Macroeconomics

Massachusetts 9C Budget cuts FY2009: its impacts on low-income families and poverty reduction.

In spite of the few positive news about american economy and its recovery, Poverty Reduction is still being a major challenge to the Federal and Local States in the United States. The exclusive focus of the political debate on unemployment rate, business creation and tax cut has marginalized major concerns on the effects that budget cuts have had on most vulnerable population. Even though economic growth may help US move forward the Great Recession, Poverty Reduction Policy may keep US afloat while economic policies start giving substantial results. The following analysis depicts the possible social impacts of the most recent budget fiscal cuts in Massachusetts: the so-call 9C cuts of FY2009. In order to do so, we start by defining Poverty Reduction Policy. Then, we make a brief characterization of the Poverty in Massachusetts. In the third section we analyze the 9C cuts accounts of FY2009. Finally we present two major policy recommendations. 
What do we understand by Poverty Reduction Policy?
Analyzing Poverty Reduction is threefold. It involves state expenditure issues, public policy preferences and poverty measures and estimations. In that sense, we understand Poverty Reduction Policy as all those budgetary allocations that are aimed at ameliorating poverty measures and metrics. Therefore, what is also important is how we define Poverty. Likewise,  we follow the poverty definition in absolute terms or measures as were defined by Molli Orshanky of the Social Security Administration since 1950’s. It means that we consider family income and its respective poverty threshold. In this analysis the poverty threshold is families which income is “less than 125% of the poverty level”.
In terms of empirical information regarding Poverty, the characterization of poor people basically relates aspects of ethnicity (race discrimination), family structure (women-headed families) and geography conditions (rural and economic dislocation). It is broadly acknowledged that “Poverty is more pervasive among some groups, such as minorities and female-headed families” (Iceland, 2003.P. 68). In addition to that, experts have stated that “poverty varies widely across states and has also become more concentrated within cities over the last few decades, mainly because of economic reorganization and residential segregation. Rural pockets of deep poverty also persist in some places”. (Iceland. 2003. P. 69). 
More recently, characterization of poor people has made emphasis on family structure. They have found that female-headed families are particularly more likely to be poor because women householders tend to:
  1. have only one income and paying for child care while at work. 
  2. have lower levels of education, which means less earnings. 
  3. earn less than men with comparable qualifications. 
  4. accumulate less experience than other workers. 
  5. not receive sufficient child support from the children’s absent parents. (Iceland, 2003.P. 97). 
Poverty Characterization in Massachusetts:
Considering the characteristics of the poor population made by John Iceland (2003) the following section depicts poor people in Massachusetts. From the previous section we derive five major measures: work status, educational attainment, race and ethnicity, and living arrangement (which include sex considerations). The bigger numbers are highlighted in yellow in the following tables. We can identify at least four major characteristics of the poor people in United States: first, poverty situation is related to not having employment in the last 12 months. 37% of the people within our threshold declared not having worked during the previous year (Table #1). Second, education is also another important factor that determine poverty. 34% of the poorest people manifested to have less than a high school diploma (Table #2). Beside those factors, racial discrimination is still in the explanation of poverty in the United States. As it is shown in Table # 3, being Hispanic (39%) or American Indian (32%) seems to be equal of being poor. Last but not least, female-headed families represent 34% living under the poverty threshold we chose (Table #4).    
Table #1.
WORK STATUS
Estimate of the total population
Less than 125% of the poverty level
  Population 16 to 64 years
4,240,555
14.10%
  Worked full-time, year-round
2,068,321
2.20%
  Worked less than full-time, year-round
1,303,252
17.70%
  Did not work
868,982
37.00%
Data Source: 2010 American Community Survey 1-Year Estimates.
Table #2.
EDUCATIONAL ATTAINMENT
Estimate of the total population
Less than 125% of the poverty line
    Population 25 years and over
4,385,643
12.40%
  Less than high school graduate
466,835
34.30%
  High school graduate (includes equivalency)
1,139,246
15.50%
  Some college or associate’s degree
1,054,663
11.10%
  Bachelor’s degree or higher
1,724,899
5.10%
Data Source: 2010 American Community Survey 1-Year Estimates.
