well as other loopholes that particularly benefit wealthy, well-connected individuals. And both state and federal policymakers should reinstate fair taxation of inherited wealth and use that money to create broad-based wealth-building opportunities. There’s a lot of work to be done to build an equitable recovery and economy, and there’s also a lot of opportunity to do so. Let’s get to it.

– Laura Goren, Research Director

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#people are the economy #virginia #federal aid #families

Virginia Poised to Become A National Leader On Expungement Reform

Lawmakers have arrived at a proposed compromise on legislation that would expand Virginia’s restrictive expungement law by including new criminal record sealing provisions to limit how certain records can be disseminated. For a significant number of the estimated 1.6 million people in Virginia who have a past criminal record, this bill—if it becomes law—would provide greater economic security, opportunity, and hope.

The proposed compromise includes both automatic sealing and petition-based sealing, depending on the nature of the case. Notably, the bill also includes a number of important provisions that generally apply to all cases, including:

No Duty to Disclose A Sealed Record. Once a record is sealed, a person is typically not required to disclose it to employers, educational institutions, or to state or local governments. Those same entities also cannot ask about sealed records, unless a specific exception applies. That information is similarly sealed for purposes of purchasing or renting a home.

Old Fines & Fees Are Not A Barrier to Record Sealing. Although some prior versions of this legislation required a person to have paid court costs and fines from the offense before becoming eligible for record sealing, there is no such requirement in the compromise bill. This represents a critical improvement, in part because court fines and fees are imposed with unparalleled intensity in Virginia’s Black communities. Note, however, that sealing does not relieve someone from the paying fines and fees resulting from the underlying offense.

Accuracy Standards for “Business Screening Services.” This bill creates an affirmative obligation for business screening services in Virginia to maintain accurate records and delete records that have been sealed. The legislation includes specific monetary penalties (e.g., $1,000 or actual damages, whichever is greater) for violations and permits the Attorney General to file civil actions to enforce these protections.

Sealing of Traffic Infractions. Traffic infractions would be automatically sealed after 11 years, unless otherwise prohibited by state or federal law. (This does not include criminal code violations such as DUIs.)

Full Implementation by 2025. While a number of provisions will phase in gradually over the next few years, the law would be fully implemented by October of 2025.

Beyond these general provisions, the compromise bill creates new opportunities to seal criminal records, both through an automatic and a petition-based process, as briefly summarized in the table below:

Automatic Sealing Petition-Based Sealing

Misdemeanor charges, excluding traffic offenses, that result in acquittal, dismissal, or where the prosecutor no longer pursues the charge (nolle prosequi). There is no waiting period for cases that qualify for sealing, however:

The bill lists six factors that may preclude the sealing of records in these cases (e.g., where good cause is established by the Commonwealth's Attorney, or where another charge arising from the same facts and circumstances is pending against the person, etc.).

Charges brought under § 4.1-305 (related to underage alcohol offenses) or § 18.2-250.1 (possession of marijuana) that are deferred and dismissed. The waiting period is 7 years from the date of dismissal, so long as the person has not been convicted of another offense in that time, excluding traffic offenses.

Convictions of certain minor offenses (e.g., related to trespassing, petit larceny, etc). The waiting period is 7 years from the date of conviction, so long as the person has not been convicted of another offense in that time, excluding traffic offenses.

Felony charges that result in acquittal or that are dismissed with prejudice. There is no waiting period. Upon request by the defendant, and with the agreement of the Commonwealth’s Attorney, the records shall be sealed. Denials may be challenged in the circuit court.

With certain limited exceptions, convictions or charges that were deferred and dismissed for a: (i) misdemeanor offense, (ii) class 5 or 6 felony, or (iii) a violation of § 18.2-95 (grand larceny) or any other felony offense in which the defendant is guilty of larceny and punished under § 18.2-95. Costs for filing the petition are waived for people who have little income and the bill establishes a “Sealing Fund” to cover the costs of counsel for eligible defendants. The court shall seal the record if the following factors are met:

The person has not been convicted of another crime for 7 years (if sealing a misdemeanor offense) or 10 years (if sealing a felony offense), and has not been convicted of a serious felony within the past 20 years and never convicted of a Class 1 or 2 felony;

In cases involving substance use, there is evidence of rehabilitation;

The person has not already sealed more than 2 prior records;

Continued dissemination of the record will cause a “manifest injustice” for the person.

These reforms, if enacted, would transform lives and strengthen families, communities, and the economy. This legislation also represents an important step to address racial injustice and the unequal outcomes that permeate our criminal justice system. At the same time, this legislation offers an opportunity to strengthen Virginia’s reputation as a national leader on criminal legal reform.

-- Phil Hernandez, Senior Policy Fellow & Counsel

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Compromise House Conformity Bill Takes Fiscally Responsible Approach on Business Tax Deductions

Economic hardship has sharply increased at the highest rate in over 50 years. In Virginia, families and communities across the state are struggling to keep up with rent and to put food on the table. After months of employment growth, employment in the state was essentially flat between November 2020 and December 2020. Similar to the experience of the last recession, national data show that state and local budget cuts are hurting overall economic growth and could dampen the recovery in the months ahead. To minimize these impacts, the state should preserve available resources to maintain support for K-12 public schools, higher education, the public health response, and other services, while providing additional targeted aid to families and small businesses.

Unfortunately, some businesses and special interests are pushing for a broad, unlimited state tax deduction related to already tax-exempt Paycheck Protection Program (PPP) loans, which would lead to deep cuts elsewhere in the state budget. Because it would have no dollar limit, this would provide a large “double-dipping” tax break for many big businesses in the name of helping small businesses.

The House of Delegates is seeking a more prudent balance, proposing to provide a more limited deduction that would better focus on helping struggling small businesses. Tomorrow, the House of Delegates will vote on legislation that takes this more measured approach, limiting deductions related to forgiven PPP loans to $25,000. Meanwhile, the Senate passed similar legislation that provides a larger $100,000 deduction. Because the loan amounts themselves are already tax-exempt, that means eligible businesses would be allowed additional tax deductions up to these amounts on their other income. In addition, both pieces of legislation provide equivalent deductions for businesses that received Rebuild Virginia grants from the state.

Both bills represent a compromise that departs from ordinary tax policy related to loan forgiveness, providing an extra tax break for businesses (albeit with limits, unlike what some business lobbyists have proposed). Normally, businesses receive income through normal operations and are able to deduct business expenses, such as payroll costs. For business loans that are later forgiven, the forgiven loan amounts are considered income, and businesses are able to take deductions related to expenses that were paid with the loan proceeds. Hypothetically, if a business had a $100,000 loan forgiven but used the entire loan on payroll, the business faces no income taxes on that loan amount.

Under the PPP loans that were created under the federal CARES Act, the usual tax policy was flipped. The forgiven loans were not counted as income for tax purposes, and deductions related to those loan proceeds were—pursuant to a May 2020 IRS Ruling—not allowed. Similar to the above scenario that applies to other types of loans, the business effectively faced no income tax on their forgiven loan amounts. The Northam administration proposed to follow this approach that was in place until late December: forgiven PPP loans would be tax-exempt for state tax purposes, but additional deductions related to the forgiven amounts would not be allowed at the state level.

However, under the federal Consolidated Appropriations Act that was signed into law in late December, the federal government changed course and decided to provide additional federal tax deductions on top of the existing tax exemption related to forgiven PPP loans. This creates a double tax benefit. Because the forgiven PPP amounts are already tax-exempt, the business can use those additional deductions to offset income taxes on their other income, including profits.

For Virginia, fully conforming to the new federal policy that provides these new PPP deductions would reduce state revenues by an estimated $340 million to $500 million for the two-year state budget. Unlike the federal government, the Commonwealth of Virginia must have a balanced budget. Fully allowing the double tax benefit would force the state to make cuts elsewhere in the budget, at a time when the state has to meet its commitments on school funding, health care, and other pressing needs.

Additional support for families, communities, and small businesses is critical, but fully tying that support to new across-the-board deductions related to PPP loans is likely to miss the mark. Numerous media reports last year highlighted that many large corporations that were relatively unaffected by the pandemic were able to receive millions in PPP loans, depleting the pool of available funds, while many struggling small businesses, particularly Black-owned businesses, were unable to obtain the loans at all. According to the nonpartisan Congressional Budget Office, the initial rounds of PPP loans provided less effective economic stimulus than other federal actions like enhanced unemployment benefits and fiscal relief to states and localities.

Targeted grants would be best able to reach struggling small businesses and hard-hit sectors. Lawmakers are pursuing a second-best strategy of limiting the deductions at the state level, which is aimed at providing a tax break to smaller entities and helping to prevent large, unaffected corporations from taking hundreds of thousands or more in additional business deductions. At most, the compromise would cost about $150 million in the current two-year budget, much lower than the estimated $340 million to $500 million of providing an unlimited deduction.

As these bills continue through the legislative process, state policymakers should continue to balance their desire to help small businesses with their fiscal responsibilities. New tax deductions must be weighed against the state’s other commitments in addressing the pandemic and economic downturn: to adequately deliver public services, provide economic support for families, partner with localities on costs to safely reopen school buildings, and fully invest in the ongoing public health response.

– Chris Wodicka, Senior Policy Analyst

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#tax ppp deductions virginia house senate

For Today and Tomorrow: Increasing Health Coverage for Undocumented Virginians

COVID-19 has reminded us that our health and well-being are highly intertwined with that of our neighbors, and that our communities are stronger when everyone has the resources needed to be healthy and provide for their families. Virginia has made recent strides to offer affordable and comprehensive health coverage to more families living in the state -- in 2019, Virginia’s uninsured rate dropped from 8.8% to 7.9% largely due to the decision to expand Medicaid. Yet 658,000 people remained without coverage, and just over a quarter (27%) of the total uninsured population in Virginia are foreign-born non-citizens. This is largely because many non-citizens, particularly undocumented immigrants, face several barriers to accessing health insurance. If Virginia would like to continue its recent progress in providing affordable health coverage options for those who call the state home and strengthen our communities, expanding coverage options for undocumented immigrants can be an important next step.

