LFB Paper Confirms Large Gap in Budget for the State’s Welfare to Work Program

The Joint Finance Committee (JFC) is scheduled to meet this Wednesday, November 6, on a number of budget issues, including a couple that we will be watching.  Among those is a proposal from the Dept. of Children and Families (DCF) and Dept. of Health Services (DHS) that would close part of the large funding gap in the Wisconsin Works (W-2) program. Another one of the items on the JFC agenda Wednesday would release $7.1 million that is currently held in reserve for implementation of a student information system.

[UPDATE;  The Nov. 6 meeting has been postponed, apparently because of differences of opinion about a  different agenda item.]

The W-2 funding is part of a DCF/DHS plan submitted to JFC on October 1, which makes recommendations for using unallocated federal funding known as “income augmentation” revenues. These funds are received by the state as federal matching funds for state and local spending on things like Targeted Case Management and the Medicaid HealthCheck program.

The proposal identifies a total of about $12.5 million of income augmentation funds that haven’t already been alloted in the biennial budget bill.  The DHS/DCF plan would use that funding for the following:

• $9.6 million for Wisconsin Works,
• $1.7 million for a functional family therapy program called the SAFE Milwaukee Initiative, which targets high risk youth in Milwaukee.
• $1.2 million as a lapse to the General Fund to meet the DCF lapse requirement for both years of the biennium.

As I noted in a Budget Project blog post in early October, we were very pleased to see the Walker administration propose closing part of the W-2 funding gap. However, it is important to note that the funding shortfall is much larger than the recommended supplement: 

• The proposal is intended to only address the shortfall in the first year of the 2013-15 biennium, and the Fiscal Bureau estimates the gap in that fiscal year to be at least $13.3 million, even if W-2 participation starts to fall by 1% each month.
• The LFB paper projects that even under a scenario of W-2 participation declining by 1% per month, funding will fall short by $12.2 million in the second year of the biennium. 
• If W-2 participation stops growing and remains at its current level, rather than declining, the LFB projects that the funding shortfall will be $43.4 million during the biennium, or almost $34 million more than the DCF/DHS plan would provide at this time. 

The LFB paper confirms a problem that we have been writing about since early this year, though the gap is actually a little larger than our last estimate because the cost per participant has also risen. We will continue to follow the W-2 funding issue closely.

Jon Peacock