State Budget

According to a new research report from the Center on Budget and Policy Priorities, facing large budget shortfalls, a small number of states are scaling back tax credits for low-income working families, which not only harms some of the families hardest hit by the recession but also weakens the economy by lowering overall demand.

Millions of low-income working families and individuals are relying on federal and state tax credits, such as Earned Income Tax Credits (EITC), to help them endure the recession. The economic crisis has increased unemployment and reduced work hours and wages. Credits offered by states help to alleviate this hardship and stabilize incomes.

The benefit of such programs also extends to the economy at large. State tax credits for low-income families put money into the hands of people most likely to spend it, and most likely to spend it in their local economy.

Earlier this month, Virginia enacted a cut to its EITC that would take effect in 2010 and would cost an estimated 114,000 low-income working families a total of about $6 million. Strange given how the new governor, Bob McDonnell, regularly touts the favorable tax climate as reasons for businesses coming to Virginia. A spokesperson for the governor Bob McDonnell is promising that the governor will reverse the cut so that families can claim the full credit for the 2010 tax year. So far this is simply talk because to restore this tax cut, the Governor would have to call a special session of the Virginia legislature. The 2010 regular session is over.

The Virginia legislature had to make hundreds of millions of dollars in cuts and tax changes to close their budget deficit this year, presumably why this EITC change was made. The legislature voted to phase out a corporate tax break this year, but Governor McDonnell line-item vetoed that measure. Allowing that phase-out to take effect would have saved the state $30 million, more than enough to sustain the EITC. This is simply misplaced priorities and failure in leadership. Low-income children in Virginia will have to pay the price for this even though none of them voted for Bob McDonnell last fall.

Other states are considering similar measures:

• Minnesota Governor Tim Pawlenty cut funding for the state Renters’ Credit by $51 million for close to 300,000 low- and moderate-income households. One-quarter of the affected households are seniors and people with severe disabilities.
• In Georgia, the state legislature is considering eliminating the refundability of the state’s low-income tax credit, which provides needed tax relief and wage support for workers earning less than $20,000 per year. The change would take nearly $22 million directly out of the pockets of the 1 million affected taxpayers — mostly workers and seniors.
• New Jersey Governor Chris Christie has proposed reducing the state EITC from 25 percent of the federal credit to 20 percent. Approximately 485,000 families would lose more than $45 million. The governor is also proposing eliminating property tax rebates for seniors, renters, and homeowners with incomes below $75,000.
• In the District of Columbia, Mayor Adrian Fenty proposed reducing the District’s credit to 39 percent from 40 percent of the federal credit. This change would save the District a tiny fraction of its expenditures but take $1 million from some of the 50,000 low-income workers whose wages get a boost from the DC EITC.
• A similar reduction is being pursued in Montgomery County, Maryland, one of the three localities in the country to offer a local EITC (the other two are New York City and San Francisco). County Executive Isiah Leggett has proposed reducing the county’s EITC by one-third or $5.4 million for the 30,500 working families who claim the credit.

It is pure idiocy to raise taxes on those hardest hit by a recession. State refundable tax credits targeted at low-income working families encourage work, stabilize income, and spur consumption. Every state legislator who votes to eliminate them need to be asked why the oppose tax breaks for some, but not for working families who need them the most.

Last year, the Congress passed the American Recovery and Reinvestment Act. It provided billions of dollars to support education and education reform throughout the country. It kept states from firing teachers and closing schools. It is set to expire at the end of the year, and without additional funding, these educational reform efforts could end. As Education Secretary Duncan recently told Congress, “We are gravely concerned that the kind of state and local budget threats our schools face today will put our hard-earned reforms at risk.”

The recession has driven down state revenues by record proportions. Education makes up the largest single item in state budgets, and spending cuts there have been deep and widespread. Serious state budget shortfalls will likely persist for at least the next two years, reaching an estimated $180 billion in fiscal year 2011 (which in most states will begin July 1) and $120 billion in 2012. This sets the stage for even more severe cuts as states wait for revenues to recover to pre-recession levels. For 2011, governors are proposing cuts that go even deeper than those enacted to date. Congress must continue this educational and Medicaid support or children will have to pay an even greater price for a situation they did nothing to create. The economy didn’t crash because of spending on education, and firing teachers and close schools will not get us out of this recession.

