Playing With Our Future: Child Care and Development Spending at Its Lowest Level in Over a Decade

March 13, 2012

State child care and preschool programs provide safe and affordable care that helps low- and moderate-income parents find and retain jobs. These programs are as important as ever as parents work to keep their jobs or return to the workforce in the aftermath of the Great Recession. In light of this, it is especially troubling, as we’ll show in an upcoming CBP report, that total spending for child care and development programs—which include child care, preschool, and afterschool programs—has dropped dramatically since 2007-08 and would fall even further under the Governor’s Proposed 2012-13 Budget. In just four years, child care and development spending in California has dropped from its peak by 22.7 percent, after adjusting for inflation. Under the Governor’s proposal, spending would fall by an additional 18.5 percent in 2012-13, to its lowest level since 1998-99. The CBP’s upcoming report will look at recent trends in state child care and development programs, examine recent spending cuts targeting child care and preschool, and highlight the importance of these programs for California’s working families.

– Sam Sellers

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Ending CalWORKs as We Know It?

February 29, 2012

In the aftermath of the Great Recession, California’s families face the toughest job market in decades. The state’s unemployment rate, currently 11.1 percent, is projected to remain in double digits through 2014. Nearly 1 million Californians have been without work for six months or longer – seven times higher than before the downturn began. Nearly one-quarter of California’s children (23.4 percent) were living in poverty in 2010, up from 17.9 percent in 2007. Moreover, the recession hit single mothers and their families particularly hard, as we show in this chart. The share of California’s single mothers with jobs dropped from a recent peak of 69.2 percent in 2007 to 58.8 percent in 2010. In just three years, the downturn erased all of the employment gains that single mothers made following implementation of welfare reform in the 1990s.

Given this grim landscape, CalWORKs – a key part of the state’s safety net for low-income families with children – is more important than ever for the 1.4 million Californians in the program, more than three out of four of whom are children. While state policymakers have made deep cuts to CalWORKs in recent years to help close budget gaps, the basic foundation – welfare-to-work services and modest cash assistance – remains intact. The Governor, however, proposes to blow apart that foundation with even deeper cuts, including reducing parents’ access to welfare-to-work services and dramatically cutting or eliminating cash assistance for more than 430,000 families – nearly three out of four families currently in the program. These changes would cut spending on CalWORKs by roughly $1 billion in 2012-13, providing more than 9 percent of the Governor’s proposed “solutions” to the state’s budget gap even though CalWORKs accounts for less than 3 percent of the state budget, as we show in a new report released this week.

The Governor’s proposal will receive a full airing in the Legislature this afternoon and tomorrow. Assembly Budget Subcommittee #1 on Health and Human Services will review the CalWORKs proposal today at 1:30 p.m., and the full Senate Budget and Fiscal Review Committee will hear the proposal tomorrow at 9:30 a.m.

– Scott Graves

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Measuring Up: The CBP’s Annual Chartbook Is Out

February 7, 2012

The California Budget Project (CBP) has released Measuring Up: The Social and Economic Context of the Governor’s Proposed 2012-13 Budget – the CBP’s signature annual ”chartbook.” This publication provides an overview of the Governor’s proposed spending plan and the social and economic context that will shape this year’s budget debate.

Measuring Up looks at:

  • How the economic downturn has contributed to the $9.2 billion budget shortfall facing California;
  • How the Governor’s proposed budget aims to close the budget gap;
  • What the Governor’s proposed budget would mean for state support for education, health and human services, and other key areas.

The full chartbook is available here.

– Steven Bliss

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Who Would Pay the Governor’s Proposed Tax Increase?

February 3, 2012

The Governor’s Proposed 2012-13 Budget assumes the passage of a ballot measure that would add three new rates to the state’s income tax on high-income Californians and add a new 0.5 percent sales tax rate. For married taxpayers, the proposed measure would increase the tax on income between $500,000 and $600,000 from 9.3 percent to 10.3 percent, that on income of between $600,000 to $1 million to 10.8 percent, and that on income in excess of $1 million to 11.3 percent. The new income tax rates would apply for 2012 through 2016, while the sales tax rate would take effect January 1, 2013 and end December 31, 2016.

