Thursday, April 24, 2008

About last night...

In addition to closing out the operating side of the budget bill, HB 2500, the chairs addressed two issues that have been in dispute and will have a critical impact on segments of our community. One is the funding levels for Hawaii's charter schools, and the other is the reserve levels for TANF, or Temporary Assistance for Needy Families.

Charter Schools: Finance Chair Marcus Oshiro explained to conference members that the legislature will provide an additional $1.6 million for the charter schools. He realized that it is less than they wanted, but given the lack of financial resources this year, most state agencies will be taking a cut in their budgets by comparison.

In mid-December of 2007, Governor Lingle and her staff performed the initial calculation for the Charter Schools budget. In fiscal year 2008, Charter Schools received $51.6 million. While Charter Schools came in for an increase of $19 million, the administration reduced the amount to $4.5 million. Still, Charter Schools would be getting more money than last year, while many other state programs will be forced to cut their budgets.

Rep. Oshiro took care to emphasize that this is a one-time-only expenditure and that it should not be added to the baseline budget of the charter schools. In addition, he made it clear that the Governor and her administration gave no indication that they supported the charter schools' budget increase request. In fact, the two chairs asked the charter schools to have the Governor send down a Governor's Message to restore a larger increase, and that message never came.

Further, it was troubling that the charter schools voted to approve a new school just last month. The new school will add 250 students to the system at a time when financial resources are not available. Oshiro questioned the management decision.

TANF: The Advertiser has a story outlining the TANF restrictions here. Here are some additional comments.

The administration receives $98 million per year from the federal government for TANF, but they have been spending $138 million per year resulting in a $40 million deficit which is taken from the reserve. As stated in the Advertiser story, the administration would like to spend the reserve down to zero. The Legislature is concerned that a)the reserve level will deplete rapidly and b)we are going into a recession which will result in even more people dependent on welfare funds.

How much should states keep in reserve? According to Jack Tweedie, the Director of the Children and Families Program at the National Conference of State Legislatures, who responded to an inquiry by House Finance staff:

"There is no federal or generally accepted standard as to how much of their TANF block grant states should keep in reserve for potential increases in cash assistance caseloads. NCSL did an analysis of changes in state's TANF caseloads and concluded that most states would be able to cover increased costs of cash assistance for two years out of TANF reserve fund if they kept 50% of the most recent year's basic assistance spending (which includes, but is not limited to, cash assistance spending) in reserve.

We recommend being able to cover the costs of increased cash assistance out of a TANF reserve fund (rather than increased state spending or cuts in other uses of state or federal funds), because increases in cash assistance caseloads virtually always come in bad economic times when spending in other state assistance programs (especially Medicaid) are also increasing and state revenues are going down."

Therefore, the money committees decided to keep $44 million in reserve, and drop the annual level of funding from $138 million to $116, or a restriction of $22 million.

It has been 12 years since former President Clinton and the U.S. Congress ended the traditional "welfare" programs and started the Temporary Assistance for Needy Families as a way to help people get out of poverty. Tweedie goes on to say that,

"Nothing that I have seen suggests that Hawaii has developed a strategy for using TANF funds in ways to reduce poverty or help move families toward self-sufficiency. Spending on youth programs does not contribute directly to reducing poverty....As your Auditor pointed out a few years ago, there does not seem to be much of a strategy in the funding of youth programs. Hawaii has also not tracked the families leaving TANF effectively, so you do not know how well they are doing or what has worked in your efforts to move them into jobs and off welfare."

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