Even though the funding the Recovery Act has provided has saved 284,000 jobs, school districts and other local education employers (such as community colleges) have nevertheless cut 104,500 jobs — and this number is very likely to grow. California school districts have notified nearly 22,000 teachers that they might be terminated, for example, and Illinois’ governor has proposed education cuts that he estimates would mean layoffs for 17,000 teachers. The end of this funding would likely accelerate this job loss. These job losses — as well as teacher furloughs, salary reductions, cancellation of contracts with private-sector vendors, and other budget-cutting measures — also weaken the overall economy by reducing consumer demand. Without additional federal aid, state budget cuts could cost the economy 900,000 public- and private-sector jobs.

In addition, current and additional education cuts undermine reform initiatives that many states are undertaking with the federal government’s encouragement, such as supporting professional development to improve teacher quality, improving interventions for young children to heighten school readiness, and turning around the lowest-achieving schools, to name just a few.

After the jump, we enumerate state education cuts already made:

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Arizona Senator Jon Kyl has an interesting approach to legislating. 1,100,000 workers are set to lose their unemployment benefits and health coverage through the COBRA program. Senator Harry Reid from Nevada is trying to extend these benefits for the next year and provide Medicaid relief to states like Arizona. Jon Kyl has decided to block this effort in order to preserve a massive tax break for those who inherit millions of dollars:

On Wednesday, a top Republican leader said a deal on the bill would depend on working out the fate of the expired estate tax…Minority Whip Jon Kyl, R-Ariz., said that Republicans will block consideration of the new bill unless they get “a path forward fairly soon” on the estate tax.

Not only are 1.1 million workers scheduled to lose their unemployment insurance in March, 2.7 million are on track to lose them by April, while unemployment is still at 9.7 percent and there are six unemployed workers for every job opening. 6.3 million Americans have been unemployed for six months or longer, which is the most since the government began keeping track in 1948 and “more than double the toll in the next-worst period, in the early 1980s.

Despite all this, Jon Kyl is insisting nothing can move forward to help middle and lower income families in dire economic straits until those wealthy few are protected from having to pay taxes when they inherit millions of dollars. Due to a Bush-era budgeting gimmick, there is no estate tax for those who inherit money in 2010. This tax will be reinstated in 2011 at the level it was when Bill Clinton was president. Kyl’s proposal to slash the estate tax rate and increase its exemption would cost $250 billion over ten years, with 99 percent of the benefit going to the heirs of multi-millionaires. Under 2009 law, only 0.2 percent of estates are subject to the estate tax at all.

The fact that Kyl has vowed to stop the business of the Senate to deal with this non-urgent issue for 99.8% of households is particularly galling given what children in his state are facing. Arizona has been hit particularly hard by the economic downturn and the housing crisis. And the Governor and legislature are proposing policies that will hurt children and families far more than the reimposition of the estate tax. If the budget were enacted, it would:

• Eliminate the state’s children’s health insurance program (KidsCare), which covers 47,000 children
• Repeal Medicaid coverage for 310,000 childless adults and 3,000 adults with serious mental illness
• Make deep cuts to support for early learning by eliminating preschool for 4,328 children and K?3 education support for more than 77,000 students
• Reduce the number of months that low-income families can receive cash assistance through the Temporary Assistance for Needy Families (TANF) program, immediately eliminating assistance for 10,000 families

Last year, Jon Kyl voted against expanding the KidsCare program to 100,000 more children. He voted against the economic stimulus program that provided nearly two billion dollars in Medicaid for children, prevented a billion dollars cut in children’s programs, and invested several hundreds of million dollars in education programs and programs for disabled children in Arizona. He voted against the federal budget that increased funding for Head Start and many other children’s programs, and was just one of votes against expanding afterschool programs.

So while the Governor and legislature are making tough decisions that will hurt the health, safety, and education of Arizona children, Senator Kyl in Washington DC is blocking needed relief so that a few millionaires can avoid paying money on the millions of dollars they inherit. And people wonder why Washington is broken.

