Other items on the agenda that day include some proposals for new sales tax exemptions, some of the smaller DHS issues, and the public benefits fund used for low-income weatherization and energy assistance.  

A full list of the items being considered can be found here, with links to each of the papers.   The outline below includes links to some of the many Legislative Fiscal Bureau papers: 

Low-Income Weatherization and Energy Assistance Program

• Low-Income Weatherization and Energy Assistance Program Allocation Changes (Paper #105)

Supreme Court  

• 2011 Act 32 2013-15 Courts Lapse Requirement (Paper #625)

General Fund Taxes — Sales and Excise Taxes

• Sales and Use Tax Exemption for Qualified Research in Biotechnology and Advanced Manufacturing  (Paper #295)
• Sales and Use Tax Exemption for Veterinary Services (Paper #296)
• Sales and Use Tax Exemption for Services of Printing and Imprinting Advertising and Promotional Direct Mail (Paper #297) 

Health Services — Other Health Programs and Departmentwide

• Peer-Run Respite Centers (Paper #347)
• Office of Children’s Mental Health (Paper #348)
• Health Care Data Organization Grant (Paper #349)
• Graduate Medical Education Program Grants (Paper #350)

Wisconsin Health and Educational Facilities Authority

Public Instruction — General School Aid and Revenue Limits 

• State Support for K-12 Education and General School Aids Funding Level (Paper #505)
• General Aid Calculation for Consolidated School Districts (Paper #506) 

Public Instruction — Categorical Aids 

• School Performance Incentive Grants  (Paper #510)
• Educator Effectiveness Evaluation System (Paper #511)

Public Instruction — Choice, Charter, and Open Enrollment 

• Milwaukee and Racine Parental Choice Programs — Per Pupil Payments (Paper #515)
• Expansion of Parental Choice Program for Eligible School Districts (Paper #516)
• Special Needs Scholarships (Paper #517)
• Pupils Enrolled in Home-Based Private Educational Programs (Paper #524)

Jon Peacock 

A full list of the items on the May 23 agenda can be found here, with links to each of the papers.   The outline below includes links to a few of the many Legislative Fiscal Bureau papers: 

Financial Institutions 

• Regulation of Rental-Purchase Companies (Paper #275)

Justice 

• Internet Crimes Against Children Taskforce (Paper #392)
• GPS Tracking Grant Program for Individuals Subject to Domestic Abuse or Harassment Restraining Orders or Injunctions (Paper #415)
• Transfer the Office of Justice Assistance (Paper #405)
• DNA Collection at Arrest and the DNA Analysis Surcharge (Paper #410)  

Transportation — Local Transportation Aid 

• Mass Transit Operating Assistance — Convert Funding to GPR and Mass Transit Funding Level (Paper #640) 

Transportation — State Highway Program

• Major Highway Development Funding (Paper #652)
• State Highway Maintenance — Routine Maintenance Funding and Program Restructuring and Traffic Signal and Intelligent Transportation System Installation, Replacement, and Rehabilitation (Paper #657)

Higher Educational Aids Board 

• Reestimate Wisconsin Covenant Scholars Grants (Paper #365)
• Dental Education Contract (Paper #366)

University of Wisconsin System 

• PR Appropriation Balances (Paper #675)
• GPR Funding Increase and Compensation Plans (Paper #676)
• Incentive Grants (Paper #677)

Jon Peacock

The Joint Finance Committee (JFC) approved an omnibus motion (#364) late today that makes a few improvements in the Department of Children and Families (DCF) budget, but which is nonetheless very disappointing in many important respects.  We’ll take a closer look at that motion soon, but here’s an overview of the good and bad news – starting with the positive parts of the motion: 

