Finance Committee Votes Tuesday on Important Issues for Low-income Families

Sunday, May 29, 2011 at 2:07 AM by

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. It’s the $37 million per year increase in the amount of federal funds from the TANF block grant that is being used for the state Earned Income Tax Credit. That amounts to $74 million in the 2011-13 biennium (or $111 million total when the current fiscal year change in the budget repair bill is included), which is being used to replace state dollars used for the credit, in order to use those dollars to reduce the General Fund deficit. But despite the increase in TANF funding for the credit, the proposed reduction in state funding is even larger, resulting in a $41 million cut in the credit. A WCCF memo to the JFC makes recommendations from the options in LFB Paper # 312 relating to the potential cuts in the EITC.

Wisconsin Shares child care subsidies and YoungStar (Papers #216 and 217) – The Governor proposes reducing funding for Wisconsin Shares by about $52 million in 2011-12 and $54 million in 2012-13. Most of that reduction reflects recent trends in reduced spending resulting from a crack down on fraud in the program and much tougher reimbursement policies for providers. Some of the cut would result from the Governor’s proposal to use the pending YoungStar tiered reimbursement system (LFB Paper 217) to significantly reduce rates for the lowest rated providers; however, the LFB says those savings would be much less than estimated. A memo to JFC from the Wisconsin Early Learning Coalition contains the coalition’s recommendations regarding Wisconsin Shares funding and YoungStar.

W-2 payment level (Paper #212) – People engaged in work activities in the W-2 program get paid up to $673 per month for Community Service Jobs (CSJs) and $628 for transitional placements. Those amounts have been frozen since 1997, and they would now be $930 and $870 respectively, if they had increased with inflation over the past 14 years. Nevertheless, Governor Walker’s budget would cut both amounts by $20 per month, based on the argument that increasing the gap between these payment levels and the minimum wage would encourage participants to take unsubsidized jobs.

W-2 agency contracts for benefits and services (Paper #211) – The Governor proposed an increase of about $17 million of TANF funds over the next two years for W-2 benefits, about $2.7 million (net) for W-2 services, and $714,000 more for local administration. The LFB paper suggests that caseloads are likely to be much higher than the Governor’s budget assumes, requiring significantly more for W-2 benefits, though the funding for services could be reduced. That paper contains a range of options, including one that would require an increase of $28.1 million of TANF funds for W-2 benefits.

W-2 time limits (Paper #213) – The Governor proposes restoring the 24-month participation time limit for CSJs and W-2 Transition (W2T) positions. Those limits were removed by the legislature two years ago, in part to end the administrative burden for W-2 agencies associated with requests for extensions. The 60-month time limit on W2 participation wasn’t changed in that legislation, but eliminating the 24-month time limit has given the agencies more flexibility and reduced unnecessary paperwork.

Transitional jobs demonstration program (paper # 215) – Walker’s budget would eliminate the transitional jobs demonstration program, which was initiated last year and seeks to serve up to 2,500 unemployed, non-custodial parents who are ineligible for W-2 and unemployment insurance. Continuing it would require $12 million per year.

Later in the week we will update the Budget Project’s Comparative Analysis of the 2011-13 Budget to rereflect the Fiannce Committee’s actions on the issues noted above.

Jon Peacock

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