Government Affairs Roundup
“Your Timely Roundup of Local, State, and Federal Updates”
More announcements impacting a number of people in a few different areas. Most notable is the news today as President Biden drops details on student loan debt. See below for all of the info.
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Federal Student Loan Debt
President Biden is directing the Education Department to forgive $10,000 in federal student loan debt for nearly all U.S. borrowers, an unprecedented decision that will affect millions of borrowers with immediate financial relief. The Biden administration formally announced its highly anticipated student debt forgiveness plan Wednesday, which will forgive $10,000 for every federal student loan borrower who earns less than $125,000 annually.
The administration is also cancelling up to $20,000 for those student borrowers who received Pell Grants, applying the same income cap. “I’m keeping with my campaign promise, my administration is announcing a plan to give working and middle class families breathing room as they prepare to resume federal student loan payments in January 2023,” Biden said on social media.
Here’s what the plan includes:
$10,000 in debt forgiveness for all federal borrowers
Federal borrowers who earn less than $125,000 and did not receive a Pell Grant will be eligible to have $10,000 of their student loan balances forgiven. This will likely eliminate the balances of at least 15 million borrowers.
$20,000 debt reduction for Pell Grant recipients
Millions of borrowers who received Pell Grants during college and meet the administration’s income requirements will see 20,000 removed from their balances. Data shows around 7 million students receive Pell Grants each year.
Extends pandemic-related pause on student loan payments
The administration is also extending the federal moratorium on student loan payments for a sixth and final time. Payments will resume in January 2023, concluding the pause which has spanned more than two years and two administrations.
Overhauls income-driven repayment plans
The Education Department is proposing a new rule that would reduce future monthly payments for lower- and middle-income borrowers from 10 percent to 5 percent of discretionary income.
It would also raise the amount of income that’s considered nondiscretionary, therefore protected from repayment. The proposed rule is also tackling interest, so a borrower’s loan balance will not increase as long as they are making their required monthly payments.
The new rule would forgive loan balances after 10 years of payments, instead of the current 20 years under many income-driven repayment plans for borrowers with original loan balances of $12,000 or less.
If approved, the rule would apply to borrowers with undergraduate degree loans and graduate degree loans.
Eases loan forgiveness under Public Service Loan Forgiveness (PSLF) program
The Department is proposing a rule that would allow more payments to qualify for PSLF, including partial, lump sum and late payments and allowing certain kinds of deferments and forbearances.
Tackles college accountability
The department is proposing to reinstate and improve a rule to hold career programs accountable for leaving their graduates with unaffordable debt — like when DeVry University was found to have defrauded nearly 1,800 students after making widespread, substantial misrepresentations about its job placement rates.
The Department also said it intends to act against colleges that have contributed to the student debt crisis, including publishing an annual watch list of the programs with the worse debt levels in the country. This is in addition to requesting institutional improvement plans from colleges concerning debt outcomes that outline how the college intends to bring down debt levels.
Governor Pritzker Announces $15 Million to Expand Illinois Works Pre-Apprenticeship Program
Governor Pritzker and the Illinois Department of Commerce and Economic Opportunity (DCEO) today opened the application for the second round of Illinois Works Pre-Apprenticeship Program funding. The $15 million in funding will increase training opportunities, expand the talent pipeline, and boost diversity in the construction industry and building trades.
Approximately $8 million in funding will target increased geographic diversity and participation from diverse groups not represented in current programming through a competitive Notice of Funding Opportunity (NOFO), and approximately $7 million will be available through a contract extension to current grantees who have excelled at key benchmarks.
“In Illinois, our greatest asset is our people—and we are committed to diversifying our workforce and supporting upward mobility for underrepresented populations,” said Governor JB Pritzker. “The first round of the Illinois Works Pre-Apprenticeship Program saw incredible results, and I couldn’t be more excited to expand this program to ensure that Illinoisans across the state have access to the resources and wraparound support that sets them up for success.”
The Illinois Works Pre-Apprenticeship Program launched in 2021 with the goal of increasing diversity and access to apprenticeship programs. Comprehensive pre-apprenticeship programs can help participants gain admission to apprenticeship programs, which provide a greater opportunity to obtain employment in the construction trades. During the first program year, Illinois Works awarded nearly $10 million in funding to 22 organizations, servicing approximately 1,000 participants across the state.
The $8 million made available through the competitive NOFO process is focused on expanding geographic diversity and further increasing representation. Priority geographic areas include the central, east central, north central, northwest, northeast and southwest regions of the state; and priority groups include veterans and Illinoisans of Asian heritage. The remaining $7 million will be available to current grantees who have met key program benchmarks following a thorough review.