• It cuts state GPR support for the EITC by less than the Governor recommended.  His budget would have used an additional $27 million per year of federal TANF funds to replace state funding for the EITC.   The motion reduces that funding shift to $19 million per year, thereby not siphoning off as much of the TANF funding to use elsewhere in the budget. 
• The motion reduces the cut to Wisconsin Works (W-2) by $18 million, which reflects the fact that W-2 spending has grown by 8.5% since last fall, instead of declining by 5.9 %, as DCF anticipated.   (See alternative A.2. in LFB paper #196.) 
• It increases funding for child support enforcement – providing an additional $4.25 million GPR per year, compared to the Governor’s recommendation (capturing an additional $8.25 million per year in federal matching funds), which is a proposal WCCF endorsed. 
• It includes $8.75 million of TANF funds for the Transform Milwaukee jobs program (alternative 2 in LFB paper #199), although that amount is $1.2 million less than the Governor recommended.

Some of the most disappointing parts of the committee’s actions on DCF issues include the following:

• Wisconsin Shares funding (for child care subsidies) is reduced sharply, pretty much as the Governor proposed, and for the most part the bill squanders a great opportunity to use those savings to address concerns about reimbursement rates (which haven’t risen since 2006) and child care quality.  (See the WI Early Learning Coalition’s recommendations.)  However, the committee did reduce the cuts for Shares by a net of $1.2 million (compared to the Governor’s bill), and when that change is coupled with another reduction in the estimated cost of maintaining the status quo, DCF expects to have $5 million to finally increase rates in the second year.  That would amount to about a  2% increase, on average, if the boost in rates began in July 2014.    
• The motion assumes that W-2 spending will drop by 1% every month from April of this year through June 2015.   Although that scenario results in a much smaller W-2 cut than the Governor proposed (because it takes recent growth into account), it may be unrealistic to expect W-2 participation to drop that fast.   If the W-2 spending doesn’t drop that fast, the chances of a  Wisconsin Shares rate increase will be reduced. 
• The amended bill siphons off an additional $38 million of TANF funds by transferring it to the Dept. of Revenue (on top of the large increase for that purpose last session).  Ostensibly, the increase is intended to “strengthen” the EITC, yet total EITC funding is reduced by $16 million in the 2013-15 biennium (based on the preliminary reestimate of the cost of maintaining the program).   
• By using virtually all of the TANF surplus being carried over from the current fiscal year, state lawmakers are adding roughly $80 million to the structural deficit in the 2015-17 biennium.

You can find the omnibus motion here.

Jon Peacock      

In the 2012-13 school year, 42% of Wisconsin children were eligible for free or reduced-price school lunches. In the 2003-04 school year, just 30% of students qualified for free or reduced-price school lunches, as shown in the chart below. The share of students qualifying has climbed every year since then. This video shows how the share of low-income schoolchildren has changed over time in each school district.

The criteria for qualifying for free or reduced-price lunches have stayed the same during the time period shown in the chart above. Students in families earning less than 130% of the federal poverty level qualify for free school lunches. For the 2013-12 school year, students from a family of four earning less than about $30,000 would qualify for free lunches. A much smaller number of students in families earning between 130% and 185% of the poverty level qualify for reduced-price lunches.

In Wisconsin’s largest school districts, more than half the students are from low-income families, as shown in the chart below. Eighty-four percent of the students in Milwaukee Public Schools are from low-income families.

The rising number of low-income students presents challenges for Wisconsin schools. Children from low-income families have poorer educational outcomes and lag their peers in educational achievement. They also are less likely to graduate from high school and become well-educated, healthy members of Wisconsin’s skilled workforce.

New policies proposed by state lawmakers may pose additional challenges to schools that serve largely low-income students. In his budget proposal, Governor Walker has recommended setting aside funding for schools that are rated the highest on DPI’s report card system. Schools that score in the lowest category would receive much less money, with the result that schools with relatively small numbers of students from low-income families would receive the most benefit. For more on that proposal, which is scheduled to be voted on by the legislature’s budget committee, read this blog post.

