The Challenge Ahead February 22, 2007 Presentation for Zero-to-Three Fact Finding Trip Eva DeLuna Castro, Budget Analyst deluna.castro@cppp.org (512) 320-0228 x 103

Outline Growing Needs/Needs of Zero to Three Current programs and levels of investment; likelihood of major changes in 80th Session Long-term Challenge: Tax Reform

Texas: A Young, Fast-Growing State Texas has 6.4 million children, second only to California (9.7 million). Texas is almost tied with California in child population growth from 2000 to 2005. Our child population grew by 417,000, vs. 428,000 for CA Texas child pop. grew 7% from 2000-05, behind GA (8.4%), NC (8.4%), FL (11%), AZ (14.7%), NV (20%). Children are 27.7% of the state’s residents. Only Alaska (28.4%) and Utah (30.1%) are younger. By 2040, school enrollment projected to double.

With High Needs Almost one-fourth of Texas children live in poverty (less than $17,170 for a family of 3) Another fourth live in homes that are economically disadvantaged Highest percentage of children without health insurance Limited English Proficiency students: 1996-97 = 514,139 (13.4%); 2006 = 711,237 (15.8%) 38% growth in the total, 18% growth in the rate

A Closer Look at Texans Ages 0-3: By Ethnicity and Income/Poverty, 2004-05 0-3 statistics INCLUDE age 3, unless otherwise stated (2005: about 380,000 Texans age 0, 1; 370,000 aged 2, 3) About 98% of these children (no variation by income) are native-born US citizens; about ¼ have a parent that was foreign-born 52% of Texas’ 1.5 million Zero to 3-Year Olds are “Low Income” (Below 200% of Poverty)

Texans Ages 0-3: By Health Coverage and Income/Poverty, 2004-05 19% of Texas’ Zero to 3-Year Olds are uninsured. Medicaid/CHIP are covering most low-income kids; employer-sponsored or other private coverage reaches most kids at higher income levels.

Texans Ages 0-3: By Family Type, 2004-05 56% of Children Up to Age 3 in Female-Headed Families Live In Poverty, Compared to 17% in Two-Parent or 29% in Male-Headed Families

Enrollment Trends in Child Care and Pre-Kindergarten PreK: As % of 3 and 4 Year Olds Child Care: As % of 0 to 12 Year Olds In 2005, 46% of Texas children served by the federal child care block grant were under 4 years old. US Average: 40%.

Pre-K, Early Education, and ECI Comprehensive Services Pre-Kindergarten ECI Services (for 0-2 Year Olds) Early Education ECI: from 22,000 to almost 52,000 preK: 119,000 to 181,000 Early education: down from peak in 03-04 of 14,500, to current 13,200 Early Education programs through school districts have seen no enrollment growth, but ECI and Pre-K have grown

Child Protection: Confirmed Victims of Abuse/Neglect Zero-to-Three Age group is becoming a larger share of Texas’ children who are confirmed to be victims of abuse or neglect

Child Protection: Foster Care Zero-to-Three Age group also a larger part of Texas’ foster care caseload

Texas Invests Less than Other States State and Local Own-Source Revenue as a Percent of Personal Income, 2004 Local only: 10th (7.3%) State only: 49th (6.7%) 1% of Personal Income = $7 B

Texas Spending Is Flat Sources: U.S. Census Bureau; Comptroller of Public Accounts

What State Government Pays For Source: U.S. Bureau of the Census, State Government Finances series. Data for 2004 for Texas, total expenditures (including trust) of $77.3 billion.

What Local Government Pays For Debt service is a lot larger for local governments — local infrastructure for water, wastewater, transportation, schools, etc. Insurance trust spending is a lot lower than state (state has ERS, TRS, retirement systems for other public employees) — state also has UI Other/inallocable: Judicial/courts, Housing and Community Development, Protective Inspection and Regulation, Air transport, public transit, parking facilities, buildings Source: U.S. Bureau of the Census, Government Finances series. Data for 2004 for Texas, total expenditures (including trust) of $85.7 billion.

How Can There be a “Surplus” in a Low-Spending State? For 2006 and 2007, the Comptroller reports $68.2 billion in general spending, For 2008 and 2009, the Comptroller projects $82.5 billion in general revenue And $82.5 B revenue, 08-09 - 68.2 B spent, 06-07 $14.3 billion “surplus”

What a “Current Services” Proposal Would Have Done with $14.3 Billion (public employee pay/ health ins./pension; prisons; all other) (would restore state parks funding; utility discount; more)

What the Proposed State Budget Would Do with the $14.3 Billion 41% of revenue ($5.8 billion) would not increase state spending

What Would the Proposed 2008-09 Budget Do for Basic Services? K-12: Cuts to Student Success Initiative ($31.8 million less); pre-K grants (-$18.4 m); Reading, Math & Science Initiatives (-$3.4 m); Master Teacher Grants (-$2.7 m) Cover caseload increases in Medicaid and CHIP, but not cost increases (need another $1.6 billion GR for that) Provide funds needed to keep Child Protective Services reform at 2006-07 levels, but not to further reduce caseloads, improve foster care/other provider rates, etc. Higher Ed: Texas Grants would reach only 47,852 students by 2009, a 22% drop from 61,067 in 2006

What Else Would the Proposed Budget for 2008-09 Do? Cut General Revenue Funding for community & other public two-year colleges and 43 state agencies (22 General Government & Regulatory, 5 Judiciary, 4 Public Safety/ Corrections; 7 Natural Resources; 5 Business/Economic Development) Not completely make up for loss of federal funds for child support enforcement Cut TANF cash assistance funding by 11 percent; caseloads drop 4 percent (to 131,820 by 2009) Cuts child care slots for “working poor” families from 104,439 in 2006 to 96,964 in 2009 (7% cut)

Cost of Reducing School Property Taxes Compared to New Revenue $5.2 billion gap $5.8 b gap

From a Taxpayer’s Point of View Sources: Comptroller of Public Accounts, Annual Property Tax Report; Cash Report.

Taxes, From the State’s Point of View

All Revenue, From the State’s Point of View

State Government Sources of Nonfederal Revenue

Indicators of Ability to Pay Texas US Average rank Per Capita Personal Income, 2005 $32,462 $34,586 27th State and Local Taxes as a Percent of Personal Income, 2004 9.4% 10.4% 43rd Sources: Bureau of Economic Analysis and the Census Bureau.

Households with the Lowest Income Pay the Highest Percentage in State and Local Taxes

The Top One-Fifth of Texas Households Pays Less Than Its Fair Share of Taxes