Legislature Approves Unfunded Transitional Jobs Bill

Tuesday, November 5, 2013 at 6:31 PM by

New LFB Paper Illustrates Why Tapping TANF Funding Appears Unlikely

The Assembly overwhelmingly approved a bill today that we strongly support, because it is aimed at expanding a program to provide on-the-job training to low-income people.  The only catch is that it isn’t funded, and the prospects for funding it don’t look promising anytime soon.   

The bill in question is SB 333, which is part of the package of workforce training bills proposed by the Governor in late September.    It authorizes expansion of the Transitional Jobs program, which now only operates in Milwaukee.  Transitional Jobs was first implemented several years ago as a pilot program, with funding from the federal Recovery Act.   Although that came to an end, the 2013-15 biennial budget bill created a new version of it in Milwaukee, which is now called the Transform Milwaukee Jobs Program.  It was allocated $9.9 million from the federal welfare reform block grant known as Temporary Assistance to Needy Families (TANF).   

SB 333 would allow the Dept. of Children and Families (DCF) to expand the program to one or more additional geographic areas with relatively high rates of unemployment and childhood poverty.  It was approved by the Assembly today by a vote of 92 to 3, after being passed on a voice vote in the Senate in October.  (See the bill history here.)

In a blog post about a month ago, I summarized a study released in September by the Economic Mobility Corporation that examines the effectiveness of subsidized job programs in several states including Wisconsin, and makes a strong case for this sort of on-the-job training. 

This certainly isn’t the only time that the legislature has passed enabling legislation for a new or expanded program without designating a revenue source.  Even without funding, the commitment to try to finance a program is useful, especially if there’s a potential funding source on the horizon.  In this case, I don’t see any promising options, though I’m sure legislators could find a revenue source if this work training program is truly a priority. 

The SB 333 fiscal estimate, which was prepared by DCF, cites several possible funding sources.  Those options include reallocating some of the federal TANF  funds appropriated in the budget, or spending part of the $4.3 million TANF balance that the budget bill estimated would be unspent at the end of the biennium.   The problem with both of those options is that current Wisconsin Works (W-2) spending is far over budget.  I’ve been writing about the W-2 underfunding since last spring, and a new Legislative Fiscal Bureau (LFB) paper indicates that the shortfall is likely to be even larger than I dared suggest.     

The LFB paper was written for the Joint Finance Committee’s review of a DCF/DHS plan to spend $9.6 million from federal “income augmentation” funds to help close the W-2 funding shortfall.  Although that JFC meeting has been postponed, the LFB paper is still instructive.  It indicates that the $9.6 million would fall far short of closing the W-2 funding gap: 

  • The proposal is intended to only address the shortfall in the first year of the 2013-15 biennium, and the Fiscal Bureau estimates the gap in that fiscal year to be at least $13.3 million, even if W-2 participation starts dropping this fall by 1% each month.
  • The LFB paper projects that even under a scenario of W-2 participation declining by 1% per month, funding will fall short by another $12.2 million in the second year of the biennium. 
  • If W-2 participation stops growing and remains at its current level, rather than finally starting to decline, the LFB projects that the funding shortfall will be $43.4 million during the biennium, or almost $34 million more than the DCF/DHS plan would provide at this time. 

Groups like WCCF that support the expansion of the Transitional Jobs program should be hoping that some other source of funding comes along, because the budget bill siphoned off TANF funding to help build up the state’s General Fund surplus (and free up funding for tax cuts).  Because the substantial TANF balance was diverted in that way, the unrealistic assumptions about W-2 participation have created a large hole to fill in the TANF budget. That hole helps account for the fact that lawmakers are currently unable to fund part of the Governor’s work training agenda.

Jon Peacock

Categories: Blog, ECONOMIC SECURITY, jobs, TANF, W-2 | Comments Off on Legislature Approves Unfunded Transitional Jobs Bill

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