Medicaid, Food Stamps and unemployment benefits are up, but the Feds have bailed out Wisconsin

As Assembly Republicans threaten nearly $50 million a month in expanded food assistance from the Feds because of...spite?, it's worth recognizing that a key part of Wisconsin's large budget surplus is because of extra help from DC to get through the COVID World.

Wisconsin is far from the only place that is benefitting from that extra Federal food aid, as the number of people needing food assistance has gone up in the COVID World. Which means the expenses for SNAP went up by nearly 50%.

The Supplemental Nutrition Assistance Program, still known to many as food stamps, cost nearly $90 billion in fiscal year 2020, USDA said Wednesday. That’s a major jump from just over $60 billion in 2019. The why: The massive increase in cost is a result of two major factors: Some 8 million more Americans are getting aid, and benefit levels were increased by Congress on an emergency basis last spring to help blunt the effects of widespread business and school shutdowns. There are now nearly 44 million individuals on the program, up more than 20 percent from about 36 million in 2019, according to the latest data. The average monthly benefit per person has jumped to $161, from about $130.

Along with food aid, the number of Wisconsinites on Medicaid also continues to increase, even as the economy “recovers”. In fact, the number of Wisconsinites on Medicaid went up by more than 17% after March, and December had the largest one-month increase since July.

Fortunately, the GOP Legislature can’t screw up the extra Federal funding that is helping states cover the additional Medicaid expenses, because outgoing Trump Health Secretary Alex Azar extended the US’s COVID-19 public health emergency into April in early January. This allows for the added Federal funding to stay in place through the end of June.

Wisconsin's Legislastive Fiscal Bureau said that higher Medicaid match percentage is a main reason why the program would have a $685 million surplus at the end of the 2019-21, as part of its update on revenues and other state budget information earlier this week.

The extended Federal help for Wisconsin also came up in the Legislative Audit Bureau's review of state’s 2019-20 financial statements. which was released and discussed on Tuesday. In the 2020 Fiscal Year, the state ended up getting $2.6 billion more coming in than it spent on an overall basis, with much of that surplus being the result of more money coming down from DC.

On page 31 of the Management’s Discussion and Analysis, DOA noted that total General Fund revenue increased by $1.6 billion and totaled $29.4 billion for fiscal year (FY) 2019-20. Increases in income taxes, sales taxes, and federal revenue were the primary contributors to the increase in General Fund revenue. As we noted in report 20-20, the Department of Revenue required that marketplace providers collect and remit sales or use tax on taxable sales delivered in Wisconsin, starting in January 2020. Federal revenue increases related partially to federal funding the state received related to the ongoing public health emergency.

Also, on page 31 of the Management’s Discussion and Analysis, DOA noted that total General Fund expenditures increased by $1.3 billion and totaled $26.8 billion for FY 2019-20. Increases in Medical Assistance costs and school aids payments were the largest contributors to the increase in General Fund expenditures. Further, a new program called the Wisconsin Healthcare Stability Plan contributed to the increase in General Fund expenditures. The Wisconsin Healthcare Stability Plan, which was created by 2017 Wisconsin Act 138, is a state-operated reinsurance program that is intended to reduce health insurance premiums paid by individuals who purchase health insurance in the individual market by reimbursing insurers for the costs of certain claim.

And while the amount of money the state paid in unemployment benefits skyrocketed in FY 2020, the Feds took up most of that cost, so the state's Unemployment Fund didn't lose much at all.

Wisconsin’s Unemployment Insurance program is accounted for in the State’s CAFR in the Unemployment Reserve Fund, which is administered by the Department of Workforce Development (DWD). The Unemployment Reserve Fund collects contributions made by employers and other federal program receipts that accumulate to make payments to employees who have lost their jobs. In the Management’s Discussion and Analysis on page 34, unemployment benefit payments of $3.4 billion were reported for the year ended June 30, 2020, compared to $387.0 million for the year ended June 30, 2019. Federal assistance under the federal Coronavirus Aid, Relief, and Economic Security (CARES) Act contributed $2.4 billion in aid to fund unemployment insurance benefits for individuals whose employment was affected by the public health emergency. As shown on page 52 of the CAFR, as of June 30, 2020, the Unemployment Reserve Fund’s net position declined $345.4 million, from $2.0 billion as of June 30, 2019, to $1.7 billion as of June 30, 2020.

So keep this in mind as we discuss the stimulus package and President Biden's request for $350 billion in additional state and local assistance. The added funding that states like Wisconsin got from 2020's COVID relief bills allowed the state's finances to be surprisingly strong despite a large increase in needs, and with unemployment, food insecurity, and Medicaid enrollments likely to remain high for the coming months, how much we get from DC will have a big impact on how much we can invest in the next 2-year budget.