July « 2011 « Policy Matters

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National Policy Center Highlights Underfunding of Mississippi’s K-12 Education System

July 27, 2011

Filed under: Budget & Tax,Education,FY 2012 — admin @ 7:50 AM

A new brief from The Center on Budget and Policy Priorities highlights the state’s chronic underfunding of the K-12 education system in its new brief “State Budget Cuts in the New Fiscal Year Are Unnecessarily Harmful Cuts Are Hitting Hard at Education, Health Care, and State Economies.”

The report gives examples of state budget cuts around the nation and discusses how these cuts are stalling the nation’s economic recovery and job creation.

Among other effects, the budget cuts are slowing the pace of economic recovery. Cutting state services not only harms vulnerable residents but also slows the economy’s recovery from recession by reducing overall economic activity. When states cut spending, they lay off employees, cancel contracts with vendors, reduce payments to businesses and nonprofits that provide services, and cut benefit payments to individuals. All of these steps remove demand from the economy.

The report states that state governments have already eliminated 577,00 jobs since August 2008 and an unknown number of associated private sector jobs have been eliminated indirectly.

Moreover, many of the services being cut are important to states’ long-term economic strength. Research shows that in order to prosper, businesses require a well-educated, healthy workforce. Many of the state budget cuts described here will weaken that workforce in the future by diminishing the quality of elementary and high schools, making college less affordable, and reducing residents’ access to health care. In the long term, the savings from today’s cuts may cost states much more in diminished economic growth.

An example of these detrimental cuts in Mississippi are the cuts to the Mississippi Adequate Education Program. The funding formula has been underfunded from statutory levels since 2008, and the amount of underfunding has grown to an estimated $237 for FY 2012. Not only has the program which provides state funding for all of the state’s K-12 schools been underfunded by statutory levels which increase each year, it has been cut from already underfunded levels since 2008. Total appropriations from all sources for MAEP has declined over $170 million since 2008. This decline is even more steep when you consider the increases in the costs of providing education over the last 4 years.

Mississippi Adequate Education Program Total Appropriations FY 2008 and FY 2012

Education is vital to the state’s economic recovery and quality of life. More revenue is needed to restore the state’s education system and maintain the gains in education the state has made over the last few decades.

Author: Sara Miller, Senior Policy Analyst

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Drug Testing of Workforce Supports Costly, Inefficient and Threatens Children

July 21, 2011

Filed under: Income & Working Families — admin @ 3:17 PM

Misguided calls for policies to require drug testing for workforce supports such as Temporary Assistance for Needy Families (TANF) and Unemployment Insurance could cost the state money, add another layer of expensive bureaucracy and strip vulnerable children of access to basic needs such as food and shelter.

Drug testing of workforce supports is bad policy for Mississippi for three reasons:

1. Drug Testing is Expensive and will not Result in Savings

Analysis conducted by numerous states from as far away as Idaho to as nearby as Louisiana have found that the costs to test TANF recipients and treat those who test positive exceed any savings that may be found by terminating benefits. In fact, in Louisiana the annual fiscal cost of implementing the policy would cost more than half a million dollars.¹

Additionally, a policy that pursues mandatory drug testing is subject to legal challenge. In Michigan, the state implemented a mandatory drug testing requirement as a condition of eligibility for welfare benefits. The United States Court of Appeals for the Sixth Circuit upheld a lower court finding that this requirement violated the 4th Amendment’s protection from unreasonable search and seizure. Legal action would add additional costs on top of those required for testing and treatment.

Note: Federal laws prohibit using a drug test as a requirement for eligibility for Supplemental Nutrition Assistance Program (SNAP, formerly Food Stamps), Unemployment Insurance and Medicaid.

2. Drug Testing is Inefficient

Requiring drug testing for workforce supports would add another layer of bureaucracy onto an already stretched and underfunded social service system. Some drugs are only detectable for up to 48 hours. Furthermore, urine tests can turn up false positives putting the state in a situation where it will need to pay for a more expensive follow-up test.²

3. Sanctioning Parents for Drug Abuse Threatens the Welfare of Children

Young children are exceptionally vulnerable to the effects of deep poverty. In addition to costing the state more than it saves and adding another layer of bureaucracy to the welfare system, sanctioning parents would harm already at-risk children.³ Removing assistance leaves families who are already far below the poverty line with even fewer resources for food, shelter and other needs for a safe and secure environment that are imperative to a child’s development.

