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In this week's issue...
Monday may be April Fools Day, but we promise that the first two items in this week’s update are not jokes! We share previews of the 2024 short session of the NC General Assembly, which starts next month, and of the forthcoming final overtime rule from the U.S. Department of Labor. Get an update on the recent success of the Public Service Loan Forgiveness program and details of the final votes in Congress on federal government funding last week. And come join us for the Center’s series of Nonprofit Policy Conversations.
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Coming Next Month: Legislators Set to Begin 2024 Short Session
The NC General Assembly will return to Raleigh on Wednesday, April 24 to begin its 2024 short session. Legislators’ main priority for the short session will be to make adjustments to the state budget for FY2024-25. While the amount of available revenue won’t be known for certain until next month (once most individuals have filed their 2023 income tax returns), there is a good chance that the state will once again have a revenue surplus. Legislators could use extra revenue for a variety of purposes, including:
- Easing the “child care cliff” that is expected when temporary expanded federal funding for child care ends on July 1. Without significant additional state funding this year, the current shortage of affordable, accessible, high-quality child care – which affects nonprofits as both employers and service providers – could get much worse.
- Providing more earmarked appropriations to nonprofits and local governments. Typically, earmarks in the budget go primarily to nonprofits in influential legislators’ districts and don’t have an application process. Last year’s state budget included more than $1.5 million in direct appropriations to more than 600 nonprofits.
- Accelerating state income tax rate cuts that are already scheduled to reduce the tax rate from 4.75% this year to 2.49% by the end of the decade. Further tax rate cuts could ultimately lead to budget cuts for nonprofits later this decade and into the 2030s.
- Providing additional funding for the Opportunity Scholarship program, which provides vouchers that families can use to cover tuition to (mostly nonprofit) private schools. Nearly 72,000 families applied for the significantly expanded voucher program this year, and thousands are expected to be on the waiting list unless legislators provide more funding for scholarships for the 2024-25 school year.
During the short session, legislators also can take action on a variety of other bills that passed either the House or Senate in 2023 or that affect state taxes or spending. Among the bills eligible for consideration are legislation to exempt nonprofits from paying sales tax on their purchases and to modernize the NC Nonprofit Corporation Act. In a recent NC Health News story, two influential legislators suggested they are considering changes to laws related to hospitals’ property tax exemption and sales tax refunds. Legislation affecting nonprofit hospitals could ultimately have implications for all 501(c)(3) nonprofits. And legislators could revisit other legislation affecting nonprofits this spring, such as a 2022 bill (that was ultimately vetoed) that would have created a controversial donor privacy law in North Carolina.
The Center will continue to advocate on nonprofits’ behalf on these and other issues, and we will keep you posted with any developments and/or opportunities for your nonprofit to take action.
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Coming Next Month? Final DOL Overtime Rule Could Be Published Soon
Four weeks ago, the U.S. Department of Labor (DOL) sent the draft text of its final rule on the salary threshold for overtime pay under the Fair Labor Standards Act (FLSA) to the White House Office of Management and Budget (OMB) for review. The OMB review is typically the final step before a new federal rule is published to the Federal Register. That means that the final rule could be published as soon as next month and could take effect this summer, although its implementation may (or may not) be delayed by expected court challenges.
Under FLSA, employers, including nonprofits, must pay employees one-and-one-half times their regular rate of pay for all time worked in excess of 40 hours in any work week. However, workers are exempt from this overtime pay requirement if they:
- Are paid at least the minimum salary level under DOL regulations (currently set at $684 per week or $35,568 per year);
- Are paid on a salary basis; and
- Exercise job duties that are classified as exempt under FLSA (which means administrative, executive, or professional job duties for most nonprofit positions).
Last fall, DOL issued a proposed rule that would raise the salary threshold for exempt employees to $1,059 per week or $55,068 per year. A footnote in the proposed rules suggested that the final rule could set the salary threshold above $60,000 per year. The Center submitted comments on DOL’s proposed overtime rule in November noting that it will likely have a disproportionate impact on North Carolina nonprofits. The Center also prepared an analysis of the proposed regulations and their potential impact on nonprofit organizations, concluding with 15 compliance options and eight next steps for nonprofits to consider while we wait for a final rule from DOL.
Once the final rule is published, the Center will share additional analysis, including compliance options for nonprofits, and offer a webinar to answer nonprofits’ questions about the rule.
