Minnesota Economics – Part Two

I recently participated in an event sponsored by MAPA, Lutheran Social Services, AFL-CIO, and many others, and lead by Education Minnesota‘s Lisa Nentl-Bloom and AFSCME‘s Chris Cowen, where we had a discussion about substantive impacts of economic policy, particularly those of the shift in distribution of public education funding to the state, where the state has the responsibility to provide all of the basic school funding. We are now facing the resulting burden of that shift because the state did not address increases in school needs and increases in cost of living that affects all budgets and left local governments holding the bag. Those costs are now having to be made up by the local governments, which had cut property taxes when the revenue source was shifted to the state in the belief that the state was covering the costs, and now those local governments have to raise property taxes to cover the deficits. The state is the “good guy” for cutting taxes, and local governments are the “bad guy” for raising taxes – a most unfair perception.

In an effort to clarify the source of the problem, SF1073 was proposed to put spending and revenue limits on local governments in recognition that it is a state problem. It has yet to be passed through the Senate’s Tax Committee. So far, there is no companion bill in the House. This is proposed as a constitutional amendment, and is known as TABOR, the “Taxpayer Bill of Rights.” TABOR was also brought up at a Northfield Community Action Group meeting I attended earlier in the month. TABOR would prevent local governments from increasing taxes to cover the needs of their particular community by linking maximum tax increases to indicators such as the rate of inflation and the increase in population of that government unit. City and county limits would also be limited by the increase in value of real estate, and school districts would be limited by a formula reflecting increase in enrollment.

At another meeting earlier this month, I joined fellow candidates and activists to hear Joel Kramer, founder of the progressive think tank Growth & Justice present his study “Workforce First,” a report released in February, and he led a wide ranging and spirited discussion on impacts of policy decisions and the suggestions his organization promotes for economic growth.

The goal of the study is to explore policy ideas to increase the number of Minnesotans who can live on their income, utilizing efforts that are effective, have strong support, and are reasonable in price. What a radical notion that is – working citizens being able to live on their income! Although they address both sides of the equation, how to increase income and decrease expenses of families, the most effective way to assure people can live on their income is to raise their level of education so that their income is increased. This can only be done with a vibrant and well-coordinated educational system from early childhood extending through college and worker retraining programs.

What solutions do they propose? It’s on p. 23 of the report.

* For their goal of increasing by 10,000 the number of low-income Minnesotans who receive a postsecondary degree, they recommend higher education scholarships, college for welfare recipients, technical education, access to on-line degrees and increasing capacity of higher education system in Minnesota.

* To increase skills of low wageworkers, they recommend “Pay-for performance” for nonprofits that deliver these services, increase in funding for the Minnesota Job Skills Partnership, and part time work for those on unemployment who are in education or training programs.

* To assure youth are prepared for postsecondary education, develop tiered child care program to encourage use of accredited child care providers, and in K-12 education, fund reform that recruits, rewards and retains high-quality educators, and increase the number of students pursuing science and math careers.

Their background information was very helpful and was tied to policy recommendations that could easily gain support from a wide spectrum of citizens. This group is thinking forward about a Minnesota that many of us will want to live in, a place where a thriving middle class continues to produce young people ready and willing to contribute their creativity and muscle to the opportunities that await them. We were all hungry for more data and information, and one attendee recommended “the Budget Project, an arm of the Council of Nonprofits, analyzes the impact of Minnesota’s budget and tax policy on low-income households and has a ton of easy-to-read articles, toolkits, and research” that can be found in their archives.

Other good sites are the MN Department of Finance, and the MN Department of Revenue.

There is much work to be done as we dream and set a new course for the possible. With eyes wide open, with a clear vision of our course, we can see a hopeful future that awaits all who wish to go there.

“This, then, is the test we must set for ourselves; not to march alone but to march in such a way that others will wish to join us.” – Hubert H. Humphrey

“When people generally are aware of a problem, it can be said to have entered the public consciousness. When people get on their hind legs and holler, the problem has not only entered the public consciousness – it has also become a part of the public conscience. At that point, things in our democracy begin to hum.” – Hubert H. Humphrey

What’s most exciting about the political climate now is the number of people willing to turn out for caucus meetings and conventions because they care about the state of the state, and the direction we’ve been headed with this last administration. People are clamoring for change and it is invigorating. I’m glad to be a part of it.

