April 13, 2011
Walker Budget Proposes Cuts for Public School Aid
Governor Walker’s budget proposes cuts to both general and categorical aid to Wisconsin public school districts. These cuts will negatively impact students in all districts, particularly those in low-income areas. Without access to a quality education, Wisconsin’s young citizens will have fewer job or higher education opportunities, which negatively impacts the economic health of our state.
General Aid
Walker proposes decreasing funding for general school aids by roughly $7.5 million, or 8.1 percent, over the biennium. In addition to cutting aid, his budget would make several changes to revenue limits making it more difficult schools to offset the effect of cuts to aid. Revenue limits impose a restriction on the amount of revenue a school district can raise from general school aid and computer aids, as well as property taxes, in a given year. Proposed changes include:
- Repealing the guarantee that total school district base revenues in the current fiscal year must be maintained at the prior year level.
- Reducing the low revenue spending ceiling from $9,000 to $8,900 per pupil in both years of the biennium. Under current law, this ceiling will be set to $9,800 per pupil in 2011-12 and each year after.
- Eliminating revenue limit exemptions related to school nursing costs, pupil transportation costs, school safety equipment and security officers scheduled to go into effect during the 2011-12 school year.
- Reducing the revenue cap by 5.5% so districts can not raise property taxes to make up for lost aid.
The reduction in the revenue cap, along with cuts in the general aid, will lead to a $1.7 billion cut in revenue for school districts (DAWN Biennial Budget Explanation).
Walker’s bill further proposes a 10 percent cut in high poverty aid, equal to a $3.74 million deduction over the biennium from the current $18.7 million base amount. This aid is given to districts with at least 50 percent of its students eligible for free or reduced-price lunch, and is used to reduce the districts’ property tax levy. This reduces the tax burden on low-income district residents. Decreased funding for high poverty aid means that school financing will increasingly fall to local districts and their residents.
Categorical Aid
- Freeze special education aid to school districts, resulting in a 3.4 percent drop in the percentage of costs reimbursed by the state by the end of the biennium.
- Eliminate grants for preschool to grade 5 programs designed to improve the education of students enrolled in districts with high concentrations of low-income and low-achieving students.
- Ten percent reduction to sparsity aids that help pay the cost of educating students in rural, lower-income areas of Wisconsin.
April 12, 2011
Walker Budget Repeals 2009 Change Indexing Homestead Tax Credit to Inflation
The Governor’s budget bill would repeal the 2009 change that indexed the Homestead Tax Credit to inflation.
This tax credit provides targeted tax relief to about 250,000 low-income households in Wisconsin. The Legislative Fiscal Bureau explains:
“The program is often referred to as a “circuit breaker” since it is intended to provide relief once property taxes exceed a taxpayer’s ability to pay them. Relief is provided as a credit reducing individual income tax liability or as a cash refund if the credit exceeds income tax due; the homestead credit is referred to as a refundable credit due to this characteristic.”
The 2009 change allows the maximum credit to increase each year as inflation increases. By repealing the annual adjustments, the credits will be cut by $2 million in 2011 and $6 million in 2012, costing low-income Wisconsin families $8 million over two years. Each year, the cost to each recipient will grow higher, from $8 per recipient in 2011, to $24 in 2012, and rising each year thereafter.
Corrections Funding in Governor Walker’s Budget
Governor Walker’s budget makes a number of changes to funding for the Department of Corrections (DOC). Two notable changes include funding for mental health initiatives and a repeal of 2009 early release provisions.
Mental Health Initiatives
The proposed budget provides DOC with $381,800 to fully fund women’s mental health services at the Taycheedah Correctional Institution and to provide security staffing for a new women’s unit at the Wisconsin Resource Center.
This continues funding for the programs, which were first funded in the 2009-2011 budget. These are important initiatives that will address the mental health and safety needs of the approximately 1,100 women housed in the correctional system or Wisconsin Resource Center each day.
DOC also receives $412,500 to fully fund a women’s mental health conditional release program under the Becky Young community corrections appropriation. This appropriation aims to increase public safety and reduce recidivism. The program is expected to serve an average daily population of 36 women.
Repeal of 2009 Act 28 Sentencing Modifications
The budget bill would repeal several provisions from 2009 regarding early release for inmates. It would:
- Delete positive adjustment time, which allows certain inmates to earn earlier release from prison by following regulations and performing required duties.
