The EITC and the Suburban Working Poor

The Earned Income Tax Credit is a federal tax credit for low- and moderate-income working people designed to encourage and reward work as well as offset payroll and income taxes. EITC has been successful by most accounts in its response to economic trends by offering critical support to help working families during times of economic hardship as well as to the shift in geography of the working poor (increasingly suburban). A report by the Brookings Institution, Responding to the New Geography of Poverty: Metropolitan Trends in the Earned Income Tax Credit, assesses the changing geographic distribution of the low-income population compared to recipients of the federal Earned Income Tax Credit (EITC) between 1999 and 2007 in the nation’s 100 largest metro areas. The report finds that:

• Changes in EITC receipt have tracked closely with the growing and shifting geography of working poverty.
• Between 1999 and 2007, all 69 large metro areas that experienced significant growth rates in their low-income populations saw EITC receipt increase in response.
• Low-income workers claimed $47.5 billion through the EITC in 2007—a real increase of 25 percent over 1999—with 60 percent of EITC dollars going to residents of the 100 largest metro areas.

The continuing growth of poor working families in the suburbs is an important aspect of this report. It highlights the importance of EITC for low-income workers and families because of it’s ability to respond to families in suburban and rural communities. Low-income suburban residents living in communities without place-based opportunities are able to benefit from the EITC because it is delivered through the tax code, and therefore highly accessible.

Click here to learn about state strategies for enacting and expanding a state EITC. Click here for strategies to expand state EITC outreach

New on PolicyforResults.org! Preventing Child Abuse and Neglect

Preventing child abuse requires a multi-generation approach that supports parents, addresses developmental needs, and reaches families long before they come in contact with the child welfare system.  

As a part of its commitment to building strong and stable families, the Center for the Study of Social Policy (CSSP) has developed a new section on  PolicyforResults that focuses specifically on preventing child abuse and neglect, which includes facts, data and strategies to support  states in preventing child abuse and neglect by ensuring that children are able to thrive in safe and stable homes. The site also features two new videos:

• An overview of CSSP’s Strengthening Families initiative, which encourages building protective factors in families

• The story of how Kansas uses the Strengthening Families approach at the state and community levels

Both videos were made possible through CSSP’s partner, Kansas Strengthening Families Plan

A Resource: 13 Ways of Looking at Poverty

In 2009, one in seven Americans—43.6 million people—were poor. Who was poor and what that means is addressed in The Urban Institute fact sheet, 13 Ways of Looking at Poverty. The fact sheet presents a quick overview of research on poverty, including 13 key points on poverty's effects on immigration, health care, children, infants with depressed mothers, employment, assets, and neighborhoods. Each fact on the fact sheet is connected to an Urban Institute research report.

For more information on poverty and strategies to promote Family Economic Success.

State Budget Shortfalls and New Priorities

States governments continue to feel the impact of tough economic times with 44 states and the District of Columbia projecting budget shortfalls for fiscal year 2012 totaling $125 billion. According to a report by the Center on Budget and Policy Priorities, as governors across the country work on state budgets for the year they face decreased tax revenues without a decreased need for state-provided services - leading to increased spending gaps.

In the wake of the recession, states’ are facing significant budget constraints and are focused on redesigning government in a way that is more efficient. The National Governors Association released an issue brief analyzing Governors’ 2011 State of the Union Addresses. The report highlights the priorities most frequently addressed by governors as they outline their state’s goals for 2011. Governors’ were focused on government redesign efforts citing consolidation, streamlining the bureaucratic processes and controlling employee and pension costs. NGA’s Redesigning State Government page provides resources for states including a fiscal survey of the states, past government redesign efforts, and state-requested audits aimed at guiding cost savings, revenue enhancements, consolidation and elimination of agencies, and increasing government efficiency in general.

Even though the recession is over the aftermath continues at both the federal and state level. The importance of perusing policy changes that work and creating more responsible, effective government solutions is critical for both state budgets and for the children, families and communities state policymakers serve.

Visit the PolicyforResults homepage for updates on new content offering solutions for policymakers in tough economic times; including practical tools for making effective policy decisions.

