Wonky Words: OBPP vs. LFD

Now that the elections are over, talk around the state will focus on the upcoming legislative session. Things are already heating up with the Governor’s budget release, and the Revenue and Transportation Interim Committee (RTIC) is meeting today to decide on the revenue estimate.

But before we get to what RTIC will decide on the revenue estimate, we thought we’d do a quick “brush up” on the agencies who are providing recommendations to legislators.

These are two agencies that folks should be familiar with as we discuss the budget –the Office of Budget and Program Planning and the Legislative Fiscal Division. The difference between OBPP and LFD can get very confusing, but both are very important when talking about the state budget.

Here is where they are similar.

Both are government agencies housed in the State Capitol. They both provide fiscal analysis on the state budget and provide feedback to Legislators and other interested parties.

Here is where they are different.

The head of the OBPP is the budget director who is appointed by and reports to the governor. The director of the LFD reports to the legislature and does not change when legislative leadership changes. Each is responsible to a different government entity, which can lead to different analysis and conclusions based on the information requested by their respective employers.

Throughout the year, both OBPP and LFD monitor the budget and make note of any changes in revenue or expenses. The LFD reports findings to the appropriate legislative committee and OBPP makes recommendations to the governor on any necessary changes.


Today, both agencies will present their estimates for where revenue will be for the next two years (the 2019 Biennium). Below is a chart that LFD has prepared, which shows where each agency is at in the amount of revenue for the next two years. The differences in their estimates this biennium are not nearly as significant in past sessions. OBPP projects revenue slightly below what LFD is projecting.




Each November in even years (because the legislature always meets in odd numbered years), RTIC prepares a revenue estimate “projected to be available for legislative appropriation.” This initial estimate is considered the official estimate for the legislative session until it is amended or adopted by both legislative chambers. In general, this estimate is introduced as House Joint Resolution 2 (HJR 2). After the session begins, the initial revenue estimate can be debated, amendments can be made, and both the House and Senate can approve the final revenue estimate.

While the process and the details can get pretty complicated, the revenue estimate is a critical component for how Montana will invest in our state. The estimate has real implications on families and communities across Montana. Stay tuned as we see how things play out today.


Wonky Word Wednesdays: Two-Generation (2Gen)

For today’s Wonky Word Wednesday, we’ll examine an approach aimed to support families experiencing poverty, called a two-generation method. And tomorrow, we’ll then talk about some of these approaches and how policymakers can support them.

Too often, policies aimed to reduce poverty focus on either children or their parents, not the whole family. Solutions miss the mark when they focus just on children, without addressing issues like work support for their parents.

A two-generation (often referred to as 2Gen) approach creates policy or programmatic solutions that move the entire family toward economic security. The Aspen Institute’s project on 2Gen has identified four core components that individuals should focus on in order to create impacts that will pass from one generation to the next:2gen

Education – When parents have access to quality and affordable education and workforce development programs for themselves, they earn more – and in turn – can better provide for their children. Likewise, children need access to quality early childhood education programs, like pre-kindergarten. When they do, they perform better in school, are less likely to commit crimes as adults, and have higher earnings later in life. These two components can often be provided simultaneously. For example, Flathead Valley Community College provides a state-of-the-art pre-kindergarten program on campus for students, faculty and the community.

Social Capital – Social capital refers to the networks of relationships that individuals have in their communities, which provide them with information, resources, and support. Families rely on these trusted networks among their friends, family members, neighbors, work colleagues, and local organizations in order to get what they need to thrive. For example, parents with access to affordable and quality child care providers are able to remain working and have the piece of mind that their children are in a safe environment.

Economic Supports – Access to financial education and asset building opportunities, like savings accounts, increase parents’ earnings and put them on a path toward a stable financial future. For example, efforts to provide parents with the ability to save for a child’s college education provides the direct benefit of making post-secondary education more feasible for the child, but it also helps build the parents’ skills and understanding in the importance of saving.

Additionally, research shows that children who move out of poverty early in life benefit as adults. For example, children of parents who receive the federal earned income tax credit are more likely to attend college and have higher earnings later in life.

Health and Well-Being – families need access to programs that enable them to remain healthy and ensure their well-being, including mental health services and addressing negative childhood experiences. While Montana has provided access to health care for hundreds of thousands of children in Montana, it is also important to provide affordable access to health care for their parents as well. With Medicaid expansion in Montana, low-income parents can afford health care and take preventative measures for themselves and their children. Healthy parents remain working and providing for their families and healthy children remain in school and learning.