- Reduce a rehabilitation program that allows inmates with one or more treatment needs related to her criminal behavior back to a solely substance abuse program.
- Repeal provisions allowing DOC to discharge a person early from the remainder of their extended supervision or probation term after a certain time period.
- Repeal early release changes in sentencing for inmates with disabilities and mental illness.[i]
[i] DAWN Biennial Budget Explanation Part 3
March 30, 2011
Public Transit Faces Cuts in Walker’s Budget
While increasing funding for state highways, Governor Walker’s proposed budget reduces funding for public transit and changes public transit’s funding source to make it more difficult to secure funding in future budgets. The Department of Transportation summary of changes can be found here. Walker’s budget would damage public transportation through three main changes:
- Cut the Department of Transportation’s (DOT) aid to local mass transit systems by 10 percent in calendar year 2012 and thereafter. Local systems may address the cuts in state aid by raising prices or reducing service, but however they deal with the coming shortfall, it will undoubtedly have a negative effect on Wisconsin families as they try to get to school or work.
- Eliminate state funding for the Intercity Bus Assistance Program, which increases the connectedness of Wisconsin’s major metropolitan areas with each other and with more rural areas. Travel across Wisconsin will become more difficult as intercity bus service providers cut bus routes to and from major cities, further limiting commuting options for Wisconsin students and workers.
- Shift the funding source for mass transit operating aids from the transportation fund to the general fund beginning in the 2012-2013 fiscal year. This change will have significant impacts on future transit funding because it will force public transit to compete with the many other programs supported by the general fund, such as K-12 education and aid for local services, for spending. The transfer of public transit from the transportation fund represents an additional $106.5 million that must be covered by the general fund, despite Walker’s claims that steep general fund cuts are necessary because the general fund is “broke” (via the Wisconsin Budget Project). Meanwhile, the budget strengthens the transportation fund by shifting funds from sales and use taxes on automobile-related sales, the environmental impact fee, and the petroleum inspection fund into the transportation fund and by issuing $115 million in general fund supported bonds to support the highway program. These changes shore up the transportation fund at the cost of the general fund and the many programs it funds.
These changes will undoubtedly have a negative effect on funding for public transit both in the coming biennium and in the future. Public transit plays an ever more important role for Wisconsin families. Because Wisconsin school districts are not required to provide transportation to a pupil who lives less than two miles from school, public transit is a vital option for parents trying to get their children to school, especially in the winter. As gas prices rise, more Wisconsinites look to public transit as an alternative to get to work, school, and daily errands. Public transportation offers a more cost-effective and environmentally-friendly way to travel, and Walker’s choice to increase state highway funds while cutting public transit demonstrates short-term thinking and a lack of consideration for Wisconsin’s working and middle class families.
March 25, 2011
Walker Proposes Cuts to the Earned Income Tax Credit (EITC)
The Governor’s budget proposes cutting the state Earned Income Tax Credit (EITC) for low-income working families by $74 million in 2011-2013 (and another $37 million cut in FY ’11 in the budget repair bill). Additionally, the budget proposes using $37 million more per year of TANF funding for the state EITC, removing a total of $74 million from other programs to serve families in poverty. (Executive Budget pp.103 & 476)
The state EITC supplements the federal EITC as an income support for low-income working families. A single mom who has two children and is making the minimum wage would lose $302 per year (43% of her current credit.) A family with three or more children would lose up to $170 per year. Families with just one child would actually get slightly more – an increase of up to $31 per year. (From the Wisconsin Budget Project blog.)
The EITC has achieved significant public support from both conservatives and liberals because it encourages and rewards work. The EITC provides a refundable tax credit that increases with each additional dollar of wages until it reaches its maximum value. In this way, the EITC provides an incentive for people to leave welfare for work and for low-income, part-time workers to work more hours. In a 1996 Business Week article, conservative economist and Nobel laureate Gary S. Becker wrote that the EITC “rewards rather than penalizes poor families with working members….Empirical studies confirm the prediction of economic theory that the EITC increases the labor force participation and employment of people with low wages because they need to work in order to receive this credit.”
