Seven Safety Net Restoration Priorities

The Anti-Poverty Network of New Jersey (APN) recognizes that New Jersey is in a time of great economic stress, with major changes necessary to restore fiscal balance. Governor Christie, Senate President Sweeney, and Assembly Speaker Oliver face daunting challenges as new leaders working to adopt a sound state budget for New Jersey.

The APN offers its expertise and experience as decision makers seek reasonable, fair, and balanced solutions to the current financial crisis. We will strive to make factual information available to the media and public.

We stress that – for the sake of those we seek to assist, those in poverty – no one in New Jersey is served by exaggeration, distortion or fabrication. The organizations of APN will seek to present accurate, meaningful information – to present truth. Where programs exist to serve the poor, they must be effective, efficient, well run and accountable, and if they fail to meet those standards, the shortfalls must be held up, and programs modified or eliminated. Where gaps in services exist and needs go unmet, those gaps must be illuminated, and solutions proposed. Where existing and successful programs are threatened with reduction or elimination, information and perspective on the impact of these steps must be made promptly available.

This report presents an initial analysis of cuts included in Governor Christie’s proposed Fiscal Year 2010-11 Budget. It is based on what a variety of member organizations in the APN have been able to glean to date from the Governor’s proposed budget. As we are able to clarify and expand our knowledge of these proposals, we will provide whatever further information emerges concerning the extent and impact of proposed cuts. The Network’s website will include all of the printed information in this report and will be updated as new information becomes available.

In the ten years since the formation of the APN, the FY 2010-11 budget proposed by Governor Christie contains the largest and most significant reductions in state programs that serve the poor. Although several programs, such as the state supplemental food program, seem to have been maintained, this is the first proposed budget in recent memory that includes no increases to assist people in poverty, and indeed, would cut that assistance. We acknowledge the Governor’s call for “shared sacrifice”, and recognize this as a time when many people and communities in New Jersey will have to do more with less. However, we live with the reality that economic recovery and sustainable employment opportunities have not reached many of those in poverty in New Jersey. For those who live with incomes insufficient to meet basic needs, who face the realities of hunger and homelessness, further sacrifice is simply not possible. The continued support and protection of an adequate social safety net is required.

APN member organizations have examined the budget information preliminarily available and prepared two lists: “Seven Safety Net Priorities”, representing APN’s judgment of the proposals which would do the most severe damage to the safety net for New Jersey’s most vulnerable, and “Significant Harms to the Social Safety Net Protecting New Jersey’s Most Vulnerable”.

Seven Safety Net Priorities

1. Proposed elimination of cash assistance to people identified as “General Assistance Employables” (GA).

The Governor proposes elimination of the cash assistance program for people on General Assistance deemed “employable”. GA is the last resort safety net program, providing very meager cash assistance ($140 per month) to those who have absolutely no other place to turn. GA recipients are adults without dependent children.

GA “employables” are people who don’t qualify for other cash assistance programs or who have exhausted other supports such as Unemployment Insurance (UI). Most have significant barriers to employment, such as inadequate literacy, learning disabilities or chronic health issues that do not quite qualify them for disability or SSI payments, but make it very difficult for them to find work. In times of economic crisis, such people are among the first pushed out of the workforce, as positions are eliminated. With an unemployment rate above the national average, New Jersey has seen an increase in GA employables as the current recession has deepened (from 22,371 in 2007 to 34,506 in December 2009: a 54% increase).

Studies in other states show that when GA is eliminated, homelessness increases, and as people become more itinerant, their chances for re-employment - even in low-skill jobs - decrease. GA cash assistance is hardly enough to live on, but since many people who rely on it receive support from family and friends, cash assistance can provide some means of repayment for shared shelter or food. Often this contribution is necessary in order for such support to continue.

Elimination of this “last resort” safety net program is likely to increase demand on shelters, community-based programs and charitable organizations, which are already over-stretched by growing demand due to the economic downturn. This is likely to increase costs related to state-funded sheltering programs and other human services.

Since a recovery in the employment sector still seems far off in New Jersey, this is not the time to eliminate the safety net for those with the least prospects of finding a job.

2. Proposed cuts in state support of the school breakfast and school lunch programs:

Congress is currently in the process of reauthorizing all child nutrition programs, including free and reduced cost breakfasts and lunches for children in schools. President Obama is calling on Congress to increase funding for these programs as part of a strategy to end childhood hunger. Increased subsidies are being tied to efforts to make the meals more nutritional and more accessible.

The proposed State budget would cut state subsidies by almost $2.5 million in the school lunch and $3 million in the school breakfast programs. Currently, New Jersey ranks #45 in the nation in participation in the school breakfast program. State funds have been meant to provide some incentive and support for expansion of this important nutritional program, which has been linked to increased test scores, reduction in discipline problems in the classroom, and fewer absences and visits to school nurses.

Currently several school districts in low income communities have significantly expanded school breakfasts by moving to a universal, in the classroom plan. Newark has already done this, and Trenton, Camden and other districts are considering it. Cutting state support will mean these districts will receive 10 cents less per meal, in effect penalizing them for improving their participation. It will have the most direct negative effect on low-income districts that already struggle to meet costs.