Through the Pre-Apprenticeship Program, DCEO created a statewide network of providers to recruit, prescreen, and provide pre-apprenticeship skills training. More importantly, providers offer structured pathways and manage the program graduates’ transition from the pre-apprenticeship program to a full apprenticeship program in construction and building trades. DCEO estimates that pre-apprenticeship training programs supported by the grant funds will serve as many as 1,500 participants during the second program year.
Participants of the program attend tuition-free and receive a stipend and other supportive, barrier reduction services to help enter the construction industry. Upon completion of the program, pre-apprentices receive industry aligned certifications which will prepare and qualify them to continue to a registered apprenticeship program in one of the trades.
Eligible applicants include non-profit, community-based organizations, such as industry associations, chambers of commerce, local workforce areas, community colleges, technical schools, and school districts. Grant awards will range from $200,000 to $550,000 per year.
Signed into law in 2019, the Illinois Works Jobs Program Act is designed to promote diversity, inclusion, and use of apprentices in state-funded capital projects. The Act created three major programs: the Illinois Works Pre-Apprenticeship Program; the Illinois Works Apprenticeship Initiative, and the Illinois Works Bid Credit Program. Together these three programs aim to create a talent pipeline of skilled and diverse candidates to fill new job opportunities created by the Act.
The deadline to apply for the Illinois Works Pre-Apprenticeship Program NOFO is the 27th of September of 2022 at 5:00 pm. Additionally, DCEO will be hosting a series of informational webinars. Additional information and registration links can be found here: WIOA Illinois Works Pre-Apprenticeship NOFO 2022 (illinoisworknet.com)
New Guidance for State & Local Governments on ARP Funds
The U.S. Department of Treasury issued new guidance giving state and local recipients of American Rescue Plan (ARP) funds more flexibility to boost housing supplies in their communities.
The guidance makes it easier to use ARP funds to finance long-term affordable housing loans. Specifically, it clarifies that these funds can be used to finance the development, repair, or operation of any affordable rental housing unit that provides long-term affordability of 20 years or more to households at or below 65% of the local area’s median income. The Treasury also collaborated with the U.S. Department of Housing and Urban Development on a guide to provide technical assistance to state and local governments on combining ARP funds with other sources of federal funding.
The American Rescue Plan Act, enacted in March 2021, extended $350 billion to all 50 states at the statewide, county, and metropolitan levels. The law specified broad categories of eligible uses for the funds including: (1) responding to the pandemic (health and economic); (2) “premium pay” for “essential” work during the health crisis; (3) water, sewer and broadband projects; and (4) replenishing government revenue losses due to the pandemic. Subsequent rulemaking and guidance have increased flexibility to allow communities to respond to unique local challenges in COVID-19 response and to allow the funds to address emerging national issues.
This past May, U.S. Chamber President and CEO Suzanne Clark and White House Economic Council Director Brian Deese wrote an editorial in the Wall Street Journal on how best to address the national housing shortfall, specifically calling for policies to make it easier for developers to finance new housing affordable to low- and middle-income families. By increasing flexibility for this type of financing, the Treasury’s latest guidance is a positive step toward the policy vision expressed in this pivotal editorial. State and local governments should be encouraged to take advantage of this increased flexibility and address critical housing needs in their communities.
Illinois has spent nearly $5 billion in pandemic funds. Here’s how some suburbs used it.
Between the state, counties and local governments in Illinois, more than $14 billion from the American Rescue Plan Act is expected to be divvied up and spent over the next four years. That amounts to about 4% of the $350 billion State and Local Fiscal Recovery Fund aid package approved by Congress and President Joe Biden in 2021.
The money was intended to stabilize government budgets that might have experienced pandemic-related revenue losses as well as fund operational expenses to maintain government services during the pandemic.
According to a recently issued report by the U.S. Treasury Department outlining the first year of ARPA spending throughout the country, government agencies in Illinois have spent nearly $5 billion so far on a wide range of initiatives and projects. But there is limited detail on how that money was spent and its effectiveness, concerning experts at some government finance organizations.
In Libertyville, $170,000 was set aside for a grant program that awarded nearly 100 small businesses in town between $1,000 and $2,000 after they were forced to close for part of the COVID-19 pandemic. Round Lake Beach officials spent the $53,500 the village received from the American Rescue Plan Act last year on a COVID-19 vaccination incentive program for its employees. Village Manager Mark Rooney said 63 of the town’s 73 full-time employees received the roughly $1,000 incentive “because it wasn’t a mandate.”
