KIDS COUNT Data Center: High School Graduation Rates Influences Economic Security

Editor’s Note: This post is Part Four of a series on the launch of the new KIDS COUNT Data Center in Washington State. The series is written by our colleagues at Washington KIDS COUNT at the University of Washington. The work of KIDS COUNT intersects well with efforts of the Budget & Policy Center to highlight the importance of state investments.

Post-secondary education and training are the primary pathways by which young adults gain the knowledge and skills to be successful in the labor force and achieve economic security. Earning a high school diploma is critical to embark on these pathways, yet a sizable proportion of youth in Washington are at risk of not graduating.

Overall, 28 percent of Washington’s ninth graders in 2007 did not graduate within four years. On-time graduation rates among students of color are particularly alarming. As the graph below indicates, 50 percent of American Indian students and 40 percent of Hispanic and Black students did not graduate on-time in 2007. Not graduating on-time puts students at risk for not graduating at all – the extended graduation rate for ninth graders in 2007 was just 78 percent, only slightly higher than the on-time graduate rate (72 percent).



Students who do not receive post-secondary education or training are more likely to have lower incomes or become unemployed as adults. In Washington, 89 percent of children with parents who did not graduate from high school live in lower income households.

Find graduation data and other indicators of child and family well-being for your county at the new KIDS COUNT Data Center.

KIDS COUNT Data Center: Child Poverty and Unemployment

Editor’s Note: This post is Part Three of a series on the launch of the new KIDS COUNT Data Center in Washington State. The series is written by our colleagues at Washington KIDS COUNT at the University of Washington. The work of KIDS COUNT intersects well with efforts of the Budget & Policy Center to highlight the importance of state investments.

In yesterday’s post, we presented regional data on children living in poverty in Washington State. However, this data does not include the impact of the current economic recession. Typically, unemployment rises when the economy shrinks. Previous economic downturns show that poverty closely tracks unemployment. By analyzing the relationship between unemployment and poverty in the past three recessions, we can estimate where child poverty is headed in Washington State.

The line graph below shows the relationship between unemployment, poverty for all ages, and child poverty over time. Data for total poverty and child poverty are only available for the years shown and the shaded areas indicate periods of recession. During each recession as unemployment has gone up, child poverty has also increased. For example, in the recession starting in 2001 when unemployment surpassed seven percent, child poverty jumped from 11 to 13 percent and an additional 33,000 children entered poverty by 2003.



In our recent State of Washington’s Children report, Poverty and the Future of Children and Families in Washington State, Washington KIDS COUNT used data from the last three recessions to estimate that an additional 37,000 children would enter poverty this year as unemployment reached 9 percent. Since the release of that report, unemployment has continued to climb. We have updated our estimate to predict a total of 60,000 children entering poverty by 2010.

Tomorrow on schmudget we will discuss the importance of education for a child’s future economic security.

Make your own customized line graphs and charts with hundreds of indicators of child and family well-being at the new KIDS COUNT Data Center.

KIDS COUNT Data Center: Child Poverty Across the State

Editor’s Note: This post is Part Two of a series on the launch of the new KIDS COUNT Data Center in Washington State. The series is written by our colleagues at Washington KIDS COUNT at the University of Washington. The work of Kids Count intersects well with efforts of the Budget & Policy Center to highlight the importance of state investments.

Economic security is vital for healthy growth and development of children. Compared to children living in poverty, those with economic security are more likely to perform well in school, have good health, attend higher education, compete successfully in the labor market, and become engaged citizens. When children are able to realize their full potential, everyone benefits – families, communities, and the state as whole.

Unfortunately, there are many children in Washington State who live in families where a lack of economic security limits their potential. Prior to the recession, 15 percent of children (226,000) in Washington lived in families with incomes below the official poverty line, which is $22,050 for a family of four. Rising unemployment due to the current economic recession will likely send many more children in the state into poverty. That data is not yet available.

The highest rates of poverty in Washington occur for children who are less than five years old, live with a single parent, or are children of color. The map below also shows significant disparities in child poverty by county, with rural counties having the highest poverty rates in the state.



Tomorrow we will share data from the KIDS COUNT Data Center on the relationship between unemployment and the loss of economic security in families with children.

Strength in Numbers: The New KIDS COUNT Data Center

Editor’s Note: This post is Part One of a series on the launch of the new KIDS COUNT Data Center in Washington State. The series is written by our colleagues at Washington KIDS COUNT at the University of Washington. The work of KIDS COUNT intersects well with efforts of the Budget & Policy Center to highlight the importance of state investments.

Washington KIDS COUNT is pleased to announce the new KIDS COUNT Data Center. The KIDS COUNT Data Center is a new, on-line resource that contains hundreds of measures of child well-being covering national, state, and county information. The KIDS COUNT Data Center is updated throughout the year and is a powerful resource for policy makers, practitioners, and the media. The Data Center allows you to:

• Rank states, cities, and other geographic areas on key indicators of child well-being;


• Generate customized maps and trend lines that show how children are faring and use them in presentations and publications;


• Feature automatically updated maps and graphs on your own website or blog.

