Thursday, July 26, 2012

Analyzing workforce development services in Wisconsin

Wisconsin’s workforce development system is comprised of a broad range of employment and training services, from job search and placement assistance to vocational rehabilitation for individuals with disabilities. The Forum’s latest report – commissioned by the Wisconsin Department of Workforce Development (DWD) – offers policymakers and service providers a view of the system as a whole, including the variety of state and federal funding sources that support workforce development programs in Wisconsin. The report also provides analysis of the trends affecting the state’s workforce development system and offers observations on ways the system may be improved.

Key findings from the report include the following:

While it appears that some consolidation of employment and training funding has occurred in recent years, Wisconsin’s workforce development system remains somewhat fragmented. Overall, nine state departments will receive $407 million in federal and state funding in fiscal year 2012 to offer 36 programs that provide employment and training services. While many programs provide distinct services that target specific populations, state policymakers should consider whether the current structure is the most effective and efficient way to organize these services.

Projected changes in Wisconsin’s workforce and economy may demand increased attention to workforce attraction and retention as well as enhanced emphasis on worker training and education. Over the next 20 years, Wisconsin must address a projected decline in the size of its workforce while ensuring that workers have the training required for jobs that are expected to become available. According to DWD estimates, of the 78,570 projected annual job openings between 2008 and 2018, approximately 60% will require some form of “training” while 37% will require a formal degree. An important question for Wisconsin policymakers is whether the current array of workforce development programs and services is appropriately calibrated to meet the state’s evolving workforce needs, particularly in the areas of skills training and education.

The vast majority of funds supporting Wisconsin’s workforce development system are from federal sources, a trend that may not bode well for the future. The federal government will provide 92% of the funding that supports Wisconsin’s workforce development system in fiscal year 2012, an increase from 88% in 2008. This increase is largely attributable to the lingering national recession, which expanded enrollment for Wisconsin’s W-2 program and brought about a federal stimulus package that included additional support for workforce development programs.

Wisconsin’s acute dependence on federal support may not be sustainable or desirable because of the many restrictions typically attached to federal funds and because of the intense fiscal pressures facing the federal government, which place all federal discretionary funding at budgetary risk. In addition, federal funding for workforce development programs has been decreasing over the long term; the overall budgets for the six largest workforce development programs in Wisconsin have declined from a collective total of approximately $430 million in 2000 to $299 million in 2012.

Some new approaches to structuring workforce programs and diversifying funding sources have been initiated in Wisconsin, and those efforts should continue. For example, despite declining federal Workforce Investment Act allocations, the Milwaukee Area Workforce Investment Board has been able to increase its annual revenue, largely by diversifying its revenue sources. Also, the Milwaukee Area Workforce Funding Alliance (MAWFA), which was established in 2009, may serve as another model for cities and regions looking for additional funding streams to support workforce development programs. MAWFA is a consortium of private and public workforce development funders and service providers in the Milwaukee area that helps to coordinate the distribution of funding from private and public funders for local workforce development efforts.

We hope this report can serve as a guide in ongoing efforts to improve the effectiveness of Wisconsin's workforce development system.

Tuesday, July 17, 2012

PPF Pearls: Wisconsin and the Internet sales tax

Yesterday the Wall Street Journal reported that tight state budgets have resulted in several governors adopting Internet sales tax agreements with online retailers that require these sellers to collect state sales taxes at the time of purchase, even if they do not have a “brick-and-mortar” presence in the state.

Such agreements ensure these states receive the sales tax they are due; relying on each consumer to report and pay the sales tax owed often leaves state coffers short. For example, self-reported taxes on online purchases (use taxes) were collected from just 29,200 Wisconsin tax filers in 2009, totaling $1.72 million. This represents less than one percent of the total sales and use tax paid in that year. A 2009 University of Tennessee study projected Wisconsin would lose $126.1 million in state and local sales taxes in 2011 and $142.1 million this year from unpaid sales taxes on Internet purchases. Wisconsin’s 5% state sales tax totaled $4.1 billion in 2011, making up one-third of the state’s general purpose revenues, second only to the personal income tax.