Utah, like most states, is facing a difficult budget decision that requires difficult decisions about which programs to cut and/or whether to raise revenues to meet the expectation of citizens for quality services. Hawaii recently has decided to close schools on Friday. But Utah Sen. Chris Buttars proposed an even more off the wall idea – that the state should stop paying for 12th grade.

Utah state senator Chris Buttars proposes eliminating the 12th grade. Utah is facing a $700 million deficit and that by cutting an entire grade it will save the state about $60 million. He argues that many students don’t take a strong academic course load in their final year so that year should be optional.

Buttars has since toned down the idea, suggesting instead that senior year become optional for students who complete their required credits early. Of course, he could require that students take a strong course load to get the most out of the educational dollars the state spends. That is the beauty of being a lawmaker, you can make laws that benefit people, instead of looking to grab money for kids so you can avoid tough decisions about raising the revenue it takes for a quality educational system.

It is mystifying why children must lose educational opportunities and health care to solve budget problems they did nothing to create. While this idea of eliminating 12th grade might seem extreme today, it could become commonplace over the next few years if states continue to balance budgets by cutting education first and not being honest about the true costs of government.

About half of the nation’s governors have released their proposed budgets for the upcoming fiscal year. Children will clearly be the victim of many of these cuts as states are choosing to sacrifice their health, education, and safety. They should expect more leadership from the people elected to shape their future, but yet again, politicians are failing them. Many of those proposals will be changed before they are enacted, but they are indicative of the magnitude of the cuts that children in these states are facing:

• Arizona’s governor is proposing deep cuts to a range of programs and services. If enacted, her budget would: eliminate the state’s children’s health insurance program (KidsCare), which covers 47,000 children; make deep cuts to support for early learning by eliminating preschool for 4,328 children and eliminating state support for full-day kindergarten; and reduce the number of months that low-income families can receive cash assistance through the Temporary Assistance for Needy Families (TANF) program, immediately eliminating assistance for 10,000 poor families, among other cuts.
• California’s governor is proposing deep cuts to health care and education beyond those already enacted. Specific cuts include additional deep reductions to Medi-Cal (Medicaid) services, a $1.5 billion reduction in K-12 and community college funding in 2010-11, and elimination of funding to respond to enrollment growth in the state’s public universities.
• Colorado’s governor proposes to eliminate a scheduled increase in K-12 funding that would cover enrollment and cost increases and implement an additional cut of $223 million in school aid. He also proposes delaying payments to Medicaid providers and cutting payment rates.
• Delaware’s governor proposes five days of furlough for teachers.
• Georgia’s governor proposes cuts to education that would reduce K-12 spending by nearly 11 percent from pre-recession levels; state university spending would be reduced by more than 9 percent.
• Maine’s governor is proposing 10 percent cuts in payments to certain Medicaid providers and a further cut in overall K-12 education spending beyond cuts already enacted.
• The Massachusetts budget proposes a $174 million reduction in Medicaid provider rates and eliminates state funding for a program providing housing vouchers to homeless families.
• Mississippi’s governor is proposing to cut state aid to K-12 schools by over 9 percent.
• New York’s governor is proposing a $1.1 billion cut to state education aid; more than $400 million in reduced payments to health care providers and about $100 million in other health-related cuts; $143 million in funding cuts for four-year public colleges and cuts to a financial aid program serving students from low- and moderate-income families.
• South Carolina’s governor is proposing capping total enrollment in the state’s children’s health insurance program.
• Vermont’s Governor recommends a host of spending cuts, primarily focused on human service programs and education, including a 3 percent reduction in Medicaid provider rates, Medicaid premium increases, caps on some Medicaid services like the number of emergency room visits, and an increase of 20 percent in the average number of students per teacher.
• Before leaving office, Virginia’s former governor proposed a budget for the coming biennium that would (in 2011) cap state funding for school support staff and school psychologists.
• Washington’s governor is proposing deep cuts to education and health care. She is proposing: eliminating two education programs, both of which reduce class sizes and one of which provides professional development for teachers; cutting the state work-study program as well as several smaller financial aid programs that help 11,000 students go to college; reduced funding for two- and four-year colleges, likely resulting in administrative cuts, larger class sizes, and elimination of support services such as student advising; and a 20 percent reduction in early interventions and 25 percent reduction in direct client services for HIV and HIV-vulnerable populations.

