Cash assistance allows low-income families to pay for crucial essentials and relieves the damaging stress that results from struggling to make ends meet with inadequate resources. That stress is known to have lasting negative impacts on children’s health and brain development. Adequate cash assistance directed at families living in poverty can improve children’s health, as well as their academic and future economic outcomes.
However, maximizing the positive impacts of cash-assistance programs requires that families living in poverty can access them. To assist families with the cost of at-home instruction during the pandemic, the NC General Assembly passed legislation to provide $335 to eligible families with children in the form of an Extra Credit Grant Program. A recent State Auditor’s report on the program reveals that a significant number of eligible families missed out on the payment. Families that filed a 2019 tax return received the payments automatically, but families who did not file a tax return because their gross income was less than the filing threshold were required to fill out an application rather than receiving an automatic payment.
A special data request from the NC Department of Revenue showed that 157,000 families who received Extra Credit Payments in the last round had incomes so low that they were not required to file income taxes. Since the Extra Credit Grant Program has been extended through May 31 and a proposal is on the table to further extend the deadline in the Senate, the Department of Revenue is working with United Way’s network of direct service providers on outreach to increase awareness among low income families.
But for families with very low incomes, it isn’t just access to the Extra Credit Grant Program and ad hoc partnerships that could ensure their access to federal Economic Impact Payments and expansions of the Earned Income Tax Credit (EITC) and Child Tax Credit. A more systemic investment in the infrastructure that can connect people to these programs and a community-driven public awareness effort akin to the efforts around vaccination should be a priority in North Carolina.
The State Auditor’s report recommends that any future cash assistance programs use all available information to administer automatic payments to ensure that the state’s lowest income families are included. Specifically, the report suggests using information available to the state through public assistance programs such as Medicaid, the Supplemental Nutrition Assistance Program (SNAP) and the Temporary Assistance for Needy Families (TANF) program to identify eligible families.
The Justice Center’s work has identified the potential of investing in community-based organizations as trusted connectors to families in need and the role of health care providers as a source of information about income supports and working-family tax credits. This is consistent with the work underway at the NC Department of Health and Human Services to advance healthy opportunities and a culture of health. Awareness, however, must be coupled with systems that remove application barriers and reduce eligibility restrictions so that these critical programs can deliver the greatest benefit to the most families and in turn, benefit our economy.
In some states, legislation requires the state to make efforts to increase awareness of working-family tax credits, like the EITC and to provide free tax preparation to increase participation in programs that provide income support to families.
- Arizona: The Department of Economic Security is required to provide information on the EITC to all child-care subsidy recipients.
- Maine: The state DHHS is required to advise TANF beneficiaries about eligibility and claims for EITC.
- Oregon: The state Bureau of Labor and Industries requires employers to provide written notice of EITC and provides information about the credit to those receiving unemployment insurance.
- Texas: The state appropriates funds to support free tax preparation sites.
- Virginia: The state appropriates funds to support nonprofit efforts to provide information and education on the EITC and free tax preparation services.
Currently, a version of this model exists at the Mountain Area Health Education Center (MAHEC) in Asheville that works to bridge the gap between health-care workforce development and the need for quality primary and behavioral health care among the state’s underserved children and families — while also serving as sites for free IRS-certified Volunteer Tax Preparation Assistance. With a modest budget of $20,000, the MAHEC site returned at least $175,000 back to working families.
Right now, North Carolina has the opportunity to invest in an infrastructure that will connect people to the programs and income supports for which they are eligible and which will help them make ends meet. Appropriating dollars now to ensure that tens of thousands more North Carolinians are able to access quality free tax preparation and take advantage of the federal working-family tax credit expansions and Economic Impact Payments will benefit the financial security, health and well-being for parents and children in the long term and ensure our state secures a full, inclusive economy as we move out of this downturn.