Minnesota’s most basic support for families is stuck in a 30-year-long time warp, and it’s hurting 64,000 of our kids

When a family falls on hard times, the Minnesota Family Investment Program (MFIP) can provide some vital, basic resources to see them through. MFIP provides a small cash grant for parents working in low-wage jobs, looking for employment, and attending job training. Unfortunately, the cash grant intended to help parents keep their kids sheltered and in warm winter clothes hasn’t increased since 1986. The Legal Services Advocacy Project (LSAP) reports on the troubling implications in a brief they released this week.

In 1986, policymakers set the cash grant amount at $532 a month for a family of three. At the time, the official federal poverty guideline for that family was $9,120 annually. Today, a family of three would need $20,160 to provide for the bare necessities. That means a $532 monthly grant now leaves families with less than a third of the resources necessary to not live in poverty.

As the LSAP brief describes in detail — and as anyone paying their bills can tell you — $532 doesn’t even cover rent for a three-person family. And no matter how cheap gas gets, $532 won’t cover the rest of a family’s basic necessities, either. As a result, about 64,000 children whose families participate in MFIP have parents that routinely make tough choices, like whether to keep their bill collectors at bay or fill their gas tank to make it to a job interview.

Much of MFIP’s funding comes from the federal Temporary Assistance for Needy Families (TANF) block grant, which also covers other vital services for low-income Minnesotans. A year ago, the Minnesota TANF Expenditures Task Force published a set of recommendations after taking a long, hard look at how Minnesota uses its TANF resources.

These policy experts urged policymakers to increase the monthly cash grant by about $100. In the long term, they recommended restoring the buying power of the cash grant to to its 1986 level. For perspective, it would take $1,148 in 2016 to buy goods and services that cost $532 in 1986.

Last year, Governor Mark Dayton proposed a $100 increase to the MFIP cash grant in his supplemental budget proposal. Despite receiving bipartisan support in both chambers of the Legislature, the increase did not make it into the budget. This year, for the 30th year in a row, the MFIP cash assistance grant remains frozen in time. Policymakers will once again have a chance to help tens of thousands of Minnesota’s most vulnerable children by restoring this vital resource. Here’s hoping they do the right thing.

-Ben Horowitz

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Share your feedback so we can bring you the information you rely on

You rely on the Minnesota Budget Project to provide you with timely, relevant information on state budget, tax and economic policy issues.

This week, we’re reaching out to our followers and advocates in the nonprofit sector asking for your feedback through a short survey.

By completing the survey, you are helping us more effectively provide you with the research and insight you have come to expect. It’s an opportunity for you to share with us how you have used our work to advance your organization’s mission and goals.

We sincerely appreciate your time and thoughts!

-The Minnesota Budget Project Team: Nan Madden, Clark Biegler, Ben Horowitz and Laura Mortenson

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Minnesota Budget Project is hiring a research intern for immigration policy

The Minnesota Budget Project seeks a research intern who will make a significant contribution to our work on state immigration policy decisions and economic trends affecting immigrants in Minnesota. This intern will conduct research and work with Minnesota Budget Project staff to produce analytic materials. The ideal candidate will have strong quantitative, qualitative and data analysis skills.

The Minnesota Budget Project is an initiative of the Minnesota Council of Nonprofits that combines sound research and analysis with advocacy, engagement and communications strategies to support policies that expand opportunity and economic security to all Minnesotans.

More information, including how to apply, is available on the Minnesota Council of Nonprofits website. The application deadline is February 15.

-Clark Biegler

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Health Care Finance Task Force ends with a bold statement for a healthier, more equitable Minnesota

When the lottery of life leaves a Minnesotan injured or ill, they should have affordable access to Minnesota’s first-rate health care system regardless of their income or country of origin. A series of draft recommendations approved by the Governor’s Health Care Finance Task Force on January 21 would move our state towards that goal. Of the 33 recommendations passed by the task force, four stood out as particularly bold steps forward. These recommendations would:

