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Project Committee Action

On May 22 the Joint Finance Committee took up the child care and TANF-related issues in the budget. The Committee unanimously adopted an omnibus funding motion (motion 346), which addressed all the TANF-related Legislative Fiscal Bureau papers except #1043. The Committee also unanimously approved motion 790, related to LFB paper #1043, pertaining to W-2 contract policy issues. Both motions are summarized below.

All of the relevant LFB papers are on the web at http://www.legis.state.wi.us/lfb/2001-03budgedocuments/2001-03BudgetPapers/May21index.htm

Motion 346 – Child Care and TANF Issues

This omnibus motion addresses all of the funding issues relating to W-2, child care and other TANF-funded programs, and also covers a number of W-2 related policy issues. The central element of the complex, six-page motion is the addition of $95 million to the Wisconsin Shares child care subsidy program. This increase is expected to fully fund the program, thereby heading off the need for waiting lists, co-pay increases, or eligibility reductions. The motion achieves this by adding almost $10 million in state general purpose revenue (GPR), which allows the state to match more of the federal block grant funding, and by reallocating large amounts of TANF funds. The motion was developed in lengthy negotiations between Representative Gard and Senators Moore and Plache.

In light of the state's huge deficit, the fact that the committee was willing to add nearly $10 million in GPR funds is remarkable. It is the largest GPR increase the Finance Committee has approved in its budget deliberations this spring. The GPR funding will match $14 million in federal child care block grant funds.

Funding Shifts

After accounting for the GPR and child care block grant funds, and also $20 million in "found" TANF funding, the committee still needed to come up with about $50 million by shifting TANF funds. Of course, making such shifts guarantees that some people will be disappointed. The many areas that federal funding is being taken from include the following:

• $7.8 million by decreasing the allocation for administration and services in the W-2 contracts by 5% from the Governor's recommendations.
• $8.4 million by eliminating funding for the work-based learning programs.
• $5 million by cutting two-thirds of the funding for early childhood centers of excellence in 2002-03.
• A reduction of $12.7 million of unspent community reinvestment (CR) funds from the 1997-99 W-2 contracts. (Additional CR funds from those contracts that are unspent by the end of 2001 will be shifted to a contingency fund for W-2 cash benefits, child care and kinship care benefits.)
• $5.4 million from the Workforce Attachment and Advancement Program.
• $4 million by maintaining the base funding level for W-2 benefits, rather than budgeting for a possible increase in the caseload.
• Nearly $2 million by lowering the assumption of what will be needed for the performance bonuses for W-2 agencies.
• $750,000 per year from child care resource and referral agencies.
• Elimination of the $500,000 per year for the Milwaukee Private Industry Council.
• $1.66 million annually from the Children First program.
• $1 million per year for W-2 transportation assistance (cutting that appropriation by 50%).
• $200,000 annually by eliminating funding for the fatherhood initiative.
• Elimination of the $100,000 annual TANF appropriation for early pregnancy identification.
• Elimination of the employment skills advancement program, which also saves $100,000 per year in TANF funds.
  

Other highlights of the funding changes relating to child care and education include:

• Removing the proposed provision to give the Department of Workforce Development (DWD) and Department of Administration (DOA) the authority to develop and implement a plan to limit expenditures for Wisconsin Shares.
• Eliminating $1 million annually for child care quality improvement grants and instead providing that amount for a “high quality child care demonstration project” in Racine County.
• Restoring $500,000 each year to the appropriation for community youth grants and specifying that those funds will be used for the Boys and Girls Clubs of America (which is still a sizeable cut from the $1.3 annually those clubs received in the last budget).
• Restoring $100,000 annually to the Wausau School District for the provision of English as a second language services for low-income SE Asian Children ages 3 to 5.
  

The motion approves the level of funding recommended by the Governor for the Bureau of Regulation and Licensing (BRL) and eliminates four BRL licensing positions. (This funding and staffing level will probably result in a further reduction in the frequency of unannounced visits, reduce technical assistance provided, slow the processing of applications, and ultimately increase complaints received and enforcement actions.)

