Why kids count

Recent news reports celebrate the decline in the unemployment rate and the quickened tempo of the recovery. But four years into the recovery, Michigan’s child poverty rates remain consistently high.

In 2013, one of every four children in Michigan lived in a family with income below the federal poverty level (roughly $18,800 for a single-parent family of three and $23,600 for a two-parent family of four), according to the latest Kids Count in Michigan Data Book, released today.

It’s not just the economy that results in these high levels of child poverty. State and federal policies shape the social and economic environment in our communities. Full-time minimum wage yearly earnings at the level passed last year by the Michigan Legislature ($8.15 an hour) leaves a family of three almost $2,000 below the poverty level and a family of four by almost $7,000. Proposals to raise the federal minimum wage to $10.10 an hour would at least lift a family of three above the 2013 poverty level.

The over half-million Michigan children living in financially strapped families are likely to face severe disadvantages not only during childhood but also during adulthood, as documented by a substantial body of research. Children who spend extended periods in poverty are more likely to be troubled by poor health and to attain minimal education as adults. They will not be equipped to fill the jobs that require postsecondary skills and training.

The 2015 Kids Count report highlights the problem areas for children and suggests state policy changes. For example, strengthening the safety net programs, including Food Assistance Program and the child care subsidy, would shield children from some the economic impact of the sluggish recovery.

Voting ‘yes’ May 5 on the road funding package will trigger the reinstatement of  the state Earned Income Tax Credit to 20% of the federal credit, which will help more than 1 million Michigan children in working families.

State policies are currently restricting, rather than expanding, access to families in need. Increased access to the child care subsidy would help both children and parents. A recent survey revealed that one of every eight parents in Michigan’s low-income families with young children reported changing, quitting or not taking a job due to child care constraints.

High-quality child care enhances child development during the critical early years so why would we curtail access by depressing the payment structure to roughly half the market rate in the state’s child care subsidy program? We want parents to work to support their families but low-wage workers can ill afford the average monthly cost of roughly $500 for full-time child care for a preschooler in Michigan. It represents over 40% of gross earnings from a full-time minimum wage job.

As Michigan retools for the 21st century, it will need to count on the next generation, and their future depends on their well-being today.

– Jane Zehnder-Merrell

An income tax cut won’t boost the economy

Cutting taxes won’t create jobs or grow the economy. Michigan is already facing budget cuts because there is not enough money to fund schools, public safety and other important services that we value. Reducing the income tax would create an even bigger hole in the budget, leading to more cuts and making it harder to create a strong workforce ready for the 21st century, according to a new fact sheet from the League.

Last week, House Republicans released their action plan that included rolling back the state’s income tax rate from the current 4.25% to 3.9%. Reducing the state income tax “remains the House Republicans’ single most important tax-relief measure,” the House GOP said in releasing the plan. This priority would largely benefit the wealthy, who do not need additional tax relief, and it would not improve the economy.

According to analysis by the Institute on Taxation and Economic Policy, $3 of every $5 in tax cuts would flow to Michigan’s wealthiest 20% of taxpayers (annual incomes of $89,000 or more) with the top 1% of earners (annual incomes of $362,000 or more) taking home 17% of the tax cut benefits. Giving to those at the top contributes to income inequality and doesn’t put money in the pockets of those who need it to meet basic necessities.

Across-the-board tax cuts would not boost the economy. They put additional financial strain and pressure on the state budget. Reducing state funds through income tax reductions while revenues are already down would only drain the necessary resources to support education, communities, and infrastructure—all of the critical components to a thriving economy that includes an educated workforce and communities where people and businesses want to locate.

 – Alicia Guevara Warren

‘Yes’ on road funding is right direction

From the League’s First Tuesday newsletter
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It’s a pivotal time for Michigan public policy. Decisions made in the next few months will determine the path Michigan takes into the future.

In three short months, voters on May 5 will decide Proposal 1, the road funding package. There’s no doubt that this is Michigan’s single best chance to raise sorely needed money to pay for road repairs and put new dollars into school classrooms all while protecting families earning the least.

A ‘yes’ vote on May 5 would end the era of delaying needed road repairs or paying for them with borrowed dollars. All with a penny sales tax increase. The sales tax increase to 7 cents will put Michigan in the middle of the pack of states — the same as Indiana’s.

For working families earning the least in Michigan, the penny tax will be offset by a full restoration of the state Earned Income Tax Credit to 20% of the federal credit.

The EITC is the best tool we have to reward work and lift families from poverty. More than 1 million Michigan children will benefit. What a win-win!

Also, this month, on Feb. 11, Gov. Snyder will unveil his executive budget, offering both challenges and opportunities.

The governor, in his State of the State address, announced the merger of the Department of Community Health and the Department of Human Services to a new Department of Health and Human Services under the leadership of Nick Lyon, the director of DCH and interim director of DHS.

At DCH, Lyon continued impressive strides in implementing the Healthy Michigan Plan so that a half-million previously uninsured or underinsured adults in Michigan get wellness care and care when they are sick.