  • Restore many working families’ eligibility for MinnesotaCare. The task force proposed revised eligibility rules for MinnesotaCare, Minnesota’s affordable coverage option for working people. The proposal increases the income cut-off from 200 to 275 percent of the federal poverty line, or from about $24,000 to $33,000 for a single adult. Families in this income range often struggle to meet their basic needs. Restoring eligibility for MinnesotaCare to roughly where it was prior to 2014 will ensure that more Minnesotans have access to high-quality insurance when it isn’t offered through their jobs.
  • Provide affordable health care coverage options for undocumented immigrants and their families. Every day, about 95,000 undocumented immigrants in Minnesota are strengthening our state’s communities and local economies. They pay taxes and fill important job openings, but many lack access to affordable health care because of their immigration status. The task force report suggests extending MinnesotaCare eligibility to our neighbors without considering where they were born. Since illness and injury show no regard for a person’s country of origin, it makes sense that we would structure our health care policy to do the same.
  • Maintain a vital funding source that supports health insurance for low-income Minnesotans. The revenue from a 2 percent tax on health care services is a vital source of funding for health care coverage for many Minnesotans who would otherwise lack an affordable option. The task force recommends that rather than allowing the provider tax to expire, policymakers should make it permanent, which would keep MinnesotaCare on sound financial footing.
  • Collect better data so that the state can hone in on racial disparities in health care. Minnesota’s racial disparities in income and education have rightly gotten a lot of attention, and we can see similar gaps in health care coverage and in general health. Advocates from communities of color have pointed out a need for more (and better) data, which will equip us to roll up our sleeves and get to work knocking down barriers to care.

The task force was made up of 29 people, including policymakers; others who represent the workers, providers and insurers in the health care system; and community members. They were asked to make recommendations to the Legislature on how Minnesota can improve access to affordable, quality health care coverage.

In spite of such a large mission and a diverse range of views, the recommendations passed with 20 affirmative votes and just five votes in the negative. The Legislature should pick up where the task force left off and translate these recommendations into policies to make Minnesota a place where everyone can get the health care they need, regardless of their income or their immigration status.

-Ben Horowitz

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Why 2015 should be remembered for research that strongly supports Basic Sliding Fee

Three research projects making a big splash in the social sciences last year build a strong case for addressing the child care needs of families with kids of all ages through policies like Minnesota’s Basic Sliding Fee Child Care Assistance.

Basic Sliding Fee lowers a family’s cost of child care for children from birth through age 12, helping parents get to school or work secure in the knowledge that their kids are in a stable, supportive environment. Unfortunately, due to a lack of state investment, Basic Sliding Fee currently has a waiting list with the names of more than 7,000 working families that are struggling to afford child care.

The age range covered by Basic Sliding Fee is one of several strengths that make it a vital resource for families. Research in 2015 builds on the already-strong evidence that older kids benefit when their families have more resources. The three pieces I’m referring to are:

  • $2.00 a Day: Living on Almost Nothing in America by Kathryn J. Edin and H. Luke Shaefer, which combines rigorous systems-level statistical analysis with extremely powerful personal stories. The authors walk through two decades of policy changes and explore institutional barriers to economic stability. They then share the stories of the people who are actually impacted by these high-level changes. Some of the most powerful passages tell the story of working parents trying their best to support their kids but being undercut at nearly every corner by a lack of basic financial resources. In one particularly heart-wrenching story, a woman’s lack of affordable, reliable child care contributes to her family’s instability with dire consequences for her daughter, who is abused by someone the mother thought she could trust.
  • Two studies released by The Equality of Opportunity Project, which use data on millions of families to show that different parts of the country offer vastly different opportunities for kids born into low-income families. The authors’ work showed that school-age kids who moved to higher-opportunity areas did better later in life. At a talk to the Center on Children and Families, one of the authors explicitly tied this finding to the importance of child care policies.
  • How Does Household Income Affect Child Personality Traits and Behaviors?, which details the big impact of a sudden increase in income for families with school-age children living in the Smoky Mountains. When families were under less stress around simply making ends meet, their kids displayed fewer social or emotional problems.

The examples cited above demonstrate that when a family has more resources to meet their daily needs, their kids have a better chance at success. You don’t need an advanced degree in economics to read between the lines of these reports. Affordable, reliable child care can be a decisive factor in a parent’s ability to advance their career, and in their child’s ability to understand their math homework. And when families can access Basic Sliding Fee, families are more likely to find the child care that they need for kids and parents alike to succeed.

-Ben Horowitz

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Most popular blogs of 2015 forecast issues of 2016

Looking over the 2015 blogs garnering the most reads over the last year provides a road map of sorts for the 2016 Legislative Session. Affordable health care, fair taxes, expanded opportunity for families – these issues will be part of the debate among policymakers as they consider what to do with the $1.2 billion budget surplus this spring, just as they were last year.