In 2020, Virginia legislators removed a barrier to accessing health coverage for lawful permanent residents, but additional work needs to be done to make sure more immigrant families in the state have access to comprehensive and affordable health coverage and services. Virginia’s immigrant population is ethnically and culturally diverse -- 35% identify as Asian American or Pacific Islander, 33% identify as Latinx, 18% as non-Hispanic white, and 11% identify as Black -- and varies in current immigration status, including naturalized citizens, lawful permanent residents, refugees, and undocumented individuals, among others.

Undocumented immigrants and DACA recipients (“dreamers”) in particular have limited health coverage options, and are banned from accessing health coverage through Medicaid, Medicare, or the Affordable Care Act (ACA) individual health insurance marketplace. The Migration Policy Institute estimates that 55% of all undocumented people living in Virginia do not have health coverage as of 2018.

Virginia lawmakers have the opportunity to build on recent coverage gains by advancing the following policy options to help undocumented immigrants access health coverage for COVID-19, prenatal care, and comprehensive coverage for children in low-income families:

Expand Eligibility for Medicaid/FAMIS MOMS Prenatal Health Coverage

Extending Medicaid/FAMIS MOMS prenatal coverage to women regardless of immigration status who meet all other non-immigration eligibility criteria would be an important coverage option for expecting mothers. This federal option is already in use in 17 other states and would require approval to amend Virginia’s CHIP state plan. Prenatal health coverage would allow more families to meet their health care needs during pregnancy and during the delivery of the child. This could also make securing ongoing coverage for the child easier as the family would’ve already been in contact with Virginia’s Department of Medical Assistance Services to access prenatal coverage.

Beyond the important health equity implications of this policy, it would also benefit Virginia’s bottom line. Extending prenatal coverage to undocumented people is projected to result in net savings for the state in the coming years ($2.3m for the budget year that begins July 1, 2021) since the federal government would pay a higher share of the costs compared to emergency only services that might be used otherwise. Budget amendments to expand access to prenatal coverage to women regardless of immigration status have been introduced by Del. Guzman and Sen. McClellan.

Clarify Emergency Medicaid to Cover COVID-19 Related Services

Virginia can strengthen its health response to the pandemic by clarifying that emergency Medicaid specifically covers COVID-19 testing, treatment, and vaccination. The emergency Medicaid program pays for certain services for people that would qualify for regular Medicaid but are ineligible due to immigration status. Services are traditionally limited to medical treatment required after the sudden onset of a medical emergency that places the individual’s health and bodily function in severe jeopardy, such as a heart attack or a broken bone.

Twelve states have publicly stated that they are offering COVID-19 services through this program and doing so may encourage more immigrant individuals to seek the services they need without fear of how they will pay for it. Legislation (House Bill 2124, Del. Lopez) to make this change has been introduced during Virginia’s 2021 legislative session.

This clarification would allow a singular statewide message to be shared widely and leave no doubt as to health care costs related to COVID-19 for all families with low incomes. Making sure that everyone has access to COVID-19 care, regardless of immigration status or income, will help reduce the spread of the virus throughout our communities.

Develop a Public Health Coverage Option Available to All Children

Six states (CA, IL, MA, NY, OR, and WA) and the District of Columbia currently use state-only funds to provide health coverage to children in low-income families regardless of immigration status. Half (50%) of all undocumented children in Virginia are estimated to be uninsured compared to only 4.9% of all Virginia children going without health coverage. Budget amendments introduced by Del. Krizek and Sen. McClellan directs Department of Medical Assistance to create a workgroup to research and recommend strategies for the financing of health care services for undocumented immigrant children. Virginia lawmakers should include this directive in their final budget so that more families can meet their children’s health care needs.

Together these policies can make an immediate and long-term difference in the lives of thousands of families across the commonwealth and help more Virginia families meet their health care needs. Virginia legislators should not hesitate to move forward with these policies due to the need to respond to the ongoing COVID-19 pandemic and the racial disparities in health care access highlighted by COVID-19 cases, hospitalizations, and deaths.

– Freddy Mejia, Health Policy Analyst

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#health coverage #immigrant #prenatal #covid

Virginia Needs an Updated Budget to Address Economic and Health Challenges

A lot has changed since April when legislators approved a state budget amid significant uncertainty. After six months, we have seen how Virginia’s economy has reacted to the pandemic and how families have continued to struggle. We also know there are federal and state resources available to help address these needs. This special session the governor, House, and Senate have put forward revisions to the budget to use some of these resources to help people gain access to health care, to stay in their homes, and help schools with reopening. However, Gov. Northam has threatened to not sign the state budget after disagreeing with revisions made by the House and Senate. Virginia can not afford to wait until spring 2021 for available state money to be provided for urgent needs related to the health and economic crisis, but that’s exactly what will happen if a budget is not approved during this special session.

Decisions made in April 2020 to “unallot,” or freeze, funding for almost all new initiatives mean people in Virginia are living without health care access, schools don’t have the resources they need, public colleges don’t have money to address rising student need and pandemic-related costs, and new affordable housing initiatives are indefinitely delayed. The budget items that were “unallotted” during the April reconvened session are initiatives that express the priorities of the new legislative majorities and many take important steps to remove barriers facing low-income families and communities of color.

The governor’s proposed revised budget that was introduced in August does not restore funding for most of these initiatives, but it takes some important steps forward. The House and Senate take further important steps, using a portion of the state’s available resources to restore funding that will help families and communities get through the coming months. Without a new budget, the funding for these new initiatives will be unavailable to help families until at least spring, undoing much of the important progress toward a more equitable Virginia that was made during the 2020 legislative session. (During “short” regular legislative sessions, which 2021 is scheduled to be, the amended budget is typically passed by the legislature in February, yet typically isn’t signed by the governor until after the reconvened session in April, and the revisions do not go into effect until after the governor signs the budget.)

There is money available to invest in the needs of families and communities and the opportunity now to do so. The governor’s administration, House, and Senate budget proposals that are currently being considered include important changes that would use a small share of the available money to improve the lives of Virginia families.

Housing - The loss of jobs and income for many families due to the COVID-19 pandemic has sharply increased the number of families at risk of losing their homes nationally, with one study estimating that houselessness could rise 40-45% by the end of the year. Black and Latinx families are most at risk of eviction due to both past and present discrimination leading to lower incomes and lower wealth, as well as direct discrimination on the part of landlords. All three budget proposals include restored and additional funding for the Housing Trust Fund and current-year money for an eviction prevention and diversion pilot program, which would help to address Virginia’s looming eviction crisis. This money is needed now -- evictions are happening despite the limited federal moratorium -- and if policymakers do not pass a budget, the funding will not be available until at least March, and likely not until April.

Healthcare - The House and Senate proposals restore funding to extend postpartum coverage from 60 days to a full year effective Jan. 2021. This is an important step in safeguarding continuous health coverage for new mothers and will make sure the families’ health care needs can be met during a critical time. Similarly, House and Senate proposals include funding to remove a barrier to health coverage for immigrant communities (“40-quarter rule”) but differ on when it would become effective. The House version would end the rule at the start of 2021, while the Senate version would not remove the rule until July 2021. Immigrant communities in Virginia have been hard hit by COVID-19 due to longstanding health care, housing, and workplace inequities. Removing this barrier to health coverage should take place as soon as possible so that some immigrant families are not forced to wait any longer to become eligible for Medicaid coverage.

Education - Virginia schools have undergone a transformational shift as they reopened, whether in-person, virtually, or as a hybrid model. This has included getting technology to students, adapting lessons, and reworking transportation and class schedules to protect student and staff safety. Meanwhile, schools are experiencing large enrollment declines, which will be a major hit to school budgets, and could reduce state funding by $150 million if current estimates are accurate. This would occur in the middle of the school year that schools have already budgeted for. The House proposal delays the enrollment declines from impacting state payments to school divisions until after March. This means the General Assembly will have the opportunity in the January 2021 legislative session to take further steps and prevent these funding losses altogether. Separately, declines in sales tax forecasts are projected to cost schools a further $189 million. The House and Senate both dedicate revenues from a tax on Virginia’s “gray machines” (also called games of skill) to cover those revenue declines in the current school year. If there is no budget, then both the declining enrollment and sales tax revenues will further limit resources for Virginia schools.

Higher education - Public colleges and universities are struggling to transition to hybrid and virtual learning while experiencing a temporary reduction in tuition and fee revenue. All three proposals restore funding for the current year to help Virginia’s historically Black public universities increase financial assistance for their students. These colleges -- Virginia State University and Norfolk State University -- serve the highest number of low-income students of any of Virginia’s four-year public colleges, and have smaller endowments than many historically white public universities in Virginia due to historical barriers to wealth-accumulation for Black families.

Policing reform legislation - A revised budget would also allow policymakers to fund any costs associated with new legislation reforming police and criminal justice training and procedures. Regular laws passed during a special session typically take effect on the first day of the fourth month following adjournment, which means that if the special session adjourns in October, the new reform legislation would take effect on February 1, 2021. However, if required funding is not available because there is not a revised budget bill, implementation would be delayed.

Closing a tax loophole - All three budget proposals would update Virginia’s tobacco tax to include newer “heated tobacco products” now on the market as well as certain out-of-state distributors that are not currently required to collect Virginia’s Tobacco Products Tax.