Tamarine Cornelius

New Legislative Fiscal Bureau (LFB) papers reinforce concerns raised several weeks ago in the Budget Project’s issue brief about the federal funding being siphoned away from programs supporting low-income families.  The LFB papers, which are on the May 21 agenda for the Joint Finance Committee, examine the budget bill’s proposals for the use of federal block grant funds intended to serve low-income families.

One of our concerns was that the budget makes deep cuts in the funding for W-2 based on the unrealistic assumption that W-2 participation and spending would drop by 1% each month from the level in December 2012.  Although we noted that participation has been increasing, rather than decreasing, LFB paper #196 shows that the difference is even more substantial than we thought because the cost per family has also grown.  As a result, W-2 expenditures have increased 8.5% since September of last year, whereas the Dept. of Children and Families was expecting a decline of 5.9% during that period.  

The LFB paper lays out several scenarios – the most realistic of which seems to be Alternative 4.  It accepts the DCF projection that W-2 participation will decrease by 1% per month for most of the biennium, but it takes the increase over the last six months into account and assumes that the participation rate levels off and then begins to drop slowly in August and September, before starting to fall by 1% per month in October.  That alternative, which could still be assuming an unrealistically high rate of decline, costs $30.1 million more in 2013-15 than the budgeted funding level.  

Fortunately, there is a straightforward way to address the shortfall in W-2 and also to improve child care quality by not cutting as deeply in the funding for the Wisconsin Shares subsidy program. Legislators can make those two improvements to the bill and can avoid creating a large structural deficit in the next biennium by not shifting so much funding from the Temporary Assistance for Needy Families (TANF) block grant to the Dept. of Revenue (DOR).  The chart below shows how the budget would substantially increase the amount of TANF funds shifted to DOR to finance the Earned Income Tax Credit (EITC), even as total EITC funding is being reduced. 

The Wisconsin Council on Children and Families (WCCF) supports alternative #3 in LFB paper #205, which would reduce the amount of TANF funds being transferred to DOR for the Earned Income Tax Credit to $25.9 million per year.  That’s equivalent to the level in 2009-10 (before the last budget sharply reduced total EITC spending, but increased the use of TANF), and it’s almost four times the level in 2008-09, when just $6.7 million from the TANF funding was used to pay for the EITC.  

A full list of the items that may be considered on Tuesday by the Finance Committee can be found here, with links to each of the papers.   You can find WCCF’s recommendations on several of the papers here.

Jon Peacock

“The Driving Boom is over,” declares U.S. PIRG, in their new report A New Direction. Americans drove more miles nearly every year between the end of World War II and 2004, according to the report. But after 2004, something unusual happened: Americans began driving less, both on a per capita basis and overall. Young people, especially, are driving fewer miles than their predecessors.

The chart below, taken from the report, shows the recent decline in miles driven, which started before the recession.

This recent New York Times article also describes the decrease in miles driven. The article profiles one professional in Charlotte, North Carolina, who uses his car so infrequently that he occasionally misplaces it.

Is Wisconsin poised to take advantage of the new trends in transportation? Not according to 1,000 Friends of Wisconsin, which published an excellent series about how to improve transportation spending in Wisconsin. The increase in total vehicle miles travelled in Wisconsin has been modest since 2001, but there have been very substantial increases in highway spending over the same time period, as shown in the chart below.

Revenues into the Transportation Fund haven’t kept up with the pace of highway spending, meaning that the Legislature has either needed to raise new revenues for the Transportation Fund, or rethink transportation priorities. The state has taken some action to slow highway projects or make other transportation-related cuts, but a large part of its strategy to address the hole in the Transportation Fund has been to shift resources from the General Fund to the Transportation Fund. The result is fewer resources for higher education, local governments, community safety, and other services supported by the General Fund.

The proposed two-year budget enhances highway spending at the expense of other important public services in a number of ways, including:

• Shifting $94 million from the General Fund to the Transportation Fund;
• Moving funding for mass transit, which totals $106 million over two years, from the Transportation Fund to the General Fund; and
• Issuing $200 million of bonds for the reconstruction of the Zoo Interchange, with the debt service to be paid from the General Fund.