For Mississippi’s young children living in an environment of economic deprivation and vulnerability, even small additions to family income lead to markedly better academic and workforce outcomes. During these difficult economic times, policies should seek efficiencies while not compromising essential programs and services that support children and their families.*

Fact Sheet: Counting The Cost

Author: Ed Sivak, MEPC Director

¹ These costs were taken from a fiscal note drawn up in Louisiana to cost out a similar policy. Source: Legislative Fiscal Office. Fiscal Note for HB 897. www.legis.louisiana.gov/billdata/streamdocument.asp?did=657095 (Accessed June 20, 2011)

² Moeller, Karen, Kelly Lee, Julie Kissack. 2008. “Urine Drug Screening: Practical Guide for Clinicians.” Mayo Clinic Proceedings, 83(1), pp. 66-76

³ In May 2011, children made up 73% of all recipients of support through TANF. MS Department of Human Services.

* Greg Duncan and Katherine Magnuson. 2011. The Long Reach of Early Childhood Poverty. ‘Pathways, Winter 2011.’ Stanford Center for the Study of Poverty and Inequality.

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Expanding Access to Fresh Food is Vital to a Healthy Mississippi

July 20, 2011

Filed under: Education,Events — admin @ 4:05 PM

In far too many communities in Mississippi, residents lack access to fresh food. One way to measure access includes Food Insecurity. Food insecurity is defined as a lack of access at all times to enough food for an active, healthy life. Mississippi and Arkansas are two states with some of the highest levels of food insecurity in the country.

Related to food insecurity, the Mid South states have some of the lowest rates of fruit consumption and some of the highest rates of childhood obesity. The table below provides a regional snapshot of childhood obesity.

Through Let’s Move, the First Lady Michelle Obama is pursuing a strategy to end childhood obesity within a generation. One of the primary components of the strategy includes making sure that more groceries and markets are accessible for community members to purchase healthy food.

Today, Bill Bynum, CEO of Hope Enterprise Corporation (HOPE) – the sponsor of the Mississippi Economic Policy Center – attended a press conference hosted by the First Lady on the progress that has been made through Let’s Move to secure commitments by retailers to move into communities that lack access to a retail outlet that sells fresh food.

Throughout the Mid South, HOPE has been actively working with a range of nonprofit, private and public sector partners to create jobs and expand access to fresh food by enhancing access to capital for retailers working in low-income areas. To learn more about the Fresh Food Retailer Initiative and how HOPE is working to expand access click here.

Fresh Foods Fact Sheet (PDF)

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Combined Reporting would Address Corporate Income Tax Loopholes and Level the Playing Field for Local Businesses

July 8, 2011

Filed under: Budget & Tax,Income & Working Families,Making Mississippi Competitive: Solutions For Building Assets In Low-Wealth Communities,Mississippi Economic Recovery Resources,Tax Expenditures,Taxes — admin @ 8:00 AM

A news report this week brought new attention to research released earlier this year from the PEER Committee on corporate participation in the state’s corporate income tax. The research shows that approximately 80% of all corporations operating in Mississippi do not pay state corporate income tax. The PEER data also shows that 70% of the largest corporations (as measured by payroll withholding) do not pay corporate income taxes. The PEER Committee examined tax data from 2006 – 2009. The large number of corporations paying no corporate income tax is striking, especially in the years of prosperity before the recession affected corporate profits.

Corporations Operating in Mississippi Paying Zero State Income Tax 2006-2009

Corporate profits are subject to Mississippi state income taxes at the same rates and brackets as individual income taxes. The rates are 3% on the first $5,000, 4% on the next $5,000 and 5% on profits over $10,000. Possible reasons for not paying corporate income tax include operating at a loss or shifting profits to related corporations in other states. One way to end the practice of shifting Mississippi profits to other states would be to require related multi-state corporations to report their income together – a practice known as combined reporting.

Most large corporations that span multiple states are made up of a parent corporations and a number of subsidiaries. Without combined reporting, such a corporation may be able to only file income taxes for one subsidiary in the state which has transferred much of its income to the parent or other subsidiary to avoid taxation. Combined reporting requires such a company to report all of their income together from all subsidiaries in all states. Then, the share of income attributable to company’s activity in the state is calculated and the state’s corporate income tax rate is applied.

Combined reporting is not a tax raising measure. It is a measure that disallows tax avoidance methods that are not available to all taxpayers. Small businesses operating in Mississippi for the most part do not have the means to take advantage of transferring income out of state to avoid taxation. Combined reporting would level the playing field for the large multi-state corporations and local small businesses.

Author: Sara Miller, Senior Policy Analyst

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