DCF and DHS Plan Would Close Part of the W-2 Funding Shortfall
Since late spring we’ve been raising concerns that the biennial budget bill cuts funding for the welfare-to-work program known as Wisconsin Works (W-2) based on faulty assumptions. This June 17 paper examines the problem and explains how reducing W-2 spending and shifting federal block grant funds made it easier to cut state taxes in the budget bill.
This week the Walker Administration acknowledged the W-2 shortfall and submitted a plan to the Joint Finance Committee (JFC) to narrow the funding gap by $9.6 million. The plan submitted to JFC by the Dept. of Children and Families (DCF) and Dept. of Health Services (DHS) closes part of the gap by using unallocated federal funding known as “income augmentation” revenues. These funds are received by the state as the federal share of state and local spending for things like Targeted Case Management and the Medicaid HealthCheck program.
The proposal identifies a total of about $33.7 million of income augmentation funds, of which the biennial budget bill has already committed $19.6 million during fiscal year 2013-14. After a little bit is set aside for administrative costs and the counties, about $12.5 million is currently unalloted. The DHS/DCF plan would use that funding for the following:
- $9.6 million for Wisconsin Works,
- $1.7 million for a functional family therapy program called the SAFE Milwaukee Initiative, which targets high risk youth in Milwaukee.
- $1.2 million as a lapse to the General Fund to meet the DCF lapse requirement for both years of the biennium.
I applaud DCF for proposing the additional funding for W-2. Though I don’t want to appear to be ungrateful, I would be remiss if I didn’t point out that the new funding plan doesn’t fully remedy the shortfall:
- The proposal is intended to only address the shortfall in the first year of the 2013-15 biennium.
- The recommended amount appears to be based on a shortfall estimate made a month or two ago that assumed W-2 caseload would start in August to drop by 1% every month. After the August numbers came out and actually showed another increase in W-2 participation (+1.0%), the $9.6 million recommendation was already $4 million short of the amount that will be required if enrollment started falling by 1% per month (based on DOA’s own calculations).
- I still think that assuming a 1% decline per month for the rest of the biennium is unrealistic.
The proposal, which is explained in a memo from the DOA budget office, concedes the point that the plan doesn’t fully remedy the 2013-14 shortfall, let alone touch the W-2 deficit for the second half of the biennium. It notes that DCF has said it would cover any additional shortfall with other funds, such as: “potential carryover balances from fiscal year 2012-13; potential federal fiscal year 2013-14 TANF contingency funds; [and] other potential surpluses in other programs funded with TANF revenues.”
In any event, the Walker Administration’s willingness to begin tackling the Wisconsin Works shortfall is welcome news for a couple of reasons. For one thing, it improves the chances that the state will adequately fund W-2 and won’t take inappropriate steps to suppress participation. Second, if DCF is able to close the W-2 shortfall with the sorts of revenues outlined in the memo, the prospects are better that the department won’t have to siphon off the TANF block grant funding set aside in the budget for a small increase in child care reimbursement rates. WCCF has been very fearful that the first increase in those rates since 2006 might be derailed by the W-2 shortfall.
The proposal is subject to the “passive review” process. That means that if no one on the Joint Finance Committee objects by October 21, the plan will be approved. If any committee member objects, the Finance Committee will need to have a meeting and vote on the proposal before it can be implemented.
We’ll continue to monitor the caseload trends and the proposals to close the W-2 budget hole.