The Districts Dime

It’s Your Turn, Mayor Bowser, To Move Paid Family and Medical Leave Forward

February 7th, 2017 | by Ilana Boivie

The ball is in Mayor Bowser’s court on paid family and medical leave, now that the Council Chairman sent the approved Universal Paid Leave Act (UPLA) to her last week. She should sign the bill and start planning for its implementation, because paid family and medical leave will help the vast majority of DC residents, improve public health, address economic disparities—and all without making the growing DC economy miss a beat.

pflThis program will give 8 weeks of paid leave for new parents to be with their children, 6 weeks to workers who need to care for an ill relative, and 2 weeks for workers to address their own health needs.  The benefits are many:

First, paid family leave will benefit two-thirds of working District residents—that’s the share of DC residents who work in the city for a private-sector business.[1]

UPLA will be especially beneficial to low-income communities of color, including residents east of the Anacostia River.  Because the program will replace 90 percent of wages for the lowest-paid workers, working DC residents in Ward 7 and Ward 8 will, on average, get more of their wages replaced under paid family and medical leave than workers from other parts of the city.

Second, UPLA will be helpful to small businesses that otherwise are unable to afford to provide these benefits. (DCFPI, for example, will be able to offer this level of paid leave for the first time thanks to this program.)

Finally, UPLA will have positive public health and economic impacts, according to a thorough analysis by the DC Council Budget Office:

  • Women’s labor force participation in the District will increase,
  • The District’s infant mortality rate will decrease, and
  • Paid family leave is “unlikely to alter the current upward trajectory of the District’s economy.”[2]

Once UPLA officially becomes law—after the Mayor’s review and the typical 30 day congressional review period—the program’s start-up costs still must be funded. Some $20 million in new funding is needed for important start-up costs, such as IT infrastructure. This could be funded by changing DC’s fiscal policy to allow spending some of the recent surplus. Once the start-up costs are provided, the program will be self-sustaining through an employer payroll tax.

Because UPLA stands to help DC residents, small businesses, and the broader economy, we encourage local and federal policymakers to ensure that it becomes law, so that we can get to work on beginning to implement this very important program.

 

[1] The bill does not cover Federal workers, DC government workers, or DC residents who work outside of the District.

[2] The Council Budget Office concludes that under paid family leave, DC’s economy will be at least 99.9 percent as large as it would be without adopting this program.

 

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We Should Put DC’s Latest Surplus to Use

February 6th, 2017 | by Chaz Rotenberg

The District ended 2016 with a lot more money in the bank, money that could be used to create more affordable housing, renovate more schools, or pay the start-up costs for the new paid family and medical leave program. But to make those important investments, we first need to change the policy that requires all surplus funds go into savings, which ties policymakers’ hands and takes away any choice over how to use the city’s growing resources.

general fund balanceThe just-released audit of the District’s finances—the Comprehensive Annual Financial Report (CAFR)—showed a dramatic $222 million increase in our General Fund balance in 2016. The fund balance represents DC’s accumulated assets, including various reserve funds. The fund balance has grown substantially in recent years, to $2.4 billion in 2016 from just over $1 billion in 2009, and is now at a record high.

DC can end the year with more money in the bank—a surplus in budget terms—for a lot of reasons, just as you might end the year with a little extra in your budget. In 2016, the District collected more in taxes than expected, and spent less than had been budgeted. A year-end surplus is unique to each year’s circumstances, and it is unpredictable from year to year. For that reason, year-end surpluses can be used for only one-time expenses like building affordable housing or schools.

About $160 million of the fund balance increase is potentially available to spend on important one-time expenses to help DC residents. However, due to a policy the District adopted in 2010, all year-end surpluses must go into savings until the city has enough cash in reserve to fund DC government for 60 days. Having this much cash on hand is helpful mostly for the purpose of managing the city’s cash flow, including paying bills in between periods when major tax payments are made. Having cash on hand limits the need for short-term borrowing during the year. Yet short term borrowing currently is a small cost to the city—just $1.25 million in interest payments in 2017. Given this, it is not clear that saving surplus funds should be DC’s only priority this year.

