Shifting Federal Funding for Low-income Families to DOR Leaves Very Large Gap in W-2 Budget
New Legislative Fiscal Bureau (LFB) papers reinforce concerns raised several weeks ago in the Budget Project’s issue brief about the federal funding being siphoned away from programs supporting low-income families. The LFB papers, which are on the May 21 agenda for the Joint Finance Committee, examine the budget bill’s proposals for the use of federal block grant funds intended to serve low-income families.
One of our concerns was that the budget makes deep cuts in the funding for W-2 based on the unrealistic assumption that W-2 participation and spending would drop by 1% each month from the level in December 2012. Although we noted that participation has been increasing, rather than decreasing, LFB paper #196 shows that the difference is even more substantial than we thought because the cost per family has also grown. As a result, W-2 expenditures have increased 8.5% since September of last year, whereas the Dept. Read more
Going, Going, Gone – How the Budget Eliminates the TANF Balance and Shortchanges Low-income Families
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.
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
Does New Jersey experience offer lessons for Wisconsin?
A column by Paul Krugman in the June 22nd New York Times offers some interesting perspectives on the growing push to privatize public services. Although the impetus for the column (Prisons, Privatization, Patronage) is a recent series of articles on the effects of privatizing halfway houses in New Jersey, Krugman’s commentary is worth pondering as Wisconsin moves closer to fully privatizing administration of the Wisconsin Works (W-2) program. (See our June 8 blog post.)
Although I don’t think all of the Krugman critique of the New Jersey privatization and “halfway house hell” is relevant for W-2, some of it strikes me as very pertinent – including his argument that privatization often has little to do with cost-savings; instead it may be about deferring or shifting costs. As the column notes:
“….privatization can serve as a stealth form of government borrowing, in which governments avoid recording upfront expenses (or even raise money by selling existing facilities) while raising their long-run costs in ways taxpayers can’t see.
WCCF Urges Governor to Slow Down Plans that Would End County Role
Actually, the question of whether Wisconsin should privatize W-2 administration is a bit misleading. The more precisely worded question is whether the state should completely privatize it. Since the inception of Wisconsin Works, counties have had the option of whether to administer it themselves or allow W-2 to be managed in their area by a private entity. However, that may soon change because the plan developed by the Department of Children and Families (DCF) for administering W-2 regionally would make it virtually impossible for any county or consortium of counties to administer the program in their area.
From the outset of W-2, it has been managed in Milwaukee by a number of private organizations, but counties in many other parts of the state have decided to keep administering it because they concluded that doing so would allow them to better do a better job of coordinating services and ensuring quality, compared to turning it over to organizations that are seeking to make a profit. A total of 20 individual counties and 11 consortia of counties now administer W-2. 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 U.S. Senate unanimously passed legislation Friday that would extend the basic federal welfare program, known as Temporary Assistance for Needy Families (TANF), through Sept. 30, 2011. The one-year extension is a stop-gap measure, in lieu of a 5-year reauthorization. The House is expected to concur in the bill during the lame duck session.
Unfortunately, the bill does not revive the TANF emergency contingency fund (ECF) and it cuts off funding for the regular Contingency Fund. The ECF, which was passed as part of the 2009 Recovery Act, enabled states to place adults with private employers and youth in summer jobs programs. That funding expired at the end of September, after Republicans blocked attempts to extend it.
A previous continuing resolution had set aside $506 million in FY 2011 for the regular TANF Contingency Fund, which has been an important funding source for Wisconsin in recent years. However, once the new resolution is enacted, it would prospectively stop states from tapping any more of that funding. Read more
This is New Year’s Day for the federal fiscal year, and it’s a very unhappy start for many jobs programs across the country, which have created thousands of subsidized jobs to help low-income parents and displaced workers transition back into the private sector workplace.
Despite the efforts of Democrats to extend it, federal funding runs out today for the TANF Emergency Contingency Fund (ECF), which was a $5 billion appropriation in the Recovery Act that has been used in a variety of ways to help low-income families. One very important use of the ECF dollars has been to finance transitional jobs and summer youth employment programs, which have provided 235,000 jobs in 36 states for low-income parents and young adults.
As an article in USA Today reported today regarding the jobs funding: “The program has won kudos from Republican and independent governors … including Haley Barbour of Mississippi and Charlie Crist of Florida.” However, Democrats couldn’t find any GOP votes in the Senate this week to reach the 60 votes they needed to avoid a filibuster of extended funding for the program – even as the Census Bureau was reporting a huge jump in poverty and an unprecedented degree of income disparity in the U.S. Read more
If you got a copy of the Sunday New York Times or read it online, you may have seen this September 26 headline: “Job Loss Looms as Part of Stimulus Act Expires.” The article concerns a portion of the Recovery Act funding that has been used to help low income families in a variety of ways, including providing funding to initiate or expand subsidized private sector jobs that are designed to enable unemployed parents to move from welfare to work.
Wisconsin is one of the many states that will be adversely affected if Congress doesn’t act quickly to extend this funding, which is referred to as the TANF Emergency Contingency Fund (ECF) and is scheduled to expire on September 30. The last hope for extending it is to include an additional year of funding in the Continuing Resolution that Congress needs to pass this week to keep the federal government from grinding to a halt. Read more