September Trends

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Trends and Transitions: September 2011

Children and a bus

Investing in Children Early 

Bucking a national budgeting trend, early childhood appropriations didn’t get the squeeze this past year despite tight state economies. Early care and education funding was stable, and prekindergarten and home visiting programs even received increases nationwide, according to a recent survey by NCSL.

In FY 2011, overall state appropriations to early care and education (prekindergarten, child care, home visiting and early childhood initiatives) were up almost 1.5 percent, as well as investments in programs for infants and toddlers, early childhood mental health care, and public-private partnerships.

States were able to draw on federal American Recovery and Reinvestment Act (ARRA) funds, including money appropriated to the federal Child Care and Development Block Grant, and the education and fiscal stabilization funds. Most of the ARRA funds went to child care, with smaller amounts for prekindergarten and home visiting programs. Fewer states allocated these funds in FY 2011 than in FY 2010, probably because those states spent more of these federal funds in FY 2010 to avoid cuts.

A big surprise this year was that a third of the states boosted prekindergarten funding by $394 million (which comes entirely out of state general funds). Survey findings from the past few years show some states have increased investments in prekindergarten every year.

Lawmakers also showed their support for home visiting programs that connect trained professionals with prospective and new parents during pregnancy and the first three years of a child’s life. These programs help reduce child abuse, improve child health and development, and identify potential problems early. Of the 40 states reporting some type of home visitation program, 27 increased funding. In FY 2010, they were the hardest hit segment of state early education budgets in terms of percentage cuts, at 10 percent.

Child care funding, however, was a challenge for states. Almost half made cuts totalling $244 million.
 

Freedom Trail

The Mercatus Center at George Mason University, a market-oriented think tank, has ranked states based on their “public policies that affect individual freedoms in the economic, social and personal spheres.” New Hampshire, the “Live Free or Die” state, came out on top, while the Empire State came in last, according to the center’s criteria. It considered more than 150 policies, from alcohol to taxes, education to utilities and everything in between.

New Hampshire
2. South Dakota
3. Indiana
4. Idaho
5. Missouri
6. Nevada
7. Colorado
8. Oregon
9. Virginia
10. North Dakota
11. Florida
12. Oklahoma
13. Iowa
14. Texas
15. Georgia
16. Tennessee
17. Kansas
18. North Carolina
19. Alabama
20. Utah
21. Wyoming
22. Arizona
23. Nebraska
24. Mississippi
25. Wisconsin
26. South Carolina
27. Michigan
28. Arkansas
29. Montana
30. Vermont
31. Pennsylvania
32. Kentucky
33. Maine
34. Minnesota
35. Louisiana
36. West Virginia
37. New Mexico
38. Connecticut
39. Delaware
40. Washington
41. Illinois
42. Ohio
43. Maryland
44. Alaska
45. Rhode Island
46. Massachusetts
47. Hawaii
48. California
49. New Jersey
50. New York

State of Pensions

Twenty-six state legislatures have made significant changes to their retirement systems so far this year. Over the last two years, 39 states in all have enacted substantial revisions to at least one state retirement plan. With just two exceptions (Michigan and Utah), state lawmakers have revised rather than replaced traditional defined benefit pension plans.

Legislation on pension reform, as of the end of July, was pending in Massachusetts and Ohio, and the governors of California and New York had proposed changes that were likely to be considered later in the year or in 2012.

The changes include:

INCREASING EMPLOYEE CONTRIBUTIONS. Sixteen legislatures increased employee contribution amounts this year, and nine did so last year. The increases apply to all current employees in 18 states and only to new employees in seven states. In nine of these states, contributions by employers were reduced, reflecting a trend toward equalizing employee and employer retirement contributions. (See map.)

CHANGING ELIGIBILITY RULES. Twenty-three legislatures have increased age and service requirements for retirement for state employees, teachers or both in the past two years. In most states, the new rules apply only to people hired after the effective date of the legislation. Most of the changes move the age of retirement closer to 65 and increase the amount of service credits required to retire early. Twelve states have also increased minimum eligibility requirements, called vesting, by three to four years.

MODIFYING HOW BENEFITS ARE CALCULATED. This year, five states—Florida, Hawaii, Maryland, Montana and Vermont—have lengthened the time period for figuring average salaries, upon which benefits are based. Eight states—California, Iowa, Illinois, Louisiana, Michigan, New Jersey, Utah and Virginia—made similar changes last year. In most cases, the change was from a person’s highest 36 months to the highest 60 months. Florida changed its provision from the highest five years to the highest eight. All these changes apply only to people hired after the effective date of the legislation.

REVISING AUTOMATIC BENEFIT INCREASES. Seventeen states have reduced their automatic cost-of-living adjustments in the past two years. Six of the nine legislatures that made changes this year will apply the new rules to future retirees, while the other three decided to apply the changes to current employees as well.

Sharia Law Assailed

Some state lawmakers and their constituents are concerned about the influence of Islamic law (Sharia) in America. In 2010, legislators in Louisiana and Tennessee passed laws prohibiting the use of foreign or religious law in state courts. In Oklahoma, voters passed an amendment to the state’s constitution forbidding state courts from using any element of Sharia law in state courtrooms. A federal judge blocked the law, however, on the grounds that it targeted the Muslim community and potentially violated the establishment clause of the First Amendment.

In response to the ruling, Representative Sally Kern introduced a redesigned bill that would have prohibited any court action based “on any law, rule, legal code or system that would not grant the parties affected by the ruling or decision the same fundamental liberties, rights, and privileges granted under the United States and Oklahoma Constitutions.” It died in committee, however, over concerns about its constitutionality.

“It’s a non-issue. It’s not happening,” Oklahoma Senator Andrew Rice told The Edmond Sun. “It’s meant just to sort of gin up anxiety and fear, and it’s too bad it’s going on at the Capitol.” Opponents believe these laws are creating hostility against Muslims and encouraging intolerance, hate and bigotry.

More than 20 legislatures this year have debated similar bills banning the use of any religious or foreign law in courtrooms and any application of it when it conflicts with state or federal constitutions. Only Arizona has passed its legislation this year.

The issue also has found its way into the presidential campaign. In July, Michelle Bachmann and Herman Cain signed a pledge to reject “Sharia Islam and all other anti-woman, anti-human rights forms of totalitarian control.”

 

A Growing Gap

The bursting of the housing market bubble in 2006 and the recession that followed have taken a far greater toll on the wealth of minorities than whites, according to a new report by The Pew Research Center.

The wealth gap between whites and minorities is now the widest it’s been in 25 years—roughly twice the size that existed then. Whites now have, on average, 20 times more new worth than African-Americans and 18 times more than Hispanics.

From 2005 to 2009, Hispanics’ inflation-adjusted median wealth fell by 66 percent, African-Americans’ by 53 percent, and whites by 16 percent.

The Pew Research Center analyzed data from the Survey of Income and Program by the U.S. Census Bureau.