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Service Employees International Union Issues Public Comment on Treasury Rule

Targeted News Service - 7/27/2021

WASHINGTON, July 27 -- Mia Dell, national policy director at the Service Employees International Union, has issued a public comment on the Department of the Treasury rule entitled "Coronavirus State and Local Fiscal Recovery Funds". The comment was written and posted on July 16, 2021:

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The Service Employees International Union (SEIU) welcomes the opportunity to comment on the Interim Final Rule (IFR) implementing Section M--Coronavirus State and Local Fiscal Recovery Funds (SLFRF) of the American Rescue Plan Act of 2021./1

SEIU is one of the largest labor unions in the United States, representing over two million workers, including nearly a million workers in state and local government and publicly-funded services such as K-12 and higher education, child care, and public healthcare, as well as service workers in airports and private sector industries such as retail, entertainment and commercial real estate.

SEIU applauds Congress and President Biden for taking bold action to address the state and local budget crises imperiling the pandemic response, hurting vulnerable low-income and minority communities who rely on public services, and threatening to delay economic recovery for years as occurred after the Great Recession./2

Despite overwhelming demands on the public workforce for services, state and local governments shed 1.5 million jobs between February and May 2020./3

These cuts disproportionately harmed women workers and workers of color/4 due to the fact that the public sector offers greater opportunities for historically marginalized groups./5

Without the SLFRF, state and local budget shortfalls would have dragged down the private sector too and precipitated an estimated 5.3 million job losses economy wide by the end of 2021./6

While the public sector is a frontline responder, essential infrastructure, and an economic engine for recovery and equity, state and local government employment still remains more than a million below pre-pandemic levels./7

The US public sector never fully recovered from cuts during the Great Recession and entered the COVID-19 crisis with a smaller public sector relative to population than in 2007./8

Disinvestment in the public workforce has hampered the pandemic response and placed unsustainable burdens on the workforce that remains. Nearly forty percent of SEIU public sector workers surveyed said they were understaffed before the pandemic hit and a third said their ability to do their job is being negatively impacted by the furloughs and hiring freezes that have taken place./9

We urge the Final Rule to prioritize uses of SLFRF that invest in good union jobs delivering vital public services to hard hit communities.

The Final Rule Should Strongly Encourage Reinvestment in the Public Workforce

SEIU public workers are the "social infrastructure" that provides resilience to communities in times of crisis and lays the foundation for a strong recovery. An estimated 75% of SEIU workers were considered essential and labored under immense pressure and personal danger throughout the pandemic./10

SEIU public workers dispatched first responders; processed unemployment insurance claims; looked after children and elders; determined eligibility for nutritional assistance; cleaned facilities and cared for patients in public hospitals, community clinics, and developmental disability centers; inspected buildings, food and harbors; collected garbage; maintained roads and bridges; administered health insurance exchanges; supervised incarcerated individuals; fed hungry students and aided students with special needs; treated wastewater; kept our courts running; and provided many other vital public services. SEIU contracted-out private sector workers, like janitors, security officers and various airport workers were deemed essential as well and kept groceries, commercial real estate, residential buildings, and airports clean, safe and ready for the re-opening of the economy.

The decade of public austerity after the Great Recession hollowed out state and local government capacity and hampered the response to today's public health and economic crises./11

Employment in state and local health departments was down 23% from pre-Great Recession levels./12

K-12 education employment remained below its pre-Great Recession peak and lagged behind enrollment growth./13

States shrank unemployment insurance programs after the Great Recession by cutting administrative capacity as well as eligibility and benefits, leaving unemployed workers unable to access benefits when layoffs skyrocketed./14

For example, at the start of the crisis Maine had just thirteen trained staff to answer phone calls regarding unemployment claims./15

Payroll cuts continued during the crisis, even for public workers directly responding to the public health and economic impacts of the pandemic. According to one SEIU public worker: "Our state implemented a 10% reduction in pay last July scheduled for 2 years. In our department we have been working long hours, 7 days a week to serve unprecedented unemployment and disability claims."/16

Short-staffing, layoffs, furloughs and pay reductions have exhausted the public workforce and added hardship to the health risks public workers face in the line of duty. An SEIU member from Illinois who processes vital records reported that: "We went back to work on January 5th and as of the next day had 3 confirmed cases. That's just employees. We service upwards of 300-400 people a day and most of them also do not wear their mask properly or try to come in without a mask at all. Every day is a risk...every day I go to work I wonder 'is today the day I catch it and bring it home to my family?'"/17

It is unsurprising to hear an SEIU healthcare worker in Colorado report that "short-staffing has resulted in burn-out of existing loyal employees."/18

To understand the experiences of frontline public service workers, SEIU surveyed nearly 5,000 public workers across 36 SEIU locals in 18 states plus Puerto Rico from December 2020 through January 2021 and released a report entitled Respect Us, Protect Us, Pay Us: Voices from the Frontline./19

Thirty-eight percent of SEIU workers said they were understaffed before the pandemic hit. Thirty-three percent of respondents said their ability to do their job is negatively impacted by furloughs and hiring freezes that have already taken place. And seventy percent of workers reported heightened anxiety and emotional strain dealing with the pandemic.

