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 …”