If you got a copy of the Sunday New York Times or read it online, you may have seen this September 26 headline: “Job Loss Looms as Part of Stimulus Act Expires.” The article concerns a portion of the Recovery Act funding that has been used to help low income families in a variety of ways, including providing funding to initiate or expand subsidized private sector jobs that are designed to enable unemployed parents to move from welfare to work.
Wisconsin is one of the many states that will be adversely affected if Congress doesn’t act quickly to extend this funding, which is referred to as the TANF Emergency Contingency Fund (ECF) and is scheduled to expire on September 30. The last hope for extending it is to include an additional year of funding in the Continuing Resolution that Congress needs to pass this week to keep the federal government from grinding to a halt.
According to an analysis by the Center for Budget and Policy Priorities, this part of the Recovery Act funding for states has helped employ nearly 130,000 adults and has paid for almost that many summer jobs for young people. Allowing the funding to expire would end the jobs of 26,000 workers in Illinois in the coming weeks, as well as 12,000 Pennsylvania workers and thousands more in other states.
As the NY Times article reports, the program has enjoyed the support of a number of GOP governors, including Haley Barbour of Mississippi, whose state has an innovative program that is using these federal funds to pay private companies to hire nearly 3,200 workers. The program pays subsidies to participating employers that are gradually phased down so an employer pays a worker’s entire salary after six months. Yet despite the program’s success and the support of conservatives like Barbour, GOP members of Congress appear to be unified in their opposition to extension of this and virtually all the expiring Recovery Act measures.
In Wisconsin the ECF dollars are being used for a number of purposes, including a recently-initiated $34million Transitional Jobs Demonstration Project to help thousands of people gain skills and re-enter the workforce. This project is expected to help create jobs for 4,000 people across the state.
Failing to extend the federal funding won’t eliminate jobs as quickly in Wisconsin as in Illinois and many of the other states because our state used part of the ECF dollars to free up funding for the state’s Earned Income Tax Credit. The state is using that freed-up funding to pay for the Transitional Jobs in the current fiscal year, without being constrained by the potential September 30 expiration of the ECF dollars.
Although the effects of failing to extend the ECF dollars won't be as immdeiate in Wisconsin as in some other states, the issue is no less important here. The state needs those funds to help cover increased costs for the Wisconsin Works program (W-2). Thanks to the recession, participation in W-2 cash benefits grew by 61 percent from July 2009 to July 2010. The total number of W-2 families getting cash benefits (about 12,900) is still low by historical standards, but it's well above what the state budgeted for.
People concerned about the issue should ask Senator Feingold and Senator Kohl whether they will support extending the ECF program as part of the Continuing Resolution to be acted upon this week.
Budget Project Director