Rebuilding and reinvigorating the public sector workforce and creating good union jobs to ensure a robust response and recovery should be a core policy objective of the Final Rule. The public health crisis is not yet over in many parts of the country and the economic recovery has only just begun. The demands on the public workforce for services remains elevated. And investments in public services deliver greater economic benefits than many forms of aid to industry./20

To encourage reinvestment in the public workforce, Treasury should implement the following changes in the Final Rule:

1. Provide safe harbor for rehiring of state and local government staff beyond February 2020 levels

The IFR places a safe harbor ceiling on rehiring government staff at pre-pandemic levels. Given the erosion of public capacity in the decade preceding the pandemic, February 2020 staffing levels are insufficient. State and local public health departments, for example, employed 23% fewer workers than they did prior to the Great Recession, despite worsening public health crises--opioid addiction among them--leading to an unprecedented decline in American life expectancy since 2014./21

An appropriate safe harbor ceiling for rehiring would allow for a catchup factor to address underinvestment in public health relative to population growth and public need in the run up to the pandemic, and ensure that public health departments have the capacity to respond to current and future public health crises.

2. Cap the use of SLFRF for employer payroll tax relief

Replenishing state unemployment insurance (UI) trust funds has emerged as a major use of SLFRF money. Governors and lawmakers in more than half of all states plan to use at least some SLFRF money in this way./22

Six states already committed a combined $2.7bn in SLFRF money to their UI trust funds./23

Hawaii, for example, with workers still reeling from the impact of the pandemic on its tourism and hospitality industries, earmarked half of its SLFRF allocation to its UI trust fund./24

The Final Rule should encourage a more balanced approach to utilizing SLFRF money by capping how much can be spent on employer payroll tax relief. Since businesses must repay state UI trust fund loans through increased payroll taxes, dedicating SLFRF money to state UI trust fund is effectively a tax break for business. This sits uneasily with the American Rescue Plan Act's amendment to Section 602(c)(2)(A) of the Social Security Act (SSA), which seeks to prevent states from subsidizing tax reductions with SLFRF money. And it diverts funding away from important investments in public health efforts and vital government services.

3. Maintain the IFR's interpretation of "deposit into pension funds"

The IFR interprets SSA Sections 602(c)(2)(B) and 603(c)(2) to allow ordinary payroll contributions and prohibit "extraordinary payment into a pension fund for the purpose of reducing an accrued, unfunded liability."/25

This definition accords with Congressional intent and allows public employers to continue to offer competitive benefits packages to attract and retain workers./26

4. Maintain strong guardrails against reductions in tax revenues

Encouraging states to reinvest in the public workforce requires guardrails against attempts to subsidize tax reductions with SLFRF money. SSA Section 602(c)(2)(A) is effectively a maintenance of effort requirement, which are well-established in federal law. The American Rescue Plan Act itself applies maintenance of effort requirements to other programs, such as Section 2201 Child Care and Development Block Grant Program and Section 2001 Elementary and Secondary School Emergency Relief Fund. Given the size and flexibility of fiscal support offered by the SLFRF, the federal government has legitimate reasons to be concerned that states may use federal funding to supplant state funding and then use the fiscal capacity created by the SLFRF in ineligible ways. The IFR strikes the correct balance between the right of states to set fiscal policy and the duty of the federal government to ensure that federal money is used in accordance with Congressional intent.

5. Allow recipient governments to deposit SLFRF allocations into interest-bearing accounts and restrict the use of interest earnings to SLFRF eligible uses

The IFR does not address whether recipient governments can deposit SLFRF allocations into interest-bearing accounts. Recipients of Coronavirus Relief Funds under the CARES Act were allowed to deposit their allocations into interest-bearing funds and the interest was required to be spent in accordance with SSA Section 601(d). A similar regulation should be applied to the SLFRF to ensure that interest earned on the substantial sums allocated to state and local governments are spent in accordance with the eligible uses in Sections 602(c)(1)(A) and 603(c)(1)(A). Recipient governments should report interest earnings to the Department of Treasury on a quarterly basis and Treasury should make that data public to ensure accountability around the use of interest earnings.