Lyon has kept the League and other advocates informed about the merger and he seems sincere in efforts to help Michigan families and children. I pledge to work with him to find solutions that will make a positive difference in the lives of Michigan’s economically vulnerable kids and adults.

As the new department works to streamline programs with a “people first” rather than a “programs first” approach, we’ll monitor with this principle in mind: True efficiency must be found in making sure services match the needs of families rather than measuring success by the number of kids and adults dropped from programs.

In addition, there will be strong pressure to cut programs as the deep business tax cuts from 2011 resulted in revenue shortfalls that are now apparent.

Next year, business tax revenue is projected to contribute a small share (8.3%) of Michigan’s General Fund — the state’s main checking account that covers public safety, higher education, healthcare and other needed services.

That’s a far, far cry from two decades ago when business revenue contributed nearly a third (29%) of the General Fund. To succeed, businesses need those public services, and it’s a reminder, once again, that business tax cuts do not grow the economy.

So buckle your seat belts as we head into 2015 public policy debates! It’s going to be a bumpy ride. The League will keep you informed of developments, and we hope you will be engaged in these important decisions ahead.

– Gilda Z. Jacobs

Happy 40th Birthday, EITC!

Today is EITC Awareness Day, and this year marks the 40th anniversary of the widely recognized tool that lifts millions of working families and children out of poverty each year. States have the opportunity to build on the federal credit, which Michigan does. However, in 2011 the state’s Earned Income Tax Credit was cut leaving behind over 15,000 families in poverty in 2012. On May 5, the voters will have the opportunity to restore the credit by supporting an increase in the sales tax by one penny.

The Michigan EITC is only available to families who have earned income from working. The credit ensures that working families are better able to make ends meet. When combined with the federal EITC, working families are lifted out of poverty and children experience better outcomes, such as improved infant and maternal health; better school performance; greater college enrollment; increased work and earnings in the next generation; and Social Security retirement benefits. All of which also benefit Michigan’s economy.

The EITC works to reduce the amount of taxes paid to help struggling families keep more of what they earn. However, when the state EITC was cut by 70% low-income workers experienced a significant tax increase and fewer families were able to move out of poverty. The restoration of the state EITC back to 20% will help these families, who include over 1 million children.

In May, voters will have the ability to do this. By supporting an increase in the state’s sales tax by one penny, people in Michigan will be able to help reduce poverty all while voting to reform and increase funding to fix our roads. As we recognize the 40 years of evidence backing the EITC, let’s spread the word about how we can strengthen it!

–Alicia Guevara Warren

 

Diving deeper into the river of opportunity

At the League, economic opportunity is our mission so it was heartening to hear Gov. Rick Snyder talk about the ‘river of opportunity’ in his fifth State of the State address Tuesday. There is an assumption in that analogy, however, that deserves a closer look.

The governor spoke about his background growing up in a 900-square-foot home in Battle Creek in a supportive family. He said despite his family’s modest income, he was still able to be part of the river of opportunity. He spoke of the Michiganians who are not part – separated by poverty, absent parents or other barriers — and he talked about his desire to move them into that river of opportunity.

Though it was a welcome tone from the governor, it contained a flawed analogy. The governor  said government is in the background of the lives of those already enjoying opportunity while it plays a prominent role for those in need. Yet, there is no ‘them and us’ when it comes to government services because we all benefit.

Let’s take public education for starters. Free education is not just for kids from families with low incomes. The support of public universities, including $300 million a year to the governor’s alma mater, the University of Michigan, helps many, many children of the affluent. Tax dollars create the public transportation to move the goods that supports the jobs, helping job providers and workers. In short, public dollars are used to keep that river flowing, and enjoyed by the citizens who are benefiting from opportunity.

The governor also called for revamping of services to help those in need. At the Capitol Tuesday, several reporters sought out League President & CEO Gilda Z. Jacobs for comment on the merger of the Departments of Human Services and Community Health into a new Department of Health and Human Services. Jacobs was positive about the potential to really lift barriers for people and also about the leadership of interim Director Nick Lyon. (See the League’s statement.)

What will be important is making sure that there are savings resulting from true efficiencies and that the merger’s goal isn’t just to save dollars. Simply cutting people from services while poverty and unemployment remain high is not the way to measure success.

With revenues coming in below expectations, the pressure will be on to make those cuts. More insight will be offered in the governor’s executive budget recommendation in February. So stay tuned!

 – Judy Putnam

More child care oversight needed

Every day in Michigan, parents head out to work with their young children in tow, dropping them off at local child care centers or homes. Child care is a necessity for many working families because they rely on two incomes to make ends meet or because they are raising children as single parents.

Yet oversight of health and safety requirements is stretched far too thin in Michigan, a new policy brief from the League concludes.

Child care centers and homes are required to be licensed or registered with the state to ensure that basic requirements are met. Two federal audits and national studies have found that Michigan falls short in its efforts to inspect child care settings. The unacceptable reality is that parents cannot rest assured that their children are spending their days in care that consistently meets state licensing standards.

