March « 2011 « Policy Matters

Share |

Proposed Cuts to Counties Could Lead to Regressive Property Tax Increases

March 31, 2011

Filed under: Budget & Tax — admin @ 7:57 AM

Under the cuts proposed in the Executive Budget Recommendation one cut in particular – a cut to the reimbursement to cities and counties for homestead exemption – could lead to cuts in services or increases in local property taxes. Counties and cities endured cuts in FY10, FY11 and are facing a third year in a row where the homestead exemption has not been fully reimbursed. The map below charts the estimated revenue loss under the proposal outlined in the executive budget recommendation.

Under the budget cuts enacted in every year since FY08, many obligations – including education funding – have been pushed down to the local level. As a result, many counties have been forced to increase local property taxes and cut services. Local property tax increases are regressive because low-income working families pay a higher percentage of their income towards property taxes than those with higher incomes. In the short term, cuts to the homestead reimbursement should be avoided to prevent further regressive tax increases just to maintain basic services.

In the long term, the cuts first approach underscores the need for a balanced approach that includes raising revenue to create opportunities for all of Mississippi’s working families.

Author: Ed Sivak, Director MEPC

Comments (0)

Mental Health Cuts Target Most Vulnerable

March 30, 2011

Filed under: Budget & Tax — admin @ 9:00 AM

Monday, the Governor released an updated set of recommendations for the FY2012 Budget. One recommendation of concern includes the proposed budget for mental health service delivery in Mississippi.

The Revised Executive Budget Recommendation underfunds mental health services and, if followed could lead to longer wait times for treatment of a person with a mental illness, the reduction of inpatient and community based services and the possible closure of crisis centers. Additional cuts raise concerns. Following the budget reductions in 2010, 200 beds at the Mississippi State Hospital were eliminated and a number of early intervention programs around the state were closed. Further cuts next year will lead to additional reductions in services to one of Mississippi’s most vulnerable populations.

The chart below illustrates the difference between the Governor’s recommendation, the Senate Recommendation and the House Recommendation.

Any amount less than $252 million will lead to further reductions in services – especially in the delivery of care through community mental health centers. In the short term, the Mental Health budget should be funded at the minimum level required to maintain services. In the long term, Mississippi must take a balanced approach to building a budget that includes raising revenue instead of a cuts only approach that hurts working families.

**Learn more about what is lacking in Governor Barbour’s approach to solving the state’s budget woes in Sara Miller’s Letter to the Editor featured in Tuesday’s Hattiesburg American.**

Comments (0)

Budget Negotiations-One Step Forward, Two Steps Back

March 29, 2011

Filed under: Budget & Tax,Income & Working Families,Mississippi Economic Recovery Resources — admin @ 10:12 AM

On Monday, Governor Barbour released a modified budget recommendation for FY 2012. The table below shows how the Governor’s recommendation compares to the current House and Senate budget plans.

The Governor recommends increases for some budget categories (beyond his previous recommendation) and for some categories further reductions are prescribed. In total, the recommendation increases state support funds for FY 2012 by about $45 million and uses hundreds of millions of dollars in one time funds similar to the budgets proposed by both the House and Senate.

Importantly, the recommendation includes higher levels of support for the Department of Revenue that could be used to increase tax collections and critical support for the Department of Human Services to meet the requirements of the Olivia Y settlement to keep children in foster care safe.

Unfortunately, the recommendation falls short on funding a number of key areas including education and mental health. While the school funding formula, (MAEP), is recommended to be funded at levels similar to the House and Senate, the Governor’s plan further strains education resources by calling for some of the MAEP funding to come from other education funds, including the supplies and instructional materials fund used by teachers. It also recommends cuts of $4.3 million which would go to schools under conservatorships – money that could be used to turn around struggling school districts.

Additionally, the Executive Budget Recommendation calls for cuts to vocational education. Recommended Voc Ed cuts could drop funding levels below federal maintenance of effort requirements and could lead to the loss of millions of federal dollars for workforce training. It should be noted that none of the funding plans (Governor, House or Senate) fully fund MAEP. MAEP would still be over $200 million below full funding levels – the fourth year in a row that the formula was not fully funded.

The mental health budget recommendation remains $17 million below the House levels passed and underfunds community mental health centers. Resulting effects from underfunding the mental health budget include the reduction of beds available for people experiencing a mental illness and requiring treatment at the state hospital, a decrease in community based mental health services and the possible closure of crisis centers in various parts of the state.