Table #3.
RACE AND HISPANIC OR LATINO ORIGIN
Estimate of total population
Less than 125% of the poverty line
  One race
6,160,937
14.60%
    White
5,147,976
12.00%
    Black or African American
423,099
29.50%
    American Indian and Alaska Native
13,136
32.00%
    Asian
338,216
17.30%
    Native Hawaiian and Other Pacific Islander
915
17.00%
    Some other race
237,595
39.90%
  Two or more races
172,674
27.80%
Hispanic or Latino origin (of any race)
611,826
39.00%
Data Source: 2010 American Community Survey 1-Year Estimates
Table #4. 
LIVING ARRANGEMENT
Estimate of the total population
Less than 125% of the poverty line
  In family households
5,105,290
12.10%
  In married-couple family
3,751,508
5.20%
  In Female householder, no husband present households
1,028,504
34.00%
  In other living arrangements
1,228,321
26.90%
Data Source: 2010 American Community Survey 1-Year Estimates
After this brief description of the poorest people in Massachusetts, the following step is to look for the budgetary allocations that reveal policy preferences. However, rather than look at the Approved Budget FY2009 in the state, we look at the cuts. Those budget adjustments reveal the  effect that the Great Recession has had on public spending and social programs for fighting poverty. In other words, a real approach to Poverty Reduction Policy. 
9C Cuts. FY2009. Commonwealth of Massachusetts:
The Commonwealth of Massachusetts have had major cuts under the Chapter 9 regulation in  Fiscal Years 2002, 2003, 2007 and 2009. The last budget adjustment reduced the state spending from a projected one of U$18.986.971.941 to an adjusted spending of U$18,192,567,756, which represents cuts by U$794.815.185 dollars. Following the poverty characterization and its related policy preferences or priorities, it is possible to analyze the C9 cuts under the perspective of Poverty Reduction Policy. It basically means, organizing the cuts in those that are aimed at eliminating or reducing Non-Poverty Related Accounts and Poverty Fight Related Accounts (which are intended to reduce yellow metrics or indicators). From the list      provided by the State, as it is shown in graph 31, Poverty Fight Accounts comprises roughly U$ 445,562,414 (or 35.92%) and Non-Poverty Related Accounts comprises U$794,815,185 (64.08%). At first glance, the State did not make major cuts in the mentioned accounts.  
Graph #1.
  Despite the fact that the cuts were substantially less in the account related to reduce poverty, the accounts that were eliminated are certainly critical for public assistance programs. The first facts to point out are the sensitive circumstances regarding female householders without husband present in household. Programs that initially targeted this population were reduced in 3.4%. We gather under this population programs such as Child care support, Kinder Garden Expansion, School breakfast program, domestic violence, teenage pregnancy, which are the programs that perhaps most relate to them. The amount initially allocated for those program highlighted in yellow (Appendix #1) comprised U$1,128,124,790. The reduction was about U$39,012,851. Although 3,4% looks really a small amount under the current budget constraints, it is also important to note that single mothers and their children represent a large portion of the most vulnerable and poor people in Massachusetts.    
The second concern is about the employment situation and the efforts the public sector does to improve the chances of people looking for jobs. In the characterization of poverty in Massachusetts unemployment rate as a determinant of poverty reaches 37% of the poor people. Also educational attainment is a factor in determining poverty conditions. Therefore, beside all the efforts on monetary policies and any kind of stimulus to bolster the economic recovery, training programs and education are equally relevant to reduce poverty. In that regard funds allocated to Schools, technical training  and Colleges or Universities are highlighted in orange in our Appendix #1. The original allocation was roughly U$1,035,977,429.And the cuts comprised U$63,249,279, which is equal to a 6.1% in cuts.       