Without a revised budget, the February 1 date for closing the tobacco tax loophole will not happen, there will be no funding until at least spring for legislation that passed during this special session, and the “unallotted” new initiatives will not be restored until March or April -- three-quarters of the way through the budget year -- harming families and communities, and denying state policymakers the opportunity to take a more holistic approach and set the stage for an equitable recovery. The budget is a fundamental policy document that indicates who and what we prioritize as a state; the legislature should pass and the governor should sign a budget that uses available resources to invest in families and communities, rather than delaying yet again.

– TCI Policy Team

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Enrollment Losses Could Have Big Impacts on Schools Unless Lawmakers Take Action Now

Among the many uncertainties that schools faced going into this school year was how many students would enroll and what resources they’d have to meet student needs. Since state dollars are largely allocated on a per-student basis in Virginia, large declines in enrollment mean that schools will see a dramatic drop-off in resources -- threatening teacher layoffs and further tightening school budgets. With many divisions in Virginia 100% virtual and spikes in private school applications during the summer, enrollment loss seemed likely. A survey conducted by the Virginia Association of School Superintendents (VASS) confirms that enrollment has dropped. State legislators are currently in session and can take steps to preserve resources for schools during this crisis. This can be done with language in the state budget to delay the impacts of enrollment loss until after March (as currently proposed in the House budget) or by including a “hold harmless protection” that ensures no division receives less state funding this year or next than they did in the 2019-2020 school year.

The VASS survey (responded to by 123 of Virginia’s 132 school divisions) shows that many responding divisions have experienced enrollment declines in the first weeks of the school year. In total, the survey estimates 36,500 fewer students than initially anticipated. That loss in enrollment would have a sizable impact on state funding come January when the Virginia Department of Education (VDOE) recalculates enrollment based on the new fall data. VASS estimates a state funding loss greater than $150 million for the current school year.

Schools already run on very tight budgets, with many fixed costs including building maintenance and utilities, and any budget shifts mid-year, particularly large unexpected ones, will be hard to deal with outside of painful cuts. (State funding has still not recovered from cuts made during the last recession.) And even with fewer students, the responsibilities of staff and teachers are growing in order to respond to the needs of students in this unprecedented time and work to provide a safe learning environment. The huge hit to school budgets is why 70% of responding divisions to the VASS survey say staff reductions are likely. Those layoffs mean larger class sizes for students and putting many people, from a largely female workforce, out of a job. In Virginia schools, more than 80% of teachers are women.

The state budget adopted back in March included language and funding ($3.7 million) to hold all school divisions harmless, meaning that no division would receive less state funding this year than they did in the 2019-2020 school year, regardless of enrollment changes. Unfortunately, these dollars were removed from the budget by the governor when he presented his revised budget on Aug. 18. Last week, the House and Senate approved competing revisions to the governor’s budget. Neither chamber includes language for holding school divisions harmless, yet the House does take an important step to delay enrollment declines from hitting school budgets. The House budget amendment delays adjustments to enrollment from impacting state payments to school divisions until after March. This means the General Assembly will have the opportunity in the January 2021 legislative session to take further steps and prevent these funding losses altogether. The Senate proposal includes no protections.

Budget conferees from the House and Senate are meeting this week to determine a compromise version. Typically, conferees negotiate between the chambers’ two proposals. While only a temporary fix, the House proposal to delay enrollment adjustments until after March is a significant improvement over the Senate’s alternative of no action, because it gives legislators more time to design and adopt a longer term solution. By delaying the enrollment adjustments (proposed by the House) or by holding school divisions harmless (similar to what was included back in March), school leaders will have more assurances of what state funding to expect and help them protect against layoffs and reduced services for students. These protections also won’t come at a large cost to the state, it would simply protect what’s currently being allocated. Given the many uncertainties students, families, staff, and schools are currently facing, this is one that the legislature can resolve right now.

-- Chris Duncombe, Policy Director

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This Recession is Different: Hardship among Asian American Communities and the Need for State Policy Solutions

The economy shows some signs of recovering from the worst of the pandemic-driven recession, yet the share of working people in Virginia who are unemployed is still more than twice as high as last year. In addition, the topline numbers obscure double-digit unemployment rates among working people of color, particularly Black, Latinx, and Asian American workers. For Asian American workers, this trend is markedly different from the previous recession, when the unemployment rate among Asian American workers was slightly lower than the overall unemployment rate. At the state level, Virginia policymakers must take action to address the historic level of economic and health needs, particularly among the communities of color who have been more likely to be excluded from the federal response to date. State action should also more specifically address challenges faced by Asian Americans, such as language barriers and anti-immigrant restrictions around public services.

Prior to the full impact of the current recession, the Asian American unemployment rate in Virginia was about 3.2% in the first months of this year. In the late spring and early parts of the summer, the unemployment rate sharply increased among all groups of workers. However, although unemployment rates have started to fall among white workers, unemployment still remains between 13% and 14% among Black, Latinx, and Asian American workers over the last several months. [Note: this analysis is based on IPUMS Current Population Survey (CPS) microdata, which produces slightly different numbers for some months than state employment statistics published by the Bureau of Labor Statistics that also incorporate other data sources; however, the CPS microdata are the only timely and publicly-available source for sub-national employment data by race and ethnicity.]

These high levels of unemployment seem to be tied, in part, to the outsized impact of the pandemic on the leisure and hospitality sectors, in which Asian American and Latinx workers in Virginia are more likely to be represented. It is also worth noting that topline unemployment rates, poverty rates, and other economic indicators for Asian Americans have tended to mask enormous variation among different Asian American communities that are evident at a more disaggregated level. Some Asian American communities in Virginia are likely facing even greater economic hardship than suggested even by the double-digit unemployment rate.

Research suggests that official U.S. statistics may have understated the extent to which Asian American workers lost jobs earlier in the recession due to data issues around which people were counted as officially unemployed. After accounting for this misclassification problem, the national unemployment rate for Asian American workers may have been as high as 20.3% in May 2020, according to analysis from the Pew Research Center.

Alongside economic hardship and the health effects of the pandemic, Asian American communities have also suffered from a surge of xenophobia and anti-Asian racism, much of which stems from racist conspiracy theories and has been documented by an increase in hate crimes and harassment against Asian Americans. As a result, many Asian American cultural districts and Asian American-owned restaurants across the U.S. suffered a steep decline in business earlier than other businesses. Asian students have also experienced well-documented additional discrimination in education spaces since the onset of the pandemic, which can create new challenges for families and communities.

At the same time, relief measures, including those enacted at the federal level, failed to fully reach many communities of color, including Asian American communities. For example, the Economic Impact Payment checks that were part of the federal CARES Act were not available to families where even one of the spouses files income taxes using an Individual Taxpayer Identification Number (ITIN). This restriction excluded about 323,000 Virginia residents, including about 221,000 undocumented immigrants who do not have a Social Security number and 103,000 family members of undocumented immigrants (65,000 of whom are children). Immigrants from Asian countries represent about a quarter of Virginia’s undocumented population, which means many Asian Americans in Virginia were likely excluded.

Despite the historically high levels of unemployment noted earlier, Asian American workers in Virginia appear to be much less likely to file claims for unemployment benefits. That means many of these workers may have missed out on critical financial support, such as the temporary $600 per week boost to unemployment benefits that was in place until late July. While some Asian American workers may not qualify for unemployment benefits due to immigration status, it is likely that many Asian American workers otherwise would have qualified but had difficulty navigating the application process due to language barriers.

Barriers also have prevented Asian American business owners from accessing needed assistance. Similar to the experience of Black- and Latinx-owned businesses, Asian American-owned businesses were much less likely to receive federal funds through the Paycheck Protection Program (PPP). For Asian American-owned businesses, a lack of existing relationships with large financial institutions as well as language barriers seems to have played a role. At the state level, Virginia’s Rebuild VA Grant Fund for businesses and nonprofits excludes several types of businesses that are disproportionately owned by Asian Americans, such as laundromats and dry cleaning businesses.

The state has policy options available to help address these needs. That could mean providing additional income supports, such as supplemental wage replacement for unemployed workers, tax credits, or direct payments that have less restrictive eligibility than what has been available to date. This also means making forms, applications, and phone intake options available in more languages so that more Asian American people in Virginia are able to access existing services and relief programs, as well as any new efforts that are launched. For example, the state’s Rebuild VA Grant Fund has application materials available in Arabic, Chinese, Korean, and Vietnamese languages. Further steps must be taken to include other languages commonly spoken among the state’s Asian American population. The state should also improve access to rent relief. Community members who do not speak English fluently have reported problems with language access for rental assistance in some parts of the state.

In addition, state lawmakers should expand health care options, such as providing funding to eliminate existing barriers to health coverage for lawfully present immigrants. For example, the restrictions in Virginia’s Medicaid program that apply to lawfully present immigrants go beyond a federal five-year requirement and currently require a 40-quarter (or 10-year) work history. The state General Assembly approved funding in March to eliminate this barrier, but this was subsequently “unallotted”—or paused—due to uncertainty around the state budget situation. Because of the pandemic and widespread unemployment, the need to remove this barrier is more urgent than ever. While the barrier remains in place, many immigrants in Virginia, including Asian American immigrants, are locked out of comprehensive coverage when they arguably need it most.

Although the governor’s budget proposal from August did not restore this funding, the Senate Finance and Appropriations Committee budget would restore this funding beginning in July 2021. Meanwhile, the House Appropriations Committee budget would restore this funding beginning in January 2021 as long as the state’s December 2020 revenue projection does not decline by a certain amount. That funding would then continue through at least June 2022, as long as the state’s revenue collections through June 2021 do not substantially decline. As the General Assembly finalizes its budget, including funding to lift this barrier will be crucial for expanding health care coverage in the state.