Studies have consistently found substantial positive effects of EITC on work. Over half of the expansion between 1984 and 1996 in the proportion of single mothers in the labor force nationally is attributed to growth in the EITC. When low-income families increase their earnings, they face reductions in benefits from programs like food stamps. These reductions, combined with the costs incurred while working, such as child care and transportation, can cause families to feel like increased work effort has not significantly increased their overall well-being. Therefore, programs like the EITC are vital for promoting work and enabling families to work their way out of poverty. The EITC is pivotal in the effort to raise working families and their children out of poverty. In 2009, the EITC lifted an estimated 6.6 million people out of poverty nationally, including 3.3 million children.
The EITC expands beyond a simple anti-poverty program, however. As the income gap continues to widen between the rich and poor, programs like the EITC are ever more important in reducing this gap and ensuring that low-income workers are rewarded for their work. Nationally, the EITC offsets 29 percent of the decline that occurred between 1976 and 1996 in the share of income that the poorest fifth of households with children receives. As income disparity in the United States continues to rise, the EITC is necessary to ensure that economic growth is distributed more equitably.
For more detail on the statistics presented in this post, see the Center for Budget and Policy Priorities’ report on the EITC.
March 20, 2011
Cuts for Wisconsin Works (W-2)
Reducing Income Support
The Governor’s budget proposes lowering the already meager maximum monthly income support from $673 to $653. This is the maximum amount of cash assistance available to Wisconsin Works participants, regardless of family size. For some Wisconsin families, this support is their only source of cash income, yet at just $7,836 a year, it would not raise a family of three to even 50% of the poverty line. Even with a generous estimate of food stamp benefits, families remain below 75% of the federal poverty line (using 2008 estimates).
W-2 participants that will be affected include at-risk pregnant women and mothers of infants who are unable to work, as well as parents who are unable to find employment and are serving in a community service positions up to 40 hours a week. Walker’s proposed reduction in monthly income support represents an attempt to balance the budget on the backs on Wisconsin’s neediest families.
Limiting Training and Education
The budget also lowers the limit on the amount of time a participant may spend in educational or training activities to 10 hours a week for participants in community-service placements and 12 hours a week for participants in transitional placements (these placements are described in the next paragraph). While Wisconsin Works agencies and case workers previously had discretion to allow clients to complete the educational or training activities needed to help the participant get the skills necessary for him or her to successfully find a job, Walker’s budget limits this discretion. Because an adult may only receive Wisconsin Works benefits for a maximum of 60 months in his or her lifetime, getting the education and training necessary to secure consistent work that pays a living wage is imperative for Wisconsin Works participants. This restriction on training and education programs limits the ability of case workers to help their clients secure the skills necessary for future success.
The budget also limits the length of time an individual may participate in a trial job, community service, or transitional placement. Currently, Wisconsin Works participants who are able to work are placed in a trial job, community service job, or transitional placement. In trial jobs, participants’ wages are subsidized as they gain work experience with an employer who makes efforts to retain the participant as a permanent, unsubsidized worker once the trial period is over. Community service jobs provide work experience through public service projects designated by DCF. Transitional placements include things like alcohol and other drug abuse treatment, mental health therapy and management, and physical rehabilitation activities. This budget limits the time a participant may spend in a trial job to 3 months and a trial job placement to 24 months; limits a community service job to six months and a community service job placement to 24 months; and limits a transitional placement to 24 months. These time limits are in addition to the 60 month lifelong limit on Wisconsin Works assistance. These time limits reduce the tools case workers have for allowing clients to get work experience and prepare themselves for the labor market. Given the current tight labor market, private-sector jobs are difficult to obtain, and trial jobs and community service placements may be the only option for many Wisconsin Works participants.
More Information
Legislative Reference Bureau Overview
Legislative Fiscal Bureau’s Informational Paper on Wisconsin Works
Cuts in the Wisconsin Shares Child Care Subsidy Program
Governor Walker seeks to cut child care support for low-income families. Despite increased need, Walker is cutting the budget for Wisconsin Shares, the state child care subsidy program under the Wisconsin Works (W-2) program. Through Wisconsin Shares, parents with children who are disabled or under the age of 13 may receive a child care subsidy to allow them to participate in work or education activities. Cuts could happen in three ways:
1.) This budget authorizes the Wisconsin Department of Children and Families (DCF) to implement a waiting list for Wisconsin Shares, which would leave families without the child care they need to work and/or participate in the Wisconsin Works program. It would force families living in poverty to choose between leaving their children without quality child care—possibly even unattended—or giving up their job and income.