Race and ethnicity are still on the top of the barriers to overcome poverty.The strategies for reducing racial discrimination vary from affirmative action to law enforcement. It is difficult to measure those strategies within our subject of study, which is the 9C cuts list. However, we could identify some programs that reveal at least the recognition that poverty must be tackled by race and ethnicity discrimination issues. Two accounts were cut by 10.6%. The first one The Indian Affairs Commission, and the second one the Program to Eliminate racial Imbalance METCO. Both accounts were initially allocated U$21,822,207, and the cuts were equal to 2,321,430. Those are highlighted in color blue in the Appendix #1. 
Policy Recommendations:
We have seen in this analysis how the budget cuts may affect most vulnerable people in the State of Massachusetts. Particularly, single mother, racial minorities, and less educated people, who are the ones that live under the poverty line and have an income of “less than 125% of the poverty line”. We strongly recommend and support:
  1. A structural tax system reform intended to balance the budget by seriously increasing the source of revenue instead of just doing “Alchemy” budgeting. 
As the Massachusetts Budget and Policy Center has proposed recently, that increase should be up to national level of taxation which is 10.4%. If we consider the total amount of cuts in 9C FY2009 (which was U$794.815.185) and at the same time the potential extra resources that can be collected from that 0.6 percentage point (which is $2.2 billions), we can infer that part of the substantial solution is in increasing the taxes to the national level. Evidently, there is still enough room for an increase of taxation. Particularly in the two highest percentiles. 
  1. Budgetary cuts on non-related poverty Accounts, which comprised in 9C FY2009 64.08% of the total cuts, must continue to increase. The priority in balancing the budget and preference in policy making  must be on Poverty Reduction Policy. 
Bibliography: 
Iceland, John. (2003). Poverty in America. A handbook. University of California Press. L.A. California.
Massachusetts Budget and Policy Center. (2011). Massachusetts ranks 33rd in Taxes in FY 2009. http://www.massbudget.org/reports/pdf/MAranks33intaxesinFY2009.pdf
     
Appendix #1. 
Account #
Account
Amount initially Assigned 
Cut
Percentage
7052-0006
School Building Assistance – Engineering and Architectural Services
19,076
-19,076
100
7061-9805
Bullying Prevention
250,000
-250,000
100
7000-9507
Public Library Matching Incentive Grant
250,000
-250,000
100
9110-1650
Family Caregivers Program
250,000
-250,000
100
7010-0216
Teacher Quality Investment
595,881
-489,631
82
1599-2009
Hale Hospital Reserve
2,420,000
-1,920,000
79
7003-0702
Individual Workforce Training Grants
11,038,500
-8,226,000
74
7003-0604
Health Care Career Ladder Programs
1,500,000
-1,050,000
70
9110-1700
Residential Placement for Homeless Elders
450,000
-297,000
66
1599-0042
Early Education and Care Provider Rate Increase
5,000,000
-3,000,000
60
4110-1020
Medical Assistance Eligibility Determination for the Blind
369,796
-204,881
55
2511-2000
Agricultural Innovation Center
1,500,000
-794,049
52
7061-9804
Teacher Content Training
991,367
-505,140
50
7027-0016
School-to-Work Programs Matching Grants
3,119,517
-1,566,398
50
4510-0716
Academic Detailing Program
500,000
-250,000
50
1599-2008
Health Care Cost Containment Reserve
1,500,000
-750,000
50
4000-0265
Primary Care Workforce
1,700,000
-850,000
50
4000-0112
