Class Sizes Rise as Wisconsin Slips Toward Average in School Spending

As Wisconsin children strap on their backpacks to begin a new school year, the quality of the schools they are returning to may not be as high as those attended by their older siblings a decade ago. A new analysis by the Wisconsin Budget Project finds that state aid for our schools has declined since 2000 and student-to-teacher ratios have increased.

Once a national leader in educational investment and performance, state support has eroded to the point where Wisconsin now ranks close to the national average in key measures of support for education. The steep cuts in support for K-12 education in the 2011-13 biennial budget continue, and probably accelerate, that decade-long trend.

According to the Budget Project’s analysis of the most current national spending data covering the period 2000 through 2009, Wisconsin’s per-student state aid decreased by 10 percent in inflation-adjusted dollars. On the other hand, support from local sources – primarily property taxes – has climbed by 21 percent since 2000, in inflation adjusted dollars. In 2009, for the first time since the mid-1990s, Wisconsin’s schools relied nearly as much on local sources of revenue as they did on state support.

Recovery Act Resources Critical to Texas, Despite Rhetoric

Texas Governor Rick Perry is making waves with his entry into the Republican race for president. He’s also making waves with his anti-Washington rhetoric, vowing to make Washington “inconsequential” to most people’s lives.

Fortunately for Texans, he didn’t take that same anti-Washington approach during the recession, when the state made significant use of Recovery Act dollars to stem its budgetary shortfall and lay the groundwork for the subsequent economic recovery. News reports at the time indicated that Texas used stimulus funds to plug 97% of its budget shortfall for fiscal 2010, a figure higher than any other state’s.

DWD Releases Optimistic Projections of Unemployment Reserve Fund Condition

Will “Rosie Scenario” Once Again Prove to Be a Fickle Mistress?

The Unemployment Insurance Advisory Council met on Wednesday, August 24, and its agenda included a discussion of the nearly $1.4 billion deficit in the Unemployment Insurance (UI) Reserve Fund.  The Council’s staff from the Department of Workforce Development (DWD) presented their estimates of changes in the Reserve Fund over the next several years.

The latest projections make me think back to remarks made on the floor of the legislature more than 20 years ago by a former Speaker of the Assembly, Tom Loftus. I don’t recall very much about the debate, but I remember Loftus chiding his colleagues about the perils when balancing a budget of being seduced by a “fickle mistress” known as Rosie Scenario. I think his admonitions at that time are probably appropriate now, as we need to be careful not to fall under Rosie’s spell without taking care to make a sober assessment of reality.

The new DWD figures assume a negligible decrease in the Reserve Fund’s deficit in 2011, with the negative balance improving by only $13 million (1%), from about $1.39 billion at the beginning of the year. However, DWD projects the deficit will fall to $946 million at the end of 2012, and will turn into a positive balance of $397 million by the close of 2014!  In fairness to DWD, they routinely base their projections on the economic assumptions contained in the Department of Revenue’s quarterly economic report. The most recent of those reports is the May 2011 Economic Outlook, which was also used by the Legislative Fiscal Bureau in estimating taxes and spending in the 2011-13 budget bill.  Although those assumptions seemed quite reasonable at the time, they may need to be revised substantially in coming weeks or months.

Public Employees Receive First Diminished Paycheck Today

Today, public sector workers in Wisconsin will receive their first paycheck reflecting reductions in their compensation mandated by the budget repair bill passed earlier this year.

Public employees with relatively low salaries or hourly wages stand to lose thousands of dollars a year, the equivalent of as much as six months of grocery costs. Some public workers at the lower end of the income spectrum could face as much as 15% in lost income and increased costs beginning this week.

This pay cut will hit low-wage public employees the hardest, and could potentially push many families that are barely scraping by into insolvency. Wisconsin Council on Children and Families highlighted these changes in a recent brief, showing how the cuts in compensation could affect low- and moderate-wage workers like janitors, beginning teachers, and public school kitchen workers.

Are Low-Income Households Paying Too Little in Taxes?

Should We Aspire to a Texas-style Distribution of Taxes?

In Governor Rick Perry’s first major speech to kick off his presidential campaign he made a rather surprising comment about taxes – surprising at least to me. In that August 13th address in South Carolina, in which Perry called for minimizing the role of government and said the U.S. should “limit” taxes, he went on to complain that too few people have to pay income taxes:

“We’re dismayed at the injustice that nearly half of all Americans don’t even pay any income tax.”

It’s an odd complaint coming from someone as anti-tax as Perry seems to be. More importantly, it creates the very erroneous impression that low-income Americans aren’t paying a significant portion of total taxes in this country. An August 15 Washington Post column by Ruth Marcus thoroughly rebuts the notion that the tax system has gotten too progressive, with poorer households escaping or shirking any responsibility for financing government. This blog post outlines the facts regarding who pays taxes and compares the distribution of tax payments in Wisconsin and Texas.