Specifically, the most-read 2015 Minnesota Budget Bites blogs were:

These blogs address the essential issue of what policy choices are needed to expand economic opportunity in Minnesota. As such, we’re not surprised they were popular in 2015, and will continue to be a primary focus of ours in the year ahead.

– Laura Mortenson

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January economic update shows Minnesota on track

Minnesota collected slightly more than expected revenues, and the U.S. economy is expected to continue to grow, according to a quarterly report from Minnesota Management & Budget (MMB).

MMB’s January Revenue and Economic Update finds that state revenues during November and December were $43 million, or 1.2 percent, higher than projected in the November forecast. The largest portion of these better than expected revenues are due to lower income tax refunds, but state economists project that this positive balance may disappear as the processing of tax year 2014 returns is completed.

The national economy continues to improve, with strong employment gains and a national unemployment rate of 5.0 percent in December. The Federal Reserve has noted these economic improvements and in mid-December raised short-term interest rates for the first time in almost 10 years.

National economic growth for 2016 is expected to be 2.7 percent, which is lower than projected in November. Looking further ahead, the economy is expected to grow more strongly in 2017 than projected in the November forecast, and then slightly slower in 2018 and 2019 than the November projections.

January economic update projections

The economic forecasters are fairly confident in their projections, and assign a 65 percent probability to their baseline economic forecast. They give a 20 percent chance for a more pessimistic scenario in which international markets contract and a weak U.S. construction sector triggers a short recession; and a 15 percent chance that the economy will be stronger than the baseline prediction, due to better than anticipated productivity, household formation and foreign growth early this year.

The November forecast brought good news for Minnesota, projecting a $1.2 billion positive balance in FY 2016-17. This week’s economic update suggests that Minnesota policymakers can continue to expect a strong positive balance in the February forecast. When they convene for the 2016 Legislative Session in March, policymakers will use the numbers in the February forecast to inform their tax and budget choices.

The forecast also made clear that its projection for economic growth in Minnesota hinges on broader participation in the workforce. Policymakers should use this opportunity to focus on strategies that support workers, such as making child care more affordable so parents can go to work, and expanding access to earned sick and safe time so workers don’t lose their jobs when they need to stay home to care for themselves or a sick family member.

-Clark Biegler

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Federal budget deal does right by 111,000 hard-working Minnesota families

With a successful Senate vote earlier today, Congress has now approved a broad tax and budget deal that includes crucial provisions for millions of Americans who struggle to get by on low wages. For months, it was uncertain whether a deal negotiated between the two chambers of Congress and President Barack Obama would preserve improvements to the federal Earned Income Tax Credit (EITC) and Child Tax Credit (CTC).

These improvements make the credits work better for 111,000 of Minnesota’s working families, including about 244,000 children, and will become permanent once the bill is signed by President Obama. Unfortunately, Congress missed an important opportunity to make new gains with the EITC by improving it for households without dependent children.

The EITC and CTC are two of our nation’s most effective tools to help families working at low wages make ends meet, which is why we led an effort in Minnesota urging Congress to make them a priority. During the administrations of presidents Obama and George W. Bush, these credits were improved in very important ways. For example, an improvement to the CTC makes that credit available to workers earning between $3,000 and $14,600. However, those improvements were scheduled to expire. If that had happened, 16 million Americans — nearly half of them children — would have fallen below or further below the federal poverty line. To put that in real terms, a single, working mother of two earning $14,500 a year would have seen her income decrease by $1,725.

The bill that makes the improvements permanent passed the House of Representatives with a vote of 318-109 and the Senate with a vote of 65-33. The elected representatives who voted for the bill in Minnesota’s Congressional delegation were Senators Al Franken and Amy Klobuchar, and Representatives Tom Emmer, John Kline, Rick Nolan, Erik Paulsen, Collin Peterson and Tim Walz.

This bill also presented an opportunity to bring the strong, pro-work impact of the EITC to households without dependent children. Households without dependent children are the only group that is actually taxed deeper into poverty by the federal tax code. A stronger EITC would be a big step towards ending that problem. President Obama and Republican Speaker of the House Paul Ryan have proposed very similar approaches on this issue. Unfortunately, this provision was not included in the year-ending budget legislation. It was a big missed opportunity to make the tax code more fair for millions of people, including young people who are just starting out.