The Asian American population in Virginia is an important and growing community in the state. Even though the overall state economy is showing the beginnings of a recovery, these improvements have not been broadly shared. During this moment, Asian American families in the state are facing unprecedented economic hardship. State policymakers must prioritize additional economic support that is inclusive, making sure these measures are accessible to everyone in Virginia.

-- Chris Wodicka, Policy Analyst

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New Census Income and Poverty Data Shows High Levels of Inequality Even Before Pandemic, Leaving Many At Risk for Hunger and Insecurity

High housing costs and income inequality meant even before the pandemic many families in Virginia did not have the means to build up savings that could have cushioned the impact of the pandemic on families and the economy even as incomes grew slightly for middle-income households and the number of very high-income households grew in 2019 before the pandemic began, according to data from the U.S. Census American Community Survey that was released today.

Between 2018 and 2019, Virginia’s poverty rate fell 0.8 percentage points and median household income rose by 3.4% after adjusting for inflation. Housing costs remained high – a trend that contributed to this year’s severe health and housing needs.

The pandemic has devastated the economy, and people across the country are struggling to get by. Federal and state policymakers must act now or they will leave millions of families to face this crisis on their own. This includes federal aid that matches the extraordinary need that households and our economy face and state support for health care services, economic supports, hazard pay and personal protective equipment (PPE) for front-line workers, and helping schools respond to the pandemic.

The consequences of the COVID-19 pandemic on people across Virginia – particularly families of color and those with low incomes - make the need for bold action at the state and federal levels clearer than ever. The Census Household Pulse Survey has more up-to-date data than the American Community Survey, allowing a look at the impact of the pandemic and recession.

10% of adults reported that their household sometimes or often didn’t have enough to eat in the last seven days

18% of adults in households with children reported that their kids sometimes or often didn’t eat enough in the last seven days because they couldn’t afford it

19% of adults who live in rental housing reported that they were behind on rent

And 24% of all children in Virginia live in a household that is either not getting enough to eat or behind on housing payments.

This hardship is being felt more acutely by people of color in Virginia who were already facing barriers before the pandemic and may be less likely to have jobs that can be done from home. More than 1 out of every 8 working people in Virginia who identify as Black, Latinx, or Asian American and Pacific Islander were unemployed this summer and actively looking for a job or were on temporary layoff without pay, compared to 1 out of every 19 working people who identify as non-Hispanic white. For Black people in Virginia, who are too often the “first fired” during a recession, a lack of jobs is compounded by challenges for Black business owners.

Digging deeper into the 2019 data that shows conditions in Virginia going into the pandemic, the statewide poverty rate was 9.9%, down slightly from 2018. The share of Virginia children who are living in households with incomes below the poverty threshold was 13.4% in 2019, indicating that even after 10 years of economic recovery, many Virginia families with children were still struggling to make ends meet. Even as the share of Virginia households with incomes above $200,000 continues to grow, 1 in 3 households in Virginia still have incomes under $50,000 a year. Too many backwards choices by policymakers over the years contributed to many working people in Virginia being left behind, while the next generation of Virginians attend schools that have endured a decade of cuts.

Two-thirds of Virginia families with incomes below the poverty threshold in 2019 had at least one adult in the household who is working. As a result, there were around 251,000 working adults living in Virginia households with incomes below the poverty threshold, which was just $25,926 for a married couple with two children. And Virginians who are Black or Latinx continue to be more likely than white and Asian American Virginians to have incomes below the poverty line.

Significantly, the 2019 data show one major improvement in Virginia -- an increase in the share of Virginians who have health insurance. This increase was the result of policymakers expanding access to Medicaid during the 2018 legislative session, a change that was implemented on January 1, 2019. Virginia was the only state in the country to have a significant decrease in the share of residents who are uninsured from 2018 to 2019. This improvement can fairly be attributed to the expansion of Medicaid and the work of thousands of advocates across the state to push for this policy. Tuesday’s press release includes more discussion on this health insurance data as well as ways that policymakers can build on this momentum to improve access to affordable and quality coverage for even more Virginians. More recent policy improvements such as raising Virginia’s minimum wage have not yet been implemented and therefore do not impact the 2019 data.

There are significant differences in opportunity both across and within regions. Many parts of Virginia experience far lower typical household incomes than the statewide levels. The metro areas of Blacksburg, Harrisonburg, Lynchburg, and Roanoke all have median household incomes at least $15,000 below the statewide median of $76,456; the Richmond and Hampton Roads areas also have median household incomes below statewide levels, although less dramatically. Additional tables with income, poverty, and health insurance rates by region are at the end of this post.

The good news is that federal and state policymakers can respond to the health and economic crisis created by COVID-19 in ways that rebuild the economy for a more equitable future.

Federal policymakers must act swiftly to provide more federal aid that matches the extraordinary need that households and our economy face. That includes boosting vital assistance programs such as SNAP (formerly known as food stamps) and housing assistance, extending enhanced federal unemployment benefits, and allocating additional aid to states and local governments that can help prevent further layoffs and cuts to core public services.

State policymakers must act now -- during the current legislative session -- to meet the demands of the moment by advancing bold, anti-racist policies to build equitable and inclusive communities and an economic recovery that extends to all people. This should include using all available resources to meet the needs of families and communities, reinvesting in health care to remove barriers for immigrant communities and new mothers, providing hazard pay and PPE for front-line workers, and helping K-12 schools respond to the pandemic rather than repeating the mistakes of the last recession that reduced support for schools serving low-income families, resulting in a long-term lack of resources.

The challenges, improvements, and inequities shown in the 2019 data are not due to chance; they are the result of the policy choices that were made up until that point. With the current pandemic showing the destabilizing consequences of an economy where many people -- particularly communities of color and low-income families -- face barriers to advancement and saving while other people just grow richer, state and federal policymakers have the choice to help families get through the current crisis while rebuilding for a better, more equitable future. Let’s make that choice.

– Laura Goren, Research Director

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Median Household Income 2018 (inflation-adjusted) 2019 % Change (if sig. change) Virginia $73,892 $76,456 3.4% Blacksburg metro N/A $56,092 N/A Charlottesville metro $72,339 $75,907 Harrisonburg metro $54,007 $60,740 11.1% Lynchburg metro $52,070 $57,736 9.8% Richmond metro $68,930 $68,324 Roanoke metro $56,150 $60,471 7.1% Hampton Roads metro $66,793 $69,329 3.7% Washington DC metro (includes DC & MD parts) $104,031 $105,659 1.5% Winchester metro $66,351 $76,583 13.4%

Note: Comparable data for the Blacksburg metro area is not available for 2018 due to a change in the included localities

Poverty Rate 2018 2019 Sig. Change? Virginia 10.7% 9.9% Yes Blacksburg metro N/A 22.9% N/A Charlottesville metro 13.9% 11.2% Yes Harrisonburg metro 16.4% 14.4% No Lynchburg metro 14.6% 11.3% Yes Richmond metro 11.3% 10.0% Yes Roanoke metro 13.4% 11.8% No Hampton Roads metro 11.2% 10.6% No Washington DC metro (includes DC & MD parts) 7.6% 7.5% No Winchester metro 12.6% 8.6% Yes

Note: Comparable data for the Blacksburg metro area is not available for 2018 due to a change in the included localities

Child Poverty Rate 2018 2019 Sig. Change? Virginia 13.7% 13.4% No Blacksburg metro N/A 23.5% N/A Charlottesville metro 15.8% 9.4% No Harrisonburg metro 6.0% 14.4% Yes Lynchburg metro 19.6% 11.4% Yes Richmond metro 16.1% 13.5% No Roanoke metro 21.2% 18.9% No Hampton Roads metro 16.7% 16.0% No Washington DC metro (includes DC & MD parts) 9.3% 9.9% No Winchester metro 21.1% 11.4% Yes

Note: Comparable data for the Blacksburg metro area is not available for 2018 due to a change in the included localities

Share of Residents Without Health Insurance 2018 2019 Sig. Change? Virginia 8.8% 7.9% Yes Blacksburg metro 6.6% Charlottesville metro 8.4% 6.5% No Harrisonburg metro 9.0% 8.8% No Lynchburg metro 9.7% 7.4% Yes Richmond metro 8.6% 7.8% Yes Roanoke metro 7.6% 6.9% No Hampton Roads metro 8.7% 7.3% Yes Washington DC metro (includes DC & MD parts) 7.5% 7.5% No Winchester metro 11.5% 8.0% Yes

Note: Comparable data for the Blacksburg metro area is not available for 2018 due to a change in the included localities

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Virginia is For Second Chances: Landmark Expungement Reform Moves Forward

Virginia is on the cusp of passing landmark expungement reform, which could help extend a second chance to those with a past arrest or conviction record. At the core of the two key bills moving through the legislature right now — House Bill 5146 (Herring) and Senate Bill 5043 (Deeds) and — is a belief in redemption. If enacted, these bills would allow certain prior offenses to be shielded from public view if a person remains crime-free for a specified period of time. For a significant number of the estimated 1.6 million people in Virginia who have a past criminal record, this “clean slate” could provide greater economic security and opportunity.

As TCI has written about previously, expungement reform holds the power to change lives, but it also benefits families, communities, and the entire economy. Consider, for example, that nearly half of all children in the country have at least one parent with a criminal record, which is often a barrier to employment and education, making it easier for poverty to pass from generation to generation. But a recent study illustrated how expungement can help to break that cycle, finding that wages increased by more than 20% in the year after an individual’s criminal record was expunged. These reforms also represent an important response to the long-standing racial disparities in our criminal justice system, which have disproportionately impacted Black communities.