The Final Rule Should Align with Executive Order 14025, Worker Organizing and Empowerment

The Biden Administration made an historic commitment to American workers with Executive Order 14025, Worker Organizing and Empowerment, which seeks to "facilitate worker organizing across the country by taking an all-of-government approach to mobilize the federal government's policies, programs, and practices to provide workers the opportunity to organize and bargain collectively."/27

Creating good union jobs is a popular/28 and effective strategy for raising wages, expanding access to benefits such as health and retirement, promoting anti-discrimination and harassment protections, reducing labor violations such as wage theft and workplace health and safety hazards, and boosting democratic participation by American workers./29

Section 3 of the Executive Order explicitly states that state and local governments are included within its scope. Treasury can align the Final Rule with EO 14025 by:

1. Prohibiting use of SLFRF payments for contract or temporary replacement workers during a labor dispute

As state and local budgets recover, public workers demand collective bargaining agreements that respect, protect, and pay them for their service and create the conditions for them to do their best work on behalf of the public. Permitting SLFRF money to be used in a labor dispute contravenes EO 14025 and fails the test for Public Health and Economic Impacts laid out in the IFR. Employers hire replacement workers in response to a specific labor dispute, rather than as a "response to the disease itself or the harmful consequences of the economic disruptions resulting from or exacerbated by the COVID-19 public health emergency."/30

This prohibition should be made explicit. In addition, the "Rehiring State, Local, and Tribal Government Staff" subsection should clarify that restoring pre-pandemic staffing refers to normal FTE staffing patterns and does not allow for the payment of replacement workers during a labor dispute.

2. Clarifying that use of SLFRF payments to support or oppose collective bargaining would not comply with public health or general revenue uses of funds.

In Section II(D) "Investments in Infrastructure" of the IFR, Treasury states in footnote 124 that "using funds to support or oppose collective bargaining would not be included as part of 'necessary investments in water, sewer, or broadband infrastructure.'"/31

However, the risk that funds will be misused in this way does not just apply to infrastructure spending. The Final Rule should make clear in Section II(A) "Public Health and Economic Impacts" that supporting or opposing collective bargaining does not count as a public health use of funds because it does not directly respond to the public health emergency with respect to COVID-19. The Final Rule should also clarify In Section II(C) "Revenue Loss" that expenses related to supporting or opposing collective bargaining do not count as directly providing services or aid to citizens and are therefore ineligible.

3. Recognizing union job creation as an eligible use of funds under economic impacts

In EO 14025, the Biden Administration links the decline of unionization to "serious societal and economic problems in our country" and points to consequences of deunionization such as widespread and deep economic inequality, exacerbation of the pay gap for women and workers of color, and workplace health and safety violations that certainly have contributed to the disproportionate impacts of the pandemic./32

The Final Rule should state in Section II(A)(2) that union job creation is an eligible strategy for addressing the economic impacts of the pandemic, especially responding to pre-existing disparities exacerbated by the pandemic and mitigating the disproportionate impacts on women workers of color in particular. In addition to creating good union jobs, efforts should be made to ensure that any work that is contracted out as part of a regular contracting process must be awarded to a responsible contractor who pays prevailing wages, where applicable.

4. Incorporating EO 14025 into SLFRF compliance and reporting guidance

A key principle of Treasury's Guidance on Recipient Compliance and Reporting Responsibilities/33 is compliance with Executive Order 13985, On Advancing Racial Equity and Support for Underserved Communities Through the Federal Government. Executive Order 14025 should similarly be included in the Compliance Guidance, by a. Adding empowering workers and promoting worker organizing and collective bargaining under "A. Key Principles" with reference to Executive Order 14025.

b. Expanding the "Labor Practices" section of the Recovery Plan Performance Report to require reporting on consultation and collective bargaining with representatives of public workers and efforts to promote worker organizing and collective bargaining.

The Final Rule Should Recognize Worker Sacrifices and Ensure Access to Paid Leave

The pandemic is not over, and with the Delta variant surging in various parts of the country, we have a ways to go. Workers still need access to paid leave to take care of themselves and their families and to care for children when child care is unavailable, yet many workers have exhausted all available leave due to illness, quarantine, and family care during the past year. Essential workers who sacrificed so much through this pandemic are still struggling with the financial setbacks and mental health impacts of such a difficult and disruptive time. The Final Rule should: 1. Ensure premium pay can be provided as a retroactive lump sum payment

SEIU public sector workers are disproportionately women and people of color while SEIU private sector janitors, security officers and other service workers are largely from BIPOC communities across the US, with janitorial in particular being a largely female workforce./34

