Examining safety nets

By one measure, Wisconsin has the 16th most-generous social safety net, according to new research from the Federal Reserve Bank of Chicago. At $16,241 per person, average benefits in Wisconsin from 10 federal and/or state programs were higher than in Michigan ($12,812) and Illinois ($13,103), but lower than in Iowa ($17,760) and Minnesota ($21,450).  Average benefits were highest in Vermont ($26,100) and lowest in Georgia ($10,045).

The research also found that states where low-income households comprised a larger portion of the total population had benefits that were less generous than state’s with fewer such households.  This was an unexpected finding.  It could be that poorer states do not have the tax base to provide the benefits richer states can provide.  Or, as the author stated, it may be that “richer states are more willing to pay for the benefits that safety nets provide.”

The study examined spending by state on 10 programs:  Medicaid, Children’s Health Insurance Program, Earned income tax credits, Unemployment insurance, Supplemental Security Income, Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program (SNAP or Food Stamps), Women, Infants, and Children (WIC) nutrition program, Worker’s compensation, and Temporary disability insurance.  Because eligibility varies by program, “eligible” population was defined as the non-elderly population living in households with income in the bottom 25% of all households (approximately $14,000 or less).

 
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School referenda pass at unprecedented rates

In the two spring elections held this year (February and April), 44 Wisconsin school districts placed 56 referenda on the ballot, some to borrow and some to exceed state-imposed revenue limits. Voters passed them at rates significantly above historical norms.

Twenty-one of the referenda asked to borrow money to construct new or to remodel existing buildings. Fifteen (71%) passed. That percentage was well above the 1994-2013 average of 54% and matched the 2012 percentage as the highest since 1994.

In addition to borrowing, districts can ask voters to exceed state-imposed revenue limits temporarily (nonrecurring) or permanently (recurring).  Of the 29 nonrecurring referenda, 20 (69%) passed. Again, this percentage was well above the 1994-2013 average (56%). The 69% approval rate was the highest percentage since 1996 when the only referendum on the ballot passed. It also continues a recent trend of high approval rates: Voters approved more than 65% of nonrecurring referenda in 2011, 2012, and 2013.

The remaining six referenda were permanent (recurring) ones; four (67%) passed. During 1994-2013, only 34% of recurring referenda were approved.

Many factors contribute to the success or failure of a school referendum. One overriding factor in recent years may be the limited growth in revenue limits during 2010-14. In 2009, districts were allowed to increase their per student limits $275, or about the rate of inflation. The average per student limit at the time was about $9,500.  State budget problems led to a smaller allowable increase ($200) in both 2010 and 2011.

Continued state difficulties resulted in a 5.5% cut in 2012, though the impact of the reduction was limited in many districts due to changes in collective bargaining laws included in the controversial Act 10 that allowed districts to reduce benefit costs. Allowable increases over the past two years have been small, $50 and $75, respectively.

The combination of allowable revenues growing less than inflation and many district costs rising more (e.g., transportation and utilities) have increased pressure on school budgets, with some districts reducing programs to balance their budgets. One interpretation of the higher approval rates is voter recognition of this phenomenon and a willingness to approve tax increases to ease the pressure.

A recent issue of The Wisconsin Taxpayer (http://wistax.org/publication/to-exceed-not-to-exceed) studied the history of Wisconsin school referenda.

 

 
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Good news, bad news on the income front

New income figures from the federal government offer  encouraging news about Wisconsin’s economy, but they also show economic expansion slowing both here and nationally.

Wisconsin per capita personal income (PCPI) rose 2.4% in 2013, from $42,121 to $43,149. The increase was 7th highest among the states and above the national average (1.8%). Among neighboring states, only per capita income in Iowa (2.7%) grew faster.

Our higher per capita income growth was due to a combination of two factors.  First, total income  here increased slightly more than nationwide (2.7% vs. 2.6%). But, in keeping with a long-term trend, our population grew more slowly (0.3% vs. 0.7%).  As a result, PCPI growth in Wisconsin outpaced the U.S.

Digging a little deeper into the new numbers from Washington reveals another positive for the state. Total personal income includes many forms of income (see below).   But it was earnings that drove rising incomes in Wisconsin (2.2% vs. 2.0% for the U.S.).  Total earnings grew 2.2% in Wisconsin compared to 2.0% nationally.  Farm-owner earnings rose 41.7% in Wisconsin, compared to 15.9% elsewhere.  Earnings of other business owners also grew faster here (6.8% vs. 6.2%). Wage and salary workers also did slightly better (3.2% vs. 3.1%).

These new findings have some discouraging news: In all 50 states, both total income and earnings increased at a slower pace in 2013 than in 2012.  Moreover, both total earnings and income grew less in 2013 than in all but two recessionary years during 1990-2012 (see chart below; black line indicates 2013 percent change).

Personal income is a broad measure of the financial well-being of a nation, state, or county and includes earnings, employer-paid benefits, dividends, interest, and government transfer payments, such as Social Security, Medicare, Medicaid, unemployment, and food stamps.

 

 

 
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