Youth-at-Risk Matching Grants
5,845,000
-2,920,000
49
4110-4000
Ferguson Industries for the Blind
1,923,538
-942,325
48
9110-1640
Geriatric Mental Health Services Program
225,000
-100,000
44
7003-0701
Workforce Training Programs
21,000,000
-9,000,000
42
0330-0410
Alternative Dispute Resolution
962,768
-385,549
40
4000-0355
Health Care Quality and Cost Council
1,888,616
-712,830
37
3000-6050
Professional Development
4,558,000
-1,557,800
34
7061-9621
Gifted and Talented Children
765,000
-257,251
33
7061-0029
Educational Quality and Accountability
2,974,554
-950,000
31
4510-0715
Primary Care Center and Loan Forgiveness Program
850,000
-261,019
30
7061-9626
Youth-Build Grants
2,770,500
-838,435
30
5920-3010
Autism Division
6,264,413
-1,802,500
28
7004-0001
Indian Affairs Commission
206,894
-51,341
24
8000-0010
Local Law Enforcement Assistance Program
21,351,035
-5,098,106
23
9110-1660
Congregate Housing Program
2,789,031
-665,776
23
4513-1000
Family Health Services
7,620,000
-1,785,000
23
1599-7050
Children’s Behavioral Health Initiative Reserve
25,000,000
-5,716,400
22
7061-9612
Worcester Polytechnic Institute School of Excellence Program
2,175,231
-475,000
21
7066-0009
New England Board of Higher Education
467,500
-100,000
21
4590-1503
Pediatric Palliative Care
1,000,000
-213,150
21
4512-0500
Dental Health Services
3,147,016
-668,676
21
7061-0011
Education Reform Reserve
5,500,000
-1,165,888
21
6000-0200
Inter-District Transportation Program
2,000,000
-418,049
20
3000-6075
Early Childhood Mental Health Consultation Services
2,900,000
-500,000
17
7061-9600
Concurrent Enrollment for Disabled Students
1,575,000
-269,000
17
7066-0000
Department of Higher Education
6,512,898
-1,096,720
16
7061-9610
Citizen Schools Matching Grants
550,000
-77,850
14
7100-0300
Toxics Use Reduction Institute – University of Massachusetts Lowell
1,917,454
-260,005
13
7030-1003
Early Literacy Grants
3,740,000
-503,842
13
4120-3000
Employment and Homecare Assistance Including Independent Living and Turning 22
8,561,446
-1,119,000
13
4800-0030
DSS Regional Administration
21,020,794
-2,741,973
13
7002-0010
Executive Office of Housing and Economic Development
585,914
-76,030
12
9110-9002
Grants to Councils on Aging
8,615,068
-1,071,644
12
7061-9408
Targeted Intervention in Underperforming Schools
9,175,041
-1,091,604
11
4580-1000
Universal Immunization Program
51,581,508
-6,131,859
11
3000-7050
Services for Infants and Parents
9,555,694
-1,079,138
11
4401-1000
Employment Services Program
27,720,672
-3,123,215
11
4800-0091
Child Welfare Training Institute Retained Revenue
3,000,000
-325,000
10
4510-0790
Regional Emergency Medical Services
1,246,896
-131,731
10
2511-0100
Department of Agricultural Resources
5,506,927
-581,542
10
4510-0721
Board of Registration in Nursing
1,725,170
-181,833
10
4510-0725
Health Boards of Registration
472,097
-49,759
10
4510-0722
Board of Registration in Pharmacy
541,311
-57,054
10
1599-4417
E.J. Collins, Jr. Center for Public Management
541,000
-57,021
10
4510-0723
Board of Registration in Medicine and Acupuncture
2,670,027
-280,526
10
7010-0012
Programs to Eliminate Racial Imbalance – METCO
21,615,313
-2,270,089
10
3000-5075
Universal Pre-School
12,138,739
-1,246,002
10
5046-2000
Statewide Homelessness Support Services
22,452,466
-2,241,547
9
4513-1111
Health Promotion and Disease Prevention
14,709,996
-1,464,944
9
7002-0100
Executive Office of Labor and Workforce Development
1,412,069
-138,740
9
0710-0225
Medicaid Audit Unit
859,745
-83,676
9
8000-0125
Sex Offender Registry Board
4,928,494
-476,720
9
4110-1000