The Budget, FY2012

The President’s budget for fiscal year 2012 was released in February, and in light of the country’s growing deficit, there were some significant cuts in program funding. However, debate continues around whether or not they were the right cuts and if they were too much or not enough. Several controversial cuts were made to domestic discretionary programs like the Low Income Housing Energy Assistance Program (LIHEAP) and there has been significant criticism about the effect of the budget on low-income families. However, in tough economic times it is important to look for opportunities wherever possible and there are some positive ones for kids and families and communities in the President’s budget.

There are valuable investments aimed at supporting young children through high quality early childhood programs including $350 million for the early learning challenge fund to improve access to higher education for minority students. To help youth succeed as adults, the higher education incentives, including tax relief through the American Opportunity Tax Credit, investments in community colleges, improved job training through the Workforce Innovation Fund and an $150 million expansion of the Promise Neighborhoods program are some of the ways this budget attempts to support young people.

The President’s inclusion of $2.1 billion in new resources for health care services like health centers, extending the Earned Income Tax Credit and $7.9 billion for efforts to prevent hunger and improve nutrition, including the implementation of the Healthy, Hunger-Free Kids Act of 2010 all help support basic needs that allow children and families a chance to be healthy and economically successful.

Additionally, with proposed support like $150 million for Partnership for Sustainable Communities, incentives can be created that establish comprehensive, multi-agency changes from transit-accessible housing to reduced greenhouse gas emissions. The President’s budget also provides $250 million for the Choice Neighborhoods initiative, designed to revitalize distressed urban neighborhoods.

The President’s budget and the following Congressional budget process are critical for states struggling with budget concerns of their own. The following is a list of some of the resources to help state’s get to the core of the opportunities and concerns regarding the federal budget for children and low-income families.

• CSSP’s Financing Community Change Blog breaks down the President’s Education Budget, has a feature on the way the budget impacts local community work and a general piece on some of the budget’s major initiatives.

• The Center on Budget and Policy Priorities released analysis on the severe cut to LIHEAP. They also include state-by-state examples of a current house budget plan and how it would impact at-risk children and families. CBPP also has a primer on the federal budget process, how it works, and the budget timeline.

• The Children’s Defense Fund has a Budget Watch tool that describes the federal budget process and includes analysis of why this year’s budget process is so complicated.

• The Center for Law and Social Policy released State Resources to Support FY 2011 & 2012 Budget Advocacy around child care and early education.

Click here for Strategies in Tough Fiscal Times.

Educational Investments

The Center for American Progress recently released a report, Return on Educational Investment: A District-by-District Evaluation of U.S. Educational Productivity. The project measures the academic achievement of a school district relative to its educational spending, while controlling for factors outside a district’s control, such as cost of living and students in poverty. Since the recession began, 30 states have had to cut educational spending, this report serves as a great tool for policymakers because it suggests gains can be made in school districts without increasing funding, but rather if funding is used by districts more productively. Some of the reports suggestions include:

• Promoting educational efficiency
• Reforming school management systems
• Smarter fairer approaches to school funding
• Reporting far more data on school performance

PolicyforResults recently released a new section on increasing high-school completion that includes strategies for states to increase graduation rates as well as information on funding opportunities, information on funding inequity, and strategies for making effective investments that lead to a state’s intended outcomes.

TANF’s Uneven Response

The Center for Budget and Policy Priorities released a report on the unevenness of TANF’s response during the financial crises. The report, which examines TANF in the first two years of the economic downturn, asserts that TANF has only been modestly responsive and goes on to say that in 22 states TANF responded very little or not at all to the crises. When we invest in policy and programs they should yield their intended results and the responsiveness of TANF is particularly important because TANF provides basic support to low-income families who are at increased risk when the economy is in crises.

When TANF is reauthorized, a critical consideration should be the program’s responsiveness in times of economic crises. The report outlines some of the factors that should be considered.