While Virginia’s special session is ongoing, and legislation continues to take shape, the discussion below summarizes the current versions of HB 5146 and SB 5043, which advance a set of complementary reforms.

HB 5146: Establishing Automatic Expungement

By introducing an automatic expungement process, HB 5146 represents a major step forward and, if enacted, would make Virginia a national leader in criminal justice reform. There are also signs this bill could become law in a bipartisan fashion: earlier this week, 59 members of the House of Delegates voted to support this legislation.

Overall, the legislation creates two distinct pathways to automatic expungement. First, for cases that are dismissed or where the defendant is acquitted, the court (absent particular circumstances) must immediately order the criminal record to be expunged and it must communicate that information with the person charged.

Second, with respect to convictions, HB 5146 provides a comprehensive and specific list of offenses, including — as the large majority of states do — certain misdemeanors and felonies, which are to be automatically expunged after eight years from the date of conviction or release from incarceration, whichever is later, if the person has remained crime-free.

HB 5146 sets forth a general rule that people do not have to disclose to employers or educational institutions information about a prior arrest, charge, or conviction once the criminal record has been expunged. In addition, HB 5146 requires Virginia’s court system to make sure, following an expungement, that personally identifying information relating to the offense does not appear in a judicial opinion, or in an appellate court, circuit court, or district court case management system.

SB 5043: Expanding Petition-Based Relief

The approach of SB 5043 is to broaden the scope of current law by adding certain categories of convictions that would be eligible for expungement by petition. Virginia's existing law — one of the most restrictive in the entire country — generally provides no process by which past convictions may be expunged.

SB 5043 would change that by allowing certain convictions related to alcohol, tobacco, and marijuana possession to be expunged, but only after a five-year waiting period and upon payment of any outstanding court costs. The bill would also permit the expungement of convictions for non-violent offenses if the person has received a simple pardon and been crime-free for five years. In addition, like the House bill, after a criminal record has been successfully expunged, the individual generally is not required to disclose any related information on applications for employment or education.

Finally, SB 5043 makes clear that individuals who cannot afford to pay the fees and costs associated with filing a petition for expungement will be eligible for a waiver by the court. This provision is important, as the expense of filing the petition is often a barrier: according to a study of Michigan’s expungement law, only 6.5% of people who could get their records sealed did so within five years of becoming eligible, in part due to the required fees.

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Expungement Bills at a Glance SB 5043 HB 5146 Method of Expungement A petition must be filed in court; fees will be waived for certain eligible individuals Automatic Eligible Offenses - Certain alcohol and drug possession charges and convictions - Non-violent offense convictions following a simple pardon The bill specifically includes a wide variety of offenses, including — as most other states do — certain misdemeanors and felonies Waiting Period 5 years [with limited exceptions, in which case expungement may proceed sooner] - For charges that result in dismissal or acquittal: expungement is immediate - For all other eligible offenses (misdemeanors and felonies): 8 years Duty to Disclose An Expunged Record? No general duty to disclose to employers or educational institutions, unless otherwise required by law No general duty to disclose to employers or educational institutions, unless otherwise required by law Effective Date January 1, 2022 Full implementation by July 1, 2024

Taken together, these bills put forward significant reforms that hold the potential to transform Virginia’s expungement law from one of the worst in the country to one of the most robust and accessible. By passing and fully implementing these bills, policymakers can ensure that a life-changing, second chance is within reach for more Virginians and their families.

– Phil Hernandez, Senior Policy Fellow & Counsel

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After Saving Big on Medicaid, It’s Time for Lawmakers to Reinvest

Quality health care is essential to our well-being at any time and, in the midst of a pandemic, Virginia should be leveraging resources to make comprehensive health care even more accessible. Additional federal funding has resulted in savings for Virginia’s Medicaid program, which could be reinvested to further strengthen health care in Virginia. Unfortunately, the two-year budget proposed by Gov. Northam on Aug. 18, does not restore previously agreed upon funding for Virginia’s Medicaid program in addition to other critical public services, such as K-12 education and more.

Gov. Northam’s proposal also leaves $490 million in general funds unspent, effectively leaving money on the table at a time when families are struggling to meet their basic needs, including those related to health care. Now is not the time to delay access to critical health care services. With resources available, lawmakers should restore funding for essential oral and maternal health initiatives and end the draconian “40-quarter rule,” a barrier to comprehensive health coverage for lawfully present immigrants.

State Medicaid Savings During Pandemic

Additional federal funding for Virginia’s Medicaid program has saved the state hundreds of millions of dollars this calendar year due to provisions of the Families First Coronavirus Response Act (FFCRA). The bill increased the share that the federal government pays for Medicaid (i.e. the federal medical assistance percentage, or FMAP) by 6.2 percentage points during 2020, which directs more federal funds to states. State savings from this policy results in additional general funds dollars which legislators can use freely.

The increased federal match for Medicaid will result in general fund savings in Virginia of $331 million for the current fiscal year (FY21). Virginia could receive even more fiscal aid if the federal public health emergency is extended past December 31, 2020. In order to access this enhanced federal funding, states must agree not to disenroll members unless they move out of the state or voluntary disenroll. This promise to not terminate coverage during the health emergency is expected to cost the state $89.1 million during FY21. In total, this provision is projected to save the state $241.9 million in general funds. By freeing up general fund dollars, those savings could account for a large share of the $490 million in unappropriated funds.

Medicaid, which is a state/federal program, provides families with low incomes and people with disabilities an affordable option for comprehensive health coverage. This program has been critical in responding to the health needs of individuals during the COVID-19 pandemic. Since the declaration of a public health emergency by Gov. Northam, Virginia’s Medicaid program has enrolled 118,000 individuals.

Nearly half (47%) of those newly enrolled during the pandemic are through Medicaid expansion eligibility. Those enrolled through expansion eligibility have no general fund costs to the state due to a generous federal match (90%) and the remaining cost paid for by a tax on private acute hospitals.

An Opportunity To Reinvest

Several members of the Virginia House of Delegates have submitted amendments that would restore funding for critical policies that would allow more people to access Medicaid coverage, keep their coverage for longer, and improve the services they can access.

Lawmakers should choose to make a portion of the $490 million in unspent funds available to:

Restore funding to remove a barrier to health care, known as the “40-quarter rule”, allowing more lawfully present immigrants to be eligible for Medicaid ($4.5 million). Long-standing barriers to health care has contributed to the pandemic having a disparate and devastating impact on immigrant communities in Virginia. Access to basic health coverage is vital, and there is no better time to connect more people to health care than in the middle of a pandemic. Delegates Carroll Foy, Samirah, and Sickles have each submitted budget amendments to include this funding in the state budget.

Restore funding to allow more mothers to access health coverage for a full year postpartum ($3.2 million). Currently, Medicaid for pregnant women ends 60 days after birth for women whose income is too high to qualify for Medicaid expansion coverage and yet, experts agree that the risks associated with childbirth often extend long after 60 days. Delegates Sickles and Willet have each submitted budget amendments to include this funding in the state budget.

Appropriate funding for a home visiting demonstration project in 2022 ($3.6 million). This scaled-down version of a previously approved home visiting program would focus on providing Medicaid-eligible pregnant women with home visiting services to improve maternal and infant health outcomes and reduce health disparities. Home visiting programs for new parents promote healthy birth outcomes, enhance school readiness, prevent child abuse, and improve family self-sufficiency. Delegate Aird has submitted a budget amendment to include this funding in the state budget.

Restore funding for a comprehensive dental benefit for adults enrolled in Medicaid ($34 million). Those without dental coverage identify cost as the biggest barrier to getting access and have few options. Over half of the 19,000 ER visits for dental concerns by people enrolled in Medicaid in 2018 were for “non-traumatic dental conditions” like toothaches and loose teeth. Preventive dental care will reduce costly ER visits and improve overall health.

The Virginia General Assembly should use all available resources to restore funding to these important health priorities. In addition to the $490 million in unspent general funds, the Northam Administration has also chosen to not tap into the state “rainy day” fund or revenue reserves which total roughly $1 billion and are meant to be used during times of fiscal distress such as the current economic downturn. Virginia has an additional $241.9 million in general funds during the current fiscal year as a result of federal actions to bolster Medicaid funding. It’s time to reinvest a small portion of that money or unlock state reserves to make sure more families can access comprehensive health coverage and services.

-- Freddy Mejia, Health Policy Analyst

#health #Medicaid #healthcare #health care

Virginia Families Are Facing Hunger and Instability Due to the Pandemic: Legislators Should Use Available Federal Funds and Reserves to Help

Too many Virginia families and small businesses are struggling to stay afloat and pay their rent or mortgage in the face of continued devastation from COVID-19 on the main street economy and our daily lives, even as tech stocks drive the stock market to record highs. With consumer spending hurt by high unemployment rates for everyday working people in Virginia and a slow rebound in the service industry and brick-and-mortar retailers, state sales tax revenue is projected to be well below levels from a year ago. The state is also projecting much slower growth in employee income tax withholdings compared to pre-pandemic assumptions. This means that less new state revenue is available even as families, schools, and communities need more help to meet the economic and health crises. The good news is that the state of Virginia has available resources to help meet these increased needs, and policymakers can choose during this special session to deploy those resources to help communities navigate this challenging time.

In particular, policymakers have yet to allocate $1.3 billion of the $3.1 billion the state received from the Coronavirus Relief Fund in the federal CARES legislation. State leaders currently have until Dec. 30 to spend these funds and it’s critical that leaders direct these resources to families and communities. The state has also yet to make use of the $1 billion it has wisely saved in its two reserve funds, which can also play a critical role during this time.

