State Budget Skims Money Intended for
Low-income Families and Diverts It for Other Uses
Low-income Families and Diverts It for Other Uses
For immediate release Contact: Bob Jacobson, 608-284-0580, ext. 303
April 30, 2013-- The proposed state budget puts programs for low-income families at risk by siphoning off federal funding
intended to serve those families and diverting it for unrelated purposes.
A new analysis by the Wisconsin Budget Project examines how the Governor’s budget for the next two years would
eliminate an $84 million balance in federal funding known as Temporary Assistance to Needy Families (TANF), while
significantly reducing spending on the largest programs financed with those funds. The Wisconsin Budget Project is an
independent, nonpartisan research group associated with the Wisconsin Council on Children and Families (WCCF) that
focuses on tax and budget policy.
Jon Peacock, director of the Budget Project, said the apparent paradox is explained by the use of the federal funds to
replace most of the state dollars that have been paying for the state’s Earned Income Tax Credit (EITC). The Governor’s
budget cuts total spending for the EITC by $16 million over the next two years, even though the bill would finance the credit
with $91 million more from the federal funds than what the Department of Children and Families proposed in its budget
request.
“The budget bill uses sleight of hand to drain the funding for low-income families and use it for other purposes, such as tax
cuts,” Peacock said. “The end result is a continuation of damaging policies for the state’s child care subsidy program, and
the potential for a substantial gap in funding for the Wisconsin Works program (W-2), which provides work placements for
low-income parents.”
In addition to cutting total spending for the state EITC, the budget proposes to cut W-2 funding by $34 million over the next
two years, and it would reduce spending for child care subsidies by about $35 million.
“Child care funding has already taken a number of hits in recent years,” said WCCF policy analyst Dave Edie. “It makes no
sense to squeeze child care even more at the same time that the state is supposed to be pursuing a stated goal of
improving child care quality statewide.”
The proposed cut in spending for W-2 is based on the assumption that the number of placements will fall by 1% each
month from the December 2012 level. The Budget Project report questions that assumption, noting that the actual number
of placements has increased sharply over the past three months. The report notes that if that growth stops for the next three
months, and the caseload begins dropping by 1% each month beginning in July, W-2 spending would be $18 million higher
than the level proposed by the Governor.
The new report also notes that the proposed elimination of the $84 million balance in the federal block grant funds would
create a significant hole or “structural deficit” in the 2015-15 biennium. As a result, the cuts in W-2 and Wisconsin Shares
will need to be even deeper in future years unless the state sharply reduces the use of TANF dollars to replace state funding
for the EITC.
“A sound budget addresses important needs, uses available funds responsibly rather than employing shifty tactics, and is
based on sound assumptions about program trends,” Peacock said. “The treatment of TANF funds in the Governor’s
budget falls short on each of those criteria.”
The new issue brief is available at http://www.wisconsinbudgetproject.org/funding-for-low-income-families-siphoned-off-for-
other-uses.
April 30, 2013-- The proposed state budget puts programs for low-income families at risk by siphoning off federal funding
intended to serve those families and diverting it for unrelated purposes.
A new analysis by the Wisconsin Budget Project examines how the Governor’s budget for the next two years would
eliminate an $84 million balance in federal funding known as Temporary Assistance to Needy Families (TANF), while
significantly reducing spending on the largest programs financed with those funds. The Wisconsin Budget Project is an
independent, nonpartisan research group associated with the Wisconsin Council on Children and Families (WCCF) that
focuses on tax and budget policy.
Jon Peacock, director of the Budget Project, said the apparent paradox is explained by the use of the federal funds to
replace most of the state dollars that have been paying for the state’s Earned Income Tax Credit (EITC). The Governor’s
budget cuts total spending for the EITC by $16 million over the next two years, even though the bill would finance the credit
with $91 million more from the federal funds than what the Department of Children and Families proposed in its budget
request.
“The budget bill uses sleight of hand to drain the funding for low-income families and use it for other purposes, such as tax
cuts,” Peacock said. “The end result is a continuation of damaging policies for the state’s child care subsidy program, and
the potential for a substantial gap in funding for the Wisconsin Works program (W-2), which provides work placements for
low-income parents.”
In addition to cutting total spending for the state EITC, the budget proposes to cut W-2 funding by $34 million over the next
two years, and it would reduce spending for child care subsidies by about $35 million.
“Child care funding has already taken a number of hits in recent years,” said WCCF policy analyst Dave Edie. “It makes no
sense to squeeze child care even more at the same time that the state is supposed to be pursuing a stated goal of
improving child care quality statewide.”
The proposed cut in spending for W-2 is based on the assumption that the number of placements will fall by 1% each
month from the December 2012 level. The Budget Project report questions that assumption, noting that the actual number
of placements has increased sharply over the past three months. The report notes that if that growth stops for the next three
months, and the caseload begins dropping by 1% each month beginning in July, W-2 spending would be $18 million higher
than the level proposed by the Governor.
The new report also notes that the proposed elimination of the $84 million balance in the federal block grant funds would
create a significant hole or “structural deficit” in the 2015-15 biennium. As a result, the cuts in W-2 and Wisconsin Shares
will need to be even deeper in future years unless the state sharply reduces the use of TANF dollars to replace state funding
for the EITC.
“A sound budget addresses important needs, uses available funds responsibly rather than employing shifty tactics, and is
based on sound assumptions about program trends,” Peacock said. “The treatment of TANF funds in the Governor’s
budget falls short on each of those criteria.”
The new issue brief is available at http://www.wisconsinbudgetproject.org/funding-for-low-income-families-siphoned-off-for-
other-uses.