Instead, the District should modify its saving-as-the-only-choice approach and use some or all of the surplus to build new affordable housing, preserve affordable housing that needs repairs, build or renovate schools to accommodate DC’s rapidly growing population, or set up a computer system for paid family and medical leave.[1]

Last week, at the Progress Amidst Uncertainty: Making the Most of DC’s 2018 Budget event, DCFPI outlined three policy proposals in response to the growing city surplus: delay the tax-cut triggers, spend the surplus, and set up a reserve fund. These are just a few of the ways that the District’s fiscal policy can be revisited to build stronger communities across the city.

We hope that Mayor Bowser will consider revising DC’s surplus policy in her proposed FY 2018 budget, so that some of the surplus can be spent on much-needed programs and services.

 

[1] Because a year-end surplus is not guaranteed every year, the District cannot use the surplus to fund programs or services that have ongoing costs, like hiring more teachers or providing permanent supportive housing to residents experiencing chronic homelessness.

 

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Medicaid “Block Grant” Is Just Another Way of Saying “Medicaid Cuts”

February 3rd, 2017 | by Jodi Kwarciany

Recent Congressional proposals to alter Medicaid through block grants could eventually set the District back by more than $2 billion or more each year, and critically harm gains that have led DC to have one of the highest rates of health insurance coverage in the nation.

In the District, the federal government generally covers 70 percent of Medicaid costs—meaning for every dollar the District spends on Medicaid services, it receives 70 cents back from the federal match. This structure ensures that DC gets additional federal dollars as needed, for instance, if more people become eligible for Medicaid if they lose a job in an economic downturn.

health careBlock grants would upend that partnership entirely, by instead providing states with a fixed amount each year, regardless of changes in enrollment or health care costs. This raises concerns that a block grant would reduce federal health care funding so significantly that DC may be forced to scale back health benefits that recipients rely on, or to even cut residents off Medicaid entirely.

One key question is how a block grant’s baseline funding would be set. For example, would a block grant take into account DC residents who became eligible when DC expanded eligibility under the Affordable Care Act, since not all states chose to expand? If not, this could be incredibly harmful for the District, since 77,000 residents are now covered by Medicaid as a result of the expansion—one-third of DC’s Medicaid population.

Another question is whether block grant funding would grow over time. Many federal block grants, like the TANF block grant that supports cash assistance and employment services for families, have not been adjusted since they were established, even for inflation. Even if a Medicaid block grant were tied to inflation, the District and states would face problems if health care costs rise faster than inflation, a common occurrence, making a block grant a chronically and increasingly under-funded option for states over time.

A new report from the Office of the District of Columbia Auditor highlights the possible impact of policies proposed by President Trump and Congress that would repeal the Affordable Care Act and convert Medicaid into a block grant. These proposals would result in substantially lower federal payments to states over time, according to the report, and DC in particular could lose as much as $2.1 billion annually by fiscal year 2028 and leave tens of thousands of DC residents without insurance.

Supporters argue that block grants would give DC and the states greater flexibility on how they spend money because there would be fewer stipulations tied to how they spend their block grant. But current Medicaid rules already allow states significant flexibility, much of which comes from the spending formula that allows states to be responsive to needs—such as an economic downturns, public health epidemics, or promising pilot programs that may generate health savings down the road.

The District should be applauded, not penalized, for leveraging the Affordable Care Act to provide affordable and quality insurance options for all DC residents. It’s through these efforts that DC’s uninsured rate is now one of the lowest in the nation. Any plans to change that would be unwise.