The challenges Virginia faces

Before the impact of COVID-19, the economists and business leaders involved in the state revenue forecasting process expected employment, personal income, and state revenue to continue growing over the next several years, resulting in $22.7 billion in general fund revenue during the current fiscal year (FY 2021) and $23.5 billion in revenue in the next fiscal year (FY 2022). Given the necessary adjustments to daily life to protect public health during the COVID-19 pandemic, Virginia’s economic and revenue forecasters have sharply reduced those projections, resulting in a $1.3 billion (5.9%) reduction in forecasted revenue in FY 2021 and a $1.4 billion (5.7%) reduction in FY 2022.

At the same time state revenues are forecast to decrease, Virginia families need more financial help to prevent a rise in hunger and housing insecurity. Even before the $600/week federal boost to unemployment insurance benefits expired, 10% of Virginia adults reported that their household sometimes or often didn’t have enough to eat in the last seven days, a share that jumps to 18% of adults who are living in families with children. And 1 in 5 adult renters in Virginia was already behind on rent in mid-July. All told, about 400,000 children in Virginia were living in households where there wasn’t enough to eat or they were behind on their rent or mortgage. We expect these numbers to grow as the $600/week boost in unemployment benefits expired at the end of July. The pending CDC order halting some evictions until the end of December is an important step, yet it does not cancel unpaid rent or provide any money toward rental relief. As a result, without further help from the state, the CDC order may not reduce the total number of evictions, instead just delaying them until January.

Virginia has available state and federal resources to help meet these needs, and not spending them risks leaving money on the table

The challenges facing Virginia right now are significant, but the good news is there is money available to help meet these needs. This includes the state’s own reserves that are intended to be used to offset the impact of economic and revenue downturns, increased federal aid to help state and local policymakers meet the health and economic challenges, and options to raise new revenue.

Federal aid includes flexible funds that must be spent by December 30

The most immediate and largest of these is the federal assistance that has been provided to help state and local governments meet the needs of their communities. While these funds are insufficient to fully meet the needs of Virginia communities and more federal aid is needed (as well as more direct assistance to impacted workers and families), Virginia policymakers should be sure to fully use those funds that have been provided.

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Major Federal COVID-19 Aid for Virginia Program/Agency Description Amount Coronavirus Relief Fund (state and local) Flexible support for state and local governments to address the health and economic crises. Fairfax County received an automatic allocation of $200 million of these funds; Gov. Northam has allocated funds to other localities based on population. $3,310,000,000 Provider relief funds Direct payments to hospitals and other providers to address COVID-related costs $1,806,863,962 Enhanced FMAP Higher federal match rate for Medicaid and related services, helping to offset general fund and special health care fund costs. The portion that offsets general fund spending helps offset the expected decrease in general fund revenue. This estimate assumes the federal health emergency continues through all of FY 2021. $1,360,966,817 Federal Transit Administration Support for transit providers to meet current challenges $456,399,000 Airports Support for airports in Virginia to meet current challenges $309,729,000 Elementary & Secondary Education Fund Assistance to K-12 schools in meeting increased costs $238,599,000 Higher Education Relief Fund Assistance to colleges & universities based on enrollment; 50% must be used for emergency financial aid grants to students $294,391,000 Child care development block grants Support for childcare providers to meet current challenges $70,799,000 Governor's Emergency Education Relief Fund Flexible funding for to help K-12 schools, colleges, and universities meet the current challenges $66,775,000 Higher Education - HBCUs/MSIs Flexible funding for Historically Black Colleges & Universities and Minority-Serving Institutions to address student and institutional needs $41,014,000 Other support from the Families First, CARES, and other recent Acts Additional federal grants for public health, human services, and other needs $338,381,000 (Note: Table excludes direct relief to individuals and businesses such as the improvements to unemployment insurance, Paycheck Protection Program, and economic impact payments.)

The largest of these, the Coronavirus Relief Fund (CRF), is also the most flexible, yet Virginia policymakers have not yet committed or allocated all these funds, creating a risk that some may go unspent by the December 30 deadline despite the urgent need to help Virginia families stay afloat.

Unlike other federal funds that are tied to existing federal-state programs or are directed toward specific uses, state policymakers have greater discretion around the CRF. Expenditures must adhere to federal guidelines, including that spending be “necessary” and “incurred due to the public health emergency.” Under current law, these funds cannot replace general revenue shortfalls or cover costs that were already in the state budget when the CARES Act was enacted in March. In the April version of the state budget, legislators accepted language that provided the governor with the authority to allocate the CRF funds without further legislative action (legislators could choose during the current special session to restrict that authority or dedicate some funds to particular purposes).

Virginia’s total CRF allocation from the federal government is $3.3 billion, of which $200 million was provided directly to Fairfax County, given the locality’s large population. Of the remaining $3.1 billion, the governor’s administration has committed or allocated about $1.8 billion, primarily ($1.3 billion) in the form of support to other local governments. Other allocations include $173 million for the Virginia Department of Emergency Management for testing, personal protective equipment, and other emergency response; $70 million for Small Business Assistance Grants; $59 million for the Virginia Department of Health for contact tracing and UVA equipment; $56 million to support long-term care facilities; and $50 million for mortgage and rental assistance. Of these commitments, Virginia reported about $771 million in actual spending through the end of June, almost entirely in providing assistance to local governments.

It is unclear if Virginia will use CRF money to provide an additional state share of the temporary federal UI benefit boost. Doing so could cost about $135 million for the initial three weeks and an additional $45 million for each additional week that is approved.

However, even if Virginia does that, there is additional flexible Coronavirus Relief Fund money that is not yet committed or allocated by the administration. Under current federal law, any funds that are unspent by December 30 will need to be returned to the U.S. Treasury.

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Virginia Has Not Yet Allocated All Flexible Coronavirus Relief Fund Money Support for local governments $1,289,146,766 Testing, PPE, and other Dept of Emergency Management $173,060,401 Contact tracing and other Dept of Health $62,448,914 Small Business Assistance Grants $70,000,000 Long-Term Care Facilities Support $55,640,872 Mortgage and Rental Assistance $50,000,000 Personal Protective Equipment for Personal Care Attendants $9,256,178 Emergency Housing for the Homeless $8,828,998 Food security $3,861,953 Other $86,533,371 Total from Treasury $3,109,502,836 Allocated to date $1,808,777,453 Remaining $1,300,725,383

Virginia’s revenue reserves and unspent balances should be used to smooth the impact of the pandemic on families and communities

Policymakers in Virginia have wisely put money away over the last three years to help meet Virginia’s needs during an economic downturn. And through a hiring freeze and other actions, the governor’s administration increased the amount of cash that Virginia has on hand in addition to the two reserve funds. While maximizing the use of federal resources should be the first step, policymakers should also make use of the state’s own tools to address the impact of the pandemic and meet the growing needs of a growing population.

Using some of these funds should not negatively impact Virginia’s credit rating. In general, rating agencies have indicated that drawing down rainy day funds is appropriate during a downturn as part of a comprehensive budget strategy. “Rating agencies typically favor states that design their rainy day funds to align with turns in the economic cycle by depositing revenue during good times and spending those reserves when things turn bad” (Jeff Chapman, Airlie Loiaconi & Sheanna Gomes, Pew Charitable Trusts).

Long-term structural balance -- having ongoing revenue that is sufficient to meet the state’s ongoing expenses under reasonable assumptions about economic growth -- is also, rightly, an important consideration for rating agencies. This is evaluated by rating agencies in the context of the economic cycle; withdrawing money from rainy day funds during economic expansions would generally be viewed negatively by rating agencies. However, Virginia and the U.S. as a whole are not in an economic expansion, and the short-term use of reserve funds to meet the needs of state residents during a downturn is not the same thing as a long-term structural imbalance. Additionally, many of the needed interventions to protect Virginia families from the pandemic, such as additional rent and mortgage relief, are not ongoing expenses.

Policymakers can invest in protecting Virginia families and communities during pandemic

There are a number of ways that legislators could use the available federal and state funds to help Virginia families during the current health and economic challenges. These include additional rent and mortgage relief, food assistance for families who are struggling without employment, unemployment insurance payments for immigrant families and others who have been left out of federal help, sick leave and hazard pay for public sector and healthcare workers, removing barriers to health insurance for certain legally present immigrants, and reallotting funding for K-12 schools to help them meet the increased challenges of education during a pandemic. In some cases, the governor’s proposed budget uses state resources to help meet the increase in needs (for example, the governor’s budget proposal uses the TANF trust fund to provide food assistance to families with children in Head Start), yet more help is needed, and policymakers should consider using available CRF funds before tapping the state’s funds.

Virginia policymakers do not need to reinvent the wheel in order to help families and communities get by. Other states are using federal funds and state reserves to meet the needs of their communities at this time. For example, Oregon is using $35 million of federal funds to provide $500 one-time payments to any worker who has been impacted by job-related income loss. Hawaii has provided $100 million in housing assistance, Pennsylvania has provided $175 million in rent and mortgage assistance, and Florida has provided at least $240 million to help keep people in their homes. Maine has used $176 million to purchase a three-month supply of personal protective equipment for K-12 schools. And Iowa provided $57 million for child care providers. These are just a few examples from the National Conference of State Legislature roundup of how states are using CRF money. States are also using reserves to, for example, limit cuts to K-12 education support.

The COVID-19 pandemic and resulting recession are highly unusual events. Virginia policymakers have done a good job over the last three years of preparing the state for unexpected events by saving money in the state reserve funds. Now policymakers should use these funds, as well as available federal funds, to help families and communities stay afloat. It’s raining in Virginia, and it’s time to deploy our umbrellas.

