Unhappy fiscal New Year begins for TANF-subsidized jobs programs

Friday, October 1, 2010 at 6:27 PM by

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.

Quoting again from the USA Today article: “The program thus becomes one of the first financed by the February 2009 stimulus law to be shut down. It will be followed in months to come by others as stimulus funds run dry, causing workers to lose jobs, businesses to lose cheap labor and the jobless rate in some states and counties to rise.”

In a previous blog post, I noted that the termination of the ECF dollars will caused subsidized jobs programs to come to a rapid end in many states, but the problem is a bit less immediate in Wisconsin. Our state used a portion of its ECF funds to help pay for the Earned Income Tax Credit (EITC), and that freed up some state funding that is now being used to finance the new subsidized jobs program.  Because that state funding doesn’t have the same calendar limits as the federal funding that ended today; the Wisconsin program is funded at least through June 30, 2011.

Nevertheless, the cut-off of the ECF dollars will hurt Wisconsin in a number of ways, because state officials had hoped to use those federal funds to stretch our funding for subsidized jobs further and to help the state cope with much higher participation in the EITC and the Wisconsin Works (W-2) program.  The regular TANF block grant funding for states has been frozen since 1996 and doesn’t allow states to meet the needs resulting from the very rapid, recession-driven increase in low-income families. 

An excellent blog post today by Donna Pavetti of the Center on Budget and Policy Prioities describes some of the many different ways that the expiration of the Emergency Contingency Fund will hurt low-income families accross the country.

Jon Peacock, project director
Wisconsin Budget Project

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