Shumlin officials defend plans to cut benefits for low-income Vermonters

Secretary Doug Racine. VTD/Josh Larkin

Secretary Doug Racine. VTD File Photo/Josh Larkin

The Shumlin administration is hunkering down on its plan to cut benefits programs.

Officials say both of the proposed changes — cutting $16.7 million from the state’s EITC to scale up child care subsidies and putting a cap on the length of time people can receive welfare benefits — will remove disincentives that have kept Vermonters out of the workplace. Officials are also making the case that the other programs comprising Vermont’s social safety net will cushion the impact of the cuts.

The plan, depicted in two particular line items of the governor’s FY 2014 budget, has drawn ire from lawmakers, advocate groups and the public at large.

Jeb Spaulding, secretary of administration, told reporters at a press briefing on Monday that the state must make “tough decisions” in the current budget climate.

“He [Gov. Shumlin] was willing to talk about reallocation and we are asking the public and Legislature to be able to talk about the fact that we need to make tough decisions about where our money is going to give us the biggest bang,” Spaulding said.

Doug Racine, secretary of the Agency of Human Services, said the reallocation of funds from EITC to child-care subsidies is unquestionably a “tradeoff.”

Racine explained why the EITC was singled out as the source of reallocated funds. He pointed to the “volatility” of the credit — 34 percent of people who received a credit in 2012 did not receive one in 2011 — for this reason, he said, it is an unreliable supplement to people’s income.

Racine said while the state has shelled out an increasing amount of EITC money — from $17.3 million in 2003 to $25.8 million in 2011 — while child-care subsidies have stayed the same. The increase was driven by federal policy changes (the state EITC is pegged at 32 percent of the federal credit).

“The point is that we in a way have backed into a priority, which says EITC is more important than child care,” Racine said.

If the cut takes place, recipients stand to lose $377 on average, and the maximum amount a household would lose is $1,200.

The governor’s other proposal is to trim $6 million from the Reach Up program by putting a three-year cap on benefits. (The cap can be extended for two additional non-consecutive years.) Currently 6,400 households, totaling about 16,000 individuals, participate in Reach Up. The program covers roughly 50 percent of the cost of people’s housing and basic needs — $660 per month on average. The cap would take effect Oct. 1, immediately kicking 1,188 people off the program. The median time spent on Reach up is 18 months. About 10,000 Vermont children are indirect recipients of welfare benefits.

David Yacovone, commissioner of the Department for Children and Families, said the lack of a termination date for welfare benefits can be conducive to complacency. The time limits on welfare benefits, he said, will be a “powerful incentive” for people to find employment.

Yacovone made assurances, however, that certain categories of people would be exempted. People with disabilities, child-only cases, and people participating in Reach Up’s post-secondary education could all receive benefits past the designated deadline. Parents under the age of 18 would also be excused from the cap. There are approximately 800 people who have been on the program for longer than three years but would qualify for an exemption under these standards.

The director of Reach Up, Paul Dragon, said people who have been on program for more than three years are up against legitimate challenges — they face an average of 3.7 barriers to employment, whereas the average Reach Up participant faces about three. Barriers include lack of transportation, insufficient housing and unmet child-care needs.

Racine and Yacovone suggested that other components of the state’s social safety net — subsidized housing, health care benefits, fuel assistance, child-care subsidies, food stamps — could address these barriers. The cap “puts the pressure on us to look at those individuals and say, you know maybe Reach Up is not the right place for them to be, and there is something that better meets their needs.” For others, Racine added, “a deadline is going to be the best incentive.”

The investments Shumlin has made to other programs will largely offset the cuts to EITC and Reach Up, Yacovone said. “This is the first governor who has ever proposed making sure that kids on free and reduced lunch have their lunches paid. This is the first governor to my knowledge who has ever recommended sustainable state funding for the fuel assistance program. … This is the first governor who’s ever said I want to have a Vermont rental subsidy program like the federal Section 8 housing program … and this is the first governor who has ever made a really significant investment in early childhood education …”

Follow Alicia on Twitter @aefreese

Comments

  1. John Greenberg :

    Many before me have made the argument that Governor Shumlin’s decision to fund proposed programs for the poor by stinting on (and or restricting) other programs for poor people is morally indefensible. I agree, but won’t belabor the point.

    I do want to point out that when we think about “the poor” or about “poverty,” we need to be a good deal more subtle than our debates generally are. For example, arguments about whether or not poor people work has no bearing at all on the elderly poor or children in poverty, none of whom is expected to work, and little bearing on people with disabilities either, but these 3 groups constitute about 2/3 of America’s poor.

    Similarly, not all poor people have children or need child care. When we decide to remove funding from the EITC to pay for more child care, the people who are impacted are sometimes the same, but sometimes quite different. To state the obvious, only SOME of the poor have day care needs. Is it really intelligent policy to penalize someone who is working their way out of poverty to provide child support for someone else who may or may not be?

    Finally, the notion that high-income Vermonters are “overtaxed” SHOULD lead us to ask “compared to whom?” It’s somewhat remarkable that we appear to ignore both our own history (top federal marginal tax rates have been in decline for half a century, REDUCING the tax burden on high-income earners) as well as the experience of myriad societies around the world whose tax rates are higher than ours.