The risk to children is greatest in families earning low wages, including parents who are required to work 40 hours a week as a condition of receiving public assistance. Low-wage families have fewer options and face difficult choices because they cannot afford higher quality child care that comes at a higher cost.

These are the facts:

  • Michigan cannot provide adequate oversight of child care because the state’s child care inspectors have caseloads that are more than three times the national standard. Child care inspectors in Michigan have average caseloads of 153, with a nationally recommended ratio of 1 worker for every 50 child care programs.
  • In unannounced visits, federal auditors found that child care providers failed to comply with one or more state health and safety requirements. Most disturbing was the fact that half of the family and group child care providers had not done required criminal and protective services background checks, and none of the child care centers had completed those checks on their employees.
  • A national report gave Michigan a “D” grade for its child care centers regulations and oversight, citing ineffective monitoring.
  • Michigan was one of eight states that received a score of 0 out of a possible 150 points for its licensing of child care homes, primarily because of a failure to inspect homes before they are registered and children are placed into care.

The state inspects a range of services in order to protect the public including restaurants, roads and bridges, and grocery stores. Certainly the state’s youngest children, who are in child care so their parents can work to support them, deserve to be at the top of the list.

– Pat Sorenson

Celebrating good public policy in Michigan

Restoring the Earned Income Tax Credit, part of the bipartisan compromise on road funding approved early today, will be a boost to struggling families across Michigan.

If voters agree to the package, it will put extra dollars into working households where families have the hardest time making ends meet. It’s designed to offset additional costs from an increase in the state sales tax and wholesale gas tax to pay to fix Michigan’s battered roads. (more…)

High cost of low pay for child care providers

The failure of the state and federal governments to address low wages for child care providers comes at a high price for the economy, the state budget, and ultimately for children and their families.

Nearly half of all child care workers in Michigan have incomes so low that they are eligible for and receive public supports, including Medicaid, MIChild, food assistance, or Earned Income Tax Credit benefits – at a cost exceeding $80 million annually according to a new study of the early childhood workforce. (more…)

Maintaining cultural ties and family stability for American Indian Children

American Indian children in Michigan are the most likely to be removed from their homes due to abuse and/or neglect: 1.5 times the rate of white children and the highest of all children of color in the state, according to the Michigan Race Equity Coalition. They are also more likely to age out of the foster care system. It is disturbing, however, that the rate of investigation for abuse and/or neglect is lower compared with white children. (more…)

Children thrive when parents succeed

Roughly half of Michigan’s young children ages 0-8 live in low-income families where meeting basic needs is a daily challenge.

Living in a financially stressed family during childhood has a long-term impact on education and employment. A child who spends the critical early years in poverty is less likely to graduate from high school and remain employed as an adult. To be more effective in assisting these families, public and private programs need to address the needs of both parents and children.

In the majority of Michigan’s low-income families with young children no parent has a year-round full-time job (56%) nor a credential beyond a high school diploma (79%) severely limiting their opportunities to secure well-paid job, according to the latest policy report, Creating Opportunity for Families: A Two-Generation Approach, from the Annie E. Casey Foundation.

Getting access to higher education as a nontraditional student has become much more difficult at a time the state needs a more educated workforce. Over the past decade Michigan policymakers have eliminated all public university and community college grants for older students. Most (85%) parents of young children in Michigan families with income below 200% of the poverty level (roughly $47,000 for a family of four) are over age 25.

Not only does the state not offer financial support to help with college costs for older adults, the state’s woefully inadequate child care subsidy fails to meet the needs of low-wage workers and students. It offers payments substantially below the market rate and only on an hourly basis — severely limiting child care options for families in need of care. Furthermore, eligibility for the subsidy ends when parental income rises only marginally above the poverty level where absorbing the cost of care, which averages over $500 a month, would not be feasible, thus disrupting the stability of care.

One of every eight parents in the state’s low-income families with young children reported that problems with child care resulted in changing, quitting or not taking a job.

Employer practices impose additional stress on working parents who struggle to meet their responsibilities as parents. Parents in part-time, low-wage employment typically lack benefits, as well as flexible and predictable schedules. The constant juggle of changing work schedules and family responsibilities exacts an emotional as well as a physical toll.

Unfortunately programs targeted to assist low-income families rarely address the needs of both parents and children in the family. For example, job training programs do not focus on the quality or accessibility of child care. This latest Casey report makes several recommendations on strategies to strengthen the whole family, including:

  • Providing parents with multiple pathways to family-supporting jobs and financial stability through access to employment and training programs, and state and federal assistance such as the Earned Income Tax Credit and the Supplemental Nutrition Assistance Program.
  • Structuring public systems to respond to the realities of today’s families through interagency collaboration and streamlined application systems.
  • Using existing neighborhood programs and platforms to build evidence for practical pathways out of poverty.

In order for children to thrive, their parents must have access to the tools and supports they need to be successful as parents, as well as workers in an economy that requires postsecondary training or education for a job with a family-supporting wage. We cannot afford to delay addressing these issues. The future of over half a million of the state’s young children is at stake.

– Jane Zehnder-Merrell

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