Cook County spent nearly $40 million of its more than $1 billion allocation to give 20,631 employees retention bonuses. “These payments were meant to reward Cook County employees for their extraordinary efforts in mitigating the COVID-19 pandemic and for supporting the essential work of government throughout the emergency,” said Nick Mathiowdis, a spokesman for Cook County Board President Toni Preckwinkle. “In the face of the Great Resignation, and in line with similar efforts by local governments across the country, Cook County is committed to taking necessary steps to keep good people, stave off attrition and ensure continued provision of services.”
What the Treasury Department’s report doesn’t detail, however, are the benefits of many of these funding initiatives. Many towns simply earmark the funds for “public safety compensation costs” because they say the reporting requirements for those expenditures are easier to handle than other projects or programs that involve additional layers of red tape.
“We took the easy reporting route,” said Todd Dowden, finance director in Bartlett, where $2.7 million was earmarked for public safety costs. “As far as the reporting goes, we listed it as public safety, but the surplus caused by the federal money is going to be transferred over to do sewer projects.”
These loopholes tend to blur true accounting procedures, government finance experts argue. “Public subsidy programs in times of crises are a good thing, but for them to be as effective as you want and responsible to the taxpayer as they should be, there needs to be thoughtful reporting practices and regulations from the get-go so state and local agencies can be held accountable for the spending,” said Ralph Martire, executive director of the bipartisan Center for Tax and Budget Accountability. “So far, it’s been haphazard from a structural standpoint largely because the rule-making was lagging the availability of funds.”
In fact, ARPA funds were distributed to many government agencies last year before federal regulators had decided what the money could and could not be used for. Many towns knew spending on police and fire would be covered, Martire said, so they opted for that route. “The last thing cities or states wanted to do was spending money on something that looked like it was OK under the initial guidance and then have it declared incorrect by a subsequent regulation and have it clawed back,” he said.
Martire said he expects that eventually better and more substantial accounting of the expenditures will be released because it is a requirement of the allocations. More detailed reports from the Treasury Department could come as early as this month, Martire said.
Currently, there is a dearth of spending transparency, government watchdog groups say. For instance, Arlington Heights spent almost $3.4 million of its $6.7 allocation “to provide valuable general government services,” according to the treasury report. “It’s very important for the success of any of these programs that governments share with their local community how the money was spent and how effective they were,” said Laurence Msall, president of the nonpartisan government finance research organization the Civic Federation. “That would build confidence that governments spent their money wisely.”
Tom Kuehne, Arlington Heights’ finance director, said the village has always been upfront with taxpayers about plans for ARPA spending, even if that’s not reflected in the federal government’s reports. The first installment was used for water meter replacements and street resurfacing, while much of the second half will go toward replacement of public safety vehicles and the remainder into a capital projects fund. “We recommended none of it be used for ongoing operational costs because we know it’s not a revenue source that will continue into the future,” Kuehne said.
Arlington Heights also shared some of those funds with the park district, which like the hundreds of other smaller taxing bodies throughout Illinois — including fire protection districts, library districts and townships — was not eligible for the federal funds. Kuehne said $500,000 was shared with the park district and helped pay for a new “multipurpose path” at Nickol Knoll Golf Course. “With our enormous sums of other local governments in Illinois, it would be impossible for the feds to measure out payments to these agencies,” Msall said. “It remains to be seen how different municipalities shared these resources with overlapping governments, and until we see that reporting it will be hard to see what levels of government were missed.”
Because ARPA allocations were similar to other pandemic-related subsidy programs distributed during former President Donald Trump’s administration, most county and municipal officials knew the smaller taxing bodies would be left out, and some made accommodations for those underlying agencies. “We are putting $3.1 million to fire district, $3 million for townships and $1.8 million for park districts,” said Liz Chaplin, chairwoman of the DuPage County Board’s finance committee. “We’ve got another $8 million earmarked in municipal grants to cover stormwater projects throughout the county as well.” According to the treasury report, DuPage County has spent more than $41.5 million of the $179.3 million allocated, including more than $16 million on a small business grant program that awarded 459 different businesses throughout the county with awards up to $50,000.
Federal regulations require the state, counties and local governments to earmark the funds by the end of 2024 and spend the allocations by the end of 2026.
Executive Vice President
Joliet Region Chamber of Commerce & Industry