This week on schmudget, Washington KIDS COUNT will be highlighting indicators of child and family well-being from the Data Center to accompany the release of the 2009 KIDS COUNT Data Book: Counting What Counts.

Check out the new KIDS COUNT Data Center at http://datacenter.kidscount.org/wa

UPDATE: Basic Health Waiting List Continues to Grow

Last month we posted on the increasing numbers of people on the waiting list for the state Basic Health Plan. As the revised graph below shows, this trend continues. In June there were 31,275 people on the list. Today, there are 38,662.

Revenue Implications of Federal Estate Tax Reform

The federal estate tax provides a substantial revenue stream to the government that could be a key source of funding for health care reform, education and drawing down our federal deficit. Paid by only one quarter of one percent of all estates, it is the most progressive of all federal taxes.

Since 2001, revenue from the estate tax has shrunk continuously due to tax cuts instituted by the Bush Administration. According to current law, the federal estate tax is set to expire entirely in 2010 and then resume at 2001 levels the following year. Prior to this happening, it is expected that Congress will pass new legislation that sets a standard exemption level going forward.

In anticipation of the debate, the President has proposed keeping the estate tax within the 2009 parameters. This allows for an individual exemption of $3.5 million and taxes eligible estates at 45 percent. The White House has also proposed indexing the exemption levels for inflation, which would allow the real value of the exemption to be maintained over time.

Not everyone agrees. Others have called for raising the individual exemption to $5 million and lowering the tax rate to 35 percent. But a new paper released by the Center on Budget and Policy Priorities estimates that instituting these parameters would cost the federal government $118 billion* between 2012-2021, when compared to the White House proposal.

Now is not the time to reduce government revenue. Because of the severity of the current recession, the federal government must make major investments to help spur recovery. Any estate tax revenue lost over the next ten years will likely result in other tax increases or significant reductions in key investments. And attempts to offset reductions in the estate tax with other tax increases would represent a tax shift away from the wealthiest families in the country to families with more moderate means.


*This figure includes $91 billion in lost revenue and $27 billion in increased interest payments on the debt.

Initiative 1033: Experience in Colorado Shows Harmful Effects

In 1992, Colorado passed a state constitutional amendment similar to 1033. Known as TABOR, the Colorado initiative restricts spending in state, county, and city governments to the previous year’s level plus population growth and inflation. This formula has proven to be insufficient to fund the ongoing cost of government and has created a permanent revenue shortage.

A growing body of evidence shows that TABOR has contributed to a significant decline in Colorado's public services. This includes:

• Colorado declined from 35th to 49th in the nation in K-12 spending
  
• Higher education funding dropped by 31 percent
  
• Colorado fell to near the bottom of national rankings in providing children with full, on-time vaccinations
  
• The share of low-income children in the state who lacked health insurance doubled, making Colorado the worst in the nation by this measure

The effect of 1033 may be worse for Washington than it was in Colorado because it would go into place during a fiscal crisis. Again, Colorado provides an apt example: the state's economy was slow to recover following the 2001 recession with a job growth rate at a meager .2 percent. Other surrounding states had job growth rates that were much higher.

Below is a video that describes the experience of TABOR for Colorado voters and lawmakers.

Initiative 1033: Harmful Effects Worsen Over Time

As we’ve discussed in previous posts, Initiative 1033 would have a harmful effect on the ability of state and local governments to fund investments in education, health, public safety, and economic security. Importantly, this restricting effect will grow bigger over time making it increasingly difficult to fund these and other public priorities.

Take for example, the effect on the state budget if 1033 had been put into place in 1995. Economists measure the size of state budgets as a share of total personal income. This provides insight on the share of total resources that are used for public investments.

Even without 1033, the share of personal income in the state general fund has declined between 1995 and 2011, from seven percent to 5.5 percent. If 1033 had been in effect in 1995, there would have been a much more dramatic drop in the state general fund, from seven percent down to just over four percent. As the graph below shows, this means we would have had $6 billion less to spend in the current biennium than we actually had.


This $6 billion amounts to the entire two-year state budget for higher education, natural resources, public health, early learning, corrections, and the Basic Health Plan.

Initiative 1033: Harms Our Ability to Recover from Economic Downturns

Initiative 1033 would dramatically limit state and local spending starting in 2010. It is particularly troubling that this initiative comes during a time of economic recession when revenue is especially low. The spending cap imposed by 1033 would be based on the previous year’s revenue with a flawed formula for annual increases using population growth plus inflation.

It would also be tough to recover from future economic downturns. According to the 1033 proposal, if revenue drops below the spending limit in a given year, the following year’s limit is based on the lower number. The state, county, or city permanently loses that spending capacity.