Applying these core principals to programs, policies, and research – at both the state and federal level – will help families build economic security that extends from one generation to the next. Stay tuned to learn how President Obama used 2Gen in his 2017 budget.


Wonky Word Wednesdays: Volunteer Income Tax Assistance (VITA)

It’s that time again, another Wonky Word Wednesday. With many Montanans receiving their W2s and free tax prep sites opening their doors this week across the state, tax season is officially off and running.

Let’s delve into a service that makes it easier for you to get more of what you earn back and invest in your community. Today’s wonky word is VITA (Volunteer Income Tax Assistance).

VITA is an IRS program that was created in 1971 to help low-and moderate-income taxpayers receive free tax filing assistance. Visiting a local VITA site enables individuals to file taxes without errors, receive their refunds sooner, and claim credits that can be overlooked, like the federal earned income tax credit (EITC), or deductions for students paying for college.

Every year, fellow Montanans around the state volunteer their time – usually from January through April – first becoming IRS-certified volunteers and then helping individuals in their community file electronic income tax returns free of charge.

Individuals with yearly incomes of $54,000 or less and with fairly straightforward returns qualify for free services through VITA sites and can pick from many site locations. This year, organizations focused on improving Montanans’ financial security, like Montana Credit Unions for Community Development and Rural Dynamics, Inc., are operating over 60 VITA sites located from Missoula to Glendive and in between.

Additionally, 25 free tax assistance sites through AARP are also located throughout Montana, geared toward providing individualized tax preparation for low-and middle-income seniors. However, non-AARP members can also receive free tax filing support through these Tax-Aide sites too.

Learn more here to see if a free tax site is located near you and what materials you may need.


Wonky Word Wednesdays: The Census Bureau

This week, the U.S. Census Bureau will release statistics highlighting poverty, income, and health insurance coverage from 2014. But before we dive into the specifics of what this data means for Montana’s economy and working families, let’s take a moment to learn about the U.S. Census Bureau and what it does. So here is today’s wonky word – Census Bureau.

The Census Bureau was created in 1903 and is constitutionally mandated to count the entire U.S population every ten years. This count is used to determine the number of members of each state that are elected to the U.S. House of Representatives. Remember in 1993 when Montana went from two house seats to one? Well, you can thank the census for that.

Since its creation, the role of the Census Bureau has extended and now, many different censuses and surveys are conducted to provide economic, education, employment, health, poverty, and family make-up data at the state and national level. (Note: a survey collects data on a sample of the population and a census collects data about every member of the population).

The Census Bureau conducts some of the following censuses:

  1. The Decennial Census of Population and Housing is conducted every ten years and counts every U.S resident in order to determine the House of Representatives.
  1. The Economic Census is conducted every five years and measures outcomes related to business and the economy nationwide.
  1. The Census of Governments is conducted every five years and is a comprehensive measure of state and local government operations and activities.

Two key surveys from the Census Bureau tell us about income and poverty in our state.

  1. The American Community Survey (ACS) is an ongoing survey that samples a small population of the U.S and releases information about ancestry, educational attainment, income, employment, housing etc. The survey provides detailed characteristics at state and local levels and allows you to compare data between states.
  • The Small Area Income and Poverty Estimates (SAIPE) measures the population of individuals living in poverty by age and income at state and local levels. These estimates are built from ACS data.
  1. The Current Population Survey (CPS) is a joint effort between the Census Bureau and the Bureau of Labor Statistics (BLS). Like the ACS, this is also an ongoing survey that collects information about income, family relationships, and labor force estimates. The BLS uses these estimates to release monthly reports on the employment situation across the U.S. The CPS also provides long-term trends in state poverty.
  • The Annual Social and Economic Supplement (ASEC or March CPS) is based off of the CPS. In March, the CPS includes supplemental questions on income, work experience, poverty, and health insurance coverage. This data is used to create the official source of poverty nationwide, the Official Poverty Measure.

Stay tuned Thursday as the Montana Budget and Policy Center digs into the newly released data and highlights what ACS, CPS, and ASEC figures mean for the economy, those living in poverty, and health coverage in Montana.