Community Services for the Blind
4,545,633
-432,234
9
4530-9000
Teenage Pregnancy Prevention Services
4,055,586
-385,000
9
4510-0600
Environmental Health Assessment and Compliance
4,133,923
-384,271
9
5046-0000
Mental Health Services Including Adult, Homeless and Emergency Supports
322,068,305
-29,672,421
9
4000-0301
MassHealth Auditing and Utilization Reviews
2,225,904
-200,000
8
7030-1002
Kindergarten Expansion Grants
33,802,216
-3,000,000
8
9110-1633
Elder Home Care Case Management and Administration
40,368,041
-2,800,000
6
1107-2400
Massachusetts Office on Disability
759,477
-49,852
6
7061-9404
MCAS Low-Scoring Student Support
13,391,393
-828,455
6
1201-0160
Child Support Enforcement Division
52,012,766
-3,149,060
6
7100-0200
University of Massachusetts
492,251,998
-27,422,075
5
7113-0100
Massachusetts College of Liberal Arts
14,372,730
-800,562
5
7514-0100
Springfield Technical Community College
24,696,590
-1,375,601
5
7515-0100
Roxbury Community College
11,371,250
-633,379
5
7112-0100
Framingham State College
24,852,111
-1,384,263
5
7110-0100
Fitchburg State College
27,809,654
-1,548,998
5
7115-0100
Westfield State College
23,222,725
-1,293,506
5
7116-0100
Worcester State College
23,668,255
-1,318,322
5
7510-0100
Northern Essex Community College
19,164,450
-1,067,460
5
7511-0100
North Shore Community College
20,602,945
-1,147,584
5
7503-0100
Bristol Community College
16,176,392
-901,025
5
7508-0100
Massasoit Community College
20,345,926
-1,133,268
5
7114-0100
Salem State College
39,824,815
-2,218,242
5
7516-0100
Middlesex Community College
20,078,979
-1,118,399
5
7507-0100
Massachusetts Bay Community College
14,043,486
-782,222
5
7512-0100
Quinsigamond Community College
15,234,960
-848,587
5
7117-0100
Massachusetts College of Art
15,202,160
-846,760
5
7518-0100
Bunker Hill Community College
20,878,500
-1,162,932
5
7504-0100
Cape Cod Community College
11,570,597
-644,482
5
7506-0100
Holyoke Community College
18,751,285
-1,044,446
5
7509-0100
Mount Wachusett Community College
12,834,946
-714,906
5
7505-0100
Greenfield Community College
9,221,641
-513,645
5
7118-0100
Massachusetts Maritime Academy
14,077,588
-784,121
5
7109-0100
Bridgewater State College
39,535,289
-2,197,145
5
7502-0100
Berkshire Community College
9,383,215
-517,675
5
7035-0007
Non-Resident Pupil Transport
2,075,000
-99,600
4
7035-0006
Transportation of Pupils – Regional School Districts
61,300,000
-2,942,400
4
0940-0100
Massachusetts Commission Against Discrimination
2,732,903
-131,179
4
0950-0000
Commission on the Status of Women
252,634
-12,126
4
9110-1900
Elder Nutrition Program
6,804,740
-322,500
4
4590-0300
Smoking Prevention and Cessation Programs
12,750,000
-598,350
4
4512-0103
HIV/AIDS Prevention, Treatment and Services
37,666,608
-1,764,976
4
7061-9611
After-School and Out-of-School Grants
5,550,000
-247,461
4
3000-3050
Supportive Child Care
79,091,314
-3,500,000
4
5911-2000
Community Programs for the Mentally Retarded
14,137,324
-600,000
4
4000-0700
MassHealth Fee-for-Service Payments
1,535,816,000
-64,156,429
4
7061-9604
Teacher Preparation and Certification
2,032,758
-83,161
4
9110-1630
Elder Home Care Purchased Services
106,715,568
-4,192,691
3
4120-4000
Independent Living Assistance for the Multi-Disabled
12,449,034
-462,500
3
9110-0100
Department of Elder Affairs Administration
3,741,705
-136,608
3
7010-0005
Department of Elementary and Secondary Education
16,780,047
-610,965
3
7061-9400
Student and School Assessment
29,310,695
-1,040,618
3
4590-0250
School-Based Health Programs
17,457,134
-595,695
3
5011-0100
Department of Mental Health Administration