2.) The budget also allows DCF to adjust income levels for eligibility in Wisconsin Shares, leaving more families without subsidized child care. The program is currently limited to families with gross income up to 185% of the federal poverty level ($26,952 for a family of two, $40,788 for a family of four) (eligible families retain eligibility until gross income exceeds 200% of the poverty level for two months). In Wisconsin, the average annual cost of childcare for before- and after-school care for one school-aged child in a family child care home is $7,153, and the prices are even higher for young children and for center-based care. Without subsidies, many families near 200% of the poverty level would have trouble finding affordable quality child care.
3.) Those who remain in the program may face higher co-payments for their child care. Co-payment expectations are based on income and number of children. For example, for a family of two with a gross income of $18,216 (at 125% of the poverty level) with one child in childcare, the weekly copay is $36–that is, $1,872 a year. Currently co-payments are capped at 12.5% of family income, but this budget authorizes DCF to increase this cap. This increase would put further strain on families working to escape poverty.
The Importance of Child Care Assistance
Funding for child care subsidy programs are investments in a family’s current wellbeing and future. Research indicates that lack of access to child care assistance makes families more likely to go into debt or face difficult choices between essentials in their household budget (such as between paying for child care or paying for rent or clothes). Parents are also more likely to choose lower-quality child care that is less beneficial for their children and less stable child care that limits parents’ ability to maintain employment. Finally, child care subsidies are associated with better employment outcomes for low-income parents; low-income mothers who receive child care subsidies are more likely to be employed, to stay off welfare, and to have higher earnings. For an overview of research on the benefits of child care assistance, see this article from the Center for Law and Social Poverty.
March 9, 2011
WI Senate Passes Non-Fiscal Budget Repair Bill Items on Collective Bargaining; Some Changes Made to Medical Assistance Provisions
In a surprising move tonight, Republican Senators have passed the budget repair bill items related to collective bargaining. According to Channel 3000 news:
Republicans on Wednesday split from the legislation the proposal to curtail union rights, and a special conference committee of state lawmakers approved that bill a short time later.
The move set up a vote in the Senate, which voted mere moments later.
Protesters gathered at the Capitol as the committee convened, yelling “shame” at lawmakers.
The Assembly will be in special session at 11 a.m. on Thursday to take up the conference committee bill, which includes taking away most collective bargaining rights from most state employees. Republicans on Wednesday split from the legislation the proposal to curtail union rights, and a special conference committee of state lawmakers approved that bill a short time later.
The move set up a vote in the Senate, which voted mere moments later.
Protesters gathered at the Capitol as the committee convened, yelling “shame” at lawmakers.
The Assembly will be in special session at 11 a.m. on Thursday to take up the conference committee bill, which includes taking away most collective bargaining rights from most state employees.
There has been some significant changes to the repair bill provisions on medical assistance. First, DHS no longer has any new rulemaking authority. It would still be able to change current Medicaid provisions through regular rule changes, and perhaps the current emergency rule making process. Furthermore, instead of new rules being referred to the Joint Finance Committee for approval, they would have to go through the regular legislative process of rule review.
Second, the bill provides that the medical assistance changes will sunset, or end, on 2015. This would include any rules made by DHS, any amendments to the state medical assistance plan, and any waiver agreements that DHS might enter into as a result of the bill’s provisions. Also, if medical assistance eligibilty for non-disabled, non-pregnant adults is reduced to only those individuals who have a family income of less than 133 percent of the state poverty level, this restriction would be lifted in 2015 as well (unless further changes to statutes are made).
A summary of the bill done by the Legislative Fiscal Bureau can be found here.
Not Approved: School Breakfast
Reading over the cost of many budget items in Governor Walker’s proposal can make you jaded. A seven million dollars for this program, fifteen million for that one. So when the Department of Public Instruction (DPI) asks for a $935,900 increase in funding for school breakfast reimbursements, it seems like a small thing. However, this seemingly negligble amount, which was not approved for funding in Governor Walker’s budget, could have a huge impact in the daily lives of Wisconsin’s school children.