The Legislature has continued to emphasize highway spending, even as there is evidence that long-term trends in driving habits have altered in recent years. Unfortunately, the support for highways has come at the expense of other important programs that insure a high quality of life for Wisconsinites.

Tamarine Cornelius

The Governor is advocating allocating the following amounts for schools over the coming two-year budget period, based on a school report card accountability measure developed by the Wisconsin Department of Public Instruction:

• $24 million for schools that score in the highest category in DPI’s school report cards;
• $30 million for schools that improve their score on the school report cards by at least three points over the previous year; and
• $10 million for schools that score in the category of “fails to meet expectations,” if the school submits an improvement plan that is approved by DPI.

The disparities in the student population in the schools, and the higher dollar amount allocated for high-rated schools means that low-income students get relatively little out of this deal. Only one year of school report card data has been published so far, so it’s hard to know what kind of schools would be eligible for the money allocated for schools that improve their score. But we can make some generalizations on how the money would be distributed among the best- and worst-rated schools based using 2011-12 school report cards.

It’s clear that the schools with the highest scores on the school report card educate a very different population than the schools that score the lowest. Students attending the lowest-rated schools are four times as likely as students in high-performing schools to be economically disadvantaged, twice as likely to be disabled, and more than twice as likely to have limited English proficiency, as shown in the chart below. 

In Wisconsin, one out of every 9 low-income students attends a struggling school. For students that are not low-income, one out of every 67 students attends a struggling school. Twice as many students are enrolled in the lowest-rated schools than in the highest-rated schools.

High-rated schools are also located in different geographical areas than low-performing schools. About one out of every five high-performing schools is located in a city, while nine out of ten low-performing schools are located in a city, as shown in the chart below.

It’s not likely the Governor’s budget plan will do much to encourage excellence in schools. After all, the highest-rated schools, which get the most money per student, achieved that rating without any monetary incentive from the state. One thing the plan could do, though, is widen the achievement gap between schools in well-off suburban or rural districts and struggling schools in urban areas. By focusing resources on schools that already have already achieved the highest rating, we make equality of opportunity that much harder to achieve in our schools.

The Governor’s plan to reward the highest-rated districts and provide much lower levels of assistance to struggling schools would weaken Wisconsin’s commitment to ensuring that school districts have access to relatively equal resources. The bulk of the money will go to the schools that need it the least, and schools that educate the most challenging students will receive relatively little. Concentrating our resources on the highest-rated schools and giving relatively little to struggling schools is likely to worsen the achievement gap rather than improve it.

Tamarine Cornelius

Governor Walker has made it clear that he is a fan of smaller state government. That’s why it’s notable that he has proposed adding 32 full time equivalent (FTE) positions at the Wisconsin Department of Revenue. The positions would focus on improving delinquent tax collections, reducing fraud, and following up on federal audits of state tax filers.

The legislature’s budget committee is scheduled to make a decision on Wednesday on whether to add the positions.

Here is the breakdown of how the new positions would be allocated by purpose:

• Delinquent tax enforcement, 15 FTE. Staff filling these positions would encourage or force individuals and businesses to pay delinquent taxes.
• Tax fraud enforcement, 13 FTE. Staff filling these positions would review income tax returns and tax claim forms for errors and fraud. Special scrutiny would be paid to returns claiming the Earned Income Tax Credit or the Homestead Credit, both of which benefit low-income Wisconsinites.
• Federal audit report enforcement, 33 FTE. The IRS notifies the Wisconsin Department of Revenue of audit-related adjustments the IRS has made to federal tax returns. The DOR then follows up with the tax filer in collection any additional taxes owed to the state. These positions, which would expire in 2017, would help reduce a backlog of federal audit reports that has swelled to more than 100,000.

