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Voices Speaking

February 4, 2015

Keeping Kids in the Budget Part 3: Invest Now or Pay Later

KidsAs we’ve discussed on our blog the last two days, there are mechanisms built into the budgeting process that put programs for children and families at particular risk when funds are scarce. Without new revenues, the growing cost of paying down past debts is making in difficult to maintain adequate investment in children and families. In this third post, we’ll briefly wrap this series up by discussing why Connecticut can’t let other spending crowd out investments in children and families, and talking about some ways to get involved.

Connecticut must pay its debt obligations, but the State has an obligation to its children and families too – an obligation to ensure that no child wants for basic needs, every child has access to needed healthcare, and every child receives a high quality education. This intergenerational exchange is the lifeblood of a strong society – if we renege on this debt to our children, we put them at risk for a lifetime of poverty, illness, and economic hardship. At the same time, we put the economy of the state as a whole at risk, as we undermine workforce preparedness and sow the seeds for increased costs in incarceration and joblessness.

Over the last 30 years, Connecticut has become a much more unequal state. When we allow public investments in children’s healthcare and education to erode, we run the risk that more children will be shut out of economic opportunity simply because of the circumstances of their birth.  All children should have the opportunity to succeed: not only those of a particular race, ethnicity or zip code.  The State has good reason to be trying to get our fiscal affairs in order, but that’s no reason to make kids foot the bill – one way or another, we need to ensure that Connecticut continues to make adequate investment in children and families.

At Connecticut Voices for Children, we believe information is power; we hope that tools like the Children’s Budget can help empower you to stand up for kids when the Governor releases his budget proposal on February 18th. If you want to partner with us on advocacy this session, check out our policy agenda. Sign up for our e-mail newsletter, and follow us on Twitter and Facebook.  You can also tell policy makers that you support investments in families by contacting them directly and tweeting about the importance of protecting children in the budget with our hashtag: #somecutsdontheal. Tell policymakers about your own experiences – the importance of your local school, or health clinic, or how other public investments in families have made a difference in your life. If you would like to take a closer look at the budget yourself, there are many useful documents on the website of the Legislature's Office of Fiscal Analysis. And of course, we welcome your questions and insights in the comments section below.

Issue Area:
Budget and Tax
February 3, 2015

Keeping Kids In the Budget Part 2: Long-Term Budget Challenges Put Kids at Risk

At Connecticut Voices for Children, we believe that children should be the number one priority in the budget. Unfortunately, as we discussed in our previous post in this series, there are mechanisms built into the budgeting process that put programs for children and families at particular risk when funds are scarce. Today, we’ll take a look at Connecticut’s long-term budget challenges, and how they put children at risk.

Over the next two fiscal years (the period beginning July 1, 2015 and ending June 30, 2017), Connecticut is currently projected to run deficits of around $1 billion each year.  That is,  the revenue that the State expects to take in from taxes, fees, payments from the federal government, and borrowing each year is about $1 billion less than what it plans to spend. To put this in perspective, the State spends around $20 billion per year. These deficits mean that, during this current legislative session, the Legislature and the Governor must figure out how to either raise another $1 billion in revenues each year (through taxes, fees, or borrowing money), cut $1 billion from projected spending each year, or some combination of the two.

For many of the same reasons that human services programs just faced rescissions (emergency budget cuts), they will likely also be targeted for cuts during this current legislative session to close the impending deficit. The State cannot cut salaries or benefits without renegotiating state employee contracts, and can't miss payments on debt service. The State could cut grants to towns, but this generally hurts education; it also creates only the illusion of savings, because towns usually must raise property taxes (which weigh most heavily on the poor) to make up for what they lose from the State. The State also could cut Medicaid (and we are concerned that they will try to do so) but this is not an efficient way of saving money, because we miss out on Federal reimbursement. Finally, the State could raise taxes or fees, but this is often politically challenging.

Importantly, these budget challenges are not new and may not be going away. Throughout the 1990s and 2000s, Connecticut saved very little to pay for promised healthcare and pensions for State employees who will retire in the 2010s and 2020s. We also lost quite a bit of what we did save during the recession. As a result, nearly every dollar the State can free up is reallocated to try to pay down past debts. Without new revenue, this crowds out other spending.