DCF Unveils Policy Change that Penalizes Family Child Care

Imagine your boss telling you that your business is taking a step to encourage productivity and trim costs by converting your pay from a monthly salary to a daily wage – with no compensation for sick days, personal days, or vacation days. That would be hard to take, but would be a little bit easier to swallow if the daily compensation is calculated to offset the loss of paid days off.

But imagine that your employer doesn’t do that -- so you’ll take a big pay cut when the daily pay rate is computed by dividing your previous monthly salary by the number of business days in the month. (If you get 3 weeks of paid vacation and holidays, and also take an average of 5 paid sick days or personal days each year – for a total of 20 paid days off -- the new pay plan would amount to about an 8 percent cut from your previous annual earnings.)

Envision that these changes are imposed despite the fact that you have accepted a frozen salary level for each of the past five years. And while you’re imaging that scenario, picture the new pay changes happening with about one week of advance notice, and no opportunity for give and take – no consultation or collaboration about the best ways of improving efficiency and trimming costs.

What I’ve described is a pretty close analogy to what family child care providers are facing right now, after Wisconsin’s Department of Children and Families (DCF) released an "operations memo" Friday revealing that it will begin on August 28 to apply a new attendance-based policy for reimbursing family providers who serve children in the Wisconsin Shares child care subsidy program.

Live by the Jobs Report, Die by the Jobs Report

Partly as a result of Governor Walker’s high-profile pledge to create 250,000 new private sector jobs in Wisconsin, the monthly employment reports have been getting a lot of scrutiny by the media, public officials, and the public.

Last month, the employment figures showed a surprisingly large increase in the number of jobs in the state, a development some were quick to claim as evidence that Governor Walker’s policies were having a positive effect on the state’s economy. Between May and June 2011, Wisconsin added 11,000 jobs. (The figures reported at the time were preliminary numbers and so differ slightly from the final figures now available.) The Milwaukee Journal Sentinel’s Politifact rated as “false” the claim that more than half the nation’s job growth in June came from Wisconsin – but nevertheless, Wisconsin’s job growth in June was a welcome indicator that the state might have economic momentum on its side.

I hope you kept the receipt for the champagne. July’s employment report came out today, and preliminary figures show that the number of jobs in Wisconsin decreased, wiping out most of last month’s gain. Between June and July 2011, Wisconsin lost 8,200 jobs. That’s the biggest month-to-month job loss in nearly two years. The drop in private sector employment was even greater (-12,500 jobs), but was mitigated by a suprising increase in public sector employment. The unemployment rate rose from 7.6% in June to 7.8% in July.

LFB Completes New Comparative Summary of this Session’s Budget Bills

If you just can’t get enough detailed information about Wisconsin’s 2011-13 biennial budget (Act 32), then you can celebrate that the Legislative Fiscal Bureau has just released the final version of their comprehensive summary of the budget. It’s a comparative summary that describes every area of the Governor’s original budget, and all of the subsequent changes made by the Finance Committee and full Legislature, or by the governor's veto pen.

The new LFB document isn’t restricted to Act 32. It also includes a section about the “budget repair” bill (Act 10) and sections summarizing a couple of other bills enacted this session that relate to fiscal policy issues. 

The new comparative summary is 918 pages long, but online you can access it by agency. However, if you’re less of a glutton for budget minutiae, the Wisconsin Budget Project’s summary is a mere 43 pages – focusing primarily on issues relating to children and families. It includes links to relevant articles and other source material.

Speaking of our summary document, we would be very interested in any feedback you might have, so we can improve upon it for the next budget bill. 

Jon Peacock

Wisconsin Taxes on Business are Below the National Average

A corporate-funded study shows that Wisconsin businesses pay less in taxes than the national average. Tax paid by Wisconsin businesses – including income tax, property tax, and sales tax – made up 4.6 percent of the gross state product, compared to the national average of 5.0 percent.

Among the states, Wisconsin was tied for 19th lowest in the share of business tax of the state’s GSP, with businesses in 18 other states paying less in total state and local taxes. In fiscal year 2010, Wisconsin businesses paid $10.0 billion in tax at the state and local levels.

As Recovery Act Expires, More Could Slide Into Poverty

Did the Recovery Act reduce the number of people living in poverty during the recession? That’s a natural question to ask, but unfortunately, traditional measures of poverty aren’t of much use in providing an answer. That’s because the official poverty measure doesn’t take into account tax credits, food stamps, or other important forms of Recovery Act assistance that gave a boost to families struggling to lift themselves out of poverty.