As the House and Senate work to reconcile their competing versions of health care reform, the status of the State Children’s Health Insurance Program (S-CHIP) remains in doubt. The New York Times has an excellent analysis of the issues at stake. Each bill does the following:

• Senate Bill – Preserves the program and would extend federal financing through 2015, two years past its expiration date under the reauthorization passed earlier this year.
• House Bill – Ends S-CHIP and redirects the millions of children either to Medicaid, the federal-state insurance program for the poor, or to new health insurance exchanges where moderate-income Americans would be able to buy private coverage using new federal subsidies to help offset the cost.

Many children’s health advocates cite numerous risks:

Simply shifting children from one program to another could result in some losing coverage, even on a temporary basis. And there is a chance that parents, even with new subsidies, will find coverage unaffordable and choose not to buy it for themselves or their children, despite a new mandate in both bills that nearly everyone obtain coverage.

“The country has made remarkable progress in covering kids in recent years because of the success of CHIP and its companion program, Medicaid,” said Jocelyn A. Guyer, co-executive director of the Center for Children and Families at Georgetown University. “It would be a major problem if health reform undercut these gains by shutting CHIP down too abruptly or by moving kids into coverage that isn’t as affordable and as well-designed to get them the care they need to develop and grow.”

Other issues impacting the final version of the legislation include immigration and children whose parents have mixed immigrant status. As many as 14 percent of children with health care through government programs come from such families. The bill creates child-only insurance policies but does not provide detail on how they will work.

The bills expand Medicaid to individuals and families earning up to 133 percent of the federal poverty level (currently about $29,327) under the Senate bill, and up to 150 percent of the poverty level ($33,075) under the House bill. Under both the Senate and House bills, illegal immigrants would not be eligible for the insurance subsidies. States are concerned about the additional costs that they are already drowning under and causing cuts to many other health, education, and child safety programs.

These issues will be hammered out over the next several weeks. Check back here for updates on how the final version of the health care reform will benefit children and families and what challenges will remain or emerge as it is implemented.

The Washington Post had an illuminating story today about the $2.6 billion dollar budget deficit facing the state. While the outgoing Governor, Tim Kaine, has had to cut the budget deeply in the past two years, and use federal stimulus money to balance it, the state still faces a daunting deficit as a result of falling tax revenues during this national recession. Governor Kaine will likely be the first governor in several decades to spend less money upon leaving office than entering it. The new Governor, Republican Bob McDonnell, pledged to not raise any tax for any reason during the campaign. So, what will the legislature and the new Governor do to balance the budget? House Majority Leader, Republican Morgan Griffith, proposes cutting preschool education for four year olds:

Legislative leaders, particularly in the conservative-led House of Delegates, have their own ideas as well. House Majority Leader H. Morgan Griffith (R-Salem) said there are small-ticket items, a state-funded award program at Virginia Commonwealth University that honors excellence in Virginia governing, for instance, that could be cut. He also proposed scaling back Kaine’s efforts to expand state-funded preschool.

If only the state did spend $2.6 billion a year on preschool for 3 and 4 year olds. That would be one of the best investments the state could make, bringing back as many as 7 dollars for every dollar invested. Nothing better illustrates the short-sighted decisions policymakers are contemplating. Thinking what will be in the best interests of children and the state 10, 20, 30 years from now might not help politicians get re-elected, and might require something more than “limited government” or some such ideological buzzword of the moment.

4 year-olds did not put Virginia in the budget situation it faces, and denying them the head start they need to enter school ready to learn won’t solve the state’s problems.

Throughout the country, state and local budget cuts have threatened programs that provide for the health, education, and safety of children. With states facing budget deficits well in excess of $100 billion next years, many are considering even more drastic moves. In Hawaii, school has been canceled on Fridays for the rest of the school year.