The Department of Finance estimates that the proposed tax measure would raise $6.9 billion, on average, between 2013-14 and 2015-16. In 2012-13, $2.5 billion would go toward an increase in the Proposition 98 school funding guarantee, and $4.4 billion would help close the budget gap. The Legislative Analyst’s Office estimates a somewhat smaller increase. Of the additional revenues, $1.2 billion would come from the sales tax rate and $5.8 billion from the higher income tax rates in 2011-12 and 2012-13.

Who would pay the proposed tax? An analysis by the Institute on Taxation and Economic Policy shows that the top 1 percent of Californians would pay the largest share of their income toward the new tax, while all Californians would pay the higher sales tax. The extremely progressive increase in the income tax – which would provide about two-thirds of the new revenues – would be modestly offset by a regressive increase in the sales tax.

As the CBP has previously noted, economists such as Nobel Prize winner Joseph Stiglitz, argue that “Economic theory and evidence gives a clear and unambiguous answer: It is economically preferable to raise taxes on those with high incomes than to cut state expenditures.” Absent a balanced approach to closing the budget gap, Californians face even deeper cuts to schools, universities, and our other core public systems and structures.

–Jean Ross

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First Impressions

January 9, 2012

Governor Brown released his Proposed 2012-13 Budget a full five days early after budget documents were inadvertently posted on a public website. The CBP will be delving into the budget in detail over the upcoming weeks and months, and will release our signature “chartbook” in early February. In the meantime, here are some first impressions:

  • The Governor’s proposal highlights the importance of significant additional revenues that help close the budget gap. As we’ve blogged before, the various tax measures pending “title and summary” have differing impacts on the state’s bottom line. Absent additional revenues that help fill the budget gap, even deeper cuts are likely to occur in 2012-13 and future years. While the Governor’s revenue forecast shows a modestly smaller deficit – $9.2 billion over the next 18 months – than prior forecasts and somewhat stronger revenue collections, California still faces a significant “structural” gap between revenues and expenditures due to the lingering impact of the economic downturn and the massive corporate tax breaks approved by lawmakers in recent years.
  • The proposed cuts to and redesign of the CalWORKs Program will put tens of thousands of children at serious risk of homelessness. When evaluating proposed CalWORKs policy changes, it is critical to remember that more than three-quarters of the Californians who receive cash assistance through the CalWORKs program are children. The Governor’s proposals come at a time when job prospects for single mothers – who make up most of the adults on CalWORKs – remain grim. The employment rate for California’s unmarried mothers dropped by 10.4 percentage points from a recent peak of 69.2 percent in 2007 to 58.8 percent in 2010. In fact, in just three years, the downturn erased all of the employment gains single mothers made following the enactment of welfare reform in the late 1990s. Fewer than six out of 10 unmarried mothers had jobs in 2010 – the smallest share since 1996. Women, nationally and here in California, are recovering from the recession more slowly than men, with the share of California’s working-age women with jobs declining 1.2 percentage points between November 2010 and November 2011.
  • Overall, $2.5 billion of the proposed $4.2 billion in spending cuts target Health and Human Services programs and child care. These programs – which accounted for approximately one-third of 2011-12 General Fund spending – are slated to receive nearly 60 percent of the proposed cuts. The proposed policy changes would deny an estimated 62,000 children access to safe, affordable childcare; would limit services received by over 250,000 low-income seniors and individuals with severe disabilities in the In-Home Supportive Services Program; and limit cash assistance and welfare-to-work services for families at a time when jobs are scarce.

Budgets, as we frequently note, are about values and choices. We would urge lawmakers seeking to balance the budget to look first to eliminate programs that don’t work – such as the state’s failed enterprise zone program  – before slashing those that do.

– Jean Ross

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