Here’s what the Minnesota Council of Non-Profits’ Budget Project has to say about the last session. It’s long but well worth the time to understand the devastating impact of the Pawlenty administration cuts:

Consequences: The Impact of Minnesota’s Government Budget Cuts

In the 2003 Legislative Session, Minnesota faced a serious budget deficit. The $4.5 billion solution that policymakers passed for the 2004-05 biennium relied heavily on service cuts ($2.1 billion) and shifts and transfers, most notably from the Tobacco Endowment ($1.7 billion).

Although the agreement was made to address the deficit without raising state taxes, the state did raise $738 million in general fund revenues through a patchwork of fee increases, higher co-payments, and redirecting dedicated funding sources and fund balances. The $738 million does not include the increased cost of tuition at the University of Minnesota or in the Minnesota State Colleges and Universities (MnSCU) system, nor increases in property taxes that may arise from the increased pressure on local governments caused by significant aid cuts.

Although the final impact of the 2003 budget choices is not yet known, initial information from state agencies, research organizations, community organizations, and the press demonstrate that the deficit solution has already had a serious, negative impact on the lives of Minnesotans. Some of the consequences of service cuts for the lives of Minnesotans are compiled below.

There is more to come on this story. Some of the cuts increase in the second year of the biennium, and many of those responsible for implementing the cuts — in local governments and community agencies across the state — have been able to postpone the brunt of the impact through use of reserves or other one-time measures. Many expect the impact to be worse in 2004 and 2005 than what has been seen so far.

Families and Children
Minnesota’s families face a range of budget impacts that make it more difficult to make ends meet and to provide high quality care for their children.

* 13,554 Minnesotans — including parents, children, pregnant women, and adults without children — are expected to lose their health coverage from one of the Minnesota health care programs (General Assistance Medical Care, Medical Assistance, and MinnesotaCare) in FY 2004. This number grows to 26,646 in FY 2005. Those who continue to have health care coverage face new co-payments for most office visits, eyeglasses, and prescriptions. Families and individuals on MinnesotaCare with incomes above the poverty line face higher premiums.
* 1,200 Minnesota families lost their child care assistance as a result of a 50% cut in funding for the Basic Sliding Fee program. Those who continue to receive assistance face co-payments that are an average of 57% higher for families of three or four — an additional $936 a year for a family of four earning $32,200. Nearly 8,000 families in 46 counties are on the waiting list for childcare assistance – nearly double the number on waiting lists a year ago — and some families are told to expect to wait at least two years before receiving help.
* Among the consequences to cuts to the Minnesota Housing Finance Agency are that 450 fewer households will receive down payment and closing cost assistance from the Homeownership Assistance Program, and 300 fewer households will receive counseling to avoid foreclosure or training to become homeowners.
* An estimated 56,000 parents seeking help from the state in collecting owed child support face new fees of 1% of the amount collected.
* Minnesotans will pay a range of new or increased fees relating to the judicial system for things such as parking fines, subpoenas, deposit of wills, filing fees, and marriage licenses.
* Parents who learn how to ensure the healthy growth and development of their young children through the Early Childhood Family Education (ECFE) program face higher fees to participate.
* School groups visiting the State Capitol or Minnesota Zoo are now charged entrance fees.
* K-12 students will no longer have access to violence prevention programs in their schools funded by state Violence Prevention Grants, as this funding sources has been eliminated.
* Funding cuts to the WIC program, which provides nutritious foods, nutrition counseling, and health care referrals, means that clinics are being closed, fewer women and children are being served, and less nutrition education is provided. Some people are now driving over 50 miles to receive their WIC vouchers, and waiting lists are increasing. Some increased demand is being shown among families with members in the Reserves or National Guard.
* A survey of public health departments reports reduced immunization rates in communities that can no longer afford to send immunization reminder notices. Lack of immunizations has repercussions beyond the health aspects — without up-to-date immunizations, children cannot enroll in Head Start, childcare programs, or school.