The committee’s action maintains the proposed funding level for the child care pass-through grant program (as modified by a couple of technical corrections). It also leaves intact the recommended increases for the T.E.A.C.H. and R.E.W.A.R.D. quality improvement programs, and no change is made in the funding for Head Start.

Notwithstanding the various funding increases and cuts, the motion leaves unallocated about $5.2 million in anticipated federal child care block grant funds, which the state could draw down at some future date if it appropriates $3.6 million of additional GPR funding to meet the matching requirement.

Other Highlights

In addition to the various provisions directly or indirectly related to child care that are summarized above, motion #346 also addresses a number of other issues. These include the following funding changes:

• Restoration of the $100,000 annual appropriation for providing civil legal services to low-income individuals.
• A $96,700 increase to reflect current estimates of kinship care caseloads; and a provision authorizing the Finance Committee to supplement the kinship care appropriation if it proves to be insufficient.
• An additional $595,000 in federal funds to reflect increased caseload projections for the state food stamp program for qualified immigrants.
• An annual increase of $1 million for substance abuse grants, bringing that funding level to $6 million per year. In addition, the motion provides that Milwaukee County (or nonprofits in that county) will be awarded not less than $2 million annually from this funding, whereas Milwaukee County formerly received all of the funding.
  

The motion also makes a number of policy changes that do not affect net appropriation levels in this biennium. Among the more significant of these are the following:

• Requiring DWD to submit an annual report of TANF expenditures to the Finance Committee and DOA Secretary by Nov. 1 of each year.
• Transferring funding and staff from DWD to the Department of Health and Family Services (DHFS) for certain functions and staff relating to determining Medicaid and BadgerCare eligibility. (This shift is consistent with the Governor’s recommendation and a current memorandum-of-understanding between the two departments.)
• Transferring food stamp and MA eligibility determinations from the W-2 contracts to the income maintenance contracts, and removing statutory authority for W-2 agencies to either determine MA eligibility or certify eligibility for and issue food stamps, to the extent permitted by federal law or waiver.
• Requiring DWD to obtain approval from the DOA Secretary and Joint Finance Committee for any proposed reallocation within the TANF program exceeding 5% per allocation per year.
• Eliminating community reinvestment funding from the 2002-03 contracts. (This does not affect TANF expenditures until the following biennium.)
• Allowing penalties paid by counties and tribes to be used for food stamp reinvestment activities.
• Requiring DWD to hold public hearings and consult with the Milwaukee County Department of Human Services prior to implementing any changes to the W-2 geographic regions.

Motion 790 – W-2 Contract Policy Issues

The second significant motion approved by the Finance Committee relating to the Wisconsin Works program is Motion #790, which makes a number of changes in the process for contracting with the agencies that administer the W-2 program. Among the more notable of those changes are the following:

Providing DWD with the flexibility to utilize either a competitive process or right of first selection process for the 2004-05 contracts by modifying the statutes (and directing DWD to modify contract terms for 2002-03) to require DWD to utilize a competitive process to select agencies using criteria including, but not limited to, cost and prior experience, unless it opts to re-contract with agencies based on standards to be developed by DWD.

• Providing that the right of first selection would not apply to the 2004-05 contracts in any case where a county geographic area had been changed by modifying the statutes, and directing DWD to modify contract terms for the 2002-03 contracts.
• Providing for bonuses to all agencies that score 6.5 or better on the customer satisfaction performance standard instead of only to the top 10 scoring agencies.
• Requiring that the "significant audit finding" performance standard include an audit finding of unallowable or questioned costs of a certain percentage of the contract amount.
• Directing DWD to modify its contract terms for the 2002-03 contracts to specify penalties for unallowable expenditures of 50% of the unallowable amount.

Motion # 790 was also approved unanimously by the Joint Finance Committee.

Prepared by Jon Peacock and Carol Medaris
May 24, 2001