Wonky Word Wednesdays: Tribal Consultation

Today, the state of Montana is holding a tribal consultation, an important requirement in the process to submit its Medicaid expansion waiver to the federal Center on Medicare and Medicaid Services (CMS). But what is a tribal consultation, and why is it important? That brings us to today’s Wonky Word – tribal consultation.

According to CMS, tribal consultation between state Medicaid administrators and tribal leaders and tribal health programs is to “provide an enhanced form of communication that emphasizes trust, respect, and shared responsibility. It is an open and free exchange of information and opinion among parties, which leads to mutual understanding and comprehension. Consultation is integral to a deliberative process that results in effective collaboration and informed decision-making with the ultimate goal of reaching consensus on issues and better outcomes.”

Under federal law, states must engage in tribal consultations when applying for a 1115 waiver. According CMS, tribal consultation requirements are in place to recognize the sovereignty of tribal governments and ensure that any changes to a state’s Medicaid program will not inadvertently create problems for Indian health services. Apart from being required by federal law, this type of discussion is an indication of a state’s effort to support positive and genuine state-tribal relations.

Today, Montana is conducting its tribal consultation in Helena to discuss the soon-to-be-submitted waiver to give tens of thousands of Montanans access to affordable health care. You can view the Department of Health & Human Services invitation to the tribal consultation here.

In the past, states that have failed to properly follow the tribal consultation requirements have been met with disapproval either from CMS or from tribal leaders and their advocates. It is important for states to know that inadequate consultation could potentially hinder a state’s waiver approval. An example of this consequence include a letter from the New Mexico Center on Law and Poverty about the lack of tribal consultation resulting in the CMS rejection of New Mexico’s waiver application. Similar circumstances have occurred in Kansas and Oklahoma.

In 2013, CMS released a report on tribal consultation best practices, which included formal tribal health consultation policy examples from Washington, Oregon, and Minnesota. Here is the report summary of successes and challenges:

Respondents noted various attributes that contribute to the success of these interactions, including: Involvement and support of tribal and state leadership, an established state-tribe relationship, and genuine, meaningful, and open communication. In contrast, barriers to effective consultation reflected issues such as: obstacles created by consultation requirements, state or tribal staff turnover, and resource limitations preventing participation in consultations.

You can view the entire CMS Tribal Consultation Best Practices report here.

Tribal consultations are important government-to-government discussions that help ensure the proposed state policy takes into account tribal sovereignty and the strengths and needs of Indian Country. We look forward to hearing from the tribes and the state on how today’s consultation will make Montana’s waiver even better.

Wonky Word Wednesdays: Social Security

Friday marks the 80th anniversary of the signing of the Social Security Act in to law and to celebrate, we’re dedicating today’s wonky word to Social Security. (Friday we will learn why it is one of the most effective government programs to date.)

In 1935, President Roosevelt signed the Social Security Act as a part of his New Deal plan to lift America out of the Great Depression. Social Security is a federal program that provides benefits and insurance to older and disabled Americans. Those who qualify to receive benefits include:

  • Starting at the age of 62, individuals receive social security as retirement income
  • Disabled individuals
  • Children under the age of 18 or spouses who receive survivor benefits after the death of a primary breadwinner

The program is funded through payroll taxes collected from employees and employers. But there’s a cap on how much businesses and workers pay into the program.

In 2015, a worker pays into Social Security up to the first $118,500 in annual earnings. Because of this cap, an individual earning more than $118,500 per year will not contribute payroll taxes on income above this threshold and this individual will also not receive benefits based on income above the threshold. The reason is this. Individuals earning above $118,500 per year are more likely to have the financial resources to make ends meet after they retire or if they become disabled. Therefore, higher-income individuals do not need Social Security benefits at the same rate as low-to-moderate-income individuals do. In fact, the majority of Social Security recipients have few if any other income sources. For two-thirds of elderly recipients, Social Security comprises half of their total income.

Payroll taxes used to fund Social Security are collected by the IRS and placed in to separate funds used to cover the processing and administration of benefits for those receiving retirement, disability, death, or survivor benefits. Collectively, these separate funds are referred to as Social Security Trust Funds.

On Friday, we’ll explain why Social Security is not only a program for retirees and how its broad impact lifts millions of Americans out of poverty each year.

