Budget includes $77 million to prevent welfare cuts
NASHVILLE (AP) — Gov. Phil Bredesen’s budget includes $77 million in one-time federal funds for the Department of Human Services to prevent painful cuts to the state’s welfare families, but some state lawmakers don’t like the idea.
The money will cover child care and monthly benefits for the exploding caseload in the state’s Families First welfare-to-work program.
That’s exactly the kind of thing the federal ‘essential services’ money is supposed to be used for, the governor said Tuesday.
‘It’s not perfect, but I think it’s a sensible use of that money, and I certainly don’t want it to go back to the feds,’ Bredesen said.
Some senators told Finance Commissioner Dave Goetz during a hearing Tuesday on the governor’s $23.8 billion budget they believe using nonrecurring monies to cover recurring costs could affect the state’s bond ratings.
‘Just like in your home budget, when you spend your savings to pay your Visa card off, you’re not doing as well as if you paid it out of your paycheck. You can only do that so many times until you have no savings left,’ said Sen. Jim Kyle, D-Memphis and a veteran member of the Senate Finance Committee.
Three rating agencies downgraded Tennessee in 2000 after the budget was balanced with nonrecurring funds and accounting gimmicks, and two continue to give the state a negative outlook even though the current budget contains no such strategies.
Goetz said he understands the legislators’ concerns, but it was the best alternative to some ‘fairly tough reductions’ in the Families First welfare program.
‘Using these Essential Services dollars shows that Gov. Bredesen cares about the people of Tennessee by not requiring Human Services to cut the proposed $68 million we needed to cover the costs of the rising caseload,’ DHS Commissioner Gina Lodge said.
The number of welfare families in Tennessee has grown by 25 percent during the past three years. Tennessee has about 73,500 people on the welfare rolls. By the end of the year, the caseload is expected to grow to 80,500.
Bill Fox, an economist who heads the University of Tennessee’s Center for Business and Economic Research, conducted a study in November that found a major cause of the increase is the lack of lower-paying retail jobs during the down economy.
Another factor is that state law requires the Department of Human Services to offer child care to Families First clients, which is very expensive, according to DHS spokeswoman Michelle Mowery Johnson.
Tennessee also offers services that are not mandated by the state or federal government, including payments for grandparents caring for their grandchildren and caretakers for disabled relatives. Some $10.5 million of the one-time federal money is being used to keep that program operating.
‘We do not want to eliminate that grant. It’s so important. These are typically grandmothers who are working and take in the children so they aren’t put in foster care,’ Mowery Johnson said.
Kyle said he doesn’t yet have an alternative to offer. ‘That’s what the budget process is about, and it’s just begun,’ he said.
Bredesen presented lawmakers with his proposal Monday night and now they must meet their constitutional requirement to approve a balanced budget.
Goetz said the federal money is a temporary fix as the state waits for changes to regulations governing welfare. Also, Goetz said, the economy seems to be on the mend and if more jobs are created, that would cause caseloads to drop.
Comptroller John Morgan said he’s not concerned about the use of one-time federal funds because it’s ‘a fairly modest amount of money’ and he found the administration’s explanation reasonable.
DHS wasn’t immune to cuts in the governor’s budget, but much of its $20 million reduction was in administration and converting contractors to state employees.
However, the department is reducing by $5.7 million funding for child care provided to the working poor — not by cutting people from the rolls but by failing to fill slots when they come open.
There are currently 4,900 people on the rolls and about 200 drop off each month, but there is a waiting list of 21,000.
‘It’s a great need, but there are a lot of competing needs and it’s not mandated by anyone,’ Mowery Johnson said.
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On the Net:
Tennessee Department of Human Services: http://www.state.tn.us/humanserve