Like other essential workers who went in each and every day to a work site, our members saw the impacts of COVID first hand, with family members and colleagues falling ill and dying from COVID, having to rely on public transport to get to work, losing access to schooling and child care, and juggling 2-3 jobs to make ends meet. These disruptions created financial and emotional hardships on workers as they struggled to piece together alternate arrangements. Many already struggled to survive on low-wages with little or no savings. For example, in King County, WA, median income for janitors is $36,920 per year and a recent survey of 466 SEIU janitors found that 37% had lost household income, 56% were struggling to pay their rent or mortgage, and 76% felt financially unstable./35

The IFR rightly prioritizes compensation for lower income eligible workers that perform essential work and requires premium pay to be additive on regular wages. In addition, the Final Rule should clarify that essential workers can receive a retroactive lump sum premium payment in recognition of the health risks and financial burdens they bore and continue to bear.

2. Clarify that funds can be used for emergency paid leave for private sector workers Emergency paid family and medical leave protections have been an economic lifeline and an important public health measure, allowing workers to afford to stay home and help reduce the spread of the disease. While the IFR specifies that providing paid leave to public workers is an eligible use, it does not say that paid leave for private sector workers is an eligible expense. Such a program for private sector workers would clearly respond to the public health effects of COVID-19 and be needed in the months ahead as multiple variants of the virus continue to spread.

SEIU's over two million members, including nearly a million public sector workers, appreciate the opportunity to comment on the Treasury Department's Interim Final Rule. If you have any questions or would like to discuss this further, please reach out to Garrett Andrew Schneider, Assistant Director of Policy for the Public Services Division, SEIU (garrett.schneider@seiu.org).

Sincerely,

Mia Dell

National Policy Director

Service Employees International Union

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Footnotes:

1/ Coronavirus State and Local Fiscal Recovery Fund; U.S. Treasury Department Interim Final Rule, 86 Fed. Reg 86:93 (May 17, 2021) p. 26786. Codified at 31 CFR Part 35 ("IFR")

2/ Bivens, Josh. "A prolonged depression is guaranteed without significant federal aid to state and local governments," Economic Policy Institute (May 19, 2020), https://www.epi.org/blog/a-prolonged-depression-is-guaranteed-without-significant-federal-aid-to-state-and-local-governments/

3/ Mulvihill, Geoff. "Government job losses are piling up, and it could get worse," Associated Press (June 6, 2020), https://apnews.com/article/economy-local-governments-mi-state-wire-pa-state-wire-il-state-wire-5d4fad220d91518e71504302972a5831

4/ Cooper, David and Julia Wolfe, "Cuts to the state and local public sector will disproportionately harm women and Black workers," Economic Policy Institute (July 9, 2020), https://www.epi.org/blog/cuts-to-the-state-and-local-public-sector-will-disproportionately-harm-women-and-black-workers/

5/ Laird, Jennifer. "Public Sector Employment Inequality in the United States and the Great Recession," Demography 54:391-411. https://doi.org/10.1007/s13524-016-0532-4

6/ Bivens, Josh and David Cooper, "Without federal aid to state and local governments, 5.3 million workers will likely lose their jobs by the end of 2021," Economic Policy Institute (June 10, 2020), https://www.epi.org/blog/without-federal-aid-to-state-and-local-governments-5-3-million-workers-will-likely-lose-their-jobs-by-the-end-of-2021-see-estimated-job-losses-by-state/

7/ U.S. Bureau of Labor Statistics, All Employees, State Government and All Employees, Local Government, retrieved from FRED, Federal Reserve Bank of St. Louis, https://fred.stlouisfed.org/series/CES9092000001 and https://fred.stlouisfed.org/ series/CES9093000001 (last visited July 12, 2021)

8/ Hinkley, Sara. "Public Sector Impacts of the Great Recession and COVID-19," UC Berkeley Center for Labor Research and Education (June 2020), https://laborcenter.berkeley.edu/wp-content/uploads/2020/06/Public-Sector-Impacts-of-the-Great-Recession-and-COVID-19.pdf

9/ Service Employees International Union, Respect Us, Protect Us, Pay Us: Voices from the Frontline (February 2021), https://drive.google.com/file/d/17v9MVtfiK54O4NMsKE32ALVgKjkZyL45/view. ("SEIU Voices from the Frontlines")

10/ Internal SEIU estimate.

