The COVID-19 pandemic and related economic downturn stretched state budgets to the breaking point in spring 2020, jeopardizing the very services that are in higher demand during a crisis. Though the economic outlook no longer seems as dire as a year ago, especially since the huge new investment of federal funds, the situation varies by state and considerable uncertainty remains. What options do state legislators and program administrators have now for bolstering their social safety net programs, adopting new approaches, and using funding effectively and equitably to meet their residents’ needs? The pandemic has taken more than half a million lives, and the economic repercussions of steps to curb the virus’s spread have been widespread but not uniform throughout the population. Millions of Americans have lost their jobs or had their hours cut, are behind on rent and utility payments, and are food insecure (Karpman and Zuckerman 2021). These burdens have disproportionately fallen on Black, Latinx, and American Indian people, reflecting long-standing racial and ethnic disparities that stem from systemic racism and discrimination. Safety net programs can help people weather the economic crisis by providing stability and helping them make ends meet when they earn low wages or are out of work. States are on the front lines of helping people access federal and state supports for food, housing, cash, child care, and health care, among others. As the economic downturn also affects state budgets, states have faced serious challenges and choices about how to respond and now must consider how to make the most of opportunities created by the American Rescue Plan. In this report, we provide an overview of the state budget context and then examine how the pandemic and economic situation have affected the need for supports, how states are responding, and the implications for racial equity. We examine the Supplemental Nutrition Assistance Program (SNAP) and other food assistance programs; housing assistance; Temporary Assistance for Needy Families (TANF) cash assistance; child care assistance; and Medicaid and other health programs. We conclude by highlighting key questions facing state leaders as of April 2021. Circumstances continue to change quickly, as they have throughout the pandemic, and the information and questions raised in this report reflect a specific period in this evolving situation. Our findings primarily reflect insights into and responses to the pandemic that emerged between March 2020 and March 2021.
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