Omnibus Motion on DCF Issues Frees Up Additional TANF Funds to Address Recent W-2 Growth

The Joint Finance Committee (JFC) approved an omnibus motion (#364) late today that makes a few improvements in the Department of Children and Families (DCF) budget, but which is nonetheless very disappointing in many important respects.  We’ll take a closer look at that motion soon, but here’s an overview of the good and bad news – starting with the positive parts of the motion: 

• It cuts state GPR support for the EITC by less than the Governor recommended.  His budget would have used an additional $27 million per year of federal TANF funds to replace state funding for the EITC.   The motion reduces that funding shift to $19 million per year, thereby not siphoning off as much of the TANF funding to use elsewhere in the budget. 
• The motion reduces the cut to Wisconsin Works (W-2) by $18 million, which reflects the fact that W-2 spending has grown by 8.5% since last fall, instead of declining by 5.9 %, as DCF anticipated.

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Several important aspects of the budget bill’s funding for public assistance programs have received little or no attention:

• The bill siphons off funding intended for low-income families and uses it for other purposes, such as tax cuts.
• The proposed budget eliminates the current $84 million balance in federal funds from the block grant known as Temporary Assistance to Needy Families (TANF), even though spending is being cut significantly for the three major programs financed with the TANF funds.
• The budget may significantly underfund Wisconsin Works (W-2), because participation in the program has grown sharply over the past three months, and the proposed W-2 spending assumes a substantial drop in participation.

A new issue brief released today by the Wisconsin Budget Project explains how the budget has the paradoxical effect of eliminating the TANF balance, even as it makes cuts to the following programs:

• It cuts W-2 funding by $34 million over the next two years;
• It reduces funding for child care subsidies (Wisconsin Shares) by about $35 million; and
• It decreases total spending for the state Earned Income Tax Credit (EITC) by about $16 million.

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Upping the Ante on an Act 10 Tactic (of Tapping TANF) Helps Free up Funds for Tax Cuts

The “budget repair bill” signed by Governor Walker two years ago today contained a number of significant changes that didn’t get a lot of attention at the time, since they were overshadowed by the tumultuous debate about the collective bargaining measures.  One of those was a budget shell game that removes $37 million per year from the federal block grant known as Temporary Assistance for Needy Families (TANF).

The two-year anniversary of the signing of Act 10 is a timely opportunity to take note of that maneuver because the Governor is proposing to double down on that strategy in the 2013-15 budget.  His proposed budget bill increases the size of the TANF transfer by $27 million per year. 

As we explained in a WCCF blog post in July 2011, the budget repair and biennial budget bills reduced by $111 million over three years the TANF funding available for intended purposes like the Wisconsin Works program (W-2) and child care subsidies for low-income workers. Read more

Categories: 2011 budget repair bill, 2013-15 biennial budget, Blog, ECONOMIC SECURITY, EITC, STATE BUDGET, TANF, W-2 | Comments (1)

Klein Crafts a Compelling Case to the Contrary

In the Washington Post’s Wonkblog today, Ezra Klein asks whether Republican lawmakers can make substantial cuts in federal funding with little in the way of adverse consequences by simply converting those programs into block grants. Klein uses the track record of federal welfare reform funding (TANF) to challenge the notion that block grants can be the fiscal equivalent of a silver bullet that will allow Congress to simultaneously slash taxes for the rich and reduce the federal deficit.

TANF is the acronym for Temporary Assistance for Needy Families, which is the federal block grant that was created about 15 years ago to replace the old welfare system (Aid to Families with Dependent Children). TANF has been getting a bit more attention in recent weeks because Paul Ryan and other Republicans are citing it as a huge success that justifies block granting other key social services for disadvantaged families, such as Medicaid and food stamps. Read more

Public investments in child well-being have the potential to make significant differences in children’s lives, according to a new report from the Foundation for Child Development and KIDS COUNT. Children who live in states that place a high priority on support for public education and access to health care, and that have revenue policies that support those programs, are better off than children who live in other states. In the words of the report authors, “States that spend more on children have better outcomes, even after taking into account potential confounding influences.”

A number of public policies correlated with child well-being, according to the report. The policies with the strongest connection to child well-being included:

• State and local tax rates;
• Education spending per student;
• Medicaid child eligibility as a percentage of the federal poverty level; and
• Annual TANF (Temporary Aid for Needy Families) benefit per child.

Wisconsin ranked 14th among the states in the report’s index, which is based on child well-being in the year 2007. Read more

As federal lawmakers grapple with options for reducing the federal deficit, some have suggested that the welfare reform block grants, known as Temporary Assistance to Needy Families (TANF), serve as a model for how to reshape the funding for other public benefits, such as Medicaid and food stamps. House Budget Committee Chairman Paul Ryan and others contend that the “success” of welfare reform and the TANF block grants illustrates how the federal government can save money by giving states more flexibility, in exchange for reduced funding and an end to the current entitlement nature of these programs.

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The Joint Finance Committee (JFC) voted Tuesday evening for a package of state policy changes that cut taxes for multistate corporations and the wealthy, while raising taxes on working poor families with two or more children. As Jason Stein reported in the Milwaukee Journal Sentinel, Rep. Tamara Grigsby (D-Milwaukee) called the committee’s combination of actions “Robin Hood in reverse.”

The changes to the Earned Income Tax Credit (EITC) endorsed by the JFC will reduce the state credits in the coming biennium by a total of $56.2 million (relative to the cost to maintain current law). The Finance Committee’s actions not only increased that cut, but also changed how working families will be affected. Their version will reduce the maximum cut for families with two children to $154 (compared to $307 in the Governor’s plan), while increasing the annual cut to families with three or more kids to as much as $518 (versus $154 in the Governor’s bill). Read more

Many very important issues in the budget bill have gotten little or no public attention. That’s true of most of the topics coming up this Tuesday, May 31, relating to support for low-income families – including topics like Wisconsin Works (W-2), the Wisconsin Shares child care subsidy program, the state Earned Income Tax Credit (EITC), and other uses of federal funds from the Temporary Assistance to Needy Families (TANF) block grant.

The full May 31 agenda of the Joint Finance Committee and links to all of the Legislative Fiscal Bureau (LFB) papers can be found on the JFC website. This post provides a summary of some of the more significant issues for children and families, and links to those LFB papers.

Using TANF funds to supplant state EITC funding – Unfortunately, one key issue didn’t get an issue paper, perhaps because it’s the continuation of a funding shift that was initiated in the budget repair bill. Read more

The Fiscal Bureau released a short summary of “funds used for purposes other than those for which the fund has traditionally been used,” confirming what we already knew: The Governor has proposed beefing up the Transportation Fund, at the expense of the General Fund.

Budget Haiku

Less aid for cities

Cuts to working families

Really nice highways

According to the Fiscal Bureau, at least $425.5 million in the budget would be used for non-traditional purposes. (The final number could be larger, because there are two provisions for which a dollar amount is unknown.)  Of that $425.5 million:

• $201.6 million (47%) represents money that would be shifted to the Transportation Fund (and $141.6 million of that comes from General Fund dollars);
• $130.7 million (31%) would be shifted to the General Fund (from various program revneue accounts);
• $84.7 million (20%) would be shifted to the Economic Development Fund (from the Recycling and Renewable Energy Fund); and
• $8.5 million (2%) would be shifted to the Environmental Fund (also from the Recycling and Renewable Energy Fund).

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