While the recent agreements forged by governors help bolster the revenues of individual states, they result in a patchwork of policies across the country. This patchwork complicates business practices for online retailers and puts them in a different competitive stance with physically-present retailers in each state. The result is that a Wisconsin customer of, for example, would not have the state sales tax added to the cost of his or her purchase, but a resident of Kansas, Kentucky, Texas, or any other state with a collection agreement would. In addition, it means an item sold in a physical store in Wisconsin costs more at the time of purchase than the same item sold online, even if they are priced the same.

Instead of seeking tax collection agreements with individual Internet retailers, Wisconsin has joined several other states in looking to Congress to pass legislation allowing states to require online sellers to collect state sales tax. In 1992, the Supreme Court ruled in Quill Corporation v. North Dakota that retailers must have some sort of physical presence in a state before they can be required to collect state sales tax on behalf of that state. Three bills currently under consideration in Congress would tackle Quill’s prohibition by voiding the requirement of a physical nexus.

The Main Street Fairness Act, proposed by Democrats, would allow states that have joined the Streamlined Sales and Use Tax Agreement (SSUTA) to require online retailers to collect state sales tax at the time of purchase. The SSUTA, which seeks uniformity among states by standardizing the definitions of products and taxable items, as well as standardizing and simplifying tax calculations and collection procedures, has a long history in Wisconsin. In our 2000 white paper on tax policy for the new economy, the Forum noted that Wisconsin served as a co-chair of the effort, which began in 1999 with the help of the National Governors’ Association and the National Conference of State Legislators. It wasn’t until 2009, however, that Wisconsin passed the state legislation adopting the standardized definitions required to become a SSUTA member.

The second bill, the Marketplace Equity Act, will be the subject of a hearing in the House Judiciary Committee on July 24. It has been introduced in both the House and Senate with bi-partisan support and appears to be gaining momentum. This act proposes that states wishing to require online tax collection adopt a set of simplified tax rules that are somewhat similar to the SSUTA standards. Some online business groups are worried, however, that by not aligning directly with the SSUTA, the standardization and simplification goals will not be met, as the 22 SSUTA states will be reluctant to pass new and different standards. These states could choose to continue to seek agreements with individual retailers, causing big headaches for national online retailers who would be subject to many differing state tax rules if the act were to pass.

In response to these critiques, a third bill, the Marketplace Fairness Act, has been introduced in the Senate with bi-partisan sponsors. This bill would allow states who are members of the SSUTA to require online sales tax collection, but would also allow non-member states to do so as well, as long as they adopt an alternative set of simplified taxation standards.

Opponents of all three bills argue that by eliminating the nexus requirement for sales and use taxes, Congress would be at the precipice of a slippery slope that could result in all types of new taxes far removed from the activities being taxed. There is also an argument that the requiring sales tax collection by online retailers, even if simplified and standardized, would be so burdensome that it would stifle Internet entrepreneurship.

A May survey by the International Council of Shopping Centers found that 62% of Wisconsin residents polled understand they are supposed to pay a tax on items purchased online, even if the tax was not collected by the retailer at the time of purchase, and that 72% feel having the retailer collect the tax would be easier. In addition, 65% of respondents say they would support a federal law allowing retailers to collect the tax. Until Congress acts, count on Wisconsin’s Department of Revenue to continue to aggressively remind taxpayers that their online shopping sprees are not duty-free.

UPDATE 7/24: More coverage of this issue in the Milwaukee Journal Sentinel

Thursday, July 12, 2012

Measuring Milwaukee County Juvenile Justice Recidivism

To what should Milwaukee County attribute its declining adult and juvenile detention population? This question took shape in a research brief published a year ago by the Public Policy Forum, entitled “Milwaukee County Detainee Populations at Historic Lows: Why is it happening and what does it mean?” In that report, the Forum urged county law enforcement officials and policymakers to consider whether justice system policies that may have contributed to the decline were effective and should be sustained.