-Ben Horowitz

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Top takeaways for Health Care Finance Task Force from this month’s Health Care Access Fund update

Minnesota has the resources to get one step closer to being a state where every family knows they won’t have to choose between paying their rent or paying their health care premium. Just like the state’s General Fund, Minnesota’s Health Care Access Fund left its biannual checkup with a report that it is in good financial health, with a projected positive balance of $1.1 billion in FY 2019. The Health Care Access Fund is a part of the state budget that funds key portions of Minnesota’s health care system.

This news from the state’s November Forecast comes just in time to inform the Governor’s Health Care Financing Task Force. The Task Force is a group of 29 policymakers, community members, and workers and executives from the health care industry charged with making recommendations to the Legislature in January on how Minnesota can improve access to affordable, quality health care coverage. The updated balance in the Health Care Access Fund should encourage the Task Force to focus on making quality health care affordable for all Minnesotans.

The Fund’s projected balance is much higher than previously expected due to three big changes since the end of the 2015 Legislative Session. First, the federal government is providing more funding than previously anticipated for MinnesotaCare, Minnesota’s affordable health insurance option for people working at lower incomes. Second, the enrollees in MinnesotaCare are using health care services less than previously expected. Third, the state realized significant savings through a competitive bidding process with the private health insurance plans that provide MinnesotaCare’s coverage options.

Given these changes, the Task Force should support three key recommendations:

  • Maintain health care funding through the provider tax. About 83 cents of every dollar that goes into the Health Care Access Fund in FY 2019 is financed through a 2 percent tax on health care services. Policymakers enacted legislation in 2011 that will eliminate the provider tax in FY 2020. If that happens, the fund will likely be left with a deficit, and no way to sustain the quality, affordable coverage currently offered to working Minnesotans. Therefore, the Task Force should recommend that policymakers undo that major change with a minor stroke of the pen. An automatic trigger already allows the tax rate to shrink if the tax is projected to collect more than is needed. That would occur in FY 2018 if these projections hold true.
  • Reduce health care costs for families in MinnesotaCare. Last year’s budget implemented $65 million worth of state budget savings in FY 2016-17 by raising the price of health care for people who use MinnesotaCare to get health insurance. MinnesotaCare provides an avenue to affordable health insurance for our neighbors who work hard in low-wage jobs but don’t receive employer-based health insurance. The cuts were already unnecessary with last year’s positive Health Care Access Fund outlook. With the Fund even stronger, policymakers can afford to reverse these cost increases on working families.
  • Make health care more affordable for more working families. A family of three loses eligibility for MinnesotaCare when they earn more than $40,180 a year. Families above this income level who don’t have employer-based coverage would turn to MNsure. Even with federal assistance that brings down the price of health insurance purchased through MNsure, health care costs stretch many of those families’ budgets even closer to the breaking point. The task force should recommend lowering health care costs for such struggling families. For example, one potential recommendation would allow a family of three to use MinnesotaCare with earnings up to $55,247.

This year’s Census data showed that Minnesota remained a top state for health insurance coverage rates. If the state enacts the above recommendations, we can both protect our existing pathways to coverage and make health care more affordable for more working families.

-Ben Horowitz

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Policymakers should prioritize building a state economy that works for all Minnesotans

I recently attended a Summit on Economic Reality for Black Minnesotans, where black community leaders talked about policy changes for addressing the deep inequities in our state. They explored issues including:

  • Payday lending and the lack of available alternative lending options that treat consumers fairly.
  • Mass incarceration and its impact on the state’s workforce and families.
  • The two-tiered economy in which some are doing well but many workers do not have access to job quality measures like earned sick leave and fair scheduling.

The economic struggles of black Minnesotans have received renewed attention from policymakers after the release of Census data highlighting the stark contrast in economic outcomes between white and black Minnesotans. About 1 in 8 black Minnesotans are unemployed. The median household income for black Minnesotans is less than half the median income for white Minnesotans, and black Minnesotans are more than four times as likely to be living in poverty. For context, $24,250 is the current poverty line for a family of four.

While Minnesota has long seen large racial gaps in economic well-being, the Census data shows that the situation has gotten worse. Median household income for black Minnesotans has dropped by $4,500 in 2014. Policymakers are right to search for policy solutions so that economic opportunity is available to all Minnesotans.

As state lawmakers consider a special session to help unemployed miners on the Iron Range, they should also commit to addressing black Minnesotans’ lack of economic opportunity. Advancing policy solutions that respond to the economic crisis in Minnesota’s black community is one key step toward an economy that works for all. Issues that community leaders raise should be at the center of that discussion.

-Clark Biegler

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