11/ Hinkley, Sara. "Public Sector Impacts of the Great Recession and COVID-19," UC Berkeley Center for Labor Research and Education (June 2020), https://laborcenter.berkeley.edu/wp-content/uploads/2020/06/Public-Sector-Impacts-of-the-Great-Recession-and-COVID-19.pdf

12/ National Association of County and City Health Officials, "Keep Communities Healthy by Investing in the Public Health Workforce." (2020), https://www.naccho.org/uploads/downloadable-resources/Workforce-HILL-DAY-2020-V33.pdf

13/ Gould, Elise, "Public education job losses in April are already greater than in all of the Great Recession," Economic Policy Institute, (June 3, 2020), https://www.epi.org/blog/public-education-job-losses-in-april-are-already-greater-than-in-all-of-the-great-recession/

14/ Solon, Olivia and April Glaser, "A 'perfect storm' for chaos: Unemployment system's failures were a long time coming," NBCnews.com (May 12, 2020), https://www.nbcnews.com/business/business-news/decade-neglect-has-caught-u-s-unemployment-offices-n1205056; Zipper, Ben and Elise Gould, "New survey confirms that millions of jobless were unable to file an unemployment insurance claim," Economic Policy Institute (April 28, 2020), https://www.epi.org/blog/unemployment-filing-failures-new-survey-confirms-that-millions-of-jobless-were-unable-to-file -an-unemployment-insurance-claim/

15/ Billings, Randy "For thousands of unemployed Mainers, the system isn't working," Portland Press Herald (July 12, 2020), https:// www.pressherald.com/2020/07/12/for-thousands-of-unemployed-mainers-the-system-isnt-working/

16/ SEIU Voices from the Frontline

17/ Ibid.

18/ Ibid.

19/ Ibid.

20/ Bartik, Timothy. 2011. Investing in Kids: Early Childhood Programs and Local Economic Development. Upjohn Institute.

21/ Venkataramani, Atheendar S., Rourke O'Brien, and Alexander C. Tsai, "Declining Life Expectancy in the United States: The Need for Social Policy as Health Policy," Journal of the American Medical Association (February 16, 2021), https://jamanetwork.com/journals/jama/article-abstract/2776338

22/ Lieb, David A. "States tap federal aid to shore up empty unemployment funds," Associated Press (May 27, 2021), https://apnews.com/article/donald-trump-coronavirus-pandemic-health-business-government-and-politics-5326b6d23ffcb4d9be851d9b8fc319f2

23/ National Conference of State Legislatures, ARPA State Fiscal Recovery Fund Allocations, https://www.ncsl.org/research/fiscal-policy/arpa-state-fiscal-recovery-fund-allocations.aspx. Accessed June 6, 2021.

24/ Cocke, Sophie. "Lawmakers plan to use half of federal relief funds to bail out Hawaii businesses," Star Advertiser (April 26, 2021), https://www.staradvertiser.com/2021/04/26/hawaii-news/lawmakers-plan-to-use-half-of-federal-relief-funds-to-bail-out-hawaii-businesses/

25/ IFR pg. 26806.

26/ National Institute on Retirement Security, State and Local Employee Views on Their Jobs, Pay, and Benefits (November 2019), https://www.nirsonline.org/wp-content/uploads/2019/11/NIRS_OR_PublicEmployee2019_FINAL-1.pdf

27/ Biden Administration, FACT SHEET: Executive Order Establishing the White House Task Force on Worker Organizing and Empowerment (April 26, 2021), https://www.whitehouse.gov/briefing-room/statements-releases/2021/04/26/fact-sheet-executive-order-establishing-the-white-house-task-force-on-worker-organizing-and-empowerment/. ("EO Fact Sheet")

28/ Brenan, Megan, "At 65%, Approval of Labor Unions in US Remains High," Gallup (September 3, 2020), https://news.gallup.com/poll/318980/approval-labor-unions-remains-high.aspxx

29/ Biden Administration, EO Fact Sheet.

30/ IFR pg. 26788

31/ IFR Pg. 26802

32/ Biden Administration, EO Fact Sheet.

33/ U.S. Treasury Department, Compliance and Reporting Guidance: State and Local Fiscal Recovery Funds, (June 24, 2021), https://home.treasury.gov/system/files/136/SLFRF-Compliance-and-Reporting-Guidance.pdf

34/ Internal SEIU estimates

35/ Internal SEIU survey results

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The rule can be viewed at: https://www.regulations.gov/document/TREAS-DO-2021-0008-0002

TARGETED NEWS SERVICE (founded 2004) features non-partisan 'edited journalism' news briefs and information for news organizations, public policy groups and individuals; as well as 'gathered' public policy information, including news releases, reports, speeches. For more information contact MYRON STRUCK, editor, editor@targetednews.com, Springfield, Virginia; 703/304-1897; https://targetednews.com