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Wisconsin Budget Compounds the Economic Challenges for Low-Wage Workers

11:46 am in Uncategorized by WI Budget Project

The underside of the Wisconsin Capitol Dome

How Wisconsin’s budget cuts hurt workers.

Workers in Wisconsin and across the U.S. must still cope with a relatively weak labor market.  That is especially challenging for low-wage workers who are struggling with the declining value of the minimum wage, reductions in employer benefits like health care, and growing inequality. Those challenges are exacerbated in Wisconsin by budget decisions made by state lawmakers.

A new Wisconsin Budget Project issue brief examines how the how state budget choices are affecting low-wage workers in Wisconsin.  It focuses primarily on the effects of the new budget bill, but also examines a few instances of how that bill continues or compounds the challenges for low-wage workers caused by the 2011-13 budget.

Some of the major effects include the following policy choices relating to health insurance, child care, taxes and unemployment insurance:

Making health insurance and care much more expensive for many parents now in BadgerCare

The 2013-15 budget bill cuts in half the income eligibility ceiling for adults participating in BadgerCare – reducing that cap from 200% of the federal poverty level to just 100%.  That change is expected to cause nearly 90,000 low-income parents and about 5,000 childless adults to lose their BadgerCare coverage, beginning in 2014.  The good news is that Wisconsin is extending coverage to about 80,000 childless adults below the poverty level, but the decision to cap eligibility at that level and turn down enhanced federal funding from the health care reform law means that a single individual with a minimum wage job is ineligible for BadgerCare if he or she is working 30 or more hours per week.

The issue brief analyzes the effect of the budget for a single mother who has two children and an income of $11 per hour (and currently has now BadgerCare premiums and minimal copays).  Beginning in January, when she loses her BadgerCare coverage, she will have to buy insurance through the new Marketplace and will have to pay premiums of about $460 per year and will have significant co-pays and deductibles, which could be as much as $2,250 per year.

Charging premiums for parents in Transitional Medicaid

The state is now seeking a federal waiver that would not only restrict eligibility for BadgerCare, as described above, but would also change another form of Medicaid, known as Transitional Medical Assistance (TMA) by initiating premiums for parents between 100% and 133% of the federal poverty level. If that waiver is approved, parents who climb above the poverty level would struggle to be able to regularly pay the premiums and many are likely to lose their insurance coverage.

Additional cuts in child care subsidies – adversely affecting accessibility and affordability of care

The budget cuts an additional $31 million over the next two years from the Wisconsin Shares child care subsidy program for low-income working families (on top of large cuts in prior years).  Although that cut reflects the estimated cost of maintaining the status quo, it is likely to adversely affect many low-wage workers by causing more child care providers to drop out of the subsidy program and by indirectly increasing co-pays for parents participating in Wisconsin Shares.

Continuing last session’s tax increases for low-income households                                                         

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A Troubling Trend Continues: A Growing Share of Wisconsin Schoolchildren Are Low-Income

8:57 am in Uncategorized by WI Budget Project

The number of Wisconsin children who are from low-income families has climbed for the ninth straight year, according to a new report from the state’s Department of Public Instruction.

In the 2012-13 school year, 42% of Wisconsin children were eligible for free or reduced-price school lunches. In the 2003-04 school year, just 30% of students qualified for free or reduced-price school lunches. The share of students qualifying has climbed every year since then. This video shows how the share of low-income schoolchildren has changed over time in each school district.

The criteria for qualifying for free or reduced-price lunches have stayed the same during the time period described. Students in families earning less than 130% of the federal poverty level qualify for free school lunches. For the 2013-12 school year, students from a family of four earning less than about $30,000 would qualify for free lunches. A much smaller number of students in families earning between 130% and 185% of the poverty level qualify for reduced-price lunches.

In Wisconsin’s five largest school districts, more than half the students are from low-income families. Eighty-four percent of the students in Milwaukee Public Schools are from low-income families.

The rising number of low-income students presents challenges for Wisconsin schools. Children from low-income families have poorer educational outcomes and lag their peers in educational achievement. They also are less likely to graduate from high school and become well-educated, healthy members of Wisconsin’s skilled workforce.

New policies proposed by state lawmakers may pose additional challenges to schools that serve largely low-income students. In his budget proposal, Governor Walker has recommended setting aside funding for schools that are rated the highest on DPI’s report card system. Schools that score in the lowest category would receive much less money, with the result that schools with relatively small numbers of students from low-income families would receive the most benefit. For more on that proposal, which is scheduled to be voted on next week by the legislature’s budget committee, read this blog post.

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