FACT SHEET: How Treasury’s Implementation of American Rescue Plan Programs Prioritizes Equity

The American Rescue Plan (ARP) represents a historic commitment to support those most impacted by COVID-19. While the legislation itself embodied this commitment in numerous ways, the key to the success of the ARP’s programs lies in their implementation. For this reason, Treasury created a new Office of Recovery Programs to lead the Department’s implementation of more than $1 trillion in economic relief and recovery programs, with a particular focus on promoting an equitable economic recovery. 

Since then, Treasury’s Office of Recovery Programs has worked closely with the White House and across federal agencies to execute a coordinated strategy to support people in underserved communities across the country, especially communities of color. Treasury has been guided by the core principles of engaging the most impacted communities, implementing additional flexibilities to meet the needs of marginalized individuals, and providing capital to historically underserved communities. 

 

Key Treasury Actions:

• Adding Flexibilities to Ensure that Rental Assistance Reaches Those in Need.  To avoid burdensome requirements that risked cutting off vulnerable populations from accessing rental assistance, Treasury encouraged key flexibilities in the Emergency Rental Assistance program, including the use of self-attestation for program eligibility and direct-to-tenant payments. These steps have helped increase access to rental assistance—with 80% of assistance reaching very low-income households, 40% reaching Black households, and 20% reaching Hispanic households—and contributed to significant reductions in eviction filings, with the largest reductions among communities of color.  
• Broader Uses for State and Local Funds for Disproportionately Impacted Communities.  Treasury provided for especially broad eligible uses for State and Local Fiscal Recovery Funds (SLFRF) funds when being used in disproportionately impacted communities.  Treasury has also put in place reporting requirements so that large recipients must describe how projects prioritize economic and racial equity and how their planning incorporates feedback from constituents and community-based organizations.  As a result, hundreds of governments are using SLFRF funds to address disparities, with key investments in high-impact initiatives, such as $11 billion allocated to housing programs.
• Robust Collaboration and Engagement to Reach Eligible Households. Treasury has engaged in extensive outreach, including to faith leaders, community-based organizations, unions, grassroots advocates, tenant organizations, and more to increase awareness and take-up of programs like Emergency Rental Assistance and the Child Tax Credit.  This outreach has helped ARP funds reach more households in need, contributing to significant decreases in child poverty – especially among Black and Hispanic families.
• Promoting Culturally and Linguistically Relevant Outreach: In programs including Emergency Rental Assistance program and the Homeowner Assistance Fund, Treasury has used tools to strongly encourage states and localities to set up programs that include culturally and linguistically relevant outreach. This approach helps ensure that language access is not a barrier for households. These efforts have been paired with a strong push for jurisdictions to invest in housing stability services that provide wrap-around support to pair assistance with other efforts to keep families in their homes. 
• Historic Small Business Demographic Data Collection Effort and Small Business Funding.  Treasury has implemented a historic data collection effort as part of the State Small Business Initiative (SSBCI) program, collecting key demographic information from businesses participating in SSBCI.  This data collection effort will support Treasury’s implementation of $2.5 billion in funding in SSBCI directed towards businesses owned by socially and economically disadvantaged individuals (SEDIs).

 

Key Treasury Actions

Treasury’s efforts to promote an equitable recovery include: 