Wonky Word Wednesdays: Supplemental Poverty Measure

A few weeks ago, we discussed how the Official Poverty Measure has been the standard statistic used to measure poverty in America for the last 50 years. Today, we’ll introduce our second wonky word related to the topic of poverty measurement, the Supplemental Poverty Measure, and discuss why it’s a more comprehensive tool.

The Supplemental Poverty Measure (SPM) was created in 2011 as a complimentary statistic to be used along with the Official Poverty Measure in order to provide a better picture about poverty rates in America. Unlike the OPM, which only looks at a family’s pre-tax cash income, the SPM paints a clearer picture about the actual cash on hand a family has. The SPM assesses a family’s income, excluding expenditures on necessities like food, clothing, shelter, and utilities and expenses like federal and state taxes, transportation, child care, and out-of-pocket health care costs. In effect, the SPM shows what cash a family actually has on hand to make ends meet.

Further, the SPM factors in federal in-kind benefits (like SNAP and TANF cash benefits) and tax credits like the earned income tax credit, all of which help increase a family’s net income and allow them to rise above poverty levels.

So why is the SPM a more comprehensive and appropriate tool to measure poverty today? Statistics are most useful when they can tell a story over time. However, using the OPM alone to understand poverty rates between the 1960s and today is misleading.

The OPM does not take into account any of today’s poverty relief efforts and does not account for different costs of living across the country in the same way that the SPM does. For example, when estimating how many individuals are lifted out of poverty in 2011, the SPM captured about 12,500 more people than the OPM because it accounted for non-cash benefits and tax credits like SNAP and the earned income tax credit, which boost income levels. Therefore, the SPM indicates slightly higher poverty rates in any given year compared to the OPM, but shows greater reduction in poverty rates over time (graph below).

So far, the SPM will not be used to determine eligibility for government programs like SNAP or TANF in the same way that the OPM is. Instead, the SPM will be an additional measure to compliment the longstanding OPM. So the OPM tells us about work and before-tax earnings among low-income families, and the SPM allows us to see whether policies and government programs help families over time. Together they provide a richer insight and hopefully aid in our efforts to alleviate poverty in our communities.

Screen Shot 2015-08-04 at 2.51.36 PM

Wonky Word Wednesdays: Medicare vs. Medicaid

Tomorrow marks the 50th anniversary of the creation of Medicaid and Medicare. (Don’t worry we are doing a special blog to celebrate.) Both are federal social insurance programs that aim to help cover healthcare costs. However, because the programs have similar names, many people get confused about what program serves which population. So ahead of the official anniversary, we decided to dedicate this week’s wonky word to describing the programs side by side and explain how each aims to improve the health care of elderly and low-income populations in the country. Let’s break it down.

The simple way to explain it is both programs are about affordable health care. Medicare helps older Americans and Medicaid helps low-income Americans.

More specifically, Medicare is a federal program through Social Security to provide affordable quality heath care to U.S. citizens who are 65 years or older, regardless of income. Individuals under the age of 65 that have a disability and receive Social Security Disability Insurance can also qualify for Medicare.

The program provides benefits in four parts, [A] coverage for hospitalization or hospice care, [B] medical insurance, [C] private supplemental insurance (Medicare Advantage plans), and [D] prescription drug plans. Benefits in parts A and B are paid for by payroll taxes and deductions from Social Security income while benefits under parts C and D are paid for out-of-pocket by Medicare participants.

Medicaid was designed to help low-income Americans afford quality health care. Medicaid is jointly funded by federal and state governments but is managed by individual states. States determine eligibility based on an individual or families’ income level and other factors including the number of children, pregnant women, caretakers, disability, and age.

Currently, parents with children with income at or below 47% of the poverty line ($7,487 for a single mom with one child) and pregnant women with income at 157% of the poverty line are eligible for Medicaid in Montana. However, once CMS approves the state’s waiver, Medicaid will be available to adults, ages 19-64, with incomes below 138% of the poverty line (about $16,000 for a single adult).

Federal mandates state that Medicaid coverage includes things like hospitalization, doctors’ services, screenings, family planning etc. However, states can also provide additional coverage options for prescription drugs, dental services, optometrist services etc. Also, unlike Medicare, Medicaid can be used to cover long-term health care costs associated with disability, nursing facility services, chronic illnesses etc.

So now that you better understand the difference between Medicare and Medicaid, you are ready for tomorrow’s blog celebrating their 50th Anniversary. Stay tuned.