Persons with Disabilities
While some have argued that everyone should help solve the budget deficit, the most vulnerable persons in our communities have been asked to pay for a large share of the budget solution.

* Fees have been increased for parents who receive services that enable them to care for their disabled children in their own homes. These fee increases can be several thousand dollars a year. More than 300 families appear to have stopped receiving services due to increased fees.
* More than 6,800 low-income families with disabled family members participating in the Minnesota Family Investment Program (MFIP) have lost at least $125 per month — a total of $1,500 a year — due to changes in MFIP.
* Persons with diabetes who are covered by state-funded health insurance no longer have coverage for testing strips, which enable them to monitor their blood sugar levels and manage their insulin levels. This is expected to lead to serious, and more costly, complications.

Families and Individuals in Crisis
In a weak economy, many Minnesota families are just a paycheck away from serious hardship. Budget cuts have created holes in the safety net that help families weather a temporary setback.

* Cuts to the Emergency Services Program, which funds 26 emergency shelters and agencies serving the homeless, is expected to lead to hundreds more persons being turned away from shelters due to insufficient space (in addition to the 1,000 a night who already go unserved).
* Budget cuts to programs serving battered women, crime victims, victims of sexual assault, and abused children mean less access to services. Service providers in Greater Minnesota report that victims in some communities will need to travel long distances to get help.
* Legal Aid provides low-income people, the elderly, disabled persons, and children with civil legal services they could not otherwise afford. There has been a 32% reduction in the number of attorneys in Legal Aid programs since 2001, due to cuts from state funds and other sources.

Workers and Employers
Funding cuts and policy changes that make it more difficult to access education and training call into question whether Minnesota will retain the high quality workforce has been one of the keys to the state’s economic success. In addition, many high quality jobs in both the nonprofit and government sector have been lost as a result of budget cuts.

* Fewer people will have access to high school diploma completion or workplace skills classes due to cuts in the Adult Basic Education program, while those who can participate face higher fees.
* Workers seeking to enhance their skills will face cuts in financial aid and higher tuition and fees. For example, students in the MnSCU system face an average increase of 12.2%, or $372, in their tuition of fees in FY 2004.
* Low-income workers wanting to enter the health care field no longer will be able to do so through the Health Care and Human Services Worker Training Program, which was cancelled despite a worker shortage in health professions.
* Parents participating in the Minnesota Family Investment Program will no longer have access to education and training unless they are already working 20 hours a week.
* In a survey of nonprofit organizations that had been impacted by government funding changes, 72% of respondents had made staffing changes (layoffs, leaving positions unfilled, and cutting back hours) in 2003. 60% of respondents cited state budget cuts as a contributing factor in staffing changes, and 31% said local budget cuts played a role. Unemployment Insurance claims filed by nonprofit workers were up 3.5% in January 2004 compared to one year ago, and up 7.8% from two years ago.
* In a survey of cities, 26% of those responding had reduced the size of their workforce.
* Businesses face a range of increased fees, including for fire marshal hotel/motel inspections, boiler licenses, and food handler inspection fees.

Education and training is an important element in creating our future workforce. But budget cutbacks could close off opportunities to students as the price of admission climbs higher.

* High school students striving for academic excellence through Advanced Placement and International Baccalaureate face higher fees for participation in these programs.
* Students in the University of Minnesota and Minnesota State Colleges and Universities systems face double-digit tuition increases in each of the next two years.
* All 58,760 Minnesota students eligible for financial aid from the Minnesota State Grant program will have their grants reduced, some facing reductions of several thousand dollars. Around 9,000 students will lose all financial aid in FY 2004.

At-Risk Youth and Children
Government funding to community organizations helps make it possible to assist children who have been victimized or are at risk of abuse, or to intervene with kids who have made mistakes and help them get things straight while they are still young. Many of the critical prevention and intervention programs for this vulnerable population were impacted by budget cuts.

