Safety-net programs as investments

A growing body of research suggests we should think about things like food stamps, housing vouchers and health care for children as investments, not spending. Jason Furman, chief of the White House Council of Economic Advisers, lays out the case in the New York Times:

Investments in education, income, housing, health care and nutrition for working families have substantial long-term benefits for children…There are three noteworthy elements in this new research. First, the benefits often are not captured by short-term outcomes like improvements in children’s test scores, which typically last only a few years before fading.

Second, while program design certainly matters — and can matter a lot — much of the benefit appears to derive from helping low-income families pay for basic needs like food, housing or health care, or simply reducing the intense economic pressure they face. This relates to findings that poverty may increase intense stress, inhibiting young children’s cognitive development.

Third, in many cases, the additional tax revenue from the higher long-run earnings generated by the program is sufficient to repay much or even more than all of the initial cost.

Indeed, despite glib assessments from critics that poverty “won the war,” more and more research suggests otherwise. Medicaid boosts high school graduation rates and lowers mortality. Food stamps lead to healthier birth weights and increased college attendance. The Earned Income Tax Credit leads to higher lifetime earnings. The list goes on. The fact is that without these critical programs, poverty would be much worse than it is today and low-income children in particular would have even less opportunity.

Budget clears committee, health care in limbo

After the House moved a package of 11 bills last Thursday to raise more than $600 million in revenue (the actual number is a moving target), action shifted back to the House Appropriations Committee on Monday, where higher education emerged as the big winner. Health care? Not so much. Tyler Bridges and Marsha Shuler with the Advocate have the details:

Louisiana’s public colleges and universities secured a victory Monday when the House Appropriations Committee approved a budget proposal for next year that would give them the same amount of money they currently receive, thanks to $615 million in new tax revenue approved by the full House on Thursday. Health care is short by about $190 million in state aid, which translates into $500 million to $600 million when the federal match for state health care dollars is factored in. The shortfall in health care means less money for poor pregnant women and children, the developmentally disabled, the working poor who don’t have health insurance and the elderly living in state nursing homes…legislators have yet to find the revenue to provide $60 million to the private hospitals that are now managing nine state hospitals, including the big New Orleans hospital slated to open in August. As The Advocate reported Sunday, some of the private companies are threatening to cancel their contracts with the state after the session ends if the money doesn’t materialize.

Is it legal?

The road to crafting a budget that  protects higher education and health care could face another obstacle: a lawsuit. It came as no surprise that the Louisiana Association of Business and Industry (LABI) opposed the House’s efforts to raise revenue considering that much of the new money came from giving a haircut to business incentive and subsidy programs. But on Monday, LABI President Stephen Waguespack–a former Chief of Staff to Gov. Jindal–called into question the legality of the House’s action in a column:

State representatives reduced tax credits and exemptions by only a majority vote last week, which is a risky maneuver considering the Constitution explicitly requires a two-thirds vote to raise taxes and to repeal tax exemptions. The 1993 Attorney General’s opinion cited as the rationale for only seeking a majority vote actually reiterates the fact that a two-thirds vote was needed. That opinion clearly authorizes a majority vote only in the case of resolutions to suspend laws; only one tax vote last week was by resolution. This parliamentary decision could put any final budget solution in a legally precarious position.

Tuition autonomy passes Senate

Senators approved a proposed constitutional amendment that would give colleges the authority to set their own tuition. Melinda Deslatte with the Associated Press has the details:

The Senate voted 33-4 Monday for the constitutional amendment by Sen. Jack Donahue, a Mandeville Republican, that would take the Legislature out of the tuition-setting business. Instead, those decisions would rest with college system management boards. The proposal is linked to another Senate-approved measure by Donahue that would put limits on tuition awards allowed under the TOPS program. Gov. Bobby Jindal opposes the TOPS cost-control bill.The tuition-setting proposal heads to the House for consideration, where the TOPS bill also awaits a hearing.

Number of the Day

$190 million – Current gap in state funding for health care and charity hospitals, which grows to $500 to $600 million when federal matching dollars are included (Source: The Advocate)