The Effects of the Federal Government Shutdown for Wisconsin Children and Families

Tuesday, October 1, 2013 at 5:13 PM by

A Significant Economic Hit to the National Economy and a Gradually Expanding Erosion of Key Programs

Economists expect the federal government shutdown to have significant adverse consequences for the national economy.   This LA Times article reports that some project that even just a two-week partial shutdown will cause a reduction of 0.3 to 0.4 of a percentage point from national economic growth in the fourth quarter.   That’s particularly a problem when the economic recovery is already so sluggish that job growth has been barely keeping ahead of population growth.  

I worry about those economic consequences, but I am also very concerned about the effects of the shutdown on children and families in our state – especially for low-income and vulnerable families.  Fortunately, most federally funded programs for those families will continue at least through October, but the consequences could be very serious for vulnerable families if the shutdown lasts well into the fall.

Several factors help slow the impact of the cuts to funding for education and human services programs.   For example:

  • For a number of programs, such as the welfare to work initiative known as W-2 and the Wisconsin Shares child care subsidy program, the state is able to keep things going with the help of unused federal funding from the previous year or by first using the state matching funds appropriated in the state budget bill.
  • Many of the education programs are insulated because they are “forward funded.”  That includes federal K-12 education funding and adult education programs.
  • Medicaid is protected through the end of the calendar year because it has an advance appropriation equal to three months’ worth of funding.    

The supplemental nutrition program for women, infants and children (WIC) could be one of the first programs to have its federal revenue dry up, but states have a little leeway to continue it by using alternative revenue sources, such as rebates from manufacturers of infant formula.  That might extend WIC briefly.  Food stamp benefits are just a bit more secure, with enough funding to last through the end of October.

An even more immediate effect will be felt in some places by the Head Start programs whose contracts expire this month.  For now, that affects just 20 of the 1,600 Head Start programs across the country, and none in Wisconsin will lose funding this month.  However, about there are about 1,800 Wisconsin children served by several Head Start programs (including Milwaukee Public Schools) that could close in November if the shutdown lasts that long. 

In some cases, such as extended unemployment benefits, the benefits are funded but the financing of program administration is more precarious, so there could be delays in the approval of new applications and longer waits for phone calls to be answered.

The Center on Law and Social Policy (CLASP) has prepared several documents about the effects of the shutdown, and I tapped those for this overview.  Read more in these analyses about how various programs are affected and how states may be able to take steps to ensure the continuity of some of these programs. 

Jon Peacock

Categories: Blog, ECONOMIC SECURITY, FEDERAL BUDGET & TAXES, food stamps, K-12, TANF, unemployment benefits, W-2 | Comments Off on The Effects of the Federal Government Shutdown for Wisconsin Children and Families

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