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It’s Time to Stop Budgeting with Our Hands Tied: How to Make the Most Out of DC’s FY 2018 Budget

February 1st, 2017 | by Ed Lazere

The District is thriving financially, with growing revenues and healthy reserves, yet we’ve adopted policies that limit the ability to use these resources to meet our biggest challenges. That is a problem as Mayor Bowser and the Council are getting ready to put together a budget for 2018. A forum yesterday organized by DCFPI and a number of partners talked about how to untie the city’s hands this budget season, so that we can continue to make progress on huge issues like homelessness, Metro and the school achievement gap in the face of federal budget cuts.

jared bernsteinThe forum, Progress Amidst Uncertainty, started with economist Jared Bernstein of the Center on Budget and Policy Priorities. He applauded the District as a leader in charting a progressive agenda to address income inequality, including increasing the minimum wage, creating paid family and medical leave, and investing in affordable housing. Bernstein urged the District to continue promoting this agenda, to protect DC residents from threats of federal safety net cuts and to showcase that a different approach to governing is possible.

chart-revenue and budget prioritiesDCFPI’s Ed Lazere focused on how restrictive fiscal policies adopted by DC’s leaders take away the choices that we should have over how to use our growing resources.  He highlighted three steps that DCFPI and more than 50 other organizations support to help the District make the most out of the FY 2018 budget.

  • Put automatic tax cuts on hold: A policy established three years ago prioritizes tax cuts as the city’s revenues grow. Yet the automatic “tax-cut triggers” make it hard to address urgent needs, like a growing student population or Metro.
  • Use last year’s surplus for important one-time investments: When the city ends the year with a little extra money—a surplus—current rules dictate that the only choice is to put that money in savings. With the District’s fund balance at a record high level, and another large surplus for 2016 (which will be announced very soon), it’s appropriate this year to put some of the it to use to build or preserve affordable housing, provide the start-up costs for the new paid family and medical leave program, or other important things.
  • Create a reserve for federal budget cuts: It’s likely that DC will face federal cuts in the coming year, but the full extent is unlikely to be known until well after the DC budget is adopted. The mayor and Council could create a reserve for the coming year to offset these cuts and give time to adjust to the new federal reality.

event panelThe Progress Amidst Uncertainty forum also included a panel discussion led by Children’s Law Center Executive Director Judith Sandalow that included Bread for the City Executive Director George Jones, Academy of Hope Public Charter School CEO Lecester Johnson, and DC residents Angela Hodges and Keyla Ryland. They discussed the urgency of addressing racial inequities and poverty in the District, and the important role that the DC budget can play. Angela Hodges pointed out that without programs like Medicaid, “I wouldn’t be here today.”

If you missed the event, you can watch it here.

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Very Healthy Finances Mean DC Can Stay Strong Amidst a Federal Storm

January 27th, 2017 | by Ed Lazere

The DC government’s finances are in better shape than almost any other U.S. city, thanks to large reserves, relatively small debt, and rising home prices. That great news is likely to get even better next week, when we’ll learn how the city’s finances fared in 2016. All signs suggest that the District ran a healthy budget surplus. DC’s solid financial position is a testament to the work of DC’s elected officials and our Chief Financial Officer.

revneueforecastsurpluschartThe good news means that the District is better suited than many cities to weather a recession—or federal budget cuts that seem likely to come soon. It also means that the District can safely modify policies that have limited our ability to use improving finances to meet the needs of residents and businesses, especially the policy to put all year-end surpluses into savings.

DC’s financial health ranks 9th out of 116 U.S. cities, according to a recent analysis by Fiscal Times. That top-notch credit score stems primarily from DC’s large reserves and relatively low debt, but also its well-funded pension system and rising home prices. For example, DC has assets (“fund balance”) equal to 30 percent of its revenues, close to the 32-percent level needed to earn the highest ranking. The only large city that scored better overall than DC was Boston.

As DCFPI has pointed out, DC’s savings are at a record high. Our general fund balance stood at $2.2 billion at the end of 2015. And that number is likely to get even bigger next week, when DC’s audit of 2016 finances is announced; it’s likely to show that the District had a surplus

With such strong reserves, it is time for the District to consider spending some of the surplus this year rather than continuing to put 100 percent in savings. The surplus could build more affordable housing under the Housing Production Trust Fund, for example, or preserve low-cost housing in developing neighborhoods. It also could be used to pay for the start-up costs needed for DC’s paid family and medical leave, approved last year by the DC Council. These are just a few ideas.

As Mayor Bowser and the DC Council gear up to develop a budget for 2018, it’s good to know that our finances are strong, and a good time to think about the best ways to use DC’s growing prosperity to invest in our community.

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