• Making rental assistance accessible to the most vulnerable communities: 
  • The Emergency Rental Assistance (ERA) program makes funding available to assist households that are unable to pay rent or utilities. Treasury’s implementation of the program seeks to promote equity, including by reducing administrative, legal, and linguistic barriers for underserved communities. To promote equity, Treasury has:
    • Strongly encouraged state and local ERA programs to reduce unduly burdensome documentation requirements and to deliver assistance directly to renters in cases where landlords would not cooperate. 
    • Strongly encouraged grantees to invest in culturally and linguistically relevant housing stability services.  
    • Strongly encouraged grantees to adopt promising practices like making applications multi-lingual and mobile-friendly.  
    • Conducted targeted outreach to reach vulnerable and harder-to-reach communities to overcome structural barriers to equal participation. 
  • In addition, Treasury has required grantees with low initial spending to submit performance improvement plans to document their use of Treasury’s best practices, including the availability of applications in multiple languages and partnerships with community organizations to reach underserved communities.
  • Treasury has also reallocated over $2 billion in funds to grantees with significant need, prioritizing grantees within the same state as the source of reallocated funds and those that are likely to exhaust their ERA funding.  This reallocation has moved funds to areas with greater need that are serving more diverse communities. 
  • Additionally, Treasury requires state and local government ERA grantees to report on the demographics of tenants receiving rental assistance, including income level, race, and ethnicity. To promote program accountability, Treasury has since released this data, which shows the program’s broad reach to very low income and diverse communities.  
• Creating new resources and conducting outreach to drive Child Tax Credit sign-ups:
  • To increase access to the Child Tax Credit (CTC), The White House, Treasury, and the IRS worked together to launch a new user-friendly CTC filing tool and one-stop information hub (childtaxcredit.gov) that is mobile-friendly and available in multiple languages.
  • The Biden Administration also conducted extensive outreach to underserved communities, including dozens of trainings in English and Spanish for community organizations that helped people sign-up, hosted hundreds of events, and sent millions of letters to eligible families encouraging them to sign up.
• Encouraging the use of state and local funds to aid the communities most affected by the pandemic:
  • In implementing the State and Local Fiscal Recovery Funds (SLFRF), which provide $350 billion to over 30,000 governments across the country, Treasury issues rules permitting governments to use funds for a wider range of services when spending them in disproportionately impacted communities. These rules have allowed communities to address not only the near-term impacts of the pandemic, but also the underlying historical disparities exacerbated by the pandemic, including long-term health disparities, underinvestment in microbusinesses, and underserved neighborhoods in need of safe, healthy environments with strong economic opportunities.
  • Treasury has strongly encouraged state, local, and Tribal governments to use funds in ways that advance equity and address health and economic disparities. To promote accountability, Treasury requires large governments to describe how projects prioritize economic and racial equity and how their planning incorporates feedback from constituents and community-based organizations. In addition, all governments must report on how their projects advance equity by providing information about the populations served by key projects.
• Helping underserved small businesses access capital:
  • Treasury’s rules for the State Small Business Credit Initiative (SSBCI), which supports governments that increase access to credit for small businesses, are structured to support businesses owned and controlled by socially and economically disadvantaged individuals (SEDI-owned businesses) by providing additional funding for jurisdictions that demonstrate robust support for these businesses.  The rules also help facilitate targeted technical assistance to help SEDI-owned businesses succeed. 
  • To promote accountability, Treasury also launched a historic demographic information collection effort to measure equity outcomes for small businesses supported by the program. Jurisdictions participating in SSBCI will report demographic information collected from participating small businesses, including data on race, ethnicity, sexual orientation, and gender identity. The data collected will be essential to measuring the impact of SSBCI capital, aligning with Treasury’s commitment to promote economic growth by investing in communities and businesses that are most in need of resources.
• Building Treasury’s capacity to better serve and work with Tribal Nations: 
  • The American Rescue Plan represents the largest single federal investment in Tribal communities in history. This investment is anchored by the $20 billion in Tribal funds provided through Treasury’s State and Local Fiscal Recovery Fund. In recognition of the importance of ARP funds to Tribes, Treasury established a Tribal Policy and Engagement Team within the Office of Recovery Programs, which has worked directly with over 700 Tribal governments and recipients over the past year to support an equitable and efficient deployment of funds to Tribal communities. 
  • o    Across programs, Treasury has engaged in extensive government-to-government consultation and engagement to develop customized Tribal allocations, guidance, and reporting across recovery programs to provide Tribal governments with the flexibility necessary to meet the diverse needs of their underserved communities. Additionally, in recognition of the disproportionate impact of the pandemic on Tribal communities and their challenges regarding lack of access to reliable and fast broadband, Treasury has also implemented increased training assistance on use of funds and reporting to support Tribal government compliance.  