While the budget picture has improved incrementally, a significant component of the state support budget is funded with one time funds. The challenges facing the state underscore the need for a balanced and sustainable approach that includes raising revenue instead of a cuts only approach.

Author: Sara Miller, Senior Policy Analyst

Comments (0)

Education and Prosperity for Mississippi’s Working Families Threatened

March 22, 2011

Filed under: Budget & Tax,Education,Income & Working Families,Mississippi Economic Recovery Resources — admin @ 12:40 PM

With the legislative session now focused on appropriations and revenue bills, education funding has once again moved to the forefront of the debate. In the absence of additional revenue, the funding formula for K-12 education will likely be underfunded by over $200 for the second year in a row. Likewise, funding levels for the community colleges and universities will be well short of what is needed. In developing a strategy to fund education at all levels, a long term view on the benefits of educational attainment is instructive.

There is a well documented relationship between educational attainment and wages among the states. In the figure below, each state is shown at the point that their educational attainment and wage data intersect. As educational attainment increases, average annual wages increase as well.

Educational Attainment and Average Annual Wages by State in 2008

Mississippi’s average annual wage was $33,508 and 19.4% of persons over 25 in Mississippi had bachelor’s degrees in 2008 (both are the third lowest among states). Mississippi has made gains in educational attainment over the last two decades. The percent of persons over 25 with a bachelor’s degree has increased from 14.7% to 19.4%.

Progress must continue. As wages increase, people spend more and generate more revenue for important public structures – like education. Both the House and Senate have voted to support a level of education funding next year similar to this year. In previous blog posts, MEPC has pointed out that level funding is not full funding. With the long term wage implications for falling short on education, full funding of MAEP should be a top priority in the state’s economic development strategy.

Sara Miller, Senior Policy Analyst
Source: MEPC Analysis of data from the US Census Bureau and the US Bureau of Labor Statistics

Comments (0)

Extended Unemployment Impacts Thousands of Mississippi Families

March 14, 2011

Filed under: Budget & Tax,Education,Income & Working Families,Mississippi Economic Recovery Resources,Self-Sufficiency — admin @ 10:24 AM

Many working Mississippians have been impacted by job loss or reduced work hours throughout the economic downturn. As we enter 2011, Mississippi’s economy continues to slowly recover; however, the portion of Mississippians unemployed for an extended period of time remains higher than before the recession.

In 2010, 6.8% of Mississippi’s labor force was unemployed for 15 weeks or more. In 2008 the portion of long-term unemployed dipped to 2.0% and then rose steadily in 2009 and 2010 as more Mississippians struggled to find employment. Last year, the number of persons unemployed for 15 weeks or more surpassed 89,000.

Mississippians Unemployed More Than 15 Weeks Rises in Downturn

The current high rates of long-term unemployment challenge training providers to support unemployed adults, so they gain skills that open pathways to jobs with higher wages. Recently, the Mississippi Department of Employment Security was awarded an additional $1.6 million in on-the-job training funds for employers to connect unemployed Mississippians with employment and training at the same time. A portion of these funds support employers who hire and train workers who have been unemployed 19 weeks or longer.

Beyond on-the-job training, it remains important that training at Mississippi’s community colleges and universities remain affordable for all adults that wish to gain skills and transition to higher-wage employment opportunities. Maintaining affordability within postsecondary education remains one of the most important elements of solving the state’s long-term struggles with poverty alleviation and requires a balanced approach to building a state budget that includes raising revenue instead of taking a cuts only approach.

Author: Sarah Welker, Policy Analyst
Source: Bureau of Labor Statistics. Alternative Measures of Labor Underutilization for States.

Comments (0)

State Funds Still Well Below Pre-Recession Levels

March 11, 2011

Filed under: Budget & Tax,Income & Working Families,Mississippi Economic Recovery Resources — admin @ 8:56 AM

As state leaders prepare to enact the state budget for FY 2012, the rapid and steep decline in state funds due to the recent recession seems to be slowing. With the help of continued reliance on one-time funding sources, the ARRA cliff caused by the end of federal fiscal stimulus funds is not going to be as deep as it could have been for FY 2012.

However, the state support budget is still well below pre-recession levels. The table below shows state support funds (including the general fund and other state discretionary funds) and ARRA fiscal stimulus funds that are treated like state source funds for FY 2008 through FY 2011 and recommended levels for FY 2012.

State Support Budget (including ARRA funds) FY 2008-FY 2012

Recommended funds for the FY 2012 budget year are over $250 million less than state support funds in FY 2008. The effect of this decline is even steeper when you consider the increases in the need for and cost of state services.

