Louisiana faces a massive ‘fiscal cliff’ in 2025, when $650 million in tax revenue rolls off the books. State leaders have told public colleges and universities to brace for up to $250 million in cuts next year because of the budget shortfall. The Times-Picayune | Baton Rouge Advocate’s Marie Fazio explains what this would mean for universities in the state:
The cuts would result in a $50.4 million, or 20.3%, reduction in scholarships, including TOPS, Go Grants, RCP, the Patriot Scholarship and GO Youth ChalleNGe, said Sujuan Boutte, executive director of the office of Louisiana Office of Student Financial Assistance. That means students would receive lower awards and stipend amounts. Elizabeth Bentley-Smith, associate commissioner for finance and administration for the Board of Regents, said colleges and universities across the board voiced concerns about mental health of students, faculty and staff amid cuts might mean program reductions, layoffs and increased workload for staff after cuts.
Reality check: The Legislature created the fiscal cliff, and the Legislature can also avoid these potentially devastating cuts by simply renewing or replacing the tax revenue that is set to expire.
Schools race to spend Covid dollars
The federal government provided unprecedented aid to states and local school districts to navigate the education challenges caused by the Covid-19 pandemic. But that aid is set to expire by the end of September. Louisiana, which received a total of $4 billion, still has $540 million in unspent funds. The Times-Picayune | Baton Rouge Advocate’s Patrick Wall reports on the race to beat the spending deadline:
Schools have until Sept. 30 to budget any remaining COVID dollars, and until Dec. 16 to spend them. States could apply for an extension, but Louisiana declined to do so. Now, if schools fail to meet the deadlines, they could be forced to return their leftover funds to the federal government. … State Superintendent of Education Cade Brumley said he is confident school districts can meet the deadline, noting that they spent more than 99% of the first two aid packages on time. Still, he underscored that districts have no time to waste.
School districts used the federal dollars to expand tutoring programs, pay for new textbooks and make crucial infrastructure and technology upgrades. Wall explains how education leaders have been preparing for the end of pandemic-related funding:
District officials say they developed their COVID spending plans with sustainability in mind, hoping to avoid major cuts after the aid ends. To that end, most districts refrained from using the federal money to hire new employees who might have to be laid off later.
Congress examines welfare scandal
The federal Temporary Assistance for Needy Families (TANF) program provides states with federal block grants that are supposed to be used, in large part, to provide basic cash assistance for low-income families with children. But far too often these dollars are funneled to other areas that have no relation to the program’s intended purpose. Mississippi Today’s Anna Wolfe, reporting from a congressional hearing on the misuse of TANF funds, explains the lack of oversight and tenuous understanding of the program:
Minutes before the U.S. House Committee on Ways and Means held a hearing Tuesday on the topic of the Temporary Assistance for Needy Families, the subject of a still unfolding scandal in Mississippi, Chairman Rep. Jason Smith huddled with his colleagues. The other congressmen wanted to know why the chairman had invited former NFL quarterback Brett Favre — who is facing civil charges for his alleged role in diverting TANF funds to a volleyball stadium and a pharmaceutical startup — to testify. Then, Smith revealed, one of the congressmen asked a question that underscored the larger problem: “What is TANF?”
Wolfe explains how a review of non-cash TANF spending revealed a nationwide problem:
The [House Ways and Means] committee wanted to know, among other things, how states track the performance of their non-assistance programs, how they ensure they are submitting accurate financial reports, and what the federal government does with the annual TANF audit findings it receives. The report, released in conjunction with the hearing, shows that from 2021-2023, all 50 states had unresolved audit findings in their TANF programs, 50 of which were “severe” and the majority of which were repeated findings from previous years.
Louisiana is one of at least five states that sends TANF dollars to controversial crisis pregnancy centers, a highly unregulated industry that counsels women against abortion and promotes abstinence-only approach to sex education.
Teeing up the next health care fight
Congressional Democrats will unveil a plan on Wednesday that would make permanent federal subsidies that have made health insurance more affordable for millions of Americans. The premium tax credits (PTCs), which expire at the end of 2025, are opposed by Republicans. The Washington Post’s Dan Diamond reports on the next big health care fight that will consume Washington and perhaps the next president, and affect the future of the Affordable Care Act:
The tax-credit fight is part of a broader political debate over how to administer the ACA, said Rodney Whitlock, a vice president at McDermott+Consulting who analyzes health policy. Harris, the Democratic presidential nominee, has promised to expand enrollment through the law if elected president. Sen. JD Vance (Ohio), the Republican vice-presidential nominee, recently floated a plan to roll back the ACA’s approach to how chronically ill people shop for health plans.
Number of the Day
4% – Percentage increase in real (inflation-adjusted) median household income in 2023, the first increase since the Covid-19 pandemic. (Source: U.S. Census Bureau via the Economic Policy Institute)