There are several ways in which a student can be eligible for the school breakfast program. Some children are automatically eligible, such as those whose family receives assistance from the Temporary Aid to Needy Families program or those enrolled in Head Start because they met the program’s low-income requirement. Students living in a family with an income at or below 130 percent of the federal poverty level can receive a free meal, and those with a family income between 130 and 185 percent of the federal poverty level can receive a reduced-cost meal.
The following graph shows the trend in the percent of Wisconsin school children who were eligible for free or reduced meals from 2003-2009. It shows the recent uptake in need following the beginning of the recession in 2008.
Graph produced by WI DPI
The Wisconsin DPI requested an increase in its free breakfast reimbursement program in order to maintain the same level of reimbursement per meal to Wisconsin public and private schools ($.116 per breakfast), and to extend school breakfast payments to independent charter schools in Milwaukee and Racine and state residential schools for the blind and the deaf. Without the increase in funding, schools may not be able to maintain the same quality of meals, or may have to decrease funding to other programs in order to sustain quality. Certain charter and state residential schools will continue to bear the burdern of financing school breakfasts. This is important because Wisconsin schools cited cost as the number one reason for not starting school breakfast programs.
Ensuring that students can have a good breakfast has important health consequences. According to DPI:
The nutritional intake of students greatly influences the educational process. Hunger leads to nervousness, irritability, lack of interest in learning, and inability to concentrate. The School Breakfast Program has proven effective in helping children maximize their academic opportunities by improving their nutritional intake and dietary practices. School breakfast also contributes to lifelong health as it helps students develop nutritious eating practices that contribute to physical and mental development.
Furthermore, the U.S. Department of Agriculture lists a number of benefits that come from eating breakfast, all proven in various academic studies. These include:
- Improving math, reading, and standardized test scores
- Decreased absences and tardiness
- Healthy breakfasts (high in fiber and low in sugar) help sustain the cognitive effects of breakfast
Maintaining quality school breakfast programs and expanding access to more students should be a priority for government. Increasing student performance will lead to better Wisconsin workers in the future, and improve the quality of our state.
State DHS Secretary Wants to Move More Medicaid Patients to Managed Care
Wisconsin Department of Health Services Secretary Dennis Smith announced yesterday that he wants to keep Medicaid services like prescription coverage, but move the most expensive Medicaid patients into managed care.
According to the Wisconsin State Journal:
Smith said he wants to save money by making the most costly patients — such as those with complex disabilities and mental illnesses — enroll in managed care plans, which help decide what care is needed.
About two-thirds of Medicaid patients are now in managed care. The other third have “fee-for-service” arrangements, where the state pays patients’ bills directly to providers. “No one is coordinating their care,” which can mean higher expenses, Smith said.
Secretary Smith’s decision to move more Medicaid patients into managed care is similar to a decision made by Illinois Governor Pat Quinn to move half of Illinois’ Medicaid patients into managed care by 2015. Currently only 8 percent of Illinois Medicaid patients are on managed care, as opposed to around 66 percent in Wisconsin. According to the Pew Center on States, most states have around 46 percent of their patients on managed care. In these tough budgetary times, states are looking to expand the number of people in managed care, the Pew Center writes.
States have been using managed care to cut Medicaid costs for two decades. Up to now, however, the vast majority of plans covered only children and pregnant women — a large, but relatively healthy and inexpensive segment of the more than 60 million people covered by Medicaid.
At the federal level, the Pew Center on the States reports, recent health reform legislation encourages one type of managed care.
The federal health care reform law does not necessarily push states to use what is known as comprehensive or capitated managed care, in which insurance companies share risk with Medicaid programs by agreeing to serve enrollees health care needs for a set price. But it does offer hefty financial incentives for states that offer a type of managed care called “primary care case management,” where doctors receive a monthly stipend for coordinating care for Medicaid patients, including preventive care, acute care and hospitalization. Under the Affordable Care Act, the federal government will pay 90 percent of the costs for so-called “health homes,” a type of primary care coordination designed to help reduce the costs of caring for people with chronic conditions.
Given that only one percent of Medicaid patients take up 25 percent of the program’s expenditures, movement towards managed care will likely be a dominant and cost-saving trend in the near future.
Wisconsin Women's Health Budget Project 