Milwaukee County’s Delinquency and Court Services Division (DCSD) asked the Forum to help in making that assessment for the array of services it offers to youth in the juvenile justice system. Success in curbing repeat delinquent behavior can have impacts into adulthood, making the juvenile justice system one critical piece in efforts to control crime and its related costs. 

The most common way to assess the success of juvenile delinquency programming is to measure the extent to which participants commit additional crimes, otherwise known as recidivism.  However, the best approach to defining a recidivistic event is not always clear cut, with many variations seen nationally.

The Forum’s newest research brief reviews the manner in which DCSD defines recidivism and its progress in reducing it.  The following points summarize our findings:

  • Using DCSD’s recidivism methodology, we find no significant changes in recidivism over five cohorts of youth aging out of the juvenile justice system between 2006 and 2010.  However, categorizing youth based on the year in which they age out of the system (i.e. turn 17-years-old) has its limitations, as this approach blurs impacts of year-to-year policy and programmatic changes.
  • Under our alternative methodology for measuring recidivism, we categorize youth by the year in which they are referred for their first delinquent offense and allow for a uniform follow-up period.  Using this method, we find lower rates of recidivism for youth first referred in 2007 and 2008 than in the prior three years. Although two years of improved outcomes do not guarantee a new trend, this positive improvement begs further research into whether changes made in policy or programs during that time could be the cause.
  • Under either measure of recidivism, we find a small group of chronic offenders accounts for a substantial percentage of repeat offenses, a trend often seen nationally.  Consequently, increased attention to programs and strategies aimed at chronic offenders may be warranted.
  • It may be appropriate for DCSD along with other justice system officials to carefully contemplate which recidivism definition or set of definitions would best achieve performance assessment goals in the future.
Recidivism likely will continue to be the most prominent outcome measure used by policymakers in Milwaukee County to understand the performance of juvenile justice programs. Continued progress in developing and standardizing this evaluative tool will be critical as a means of helping the county's juvenile justice system articulate system performance and improve the spectrum of services it provides to county youth.

Our research brief, commissioned by DCSD, can be accessed here.

Thursday, July 5, 2012

Afterschool in Milwaukee: Is it child care?

In our latest report on child care policy in Wisconsin, released today, the Forum estimates between 24,000 and 30,000 school-age children attend afterschool programs in Milwaukee.  Starting this week, these school-age programs will now be subject to the same quality rating system as child care programs for younger children.  This promises to bring dramatic changes to many afterschool programs, as school-based programs have not previously been reviewed by state officials for regulatory compliance.

The inclusion of afterschool programs serving low-income children in the quality rating system results from the fact that many programs receive state payments under the state's child care subsidy program, Wisconsin Shares.  This child care revenue stream will become increasingly important to many afterschool programs which had been mostly reliant on federal dollars with a limited lifetime.  The result is a search for sustainability under a changing mix of revenues that has both practical and policy implications.  These implications are analyzed in our new Research Brief, "Afterschool in Milwaukee: Is it Child Care?"

Issues considered include:

1. Differences between child care and afterschool funding sources.  Federal and state funds for child care are awarded to low-income families to support their ability to afford the providers of their choosing.  In contrast, federal afterschool funds are awarded to specific programs operating in partnership with specific schools and serve all families, regardless of their ability to pay.  

2. Differences in regulatory agencies overseeing school-age programs.  Child care programs are regulated by the state's human services agency, the Department of Children and Families, while many afterschool programs have fallen under the purview of the state's education agency, the Department of Public Instruction.  These agencies work together on many issues, but have different missions and goals.

3. The ability of the child care quality rating system, designed by experts on high quality early childhood education and informed by decades of research, to accommodate school-age afterschool programs, which differ from early childhood programs in many significant ways.

The Brief also provides examples from other states that have grappled with the revenue sustainability problem, as well.  Some of these examples cite the use of federal child care funding streams, but others utilize local revenues, state education funds, or state income tax credits.