3. Crippling cuts in State funding for Legal Services of New Jersey:

Nearly all free legal assistance to people in New Jersey who are living in poverty is provided by Legal Services of New Jersey. Even at current funding levels, Legal Services can only provide assistance to one fifth of those in need. The proposed cut of $9.7 million eliminates one third of the state’s funding for Legal Services of New Jersey.

Legal Services helps people in poverty to engage in litigation to challenge unjust and illegal practices against which they have no other recourse. Claims against landlords, unfair eviction practices, and predatory lenders, protect the economic condition of low income people who might otherwise lose housing and property. This would lead to added costs if the state needed to provide homelessness or other forms of housing support. Legal assistance in processing and appealing disability, Medicare and Medicaid, SNAP (food stamps) and Unemployment Insurance claims brings federal money and legal benefits to New Jersey’s low-income and vulnerable populations. Legal help in securing child support payments, allows many single-parent headed households to survive, and support in litigating cases of domestic violence provides protection as well as savings for those who would require medical care if they remained in abusive relationships.

The proposed cut would force Legal Services to lay off at least 100 staff and cut services to 11,000 clients.

4. Assistance and support for affordable housing:

State Rental Assistance Program (SRAP) will be reduced by $13.5 million. These funds apparently will be replaced on a one-time basis by using money saved up for future project-based vouchers. Such a step will both bar any additional tenants from receiving assistance, both now and in the future.

Also, there is a $13.9 million dollar cut in “Affordable Housing”, and a $15 million cut to the State Affordable Housing Trust Fund. $5 million of this cut will come by eliminating the Office of Housing Advocacy, which supports the work of non-profit organizations in rebuilding communities, developing and rehabilitating housing, and providing foreclosure counseling. Reducing the capacity of non-profits to support the development of these programs will mean that some agencies will be unable to continue this work. In addition to its direct impact on the production and preservation of affordable housing, this will also lessen the creation of new jobs in low-income communities related to these programs.

5. Reduction of the State Earned Income Tax Benefit from 25% of the Federal benefit to 20%:

The Federal Earned Income Tax Credit (EITC) brings millions of dollars of additional income to low wage workers all over the country. Established under President Ronald Reagan, it has continued with wide bi-partisan support. The EITC has enabled low income households to have an additional tool to help them meet rising costs, even if their income is flat.

New Jersey established the State EITC under Governor Whitman, and it has significantly enhanced the impact of the federal benefit. At a time when costs are increasing and wages are, at best, stagnant, a cut in this benefit means that low income workers will see a significant decrease in their income. Since those who qualify for the EITC are lowest-wage workers, the money is usually spent in the local economy in order to cover the cost of basic necessities, pay off credit card debt or provide job-enhancing education and training. The EITC, therefore, has the effect of being an economic stimulator for local and statewide businesses and institutions, as well as a hedge against crippling debt.

6. Significant cuts to New Jersey FamilyCare

New Jersey FamilyCare, funded by both State and federal dollars, provides health coverage for uninsured children and their parents or caregivers who do not qualify for Medicaid. Under the proposed budget, enrollment eligibility for parents or caretakers of dependent children is reduced from 200 percent to 133 percent of the federal poverty level ($24,352 for a family of three) effective March 1, 2010.

In addition, the New Jersey FamilyCare benefits of all adult legal immigrants who have not been permanent legal residents of the United States for at least five years were terminated effective April 1, 2010. It is estimated that this termination of benefits will affect about 12,000 legal immigrants previously covered under the NJ FamilyCare program. The FY11 budget estimates that the termination of eligibility for New Jersey FamilyCare coverage among this group of immigrants will result in a decrease of State budgetary expenditures in the amount of $29.8 million in FY11. It is our understanding that the termination date for approximately two-thirds of these beneficiaries (those who recently received or are currently receiving medical treatment) has been extended for three months. The FY11 budget estimates that the two eligibility exclusions for FamilyCare enrollment and the immediate termination of certain legal immigrants will result in reduced budgetary expenditures in the total amount of $54.4 million. It is estimated that this loss in state funds will result in a loss of $45 million in federal funds, for a total loss of $100 million in health care funding. In addition to an estimated 11,700 parents who will lose or be denied FamilyCare in FY10, an additional 39,000 parents will be denied FamilyCare in FY11, for an estimated total of 59,000 parents without health coverage.

New Jersey FamilyCare requires that participants share costs in the form of premiums and co-payments, based on income level. According to the budget proposal, premium costs for adults enrolled in New Jersey FamilyCare will increase in FY11. The higher premium costs will result in fewer parents applying for FamilyCare and more parents dropping out of FamilyCare because they cannot afford the co-payments, already a problem under current rates. The budget estimates that these increased premium costs to recipients will result in reduced State budgetary expenditures in the amount of $1.149 million.

It is believed that these three reductions in the FamilyCare program will result in reduced enrollment of children (based on research which shows that parental enrollment affects child enrollment); higher charity care costs that will threaten hospital financial solvency; an increase in sick and unproductive parents; an increase in ethnic disparities in health outcomes; an increase in public health problems at the local level; and a major loss in federal funds, which will also greatly reduce business activity and economic growth.

7. SSI caregiver supplement:

$6.7 million is proposed to be cut from supplemental $200 monthly payments made to individuals who must provide full-time care to their disabled spouses, who receive monthly SSI allowances by reason of their disability.