The budget also proposes deleting 29 FTE as part of a permanent reduction, for a net gain to the Wisconsin Department of Revenue of 32 FTE. Because 35 positions would expire after four years, the total numbr of DOR positions would fall slightly below the current authorized level in 2017.

The new positions would more than pay for themselves in additional tax revenue generated. The new staff would cost $12.6 million over two years, and generate $81.9 million in additional revenue – a return of more than six dollars for every dollar invested.

Some legislators have expressed hesitation at the Governor’s recommendation, noting that his proposal would increase the overall number of state employees. Those legislators should keep in mind that Wisconsin is among the states with the fewest public employees per capita. Wisconsin ranks 40th in the number of government workers per population, meaning Wisconsin’s state and local governments are leaner than all but 10 other states. By adding these new positions, Wisconsin can maintain a lean state government, make sure everyone pays taxes owed, and boost tax revenue.

Tamarine Cornelius

One of the significant areas of discussion will be the Department of Revenue (DOR) budget, which includes a net increase of 32 positions to improve tax collections and fight fraud.   In another Budget Project Blog post today, Tamarine Cornelius explains that the new positions are expected to generate more than $6 in state tax revenue for each dollar invested.    

Other agencies on the agenda Wednesday include DOA, DNR, a few DHS issues (Care Facilities and Quality Assurance), and Ag (DATCP).  The outline below includes links to all six of the papers on DOR issues, as well as a very incomplete listing of other issues coming up Wednesday, with links to additional information and to some of the many Legislative Fiscal Bureau papers on those issues: 

Revenue — Tax Administration

• Audit Bureau and Compliance Bureau Revenue Collection Personnel (Paper #555)
• Increased Resources for Debt Collection (Paper #556)
• Federal Audit Reports Enforcement Activities (Paper #557)
• Increased Resources for Delinquent Tax Collection Activities (Paper #558)
• Tax Fraud Enforcement (Paper #559)
• Veteran Employment Tax Credit (Paper #560)

Administration — General Agency Provisions

• Capital Investment Program (Paper #100)
• Community Development Block Grant Administration (Paper #101)
• Regional Intergovernmental Affairs Positions (Paper #103)
• Low-Income Weatherization and Energy Assistance Program Allocation Changes (Paper #105)

Administration — Procurement

• Cost-Benefit Analysis Exceptions, Business Ownership Certifications, and Bidders List (Paper #126)

Health Services — Care Facilities and Quality Assurance

• Contracted Services for Mental Health Clients (Paper #362) 

Natural Resources — Stewardship

• Stewardship Debt Service (Paper #450)
• Stewardship Bonding Allocations (Paper #451)

Jon Peacock

The Joint Finance Committee is expected to have three executive sessions in the coming week, and the dates, times and agendas have been set for the first two.   The committee will be voting on budget issues Monday, May 13, starting at 2:00 p.m., and again on Wednesday, May 15, starting at 10:00 a.m. 

A full list of the items being considered by the JFC on Thursday can be found here, with links to each of the papers.   Here’s a very incomplete list, with links to additional information and to a few of the many Legislative Fiscal Bureau papers on those issues: 

Workforce Development 

• Reestimate Unemployment Interest Payments and Transfers (Paper #737)
• Unemployment Insurance — Work Search Requirements (Paper #738)

Corrections

• Overtime and Permanent GPR Reductions (Paper #220) 
• Adult Populations, Population and Inflationary Cost Increases, and Prison Contract Bed Funding  (Paper #225) 
• Additional Funding and Positions for GPS and Electronic Monitoring of Offenders (Paper #230)
• Juvenile Population Estimates, Statutory Daily Rates, and Serious Juvenile Offenders (Paper #235)
• Deletion of Funding for Vacant Positions in Division of Juvenile Corrections (Paper #236)

Insurance 

• Health Insurance Risk-Sharing Plan (HIRSP) Board Proposal for Transition to Individual Market (Paper #381)

Jon Peacock