At Connecticut Voices for Children, we track this trend through a project called "The Children's Budget," which measures the share of all State spending that is spent on programs devoted to children and families. (In brief, this includes the Department of Children and Families, the Department of Education, UConn and the State University system, HUSKY health insurance for children and families, and a few other programs.) As shown below, spending on children has declined from about 40% percent of the budget to 30%, while debt service and fringe benefits have gone from 16% to more than 25%.

 

 

 

In short, Connecticut’s spending priorities have shifted away from children, families, and investments in the future, and toward paying down obligations that we accrued in the past.

Tomorrow, we’ll wrap things up by talking briefly about why it is so important Connecticut maintain its investments in children, and how you can get involved supporting State investments in children.

Issue Area:
Budget and Tax
February 2, 2015

Keeping Kids in the Budget Part 1: Why Are Families Cut First?

KidsIn discussions about the state budget, questions often arise about why emergency budget cuts – known as “rescissions” – often fall hardest on human service programs that support our State’s most vulnerable children and families. This question is timely, not only due to the recent second round of rescissions announced by the Governor, but also due to the upcoming budget discussions for fiscal year 2016 and 2017: discussions that will take place in the shadow of projected deficits of over a $1 billion for each of the two years. 

At Connecticut Voices for Children, we work to give children the voice they lack at the ballot box -- to elevate the needs of children and families to the number one priority in the budget. Unfortunately, there are mechanisms built into the budgeting process that put programs for children and families at particular risk when funds are scarce; however, because the budget process can be somewhat opaque, these reasons are not always well understood. To help Nutmeggers who want to keep kids a priority in the State budget engage in powerful and informed advocacy, this week we’re releasing a brief series on our blog – “Why Are Families Cut First” – that discusses the State’s short and longer-term budget challenges, why these challenges have led to cuts to programs for children already, and why they might put children at greater risk in the future.

Today, we focus on the short term – the Governor’s recent rescissions, and why these fall heaviest on human services.

The State is running a deficit in the current fiscal year -- if it keeps spending money and collecting revenue at the current rate, then on June 30th it will have spent more than it collected.  This is happening for two major reasons: a) we are collecting less in gas taxes than expected (largely because the price of gas has fallen dramatically) and b) Medicaid spending is likely to exceed expectations.

When the state runs a deficit, the Governor has the authority to make "rescissions" – to unilaterally impose cuts to the budget without the legislature's approval in order to close the deficit. However, not all parts of the budget are created equal:

  • About three out of every 10 dollars spent from the State's "General Fund" (which is basically the whole budget, excluding transportation and a few other special expenses) are spent on salaries and benefits for employees. These payments are obligated under collectively bargained contracts with State employees, and the state must make them or face a lawsuit.
  • Another one out of every 10 dollars is spent on debt service – regularly scheduled payments that we make to pay back money we have already borrowed. If we do not make these payments, we default on our debts.
  • Another two out of every 10 dollars is spent on grants to towns, mostly for education, but also for other purposes. These grants cannot be cut using rescissions without legislative approval. Cutting municipal aid is also not very useful, because even if it closes the State's deficit, it could create a new deficit for many towns.
  • Finally, just over one out of every 10 dollars is spent on the Medicaid health insurance program. Since for every dollar we spend on Medicaid, the Federal Government pays us back 50 cents to a dollar, cutting Medicaid is a very inefficient way to close the deficit, saving only 50 cents or less on each dollar of services lost to vulnerable families.

The important point is this: when the State runs a deficit, even though the Governor could theoretically cut any spending, in practice, only about 30% of the budget can quickly be cut without facing a lawsuit, breaking the law, or losing the State even more money.

So what's left to cut? The answer is, health and human services that the State pays for out of pocket, much of which goes to groups like maltreated children, children and families struggling with mental health challenges, and individuals with developmental disabilities. This is a major reason why human services are often on the chopping block when the State is running a deficit – there just is relatively little other spending that the State can cut legally and efficiently on short notice.

Tomorrow, we’ll take a look at the State’s long-term budget challenges, and examine how some of the same forces discussed here might jeopardize funding for kids.
 

Issue Area:
Budget and Tax