To illustrate this point, imagine a scenario in which the spending limit grows according to the 1033 formula over a period of three years. In the fourth year, the economy falters and revenue falls below the limit at the beginning of the three year period. Then it starts to grow again, but starting at the lower rate. As the graph below shows, the limit is permanently lower. Short of a voter-approved tax increase, revenue cannot catch up to previous levels.


In our current economic climate, the state anticipates raising $1.04 billion more revenue in 2011 than it did in the previous year. If 1033 is passed by voters this November, we would only be able to use $471 million. The other $571 million would be required to go to a property tax cut in 2011-13.

To view a comprehensive slideshow about 1033, please click here.

Budget & Policy Center's Remy Trupin Discusses Flaws in 1033 on KUOW

Today our Executive Director Remy Trupin was invited to speak on the harmful effects of Initiative 1033 on KUOW's The Conversation. During the program, Remy said that 1033 would be:

1. Fiscally irresponsible because it would make it very hard for state, county, and city governments to set aside money for a rainy day.

2. He also noted that the timing of the initiative would be especially damaging, as it comes during an economic recession when revenue is down.

3. Finally, Remy pointed out that the state of Colorado had a terrible experience with a similar initiative that led to dramatically diminished public services and programs.

To listen to the program, please click here.

I-1033 Would Limit Government's Ability to Save for a Rainy Day

One of the lessons of the last year is that we should have been building more robust rainy day funds before the economy went sour. Hopefully, it is a lesson we will remember when the economy starts to rebound.

I-1033 will make that difficult. It sets a strict limit on the amount of state, county and city revenue that can be spent. Any money above that limit must be used for property tax cuts; it cannot be used to build savings for the next downturn.

At the state level, I-1033 would exempt constitutionally-mandated deposits into the rainy day fund from the calculation of the limit. However, deposits above the minimum would not be exempt.

At the city and county level, there does not appear to be any exception made for rainy day funds.

To view our slideshow that provides more details on I-1033, click here.

Initiative 1033: Severely Constricts State and Local Spending

Today, Tim Eyman filed Initiative 1033, a measure that would severely limit the amount of state, county, and city revenue that could be spent starting in 2010. Any revenue raised above the limit would be required to go to reducing property taxes in the following year.

According to the initiative, the spending limit would grow annually by a formula adjusting for inflation and population growth. This formula is flawed in a number of ways. First, it adjusts for inflation using a measure of the change in costs of goods and services consumers buy, not those purchased by government. Secondly, the change in population growth only looks at changes in the general population and does not account for special populations, such as the rising numbers of retiring baby boomers.

Importantly, I-1033 leaves no room for unanticipated costs, such as those that come with natural disasters, unfunded mandates, or emerging public priorities.

But even with regard to maintaining current commitments, I-1033 will fail to keep up with spending needs. The graph below illustrates the discrepancy between state estimates for rising costs of maintaining current investments and the spending limit that would be imposed by I-1033.



In upcoming blog posts, we will look at why it would be especially damaging to enact this initiative during an economic recession, the effect on the state budget over the long term, and the negative impact a similar measure has had in the state of Colorado.

To view our slideshow that provides more details on I-1033, click here.

I-1033: What's At Stake for Washington State

I-1033 is a ballot initiative expected to qualify for the November 2009 ballot. Our analysis finds that it would:

• Constrict the ability of state, county, and city governments to make essential public investments.
• Exacerbate the effects of economic and fiscal downturns.
• Increase the current deficit by half a billion dollars.

Watch the slideshow below for more details:



Stay tuned to schmudget for continued analysis.

(You can access individual images from the slide show by clicking in the lower left corner.)

Increases in Caseload Forecast Will Cost $250 Million

Today, the Washington State Caseload Forecast Council (CFC) released its revised caseload projections for the 2009-2011 biennial budget. The Office of Financial Management (OFM is the Governor's budget office) predicts that CFC's current caseload forecast will increase the cost of maintaining current budget commitments by $250 million in the current biennium. Combined with the recent revenue forecast, the State is hundreds of millions short of the revenue needed to maintain public structures.

The rise in the caseload forecasts reflect the growing need for public services during the current economic recession. The projections below are based on OFM data:

Health care: State-funded health care for children and families will require an additional $183 million. To maintain mental health services, costs are projected to increase by $29 million and costs of serving more residents in nursing homes and in home community-based services are projected to jump by almost $9 million.

Economic security: Increases in the General Assistance caseload will require an additional $12 million.

Education: Changes to the K-12 caseload amount to approximately $10 million. Most of this increase is due to an additional 916 students from the time of the budget's adoption. The state expects less private school enrollment and a larger birth cohort which will increase the number of students entering school.

With the fiscal year starting today, the deep cuts in the state budget from the last legislative session will begin to be felt in these and other state investments.