Earlier today, Voices for Children Economic Stability and Health Policy Coordinator Aubrey Mancuso testified on LR 181, an interim study to examine Nebraska’s workforce, especially in high need areas, and support personal responsibility and professional growth for all Nebraskans. Voices for Children testified on the need to ensure that public programs are structured in ways that support families as they work to improve their financial security. You can read our entire LR 181 Testimony below.
Thank you Senator Campbell and members of the committee and thank you to Senator Kolterman for examining this important issue. All children should have their basic needs meet and public programs provide an important safety net for children who may otherwise go without food or health care during critical developmental years. We need to ensure that our public programs are structured in ways that support families as they work to improve their financial security. The majority of those participating in public programs in Nebraska are children. In 2013, 64% of Medicaid participants and half of SNAP participants were kids. Voices for Children has long been interested in the issue of the “cliff effect” because it creates a disincentive for families to improve their financial situation and additional challenges for children living in families with lower incomes.
Although we lack statewide data on the scope of this problem, in 2014 we conducted surveys and focus groups with lower income women on barriers to economic opportunity. In these surveys, we found that of those participating in public programs, 46% percent reported having experienced the cliff effect. Families in this situation often resort to coping strategies that ensure that they can continue to meet monthly expense. 52% of those who had experienced the cliff effect had used a coping strategy and the most common coping strategy was cutting back hours at work. Participants also reported not getting married to their partner, turning down a raise and not taking a better paying job.
One participant, Crystal, described how the cliff effect had impacted her: “I was only getting $170 [through SNAP] for my daughter, but because I got a raise, a 50 cent [per hour] raise, I only get $88 now to feed my daughter for the whole month.” Her raise only increased in her income by $20 per month, but it left her with a total of $60 per month less in her food budget.
In these cases families are often behaving very logically based on the way that our programs are structured. When a small increase in income would actually leave the family worse off on a monthly basis, they are making choices that allow them to continue meet their family’s basic needs but contrary to the choices that would help them achieve greater financial security in the long term. In addition to where we set our eligibility levels, some of our public programs also contain “asset limits”, or limits on the amount that a family can save, which also leaves them in a more financially vulnerable situation where unexpected expenses like a car repair can quickly become a financial crisis.
Finally, I want to draw your attention to the fact sheet attached to this testimony that illustrates how the cliff effect might impact families in the counties you represent. The fact sheet contains data from a report that we published called “The Family Bottom Line” that looks at what Nebraska families need to make ends meet without assistance based on county of residence, family size and the ages of children. The data also provide an average cost of goods like food and services like child care for the county or counties you represent. In most cases, a gap exists between the wage a family would need to meet all of their expenses and the point at which they would be required to transition off of assistance programs. This gap is particularly problematic for single parents. For example, in Lancaster County, a single parent with two young children working full time would need to earn over $22 per hour to meet all of their expenses and they would transition off of food stamps at around $12, child care at $17 and medical assistance for the children at about $19.
We appreciate the progress that this committee helped make on this issue last session in child care with the passage of LB 81 and we hope to continue to work with the committee to build on that success and ensure that our public programs work for children and families. Thank you.
 Kids Count in Nebraska Report (2014)