Researchers in Wisconsin have pioneered an alternative measure, called the Wisconsin Poverty Measure, which takes a broader look at a family’s resources and paints a more complete picture of a family’s poverty status. The Wisconsin Poverty Measure – which we’ve highlighted in our blog here and here has garnered national attention, most recently in a August 8 post by Brookings called “Better Data, Better Outcomes: How Public Policy is Helping Poor Children.”

Using the Wisconsin Poverty Measure, researchers have shown that there was no increase in child poverty between 2008 and 2009. In comparison, the official measure showed an increase of four percentage points between those two years.

Bridging the Partisan Divide (and the St. Croix)

Bachmann’s Bridge Brings Bipartisan Backing and Bipartisan Barbs


After all the debate in recent weeks and months about federal spending and the deficit, you might think that you can predict how politicians and interest groups are going to line up on spending proposals. Perhaps that’s generally the case, but there are times when you would probably get it wrong – unless you take into account that the general rules don’t necessarily apply to spending for highways and bridges, especially if the proposed spending is an earmark for a legislator’s own district.

Yesterday when I stumbled across “Room for Debate” on the New York Times website, I was reminded that politics makes strange bedfellows, as well as strange inconsistencies in how politicians (and advocates) view different spending items. The debate the Times featured in a series of columns is about a proposed $700 million bridge between Wisconsin and Minnesota, which would cross the St. Croix River, and which has the backing of Rep. Michele Bachmann (R-MN) and Senator Amy Klobuchar (D-MN).  Ron Kind and Scott Walker also support the proposal.

Some conservative groups are supporting the $700 million bridge as a good economic investment, while some liberal groups think far less expensive options would be more sensible (and less of a blight on the St. Croix National Scenic Riverway). The ironies abound. 

New Lines Drawn in “Amazon Tax” Battle

For years now, states and online-only retailers (like Amazon.com) have locked horns over the issue of sales tax. There have been several new developments in this battle, but at this point it’s hard to tell whether the states or the retailers have the advantage.

Amazon, like other on-line only retailers, is only required to collect sales tax in the states in which it has a physical presence. Amazon has warehouses and other facilities in dozens of states (including Wisconsin), but those facilities are technically owned by subsidiary corporations. As a result, Amazon is able to avoid imposing a sales tax on its customers in most states, costing states billions in revenue and giving online retailers an advantage over similar Main Street businesses.

Keep in mind, sales tax is still owed on purchases made online. But instead of being collected by the retailer, customers are supposed to submit the sales tax as part on their income tax return. Few filers do that. In Wisconsin alone, the cost of uncollected sales tax from online purchases is estimated at $127 million per year.

Tax Flight Myth Busted

Policymakers commonly cite the fear of tax flight – the idea that rich taxpayers will pull up stakes and move to a state with lower taxes, taking their wealth with them – as a reason to keep taxes low on upper-income earners. A new report by the Center on Policy and Budget Priorities blows a hole in that theory.

It turns out that taxes are far down the list of why people move. Access to jobs, cheaper housing, and a better climate are the main reasons why people move – and even those reasons aren’t very common. Just 1.7 percent of people moved across state lines between 2001 and 2010, and about 70 percent of those born in the U.S. live in the same state for their whole life.

Pharmageddon??

Okay, that title is a bit over the top, but I couldn’t resist. It’s one way of summing up the critique by Citizens for Tax Justice (CTJ) of a proposed new federal tax break for pharmaceutical and biotech companies, which CTJ calls “the worst ‘job creation’ idea yet.” Since they have seen some very ill-conceived tax cut ideas, it’s worth paying attention when they flag one as being especially bad.

Recovery Dollars Still At Work in Wisconsin

Last week, we highlighted a recent report that showed that the Recovery Act is still creating and saving jobs – between two and three million in the first quarter of 2011. That’s a significant figure, especially given the agonizingly slow pace of the jobs recovery.

And although you don’t hear much about it these days, there’s still Recovery dollars at work in Wisconsin as well as at the national level. The Wisconsin Recovery website which seems to have been renamed the Wisconsin Federal Funds website, has a list of Recovery Act expenditures by state department, and the percent expended by project.

Some agencies have spent all or nearly all of the Recovery Act dollars awarded. For example, the Department of Children and Families has spent $42.8 million of the $44.3 million awarded, mostly on child care assistance and quality improvement and community services block grants. The Department of Natural Resources has also spent more than 95% of the Recovery amount awarded, in large part to protect clean water in Wisconsin.