Wonky Word Wednesdays: The Official Poverty Measure

Ever wonder how many people are unable to pay for basic necessities like food, clothing and utilities? Ever asked how rates of poverty have changed over time and what policies out there are making a difference? In order to reach some of these answers, we first need a standard metric to measure poverty in America. For 50 years, we’ve used one tool, but many have called for a more comprehensive measure that provides a better perspective about those living in poverty. Today, we’ll explore the Official Poverty Measure (OPM). Next week we’ll look at a newer measure that compliments this metric and reveals more about families and the resources they have to make ends meet.

The Official Poverty Measure has been the go-to-poverty-measure since 1969. The U.S. Census Bureau creates it using two components, poverty thresholds and family resources. Poverty thresholds are still based on the average food expenses among low-income families back in the 1960s but are adjusted every year for inflation, family size, and composition like age of family members, homeowners etc. Family resources is essentially a family’s income. The federal government uses pre-tax income (i.e. wages and investments). (The OPM for 2013 is located in the table below)

You’re probably most familiar with the OPM when we talk about it in terms of the federal poverty line (it’s the same thing). Broadly speaking, the OPM is how the federal government determines how many people are living in poverty in America. Because the OPM measures pre-tax cash income, typically from work earnings, it provides researchers and policymakers a good indication about work and earnings among low-income families.

Practically speaking, the OPM is used by state and federal officials to set eligibility criteria for programs like SNAP, TANF, and Medicaid. For instance, households with a gross monthly income set at or below 130% of the federal poverty line will qualify for food assistance with SNAP.

However, controversy has surrounded the use of the OPM since it first came on the scene. Since the OPM only measures the pre-tax income of families, it really tells us nothing about the actual cash on hand that families have to make ends meet or how poverty relief efforts improve these families’ well-being.

Next Wednesday, we’ll explore a newer measure that complements the fifty-year-old metric and provides a better understanding of how policy and government programs alleviate poverty for low-income families.

Screen Shot 2015-07-22 at 1.18.42 PM



Wonky Word Wednesdays: TANF

Wonky Word Wednesdays loves to focus on acronyms. Last week we did OTO, and this week we are going to give you one that has been in the news recently – TANF.

TANF stands for Temporary Assistance for Needy Families. Congress passed an act in 1996, which created the TANF program, replacing the Aid to Families with Dependent Children (AFDC) program, which had been providing cash assistance to poor families since 1935.

But exactly what is TANF? And how is this funding used?

TANF is a federal block grant, which means the federal government allocates a set amount to each state each year. States then have some flexibility on setting up their own TANF program and how to use the funds (within certain parameters). Along with federal dollars, states receiving TANF funding must use some of their own state dollars to operate TANF services and administer benefits. While eligibility and benefits vary because states have a great deal of discretion, typically, TANF benefits come in the form of cash assistance to families living in severe poverty. This cash assistance is often used to pay for bare essentials like rent and food.

In Montana, eligibility limits are complicated, but in general, families with income at or below 30% of the federal poverty line qualify for TANF. This means a single mother with two children earning $6,000 or less a year would qualify for TANF cash assistance. Once families qualify, and in order to continue receiving TANF benefits, parents must also comply with strict work requirements that include a set number of weekly work hours and other criteria like on-the-job training or job search and job readiness assistance.

While TANF is targeted to support families living in severe poverty, since its implementation, TANF has fallen short in reaching many families experiencing poverty. As the number of families experiencing poverty continues to increase nationwide, the number of families participating in TANF has dramatically decreased.

During the mid 1990s (the period that TANF was created and replaced AFDC), 63% of Montana families living in poverty received assistance through AFDC. In 2012 (16 years after TANF replaced AFDC), only 13% of families living in poverty in Montana received assistance through TANF (see table below).

Lets be clear. This drop is not because TANF is effectively reducing poverty. Instead, more and more families are living in poverty and unable to receive TANF benefits because of confusing program structures and strict eligibility requirements.

Screen Shot 2015-07-14 at 4.24.23 PM

Last year, the Montana Department of Health and Human Services (the agency that administers TANF) established a steering committee to look at ways that the state can better help those living in poverty. And just yesterday, a Congressional committee released a discussion draft on how to improve the federal TANF law. This is an encouraging development, and we’ll be sharing more thoughts over the next several weeks on how that law may help Montana families struggling to make ends meet. To understand what is happening at the federal level, you can read more here.