At a time when President Barack Obama is pushing for more time in the classroom, his home state has created the nation’s shortest school year under a new union contract that closes schools on most Fridays for the remainder of the academic calendar.

The deal whacks 17 days from the school year for budget-cutting reasons and has education advocates incensed that Hawaii is drastically cutting the academic calendar at a time when it already ranks near the bottom in national educational achievement.

The cuts are occurring in a Hawaii public education system that’s already ranked 47th in the nation in eighth-grade reading and math, according to 2007 National Assessment of Educational Progress test scores.

While many school districts have laid off or furloughed teachers, reduced pay and planning days and otherwise cut costs, Hawaii’s 171,000 public schools students now find themselves with only 163 instructional days, compared with 180 in most districts in the U.S.

At 163 school days, Hawaii’s school year ranks behind every other state. Most states provide students with 180 days of school, while 10 other states offer less than 180 days, according to the Education Commission of the States.

A call to action from the west steps of the state Capitol last week carried one message for the 60 community members, politicians and children who gathered for the Every Child Matters campaign: Budget cuts are coming, and they’ll hit programs that especially affect children.

When the legislature reconvenes in January, lawmakers will face a $500 million budget gap that they’ll likely close with cuts to early-childhood and higher education — unless Coloradans stand up now, said Becky Miller Updike, director of Every Child Matters-Colorado.

Of the five main categories covered by the state budget — Medicare, human services, K-12 education, higher education and corrections — cuts have already come to the prison system. Education programs, protected during the last legislative session by an infusion of federal stimulus money, are up next, Updike said.

Stories like these are taking place all across the country. As the economy takes longer to recover from the recession than previously thought, state and local revenues are plunging and children are squarely at the frontline of cuts state legislatures and city councils are considering.

Vote Kids opposes cuts that negatively impact children. They did not cause the recession and firing their teachers and throwing them out of child care will not grow the economy. Now is the time for investment in children as opposed to cuts. Vote Kids will release a report later this year on the status of children and the impact of budget cuts on programs throughout the country. It is up to groups like Every Child Matters and local community activity to spotlight this issue and let people know what cuts to the programs for education, health, and safety of children will mean.

The economy is still ravaging America’s schools as they begin again this week. In 2009, thousands of teachers and other school workers were laid off in dozens of states as a result of plunging state and local revenues. Many were hired back as part of the federal stimulus package (click here to see how your senator voted).

The stimulus helped stabilize some states, but in Arizona, California, Georgia and a dozen other states with overwhelming deficits, the federal money has failed to prevent the most extensive school layoffs in several decades.

In the hard-hit states, the shuffling of teachers out of their previous classrooms and into new ones, often in new districts or at unfamiliar grade levels — or onto unemployment — continues to disrupt instruction at thousands of schools. Experts said that seniority and dysfunctional teacher evaluation systems were forcing many districts to trim strong teachers rather than the least effective.

About half of the 160 school superintendents from 37 states surveyed by the American Association of School Administrators said that despite receiving stimulus money, they were forced to cut teachers in core subjects. Eight out of 10 said they had cut librarians, nurses, cooks and bus drivers.

Children did not create this economic mess and it won’t be solved by firing their teachers and taking away their nurses. It will take leadership in Washington to provide schools with the resources long-term to best educate children and prepare them for the 21st century global economy. Some politicians voted for this in March, others voted against it. If politicians vote against investing in children, they have an obligation to tell us what they are for.

Click here to read more about this story.

From the Associated Press:

Legislators in more than a half-dozen states, their revenues evaporating in the recession, frantically worked to stave off government shutdowns and devastating service cuts. California failed to meet a midnight deadline and now may need to issue IOUs instead of paying bills.

Across the country, lawmakers were feeling the heat as their legislatures began the new fiscal year without a budget in place.

The end of June marked the end of the fiscal year in many states, meaning lawmakers worked late Tuesday to pass budgets in a year that has seen the recession take a devastating toll on government finances.

This will have profound impact on children as many states throughout the country are making cuts in education, health, and child safety programs.