Spending Cuts Cascade Down to Local Level

Both the federal government and the state government are reducing spending, in large part by shifting costs to other levels of government. Faced with cascading cuts in spending, local governments have fewer options and are facing the possibility of having to make steep cuts in areas important to keeping our communities safe, well-functioning, and economically viable.

The debt ceiling deal means the federal government is going to be reining in spending, probably in part by sending less money to the states. Earlier this week, the Wisconsin Budget Project described the mechanism by which cuts in federal spending will take place. The cuts of more than $900 billion that the debt deal immediately locks into place come from discretionary spending – and fully one-third of this spending goes to state governments to support education, health care, human services, law enforcement, infrastructure, and other programs, according to the Center on Budget and Policy Priorities (CBPP).

Also, it’s very likely that the “supercommittee” charged with finding $1.5 trillion in cuts will find some of those savings in Medicaid, which would have an enormous effect on state budgets. (Medicaid, like other "non-discretionary" low-income programs, is spared from the initial cuts and the automatic across-the-board cuts that go into effect if the committee fails to produce a bill or the bill doesn’t pass.)

31 Ways the Budget Affects Children and Families

The Wisconsin Council on Children and Families just wrapped up a month-long series of posts describing how the state budget affects children and families. Each day in July, their "31 Ways in 31 Days" project highlighted a different way children and families will be impacted by the budget.

The project is over now, but the series is a great resource for getting a handle on changes the budget has made, what we might expect the results of those changes to be, and potential alternatives.

You can see all the posts here, or read the individual topics:

The Mechanics of Cutting $2.1 Trillion from the Federal Budget

A Summary of the Substance of the “Satan Sandwich”

The deal to raise the debt ceiling creates a three-stage process that will lead to damaging program cuts and continued economic weakness, while it increases the debt ceiling by $2.1 trillion. As many others have noted, it shouldn’t have come to this. The final deal should have included revenue increases, and key programs should have been shielded.

With the nation teetering on the brink of its second slide into a double-dip recession, America needed a deal that creates jobs, rather than one that will destroy them. And we needed a deal that doesn’t leave safety net programs stretched so thin and left so vulnerable to deep cuts later this year.

Almost no one likes the compromise, which was described by Rep. Emmanuel Cleaver (D-Mo) as a “sugar-coated Satan sandwich.” Now that the Senate has gagged down the unsavory compromise (by a vote today of 74-26), it’s important to understand what it consists of.  When examining the contents of a sugar-coated sandwich (satanic or otherwise), it seems appropriate to turn to the Food Research Action Council. Most of the following summary is excerpted from a message they distributed this morning.

Debt Ceiling Bill Approved in House with Support of Six Wisconsin Members

Liberal Groups Express Strong Concerns and Disappointment

The U.S. House voted early this evening to approve the compromise on the debt ceiling bill, by a vote of 269 to 161. Among House Republicans, 174 voted yes – including all five Wisconsin Republicans – and 66 voted no. Democrats split evenly on the bill, with 95 yes votes and 95 no votes. Among Wisconsin’s Democrats, Kind voted yes, Baldwin voted no, and apparently Rep. Moore was absent.

Many progressives have been expressing great disappointment in the bill. Lawrence Mishel, President of the Economic Policy Institute, said it will do great harm to our nation. In a statement today, he added:

“There is no economic necessity to undertake spending cuts or deficit reduction plans at this point in the economic recovery, when high unemployment is expected to persist for several more years. Jobs should be the priority and jobs are the path to get our nation’s fiscal situation to a responsible place.”

Robert Greenstein, President of the Center on Budget and Policy Priorities, expressed somewhat similar concerns, though he argued against the bill’s defeat.  Read his statement here. 

Extended Jobless Benefits Get Final Approval Today

The state Senate wrapped up work today on a bill (SB 147) that enables Wisconsin to use an estimated $88 million of federal funding to extend unemployment insurance (UI) benefits for up to 13 weeks, for people whose benefits would have run out after 73 weeks. The bill could benefit as many as 40,000 Wisconsinites between now and the end of the year, by using federal funding provided by Congress' continuation last December of an important part of the Recovery Act.  

On a vote of 19 to 14 (with all the Republicans in favor and the Democrats against), the Senate concurred today with an Assembly amendment that rejected an earlier Senate change to the bill. The brief disagreement between the two houses was not over the extended benefits, but instead was over the issue of whether newly laid-off workers must wait a week before they become eligible for UI benefits. In a surprise move about two weeks ago, the Senate approved by voice vote an amendment to repeal the one-week wait that was created by the state budget bill.  However, the Assembly rejected that amendment, and today the Republican Senators decided to side with the Assembly, thereby completing work on SB 147 and allowing it to be sent to the Governor for his signature (without the repeal of the waiting period).