 

Results

One year since the passage of the American Rescue Plan, it is clear that Treasury’s work to advance equity through its implementation has delivered results for low-income communities and communities of color across a wide range of metrics.  These impacts include:

• A Historic Reduction in Child Poverty. 
  • The Congressional Research Service estimated that changes in the American Rescue Plan would increase the overall share of families with children under age 18 eligible for the CTC by 12 percentage points. 
  • These gains are even higher among Black (+20 percentage points) and Hispanic (+13 percentage points) families. Further, a Columbia University analysis found that advance CTC payments were keeping more than 2 million Black and Latino children out of poverty in December of 2021, and a U.S. Department of Health and Human Services study found that advance CTC payments were an important contributing factor in lifting 2.2 million Black and Hispanic children out of poverty in 2021.  
• A Substantial Reduction in Eviction Filings, Especially in Communities of Color. 
  • Through the end of February 2022, approximately $30 billion in ERA funds were spent or obligated, with over 4.7 million total payments made to households across America.
  • Recent demographic data released by Treasury shows that over 80% of this assistance is reaching the lowest-income households, and that it is reaching diverse communities, with approximately 40% of all primary applicants receiving assistance self-identifying as Black and approximately 20% self-identifying as Latino.  
  • This historic assistance to underserved communities has paid off: An analysis by Princeton University’s Eviction Lab found that millions of renters avoided eviction in 2021 due to the federal government’s unprecedented interventions, in significant part through the American Rescue Plan. It also found that low-income and majority-Black neighborhoods, which typically see a disproportionate share of eviction cases, experienced the largest absolute reduction in filings. 
• Major Investments by State and Local Governments in Hardest-Hit Communities. 
  • Hundreds of state, local, and Tribal governments are using SLFRF funds to address disparities in communities hardest hit by the pandemic as of December 2021. 
  • These governments are planning 1,460 distinct projects to invest in affordable housing, quality education, and public health to reduce longstanding economic, educational, and health disparities. For example, Boulder County, Colorado allocated $1.8 million to support COVID-19 vaccinations to underserved populations, including a bilingual vaccination campaign; Alexandria, Virginia is investing in equity focused workforce development programs; and Tulsa, Oklahoma has committed $6.5 million to help minority-owned small businesses grow.

 

Looking Ahead

While significant progress has been made in the first year of the Biden Administration’s implementation of the American Rescue Plan, the next year will offer key additional opportunities to address the structural disparities facing communities of color. The pandemic underscored the extent to which these communities face barriers due to inadequate access to credit—including higher loan-denial and interest rates than non-minority-owned businesses—and a lack of access to affordable internet services.

• Access to Capital for Small Business: The State Small Business Credit Initiative is providing billions of dollars to help state governments to address the economic fallout of the pandemic and lay the foundation for a strong and more inclusive economy by supporting these jurisdictions’ programs that increase access to credit for small businesses. As a result of these investments, the initiative is projected to serve tens of thousands of small businesses across the country.  
• Emergency Capital for Financial Institutions Reaching Underserved Communities: Under the Emergency Capital Investment Program, Treasury is providing $8.75 billion in capital directly to depository institutions that are certified Community Development Financial Institutions (CDFIs) or minority depository institutions (MDIs). These funds will help these financial institutions expand their lending activities in underserved areas and enhance their ability to support small businesses and other critical investments in these communities. These capital infusions are specifically designed to increase responsible investments in low- and moderate-income and minority communities that have disproportionately suffered from the impacts of the COVID-19 pandemic. In addition, the CDFI Rapid Response Program has made $1.25 billion in grants available to CDFIs to respond to economic challenges created by the COVID-19 pandemic, particularly in underserved communities.
• Access to Affordable Broadband: The Capital Projects Fund is providing $10 billion to eligible governments to carry out critical capital projects that directly enable work, education, and health monitoring, with a focus on expanding access to and affordability of broadband services. These investments, which are beginning this year, represent the first phase of the Administration’s comprehensive approach to improving broadband access across the country, work that will especially help rural and low-income communities access new economic opportunities. 

 

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