Originally posted on Fox-7 News:

A not-for-profit organization just got news that their budget will likely be slashed. This means closures and layoffs throughout Illinois are likely.

Fox 7 met with people from the Children’s Advocacy Center who believe these budget cuts will hurt children the most.

Behind closed doors, in a children friendly room, victims of sexual or physical abuse tell trained professionals what happened to them. “Children need this center without it, they would have to tell their story in places that are not comfortable to them,” said Sheryl Woodham with CAC.

The Wall Street Journal has an excellent article today about detailing what we have been reporting here for months, that children’s health is being gutted by the recession and budget cuts in the state.

As the recession forces more hospitals and doctors to pare costs and services, the cutbacks are hitting one group of patients especially hard: children.

Children’s hospitals and pediatricians are among the hardest hit by state cuts. That’s because, while children have always made up about half of Medicaid’s rolls, their numbers have swelled in recent years to the point that at least 22 million, or one in four, U.S. kids now get their health coverage through Medicaid or a state Children’s Health Insurance Program. States often administer CHIP, which is aimed at families with more income than Medicaid participants, as part of their Medicaid programs. Both Medicaid and CHIP are jointly funded by state and federal governments.

It’s becoming increasingly difficult to find a doctor, particularly a specialist, who takes Medicaid. In a recent survey by the Medical Group Management Association, a trade group, 18% of 1,850 practices polled said they no longer took new Medicaid patients, while an additional 11% said they were likely to stop in response to the recession.

Particularly troubling, hospitals are turning away children with Medicaid cards:

More children may have Medicaid cards, but “a lot of them are being turned away at the doctor’s,” says Edwin Suarez, a Las Vegas physical therapist whose pediatric caseload had been 70% Medicaid patients. But after state cutbacks, Mr. Suarez is having to turn away some children. “Otherwise I just can’t meet my overhead,” he says.

Medicaid cutbacks also affect services for privately insured kids, as children’s hospitals cut staff and programs to make up the revenue shortfalls.

The stimulus package proposed by the President and passed by Congress will only go so far, but it should be noted who takes this problem seriously and who doesn’t and voted against giving state relief to help protect children’s health care from Medicaid cuts.

Congress is working on putting together a health care bill right now that may or may not help alleviate the deficiencies for children in the current system. Vote Kids supports a series of proposals to guarantee that every child gets the health care they need.

According to Senate Majority Leader Harry Reid, the Senate is working on a bipartisan health reform bill, but that might fall apart in the next two weeks. However, he vows that health care will pass this year either with both parties’ support or a Democratic bill. We will keep you informed as new developments arise. With nine million uninsured children, many more unable to get quality care, and the recession gutting coverage in states, major reform is a necessity than can no longer wait.

Senators and members of the House who oppose reform have an obligation to say what they will do instead to provide every child with the same level of high quality care that we taxpayers provide for them and their families.

Originally posted in the Baltimore Sun:

Northeast Baltimore teenager Sanchel Brown developed a passion for all forms of dance, from African to tap, at a local recreation center that set her upon her current path to college. But she worries that kids in her neighborhood may be denied the same opportunity because of budget cuts at City Hall.

“They complain about the children always making trouble, but we don’t have anything to do that’s affordable,” said Brown, a rising senior at Baltimore City College who is looking to apply to colleges around the state and major in dance. “We need something to recreate our minds.”

Brown was among several hundred children, parents, teachers and clergy who made the symbolic trip Sunday to the Inner Harbor, where a recent rash of assaults and harassment by roving groups of teens near the tourist hot spot has put city officials on alert and dismayed residents. Protesters called on Mayor Sheila Dixon to restore cuts to youth programs.

Click here to read more.

Originally posted in the Durham News:

Angry teachers protested job cuts this week, even as the Durham Public Schools said it had found jobs for all but 22 probationary teachers scheduled for layoffs.

About 30 teachers and their supporters gathered outside the Fuller Building on Cleveland Street before a special school board meeting Tuesday night.

“Fairness and Equality!” “Children First!” and “No More Cuts!” they shouted.

Click here to read more.