• Redesign the Contingency Fund.
• Systematically track, by state, measures that assess the effectiveness of TANF as a safety net for deeply poor children.
• Replace the work participation rate and caseload reduction credit with a new performance measure that focuses on employment outcomes or other measures of family well-being, with adjustments during hard economic times.
• Make modest changes in the types of work activities that states can count in order to refocus TANF employment activities on improving outcomes for families.
• Provide additional funds to help states maintain and build on the successful subsidized employment programs they created through the TANF Emergency Fund.

The report provides context about TANF and its uneven response, detail on the suggested policy changes needed to address the problem, and state by state fact sheets.

To see previous PfR posts on TANF read A Safety-Net that Works through Tough Economic Times, Evaluating TANF and TANF in Tough Economic Times.

For further strategies to promote Family Economic Success.

The Affordable Care Act: Costs and Savings for States

The Patient Protection and Affordable Care Act (ACA) has many provisions that will affect State budgets. In a research report by the Urban Institute, Net Effects of The Affordable Care Act on State Budgets, the authors address the new costs and savings for states. The report asserts that between 2014-2019 states will increase Medicaid spending for low-income individuals by between $21.1 billion and $43.2 billion. However, during the same time period, the ACA will save states significantly by allowing them to shift higher-income adults from Medicaid into coverage where subsidies are funded entirely by the federal government; as well as to substitute newly available federal Medicaid dollars for prior state and local spending on uncompensated care and mental health services. Those provisions will save states between $83.8 billion and $153 billion. In total, these provisions will lead to net state and local gains of between $40.6 billion and $131.9 billion.

In their conclusion the report states that throughout Medicaid’s history smart and creative state officials have responded to changes in the federal law, which often have allowed for maximizing fiscal gains and minimize losses for their state. However, even without any state-level creativity, the straightforward implementation of the ACA’s coverage expansion is likely to yield state savings that greatly exceed net state costs resulting from increased coverage of low-income adults.

This report is a good resource for learning about the costs and savings that states will experience through the ACA. The report address the above mentioned factors in detail as well as provides information on potential savings under CHIP, the possibility to integrate Medicaid and Medicare funding and services for the duel eligible, and the changing cost of health insurance coverage for public employees and retirees.

For a Framework for Policy Success.

New on PolicyforResults! Policies to Prevent Childhood Obesity

State policymakers are uniquely positioned to serve the needs of both rural and urban communities in their efforts to promote health and reduce childhood obesity. Policies that improve access to healthy foods, support healthy community design and require healthy school initiatives are all ways to make a significant impact on children’s’ health. By creating environments across communities and schools where physical activity and access to healthy foods are the norm, states will decrease both the health costs and financial burden that childhood obesity generates, creating healthier, more vibrant communities for children and families.

There are new funding opportunities available to reduce and prevent childhood obesity. Two of these opportunities are aimed at research that supports the reduction and prevention of childhood obesity. A federal grant aimed at achieving the long-term outcome of reducing the prevalence of overweight and obesity among children and adolescents (ages 9-14 years) is available. The U.S. Department of Agriculture is offering seven grants of up to $2.5 million each for their Agriculture and Food Research Initiative. The Robert Wood Johnson Foundation’s Healthy Eating Research: Building Evidence to Prevent Childhood Obesity Program is offering $2.35 million in total program funding in multiple awards to build research on environmental and policy strategies with strong potential to promote healthy eating among children, especially among lower-income and racial and ethnic populations at highest risk for obesity.

To learn about more funding opportunities available, as well as strategies to support states in preventing childhood obesity, please visit our new section on PolicyforResults: Preventing Childhood Obesity.

Supporting Potential College Students

The Center for American Progress and The Hamilton Project recently released a report, Grading Higher Education: Giving Consumers the Education they Need. The report addresses the complicated process and incomplete and uncertain information that potential students and their families face when deciding what college to attend, what to study, and which career to pursue. Making the right choices regarding post secondary education might increase the benefit for students from the growing economic burden of college as well as improve the likelihood of degree completion. The report proposes that the federal government expand the types of information that are available and allow users to com­pare indicators like cost, financial aid, student debt, employment outcomes, and average salaries following graduation, across peer institutions.

Visit our homepage to sign-up for e-mail updates on results-based policy regarding increasing college completion - coming soon!