* Young people who are struggling with academic success and/or have been involved with the criminal justice system will no longer be able to attend community programs funded by After School Enrichment Grants. Several programs receiving this funding have closed, while others have eliminated meals and snacks or transportation.
* Funding from the Tobacco Endowment for programs to prevent use of tobacco among youth was eliminated. Between 2000 and 2002, these programs stopped 13,800 Minnesota kids from becoming addicted to tobacco.
* Hundreds of children no longer will receive extra school and behavioral assistance due to cutbacks in the Foster Grandparents program.
* In a survey of local public health departments, the majority of respondents noted that budget cuts have meant cuts in family home visiting, including prenatal and new baby visits. Prevention and early intervention services for youth and families have also been reduced or eliminated.

Immigrants and Refugees
In the coming decades, New Minnesotans will become an increasingly critical component of the state’s workforce. However, budget cuts impacted programs that prepare these populations for their role in our changing economy.

* Fewer people will be able to access English as a Second Language (ESL) and citizenship classes due to cuts in Adult Basic Education, while those who can participate face higher fees.
* About 4,000 immigrants have lost their health care coverage through General Assistance Medical Care. Some have life-threatening illnesses such as drug-resistant tuberculosis or cancer, or are in need of transplants.

Minnesota’s Communities
State budget cuts, including reductions to local governments, are eroding some of the services and amenities that make Minnesota a great place to live and work.

* State aid to cities and counties were cut by 24% for the 2004-05 biennium. In a survey of cities, 32% of those responding had reduced infrastructure spending in 2003 and 23% had reduced public safety spending. More than half are contemplating additional cuts in these areas in 2004. In a survey of counties, those responding indicated that they would be offering a lower level of service to their citizens, including longer waits and less contact with county staff.
* In a survey, local public health departments expressed concern that they no longer have any kind of cushion to address potential crises, such as blizzards, floods, or an outbreak of disease such as SARS or influenza.
* Libraries across the state have reduced staff and cut back on services, and some branches have closed altogether.
* State funding for the arts was reduced, despite a recent survey that showed that 94% of Minnesotans believe that “the arts and cultural activities make Minnesota an attractive place to live and work,” and 67% of Twin Cities residents in another survey said they supported government funding for the arts. In a survey of nonprofits impacted by government budget cuts, 66% of arts organizations responding said they had made staffing changes in the last year, and 50% of the reported staffing reductions were actual lay offs. State funding cuts was the most commonly cited reason for the staffing reductions. Programs and services in the arts are being cut back in all parts of the state.
* Minnesotans will pay higher fees to enjoy Minnesota’s environment, with increased costs for licenses and camping fees.

Minnesota’s seniors have spent their lives contributing to Minnesota’s quality of life. As they age, many find they need some additional help in living independently. Unfortunately, these programs were also victims of budget cuts.

* The policy that allows the state to place liens on the property of seniors using the Alternative Care program has caused a 25% reduction in the number of people served by the program, which offers housekeeping, transportation, and other assistance to help seniors to stay in their homes. Of those dropping out of the program, 10% went into nursing homes, which cost more than five times more than the Alternative Care program.
* Fewer vulnerable seniors will benefit from the Senior Companion program, through which active seniors help the frail and elderly stay in their own homes and communities.

Information Sources
This document compiles information from a number of sources, including Affirmative Options Coalition, Association of Minnesota Counties, Children’s Defense Fund-Minnesota and Child Care WORKS, House Fiscal Analysis, Housing Minnesota, League of Minnesota Cities, Lutheran Social Service, Minnesota Citizens for the Arts, Minnesota Council of Nonprofits, Minnesota Department of Employment & Economic Development, Minnesota Department of Health, Minnesota Department of Human Services, Minnesota Higher Education Services Office, Minnesota Library Association, Minnesota News Connection, Minnesota Public Radio, and Star Tribune.

February 2004
Tell the Governor’s office what you think. tim.pawlenty@state.mn.us or Telephone: (651) 296-3391 or (800) 657-3717

Tell your legislators: Sen. Tom Neuville and Rep. Ray Cox. And most importantly, on November 2, in District 25B vote for David Bly because you want and need a Representative who shares your values.

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