-- Laura Goren, Research Director, and Chris Wodicka, Policy Analyst

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Gov. Proposal Takes Out Almost Three Quarters of A Billion Dollars ($722 M) for PreK-12, Leaves Rainy Day Funds Untouched

Last week, Gov. Northam announced his amendments to the state’s two-year budget that began on July 1. The proposal relies heavily on stripping out new investments in education, health care, and compensation to meet a projected revenue shortfall. For early education and K-12 schools, this includes taking out $533 million in new funding approved in March (this includes funding for additional school counselors, equity enhancements, and improved early education access and school nutrition, among other investments). Yet the damage goes further than stripping out new investments. Downward revisions to sales tax estimates drop state funding an additional $189 million. Taken together, schools across the commonwealth would see $722 million less from the state than initially anticipated at a time when more resources not fewer are needed to meet the educational needs of students, and federal aid falls far short.

The Senate of Virginia and House of Delegates are reviewing the budget proposal and have the opportunity to protect schools by modernizing Virginia’s sales tax, drawing upon the state’s rainy day funds, and using resources left unspent by the governor.

Virginia designates a portion of the state’s 4.3% sales and use tax for public education. These funds are distributed to school divisions based on the estimated school-age population and reduce the total amount localities are required to pay to meet the state’s Standards of Quality (SOQ). Unfortunately, sales tax revenue estimates are more than $1 billion less than originally forecast for the two-year state budget, as presented last week by Finance Secretary Aubrey Layne. This downward revision will drop state funding for education by $189 million in the two-year budget, which localities will need to find in order to meet the state’s required funding levels. The decrease in sales tax funding is in addition to the new funding that was frozen back in April (summarized here). The suspended funds for school divisions with the highest child poverty rates are twice as large per student as they are for the lowest-poverty school divisions. Divisions with the highest percentage of students of color will lose out on 23% more per student than school divisions with the lowest percentage of students of color.

The declines in sales tax revenues and impact on school finances furthers the case for the state to eliminate antiquated sales tax exemptions. Among states that have sales taxes, Virginia is one of only 16 states that does not apply that tax to digital products generally (as of Oct. 2019). By updating the tax code to include these products, the state would put them on a level playing field with equivalent goods that have been traditionally included in sales taxes and generate an estimated $30 million in needed state revenues in the upcoming budget, as well as new revenues for localities that they can use to meet the needs of local schools.

There are other resources state leaders can use during this time of financial strain. The governor did not propose using any of the state’s two main reserve funds (the revenue stabilization fund and revenue reserve fund). The two funds total more than $1 billion in 2020, equal to the second largest balance since 1995. These funds are intended to be used in times of fiscal distress. With Virginia in the midst of a health crisis and economic crisis and revenues down by $2.69 billion, now is the appropriate time to draw upon these funds to address the many challenges facing Virginia families, including protecting schools. Further, the governor left $490 million unspent in the budget. The Sec. of Finance justified this decision stressing the importance of financial liquidity for the state during this time of uncertainty, meaning a desire to have cash on hand. This is a sentiment that many Virginia families and schools share, yet a luxury they do not have in managing the challenges before them.

To meet budget challenges, states must seriously explore all available options, including rainy day funds and other reserves. The Sec. of Finance currently opposes withdrawals from the reserve funds, and General Assembly members have expressed concerns related to Virginia’s credit rating. However, in general, rating agencies have indicated that drawing down rainy day funds is appropriate during a downturn as part of a comprehensive budget strategy. While robust reserve funds are looked upon favorably by rating agencies, responsibly using these funds during a time of financial distress can be viewed as a positive in certain situations. “Rating agencies typically favor states that design their rainy day funds to align with turns in the economic cycle by depositing revenue during good times and spending those reserves when things turn bad” (Jeff Chapman, Airlie Loiaconi & Sheanna Gomes, Pew Charitable Trusts).

Virginia is not alone in facing these economic challenges and, given our reliance on federal spending, is better off than most states. Utah, for example, is also experiencing sharp revenue declines, yet Utah drew upon their reserve funds to protect school funding.

When Gov. Northam announced the proposed amendments to the budget, he asserted “cash is king” in defending the decision to leave dollars unspent and rainy day funds untouched. Virginia families and schools understand the importance of having cash on hand during this crisis. By keeping Virginia’s funds locked up in its reserves, the state will be hindering the ability of principals, teachers, and parents to have the resources to meet the new and evolving challenges they are experiencing on a daily basis. That’s why state leaders should put the state’s reserves to work and use all the resources available to them to help schools and families tackle the many challenges before them.

– Chris Duncombe, Policy Director

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#k12 #school funding #state reserves #budget #virginia

Addressing Barriers to Virtual Learning for Virginia Students

As the new school year begins, students will face a back-to-school environment far more unique than any in modern history. For students returning virtually or in a hybrid manner, this challenging transition is made even more difficult for students who do not have access to or cannot afford reliable, high quality internet. This inequity has for the most part been left up to cash-strapped local governments to try and resolve. On Tuesday, the governor proposed state assistance ($84.5 million) to expand broadband access to presently unserved areas. As state legislators review the governor’s proposal, they should also consider providing additional resources to families and schools to help with financial barriers to internet access and additional rent and mortgage relief.

Despite the importance of the internet and digital devices for everyday activities, even prior to the pandemic, thousands of Virginia families still lack access. According to 2018 5-year ACS Census data, over 190,000 Virginia households with people under 18 lack an internet subscription or do not have any computing device. Missing either of these components severely limits students from completing schoolwork digitally, and attending school in the same ways as their peers.

Despite conventional assumptions, students in both rural and urban areas struggle with internet and device access. A 2019 Commonwealth Connect report estimates that as many as 1 in 3 residents of rural Virginia lack access to high-speed broadband and a new analysis from the State Council of Higher Education for Virginia (SCHEV) found that almost 40% of students without internet access actually live in or around urban areas.

Unfortunately, Black and Hispanic students face even more barriers to home internet access and digital devices. In Virginia, 12% of all white households lack a subscription to the internet or any computing device. For Hispanic households, that number rises to 15%, while for Black households, the number is almost twice the amount as white households, at 22%. For households with computers, Black households are nearly twice as likely to lack access to broadband (higher speed) internet subscription than white households.

Even for those students who have the benefit of internet access and a computing device, more support can be provided. Students without laptops or desktop computers also have more difficulty completing longer term assignments (such as research papers) exclusively on their phones.

While internet access is crucial, it won’t help students if they don’t also have access to housing. The COVID-19 pandemic and economic recession have made housing stability for low-income renters much more difficult. One in five adult renters in Virginia was behind on rent in mid-July, and national data shows that renters who are parents or otherwise live with children are nearly twice as likely to be behind on rent compared to adults not living with anyone under age 18. Black and Latinx adults are more likely to be renters and therefore are more impacted by these challenges.

While the administration has provided $50 million for rent and mortgage relief, this is a small fraction of the total need. The National Low Income Housing Coalition has estimated that it would cost Virginia $2.8 billion to provide sufficient housing assistance between May 2020 and June 2021 for all Virginia renters who have been impacted by job loss – advocates in Virginia have requested a smaller allocation of $1 billion.

Solutions to these problems need to take several factors into account. The first is the cause of the lack of internet or a device. For some students, especially rural students, it is an issue of infrastructure: broadband simply has not reached their region yet. For these students, the governor’s proposal to increase funding for the Virginia Telecommunication Initiative (VATI), a program which extends broadband to areas throughout the state, can play an important role. Lawmakers should consider adding an amendment to the reallocation instructing the program to track progress on closing the racial digital divide in the state.

However, affordability is also a major concern -- in many areas of the state, students may have broadband in their area, but their families are unable to afford it. Establishing mobile hotspots and distributing devices with keyboards with internet enabled are positive first steps in addressing this divide. The state government has helped some amount in the short run by designating millions in flexible emergency federal CARES funds to localities that could be used for short-term access solutions, as well as the governor’s allocations specifically for internet and device access, but localities are already worrying about when this money runs out and many other reopening costs.

With many schools on the hook for purchasing devices and internet for their students this fall, the state should provide additional flexible dollars to schools to be able to make these short-term investments. The Fund Our Schools coalition has called on lawmakers to provide $600 million in emergency flexible funding during the special legislative session that started on August 18, which could go to meet this need.

The state could also expand affordable internet access to families by establishing a statewide broadband assistance program. For example, legislation was recently considered in Illinois to create a broadband assistance program that would provide free broadband service to families whose incomes are at or below 100% of the federal poverty line ($21,720 for a family of three in 2020). Families with annual household incomes above 100% but below 135% of the federal poverty line and families who have a member who qualifies for SNAP, SSI, or other benefit program would qualify for a credit of around $10 a month at minimum to pay toward their internet service. Virginia could consider a similar program in order to distribute resources quickly and directly to families who need it most.

Federal action is also needed to address affordability and provide internet to families. The Federal Communications Commission (FCC) could modify the federal E-Rate Program to allow for it to subsidize home internet access, as education leaders have requested, and Congress can approve additional funds to expand its reach. The Emergency Educational Connections Act introduced in the Senate and House would expand the reach of the E-Rate program beyond schools and libraries and provide billions in federal assistance to help cover costs. Virginia Sens. Warner and Kaine and Reps. McEachin, Luria, Spanberger, and Wexton are all cosponsors. These changes and funds are critical. Community buildings like libraries act as digital lifelines for many families, yet the public health situation changes the ability of these buildings to be used or makes it dangerous to do so.

Even if state leaders acquire additional funding to support schools purchasing hotspots and internet for students, the fact remains that if the infrastructure is not in place this fall, some students will not be able to access the internet regardless. Especially for these students and other students that have barriers to learning virtually, Virginia will need to support schools to offer remedial measures for students when they eventually return to the classroom. All students will have missed valuable instructional time, but these students will have additional barriers to instruction and will need extra support to catch up to peers who continue to have access to more learning resources.