So far the decline in state funds has been addressed with year after year of budget cuts for state services and use of one time money to prop up the state budget. The repeated budget cuts is affecting the quality of state services and is threatening the state’s economic recovery. A balanced approach that includes sustainable new revenue is needed to salvage the state’s investment in its people and its economic competitiveness.

Author: Sara Miller, Senior Policy Analyst

*Illustrates the recommended state support funding levels from the Governor. The Joint Legislative Budget Committee Recommendation is $5,417,000,000.
Source: Executive Budget Recommendation FY 2012

Comments (0)

K-12 Funding – Separating Fact from Fiction

March 8, 2011

Filed under: Budget & Tax,Education — admin @ 9:21 AM

With the legislative process moving towards final budget negotiations, a number of issues are rising to the surface regarding education funding. One argument to reduce the FY12 K-12 education appropriation below the recommendation made by the Joint Legislative Budget Committee harkens back to the Education Jobs money that Congress sent to Mississippi towards the end of last summer. At the time, Governor Barbour took issue with the much-needed resources, but ultimately accepted the funds.

The same pot of money is now being used to justify further cuts to K-12 education in the upcoming year. Those in favor of a smaller state appropriation next year are making the argument that school districts were advised not to spend the Education Jobs money in this fiscal year. If the districts did not spend all of the Education Jobs money, as the argument goes, then the FY12 state appropriation should factor in those resources and ultimately be reduced.

The argument, however, is loaded with problems. First, it ignores the fact that the current year appropriation for the Mississippi Adequate Education Program (MAEP) was underfunded by nearly a quarter billion dollars and that MAEP has not fully been funded since 2008. Districts have been doing more with less for a number of years.

Second, as a result of the routine underfunding, many districts needed to spend the Education Jobs money this year. The map below shows that 98 school districts have already spent some of the Education Jobs funds this school year.

In total, 98 (or 66% of all) school districts have spent some of the Education Jobs money. One third of the districts have spent all of the funds and have none available for next year. With less than half of Mississippi’s original funds remaining and more anticipated to be spent this year, the Education Jobs money simply isn’t available to carry over. To convince the public otherwise is not only misleading, it’s a position that ultimately affects the quality of education provided to Mississippi’s children.

Comments (0)

Are MS High School Graduates Prepared for College and Careers?

March 3, 2011

Filed under: Budget & Tax,Education,Income & Working Families,Self-Sufficiency — admin @ 10:05 AM

Key Takeaway: The average composite ACT score for Mississippi’s 2010 high school graduates is 18.8 – below the minimum score of 19 that is recognized as a measure of college readiness. Community colleges and universities face the challenge of providing effective remedial courses to ensure all students have the skills they need to succeed in college coursework and to advance to quality careers. The challenge is exacerbated by the current funding environment for the community colleges.

2010 ACT Score Summary

The ACT sets a score of 19 as the minimum composite score that students need to enter and succeed in college-level courses. In 2010, Mississippi’s average composite ACT of 18.8 was the only state average below the minimum for college-readiness. The map below details state averages for ACT composite scores in 2010 for the Southern region.

Louisiana, Arkansas, and Alabama all received ACT composite scores above 20 on average. Tennessee’s average ACT composite was below 20, but above the national minimum for college-readiness.

What do Mississippi’s ACT scores mean for community colleges and universities?

Across Mississippi, community colleges and universities frequently use ACT composite scores and subject-specific scores to determine the course placement for recent high school graduates. Each community college sets a minimum ACT composite or subject score that indicates whether a student is ready for college-level courses. Students with scores below the minimum are placed in remedial courses in math, reading, and/or English designed to prepare students for success in college-level courses.

Many of Mississippi’s high school graduates are in need of remedial coursework when they enter college. The state’s community colleges and universities face a challenge of providing effective remediation for a large number of students, both recent high school graduates and those that return as adults. Ensuring that remedial courses are provided effectively to students is imperative for increasing the number of Mississippi’s students that advance towards a college degree and into quality careers.

To ensure underprepared students receive high quality remediation, colleges will need adequate support and resources to implement improvements. As Mississippi’s leaders face a climate of limited resources, a balanced approach that includes raising revenues instead of a cuts only approach is needed to ensure that Mississippi’s students are well supported on a long-term path towards self sufficiency.

Author: Sarah Welker, Policy Analyst
Source: ACT, “The Condition of Career and College Readiness”, 2010.

Comments (0)