38,359,864
-1,304,608
3
4510-0100
Department of Public Health
21,911,667
-700,000
3
4513-1020
Early Intervention Services
42,936,049
-1,354,008
3
8000-0105
Office of the Chief Medical Examiner
8,719,907
-274,716
3
5042-5000
Child and Adolescent Mental Health Services
76,201,535
-2,376,584
3
4000-0500
MassHealth Managed Care
3,121,385,000
-95,340,714
3
1750-0100
Human Resources Division
4,225,345
-126,146
2
4800-0015
Social Worker Services and Related Operational Support
77,337,703
-2,070,697
2
4000-0600
MassHealth Senior Care
2,158,355,058
-56,822,857
2
3000-1000
Department of Early Education and Care Administration
13,867,894
-364,805
2
4800-0038
Services for Children and Families
313,792,694
-7,376,284
2
7053-1925
School Breakfast Program
4,277,635
-100,000
2
4510-0710
Division of Health Care Quality and Improvement
8,817,714
-182,805
2
4590-0915
Public Health Hospitals
144,881,131
-2,974,281
2
7061-9411
Leadership Academies
1,000,000
-20,000
2
4120-2000
Vocational Rehabilitation for the Disabled
10,982,471
-210,952
1
3000-4060
Child Care Access
213,569,917
-3,493,531
1
7061-9614
Alternative Education Grants
1,195,840
-15,000
1
7002-0012
Workforce Development Programs
8,100,000
-100,000
1
9110-1604
Supportive Senior Housing Program
4,202,915
-49,672
1
4403-2120
Emergency Assistance – Family Shelters and Services
87,224,342
-974,789
1
5920-3000
Respite Family Supports for the Mentally Retarded
56,094,228
-589,513
1
4000-0300
Executive Office of Health and Human Services and Medicaid Administration
145,368,773
-1,500,000
1
3000-4050
TANF Related Child Care
197,745,274
-1,875,000
0
7006-0029
Health Care Access Bureau Assessment
1,100,000
-10,000
0
9110-1636
Elder Protective Services
16,246,087
-143,328
0
4510-0110
Community Health Center Services
7,457,772
-60,000
0
5047-0001
Emergency Services and Acute Mental Health Care
36,228,259
-290,101
0
4120-6000
Head Injury Treatment Services
10,933,588
-87,500
0
7061-9200
Education Technology Program
5,448,093
-43,170
0
4513-1130
Domestic Violence and Sexual Assault Prevention and Treatment
6,391,677
-38,353
0
7027-1004
English Language Acquisition
470,987
-2,826
0
7051-0015
Temporary Emergency Food Assistance Program
1,247,000
-7,482
0
7066-0016
Foster Care Financial Aid
1,285,000
-7,710
0
7520-0424
Health and Welfare Reserve for Higher Education Personnel
5,670,398
-34,022
0
4510-0810
Sexual Assault Nurse Examiner (SANE) and Pediatric SANE Programs
3,623,068
-21,738
0
4800-1100
Social Workers for Case Management
157,262,697
-943,477
0
4120-5000
Home Care Services for the Multi-Disabled
5,868,362
-34,796
0
1107-2501
Disabled Persons Protection Commission
2,328,012
-13,760
0
4408-1000
Emergency Aid to the Elderly, Disabled and Children
72,476,084
-381,360
0
5095-0015
Inpatient Facilities and Community-Based Mental Health Services
181,899,591
-455,714
0
7028-0031
School-Age Children in Institutional Schools and Houses of Correction
7,726,719
-9,007
0
5920-2025
Community Day and Work Programs for the Mentally Retarded
129,159,457
-150,000
0
4110-0001
Massachusetts Commission for the Blind Administration and Services
1,168,989
-1,294
0
4000-0640
MassHealth Nursing Home Supplemental Rates
288,500,000
-300,000
0
4590-0912
Western Massachusetts Hospital Federal Reimbursement Retained Revenue
16,542,017
-15,703
0
2100-0015
Unified Carrier Registration Retained Revenue
2,300,000
-1,832
0
4800-1400
Support Services for People at Risk of Domestic Violence
23,473,406
-8,788
0

Categories: Macroeconomics

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