ARRA Keeping More Than 840,000 Californians Out of Poverty

December 17, 2009

The American Recovery and Reinvestment Act of 2009 (ARRA) has kept 844,000 Californians out of poverty during 2009, according to a new report from our colleagues at the Center on Budget and Policy Priorities (CBPP). The analysis looks at the impact of seven ARRA provisions, including increased unemployment insurance and food stamp benefits and the expansion of three tax credits for working families. In addition to keeping families out of poverty, these provisions reduced the severity of poverty for another 5.9 million Californians whose incomes fall below the poverty line.

The CBPP notes that these estimates are conservative, partly because the provisions examined in the report cover only about one-quarter of total ARRA spending. The ARRA’s other spending provisions also help to lessen the extent of poverty either through direct job creation or through increased spending that boosts consumer demand and thereby saves or creates jobs.

The CBPP’s bottom line: “In addition to boosting economic activity and preserving or creating jobs, [ARRA] is softening the recession’s impact on poverty by directly lifting family incomes.”

– Scott Graves

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Healthy Families Saga Ends, But Fewer Children Receive Coverage

December 16, 2009

Staff for the Managed Risk Medical Insurance Board (MRMIB), which administers the Healthy Families Program, announced today that applications representing the 89,000 children who had been placed on a waiting list from July through September have now been processed. MRMIB resorted to this measure earlier this year when it faced a $196 million budget shortfall. Since the waiting list was lifted in September, the program has enrolled about 80,000 children, though it is unclear how many of those new enrollees had been placed on the waiting list. 

It will be a few months before staff can assess the impact and disruption that the measure inflicted on families. Even without final data, though, the numbers are clear: Healthy Families enrollment fell from a peak of 922,429 in July to 874,762 in November – a 5 percent decline.

– Hanh Kim Quach

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Drowning in Debt

December 14, 2009

Bond debt will consume a substantially larger share of the state’s limited revenues over the next few years, according to two longtime budget watchers who testified before the Assembly Budget Committee this afternoon. State Treasurer Bill Lockyer reported that California could spend more than $10 billion on debt service in 2012-13 – about 11 percent of projected General Fund revenues, crowding out funding available for programs and services. “Debt service is cannibalizing your program support,” Lockyer said.

Legislative Analyst Mac Taylor agreed that debt service is likely to rise significantly in coming years, and recommended that the Legislature create a Joint Committee on Infrastructure to help ensure better planning. Although Taylor argued there is no “right” level of debt service, he noted that more debt means a bigger “hit on the budget” – the state pays $70 million in debt service for every $1 billion in bonds sold. Assembly Budget Committee Chair Noreen Evans, concerned about that hit on the budget, called debt service “the Pac Man that is eating up” the state budget and pledged to keep this issue front and center during 2010.

– Scott Graves

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Plummeting Private School Enrollment May Increase Strains on Public Schools

December 11, 2009

What does the recent drop in California’s K-12 private school enrollment mean for the state’s public schools? Private school enrollment fell by 5.0 percent in 2008-09, the largest year-to-year decline since at least the early 1990s. This precipitous decline is likely due, at least in part, to the economic downturn, as some families opt for public instead of private schools in order to cut costs. However, last year’s decrease in private school enrollment is also part of a longer-term trend, which may reflect an endorsement of the state’s public schools. The number of private school students in California decreased in seven of the past eight years, falling by a total of more than 112,000 — a 17.3 percent decline. In contrast, more than 200,000 additional students enrolled in California public schools during the same time period — an increase of 3.3 percent.

The strains on California’s public schools have increased due to the state’s budget crisis. In July, California cut 2008-09 funding for K-12 education programs covered by the Proposition 98 guarantee by 16.6 percent compared to the funding level enacted in September of 2008. In addition to these cuts, the Legislature allowed school districts to increase class sizes while retaining most of the funding provided by the state’s K-3 class size reduction program. As a result, many public school classes are larger this year in part due to school districts reducing teaching staffs to cut costs. An increase of even a few students per classroom will add to public schools’ workload as they attempt to achieve the state’s high academic standards with fewer resources.

– Jonathan Kaplan

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Taking Stock

December 10, 2009

Regular Budget Bites readers may have noted my absence the last two months. I just concluded a  “mini-sabbatical” spent traveling and photographing in India. During my travels, I met wonderful people and saw beautiful things. That said, I’d also note that travel in the developing world provides a good reminder of the things that we take for granted and that our tax dollars support here at home.

First and most foremost, there’s clean water. Simply put, children in California don’t die from drinking the public water supply. Californians don’t consider the ability to turn the tap and drink what comes out a luxury. But for a large share of the world’s population, the local water supply is a toxic brew and travelers spend a considerable amount of energy trying to avoid contact with the local water supply.

Clean water allows us to eat green salads with abandon. The food in India was outstanding, but I found myself daydreaming about green salads during my long train rides across Northern India. Fear of the local water supply left me suspiciously eying the kitchen, the garnish on my plate, or balancing what looked good on the menu with considerations of what might result in midnight intestinal distress. In the US, in contrast, outbreaks of food-borne disease make headlines.

Then there’s clean air. Our tax dollars support environmental regulations that have made significant improvements in the quality of the air we breathe. In contrast, the air quality in Delhi made me appreciate that of Beijing, a city known for extreme pollution. We also don’t have to sleep under bed nets and/or take malaria prophylaxis on a regular basis to avoid insect-borne disease. Thank your local mosquito abatement district and public health officials for that one.

American visitors to India often note the prevalence of garbage – everywhere. On an afternoon walk through the “blue city” of Jodhpur, I stopped to buy a bottle of water to drink. I downed it next to the kiosk-sized store that I purchased it from, assuming I could return the empty bottle to the storekeeper for disposal. His response? Just toss it on the street (for the record, I carried it back to my hotel – who knows where it ended up after that). Another “luxury” brought to you courtesy of your tax dollars in action. And the list goes on.

While we lament the impact of budget cuts on the quality of our public schools, education is free and universal for both boys and girls through high school. Again, an unimaginable luxury in many parts of the world. California’s community colleges and public university systems still provide relatively affordable access to higher education, although our continued budget crisis threatens that as well.

In India as in much of the developing world, lack of basic health, education, and other public infrastructure stems from the historic prevalence of poverty and the lack of a functioning tax system.  Estimates suggest that upwards of 90 percent of India’s economic activity takes place in the “informal”, and thus untaxed, sector. As the old saying goes, there’s no such thing as a free lunch. So next time you turn the tap to brush your teeth, say to yourself, there are my tax dollars in action.

I had a wonderful trip and would not trade my experiences for the world. Travel opens our eyes in so many ways. I’m looking forward to catching up and bringing my renewed appreciation for the importance of public services as we tackle the next round of California’s ongoing fiscal crisis.

– Jean Ross

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