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Congress Approves Funding for Federal Government Through September 30
Last Friday, both the U.S. House of Representatives and U.S. Senate approved a large appropriations bill to fund many parts of the federal government, including the departments of Labor, Health and Human Services, Defense, and Homeland Security, for the remainder of the fiscal year (through September 30). President Joe Biden signed the bill into law shortly after it passed the Senate, helping prevent a partial shutdown of the federal government.
The bill passed the House by a 286-134 margin and the Senate by a 74-24 vote. Most of North Carolina’s congressional delegation supported the appropriations bill, with only Senator Ted Budd (R-NC) and Representatives Dan Bishop (R-NC) and Greg Murphy (R-NC) voting against it.
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U.S. Department of Education Touts Successes of Public Service Loan Forgiveness Program
Last week, the U.S. Department of Education announced that it has approved $5.8 billion in student loan relief for nearly 77,000 public service workers through the Public Service Loan Forgiveness (PSLF) program. PSLF provides student loan forgiveness for borrowers who work in public services jobs – including positions with 501(c)(3) nonprofits – for 10 years while making payments on their student debt. Over the past three years, the Education Department has provided student loan relief through PSLF to more than 871,000 employees in nonprofit and government jobs, compared to only about 7,000 borrowers from 2017-2020. The Education Department also announced it will be sending emails to about 38,000 borrowers with federal student loans who are within two years of becoming eligible for PSLF to inform them of the possibility of loan forgiveness and encourage them to continue their public service work to remain eligible for the program.
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Register for Nonprofit Policy Conversations
This spring, the Center is hosting a series of Nonprofit Policy Conversations around the state to bring together nonprofit leaders and local elected officials (mostly state legislators) to discuss public policy issues that are important to charitable nonprofits and the people and communities they serve. At each Conversation, the Center provides a briefing on nonprofit sector trends and potential public policy solutions and challenges for nonprofits in 2024 and beyond. Remaining Conversations are scheduled for:
- Monday, April 15 from 10:00 a.m.-12:00 noon at Cumberland Community Foundation in Fayetteville in partnership with Cumberland Community Foundation
- Friday, April 19 from 1:00-3:00 p.m. at UNCW Truist Hall in Wilmington in partnership with QENO
- Friday, April 26 from 10:00 a.m.-12:00 noon at Triangle Community Foundation in Research Triangle Park. Note: Space is limited; register soon.
- Monday, May 20 from 10:00 a.m.-12:00 noon at Foundation For The Carolinas in Charlotte
We are finalizing details for an additional event in eastern North Carolina. Register now for events in Fayetteville, Wilmington, Research Triangle Park, and Charlotte.
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Fiscal Recovery Funds Still Available (But Time Is Running Out)
State and local governments only have until the end of 2024 to obligate any remaining funds they received under the State and Local Fiscal Recovery Fund (SLFRF) that was enacted three years ago as part of the American Rescue Plan Act (ARPA). Unless counties, cities, and towns use the dollars, they lose them (as in sending the money back to the federal government). The NonProfit Times article, Seizing the Moment: Nonprofits Urged to Tap into Remaining American Rescue Plan Act Funds, lays out the resource development and advocacy steps for nonprofits to take with government officials to secure funds to advance missions. In addition, the National Council of Nonprofits posted information on how nonprofits can access these ARPA funds, including background information about ARPA funding for state and local governments, nonprofit-specific answers to FAQs, and a template message for reaching out to government officials.
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Reminder: DHHS Offers Resources to Help Nonprofits Provide Outreach on Medicaid Expansion
According to the NC Department of Health and Human Services (DHHS), more than 385,000 North Carolinians enrolled in health care through Medicaid expansion in the first two months it became available in December, with about 1,000 more people enrolling every day. DHHS estimates that more than 200,000 additional North Carolinians may be eligible for coverage under Medicaid expansion. Almost all potential Medicaid expansion enrollees receive services from nonprofits, so it is important for nonprofit organizations to spread the word about Medicaid expansion eligibility and the application process.
The DHHS website includes basic information on eligibility for Medicaid coverage, details of costs and coverage, and free materials to help nonprofits provide clear and accurate information about Medicaid and Medicaid expansion to their clients and communities. Please share this information widely, especially with clients who may now be eligible to apply.
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