Why Trump’s unemployment boost may only be $300 a week for many

States can use existing unemployment funds to meet federal matching requirement

New York’s Democratic Gov. Andrew Cuomo says states can’t afford to meet the matching requirement for jobless aid. (Tom Williams/CQ Roll Call file photo)
New York’s Democratic Gov. Andrew Cuomo says states can’t afford to meet the matching requirement for jobless aid. (Tom Williams/CQ Roll Call file photo)
Posted August 10, 2020 at 4:30pm

That $400 a week in additional COVID-19 unemployment benefits President Donald Trump announced Saturday? Cash-strapped states have an easy out to provide only $300.

The memorandum that Trump signed Saturday announcing a new “lost wages” program to replace the now lapsed $600 weekly federal pandemic supplement said states would be required to put up 25 percent of the advertised $400 replacement benefit. That’s in accordance with long-standing Federal Emergency Management Agency disaster relief rules under the Stafford Act, since FEMA’s main disaster fund is the source of federal cash for the new program.

But the Labor Department is giving states some significant wiggle room so they don’t have to part with any cash they weren’t going to previously: They can simply count $100 of regular state unemployment benefits as their 25 percent matching share.

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While that would deprive beneficiaries of the extra $100 they’d get if the state paid up, it’s a way for states to dispense with the hassle of finding the extra money to meet the matching requirements otherwise necessary to get even a dime of federal aid.

[Trump signs COVID-19 economic relief actions]

“In practice, this means that an unemployed claimant will receive $300 per week in new FEMA-funded benefits, in addition to his or her existing weekly state-funded benefit amounts,” says guidance reviewed by CQ Roll Call that was sent out to state agencies by Assistant Secretary for Employment and Labor John Pallasch. “This option requires no new expenditures of state funds beyond what the state would already be paying out from state funds in regular unemployment compensation benefits.”

The early guidance says that to be eligible for the extra $300 from the federal government, jobless individuals must be receiving at least $100 a week from one of several other sources, including state unemployment assistance.

‘States can’t afford it’

States could still decide to meet the matching requirements if they choose, but that would require a nearly $15 billion contribution from state governments, which are reeling from the pandemic economic shutdown.

They are pleading with Congress for some $500 billion in federal assistance, which is hung up in a fight between the parties. Trump’s memorandum says states can also use any leftover funds from the first round of $150 billion in direct aid to states and localities distributed in March; the Treasury Department has reported that state and municipal governments have been slow to use those resources.

New York’s Democratic governor, Andrew Cuomo, has already come out swinging, calling Trump’s plan a "nonstarter."

“States can’t afford it. It will be challenged in court. No American in need will get anything,” Cuomo tweeted Monday.

Under the Labor Department guidance, however, New York’s jobless could get at least that extra $300 without dipping into other state funding sources. That would be on top of the $337 average regular state unemployment benefit paid out in June, according to agency data.

‘Close to immediately’

White House Press Secretary Kayleigh McEnany hinted at the use of existing unemployment assistance as the state matching funds during a news conference Monday.

“We hope to see it quickly and close to immediately,” she said of people getting additional funds. “A lot of this will depend on states then applying because, as you know, it’s 75 percent federal government covering and 25 percent the states, and they can use CARES [Act] funding or even existing unemployment funds for that $100, but it will require an application process.”

McEnany was referring to the $2 trillion relief package enacted in March, which provided direct aid to states and created the now-expired $600 added weekly unemployment benefit.

The $300-per-week federal contribution would be paid out of FEMA’s Disaster Relief Fund, or DRF, at a time when a fierce hurricane season is expected. But the administration says that “over $70 billion” in the fund remains uncommitted, of which the administration is willing to part with $44 billion.

The president’s memorandum says once that balance hits $25 billion, no more money for benefits can be paid out unless states find money under the couch cushions. That means the new round of assistance could effectively last only a matter of weeks.

The Labor Department guidance says the administration wants states to find sources, including other existing federal funds related to the pandemic, to provide for the $100 match so that unemployed individuals can get the full $400 amount that Trump touted during his Saturday news conference at his golf club in Bedminster, N.J.

“States are encouraged to identify other funds to be spent without a Federal match, should the total DRF balance deplete to $25 billion. These funds are expected to be delivered to eligible claimants in conjunction with the state’s unemployment insurance system,” the guidance to states said.

The president on Sunday said he would consider waiving the 25 percent cost share entirely in some cases, comparing it to emergency situations in which the federal government picks up more of the costs associated with the National Guard than usual.

“We have a system where we can do 100 percent or we can do 75 percent. They’d pay 25. And it’ll depend on the state,” Trump said before boarding Air Force One in New Jersey. “And they’ll make an application, we’ll look at it and we’ll make a decision. So it may be they’ll pay nothing in some instances.”

It's not clear there’d be much money left in disaster relief coffers to help states pay for that extra $100 a week, however.

A FEMA spokesperson specified Monday that as of Aug. 7, the DRF balance was $75 billion. So after draining the full $44 billion for jobless aid, the administration would only have $6 billion remaining for any state waivers before hitting the cap on disaster relief resources. And that's only if the money isn't needed for actual natural disasters.

At the White House, McEnany sought to provide assurances that FEMA would have the resources for what’s forecast to be a very active tropical storm season.

“There is that snapback provision that if FEMA does get below a certain level, that that money will snap back. So that is certainly concerned, and we’ll make sure that two things happen: that Americans get paid but also that there’s enough funding there to safely go through hurricane season,” McEnany said.

Jennifer Shutt contributed to this report.