The state could also further regulate or require action from internet service providers (ISPs) to address the digital divide. In particular, the state could require ISPs to support distribution of publicly available data showing access and subscriptions to eliminate the guesswork and individual data collection that many localities have to do to ensure equity for their students. The state also should continue discussing and researching measures that some localities and local leaders have proposed -- including paying for broadband for households that cannot afford it, considering broadband partnerships, or possibly designating ISPs as utilities under state law.

Addressing the systemic inequities in internet access will not be easy, nor will the results over the coming months be perfect. However, it is undeniably a necessary step to make sure that every student will be able to continue their education this year, reduce the achievement gap, and provide a 21st century tool for learning.

– Gabriel Worthington, Research Intern; Chris Duncombe, Policy Director; Chad Stewart, Manager, Education Policy and Development; Kathy Mendes, Research Assistant

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#broadband #internet access #virginia #virtual learning #broadband affordability

Federal Spending Likely to Continue Stabilizing Virginia’s Economy and State Revenue Through Recession

Virginia has long benefited from the federal government, largely due to the proximity of Washington, D.C. Out of all U.S. states, Virginia ranks first in federal spending per capita, according to a report by the Rockefeller Institute for Government. As lawmakers prepare to come together for a special session on August 18, where they will reconsider a number of budget items that were frozen, or “unallotted”, during the April reconvened session, they should keep in mind that Virginia’s economy is heavily influenced by federal spending. Federal jobs are providing a stabilizing effect for Virginia’s economy and state revenue, and this stabilizing effect is likely to continue for some time, reducing the need for state leaders to make pessimistic revenue assumptions and deep cuts to the state budget.

The federal government heavily influences Virginia’s economic activity. In 2017, Virginia ranked fourth among U.S. states in the share of GDP attributed to military and federal civilian activity. While the federal government's share in Virginia's GDP has declined over the last two decades, the federal government still accounted for about 1 out of every 5 dollars of economic activity in the state in 2018.

Because it relies more on federal spending than on sectors that may have been more affected by the COVID-19 pandemic, Virginia’s economy has been hit less hard by the recession than many other states. While real GDP decreased by an average of 5% in the United States in the first quarter of 2020, it decreased by only 3.8% in Virginia. The accommodation and food services, finance and insurance, and health care and social assistance industries that were hard-hit by necessary shutdowns were the leading contributors to the decrease in GDP nationally. Those sectors made up just 2.6%, 5.2%, and 6.5% of Virginia’s GDP, respectively, while government and government enterprises (which includes federal, state, and local) made up 18.2% of Virginia’s GDP in the first quarter of 2020.

Businesses and working people in the hardest-hit sectors are experiencing real challenges that Virginia policymakers should address through additional assistance. The good news is that substantial government spending, which has continued to bolster Virginia’s economy during the recession, can stabilize state revenue and help policymakers meet those needs.

As with GDP, employment in Virginia has remained higher than in much of the United States. Since the start of the economic downturn caused by COVID-19, Virginia’s unemployment rate has been consistently lower than the U.S. unemployment rate -- it was 8.4% in Virginia in June, compared to 11.1% nationally. The presence of federal jobs and businesses that contract with the federal government have contributed heavily to these employment outcomes. Federal employment makes up a much greater share of jobs in Virginia than in the United States as a whole -- in 2018, federal civilian and military employment accounted for 6.3% of total employment in Virginia and only 2.4% of jobs nationally. Employment in the federal civilian and military sectors made up 8.2% of Virginia’s total personal income in the first quarter of 2020, a larger share than each of the three industries that were the leading contributors to the decrease in GDP nationally. Virginia’s reliance on federal government employment, which has not been heavily impacted by the current downtown, has allowed it to maintain lower levels of unemployment than many other states.

This will not come as a comfort to the individuals and families in the accommodation and food services and other sectors heavily impacted by COVID-19, including those that have been laid off. Yet it is a positive for state revenues in Virginia -- revenues which can and should be used to provide needed housing, economic security, and health care for these same individuals.

Virginia has historically out-performed other states during recessions, with the state unemployment rate generally staying below the national unemployment rate. This was also true during the last recession: Virginia's economy wasn't as hard-hit as the national economy until federal government cuts started after the official end of the recession. While 6.3% of jobs were lost nationally during the recession, Virginia’s rate of job loss was lower at 5%. But when the federal government moved into a period of austerity in 2013, Virginia’s job creation began to slow. The same trend occurred in Maryland and D.C., also heavily reliant on federal spending. This indicates that in the absence of significant federal government cuts, Virginia has the potential to maintain a stronger economy than most other states even through a recession.

On August 18, lawmakers will consider a set of amendments to the state budget, including whether to continue the choice in the spring to remove funding for almost all new initiatives or to take a more balanced approach. But first, policymakers must determine what assumptions to make about Virginia’s economy now and in the near future. When considering future revenue projections and whether to set funds aside in anticipation of future revenue shortfalls, lawmakers should remember that Virginia’s economy relies more on robust federal spending than on revenue from those industries most affected by COVID-19. By freezing all new state spending, policymakers would be undoing much of the important progress toward a more equitable Virginia that was made during the 2020 legislative session. Instead, they should prioritize restoring initiatives that take important steps to remove barriers facing low-income families and communities of color -- and allow everyone in Virginia to move forward together.

-- Morgan Ackley, Research Intern, and Laura Goren, Research Director

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State Can Build on Recent Improvements and Provide Greater Local Revenue Authority

Nationally, state and local governments are on the front lines of addressing the current health and economic crises. In addition to responding to public health needs during a pandemic and carrying out evolving responsibilities related to K-12 education, local officials in Virginia have also established new programs through specific federal aid to assist families and small businesses that are struggling. At the same time, local governments in particular are facing enormous revenue challenges to maintain support for core public services. Under a new law signed earlier this year, the state has lifted some of the strict limits on a county’s ability to raise revenues. The General Assembly should consider further expanding local flexibility to manage their budgets, including authority relating to new revenues and tax relief.

Before the pandemic, spending on health and human services and education made up over half of total local governments’ operating spending in Virginia. [Note: This excludes local spending where the source of funding is state or federal dollars, as well as capital- and debt-related spending.] The effects of COVID-19 are likely placing even greater demands on local services. In the near term, federal and state actions will provide some financial assistance to partly relieve these pressures. For example, the Northam administration has provided local governments with about $1.3 billion in funds from the federal CARES Act. Localities can use these funds through Dec. 30 for “necessary expenditures” to respond to the COVID-19 health crisis that were not included in their previously adopted budgets. The CARES Act also provided funding for K-12 schools, though likely far short of what is needed.

For localities to meet the needs of their communities, including once federal aid expires, they will need greater revenue authority so that each community can determine the best mix of revenues for their situation.

Because of a U.S. legal concept commonly referred to as “Dillon’s Rule,” Virginia’s localities lack true home rule and have only the powers expressly granted to them by the Virginia General Assembly. In terms of revenues, that means localities in Virginia either do not have access to certain types of revenues or must adhere to state-established rates when levying many of the taxes that are permitted. For instance, the local sales tax is generally limited to 1%. Significantly, the state also does not permit any localities to levy a local income tax. Virginia’s local governments, especially counties, are mostly reliant on real and personal property taxes.

Under new flexibility in state law, all counties in the state will now be able to levy taxes on cigarettes and admission fees to events (e.g., movie, theater, and sporting events tickets) and have greater authority to levy meals taxes and taxes on temporary lodging such as hotels, known as transient occupancy. The provisions related to cigarette and transient occupancy taxing authority will take effect next year. This law will likely help counties to diversify their revenues streams and reduce their reliance on property taxes. However, the law also imposes a new cap on cigarette taxes, freezing existing local cigarette tax rates that are above the new cap. As of 2017, there were 15 cities and 10 towns with local cigarette tax rates at or above the new cap of 40 cents per pack, according to the Weldon Cooper Center’s annual publication on local tax rates.

Until Virginia also grants additional revenue and tax relief authority to localities, local taxes in the state will remain regressive. That means families with low and moderate incomes pay a larger share of their incomes in local taxes than families with high incomes. And although the state allows income-based real property tax relief for select categories of property owners, such as elderly or disabled homeowners, it prohibits local governments from providing income-based tax relief more broadly.

Limits on other revenue sources also contribute to reliance on court fines and fees, particularly in parts of the state where a higher share of the population is Black. Fines and fees, as well as associated interest and debt, can create “poverty traps” that exacerbate existing inequities by race and income. In contrast, local income taxes—which the state currently does not allow cities and counties to levy—and local income-based tax relief would shift local revenue systems in a progressive direction and improve equity. Local governments collect income or payroll taxes in 13 states.

State aid, not including federal pass-thru dollars, represented 32% and 30% of revenues for cities and counties, respectively, in the budget year that ended June 30, 2019. Without greater flexibility and revenue authority, localities, especially those with smaller property tax bases, need state aid to meet a large share of their budgets. During the aftermath of the Great Recession, lawmakers cut state funding for localities. Many cuts linger today, such as those related to K-12 education, where state funding prior to the pandemic remained down 8% per student compared to 2009 (adjusted for inflation).

Local governments are responding to the current moment while still maintaining core services. While new flexibilities and state and federal aid will provide budget support, localities will still face significant challenges in the years ahead. Until the General Assembly grants localities additional authority to raise necessary resources, local governments will continue to face familiar constraints. It’s up to state lawmakers to provide new options and tools.

– Chris Wodicka, Policy Analyst

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#local government #virginia #revenue #taxes #authority #budget shortfall

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