    Even putting aside the moral arguments with which I began, the fact of the matter is that taxing high-income earners makes sound economic sense. Vermont is no different from the rest of the US: income is FAR from evenly distributed and skews heavily (and increasingly) towards the top income earners. Put baldly, that’s where the money is.

  2. Amelia Silver :

    Succinctly and aptly said, John Greenberg. I particularly like your point about the lack of subtlety, or nuance, in our debates about poverty. Generational poverty in Vermont is a significant factor in the equation, but the Governor’s new policy doesn’t take this into account at all. Furthermore, the federal definitions of disability do not include myriad genuine disabilities that prevent people from working, being able to hold a job, or even get a job. Undiagnosed and untreated mental illness is the enormous elephant in the room in Vermont, and it has a fraternal twin, illiteracy and lack of education. I work with families in crisis, on Reach Up, and well over 65% of these parents suffer from debilitating and untreated mental illness that does not necessarily qualify them for SSI or SSDI. And they can’t read, though they may have graduated from high school, and they can’t clean their homes, prepare nutritous food for their children, and don’t aprticipate in our civic life in any way. Doug Racine and Dave Yacavone and Paul Dragon and Peter Shumlin should come spend a week in the world I work in; I have knowledge to share with them, and bet I could actually teach them something.

  3. Jane Stein :

    Thank you, John and Amelia for your calm, reasoned, thoughtful comments. All I could muster after reading this article is obscenities to go along with the steam coming out of my ears.

    I *thought* I voted for a Democrat when I voted for Shumlin, but now I’m hearing “making the tough choices” (hey, you get to make the choices that aren’t tough on you, just on helpless people at the bottom of the economic barrel) and crap about “disincentives to work,” and other standard right-wing talking points, oh, yeah, plus the old trope about rich people moving away if we dare peg them for a few dollars they wouldn’t even notice to help people drowning in poverty.

    • Craig Powers :

      You did vote for a Democrat who made promises to the Progressive/socialist base to bolster his vote tallies. Now he is not supporting enough Progressive tax and spend programs and you show your predictable anger. Put up a real Progressive candidate for Governor and see if you can win based on that unsustainable platform.

      Government really does need compromise to actually work (most times). Sorry your candidate is not as ultra left as you thought.

  4. walter moses :

    For those of us who voted for Shumlin and company a line from Butch Cassidy,
    “Who Are these guys?”

  5. Dave Katz :

    Your Democrat 6.0 in action, friends. Steal a populist plank to very narrowly beat back a Dubie run, reward your real constituency–W’s joking “base” of wealthy cronies– by immediately morphing into–wait for it–a Republican!
    They all do it. It’s their playbook, now.

  6. Deborah Wright :

    When will people in government, even state government, who are mostly from money, spend some real time with people who are forever without it, other than minimal daily maintenance? Yes, there are legitimately many people in every state cheating the system of welfare and unemployment dollars, and better surveillance of that is clearly necessary, because the state’s plan is to dump the baby with the bath water, because it is so distasteful to actually dig in and separate out those who are undeserving of the assistance available in each and every state? Stop putting all the focus on the poor. Run your systems properly and intelligently, that in itelf will save millions, and place the burden of financing the needs of the many where it belongs…on those who have buried themselves in wealth on the backs of the “just-making-it Americans”.

  7. Neil Copeland :

    It is a sorry state that people, it seems most people are offended when limits are placed on welfare payments to to poor people. I have a question for this forum. Should there be any limits?

  8. Nicole LeBlanc :

    THIS EITC budget proposal is Penny Wise Pound Foolish! Its like a Massive Tax hike on the POOR !!!!! Why do we always have to be the ones who suffer the most pain!! Its time for Politicans to Start taxing the Wealthy along with themselves!!! RYAN BUDGET economics Must stop NOW!!!!

  9. Has anyone else noticed, whenever a person in power, often with a 6 figure salary, tells us we will need to make some “tough decisions”, what they are usually talking about is cutting a program or service for the poor that will have absolutely no impact on them?

    Just saying…

  10. Kristi Pepoon :

    If my math is correct, there are 1,188 people that will be cut off from benefits under this proposal, and of these 1,188 people, 800 of them qualify for a deferment for whatever reasons, under 18, disability, or child-only grant. This means that only 388 people will be cut from the program initially. First of all will there actually be that much savings? Don’t the politicians understand that this is not going to push more people to work, it is going to push more people to gain deferrals from the work requirement, which in turn is a deferral from the time cap? I am not arguing that most of the people that remain on Reachup long term probably have either diagnosed or undiagnosed disabilities including learning disorders and mental health problems. My point is I don’t believe there is going to much savings to this plan. I think that people currently on the traditional Reach Up program will seek treatment options and be deferred from the time cap through Voc Rehab Reach Up case management. We will be shifting the burden from one human services office to another.

    The real elephant in the room is the $17 million deficit in Economic Services that is largeley due to having to fund housing for homeless families in hotels at the rate of $1900 and change per room per month. A single person with one child receives about $580 in case assistance a month, tell me where our money is being misspent? THere has got to be a better solution for low-income housing for our families in crisis.

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