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Short-Sighted Budgeting on the Backs of Minnesotans

September 11, 2012 By Aaron Sinner, Policy Associate

About this time last year, Congress whipped itself into a frenzy as it argued over whether to raise the U.S. debt limit. That process ultimately led to the sequester, a series of automatic budget cuts that would come into effect in 2013 unless the Super-committee saved the day with an alternative deficit reduction proposal of its own. The Super-committee dissolved in November 2011, unable to come to agreement, guaranteeing the sequester will take effect January 1 unless Congress acts to prevent it.

The sequester cuts $110 billion in federal spending next year and $1.2 trillion over the next 10 years, an impact that will be felt acutely right here in Minnesota. In fact, as Minnesota 2020 has detailed, just the cuts to the Health and Human Services, Education, and Labor Departments will cost Minnesota $70 million in 2013 alone.

These cuts demonstrate particularly short-sighted budget thinking because implementing many of them will ultimately cost Minnesotans more down the road than the sequester saves today.

For example, the sequester cuts $6.5 million from Head Start in Minnesota next year, resulting in 1,055 fewer children served. The program funds grants to organizations which provide comprehensive early childhood services for low-income families. Yet studies show a $7-$9 return for every dollar invested in Head Start. Compared to their siblings who don’t receive Head Start services, Head Start children are less likely to need special education services, more likely to graduate from high school, and less likely to be arrested. Additionally, individuals served by Head Start will earn more on average as adults. All of these factors add up to a powerful return on investment. Cutting Head Start money now merely increases our nation’s costs in the future.

In a hearing before the U.S. Senate Subcommittee on Children and Families last summer, Arthur Rolnick of the Federal Reserve Bank of Minneapolis testified, “investments in human capital prior to kindergarten provide a high public return,” citing research conducted in St. Paul to make his point.

Head Start isn’t the only program aimed at pre-kindergarten youth that will be hurt by the sequester. The Child Care and Development Block Grant subsidizes child care for low-income working families, increasing the quality of the programs those families can access. It, too, brings a positive return on investment, yet Congress’s cuts will result in a $2.4 million reduction in funding for Minnesota, meaning 1,337 fewer children will benefit from the subsidy.

Similar programs suffering cuts include the Maternal and Child Health Block Grant and Childhood Immunization Grants. Cuts to the former mean 14,239 fewer Minnesota families will receive prenatal care and comprehensive well child services, while cuts to the latter will result in 3,683 fewer uninsured Minnesota children who receive vaccinations for measles and mumps, pertussis, flu, and Hepatitis B.

This could have dramatic public health consequences for Minnesota.

Early childcare isn’t the only type of program likely to have a significant return on investment that’s receiving cuts. So, too, is funding for low-income and uninsured women for breast cancer and cervical screenings. C-Change, an organization dedicated to disseminating cancer research, reports since cancer prevention and early detection costs less than treating late-stage cancer, “Investing $2.95 per member per month to cover [breast, colorectal, and cervical] cancer screening may yield additional savings of up to $3.75 per member per month.” If the sequester takes effect, 1,365 fewer Minnesota women will receive these preventative screenings.

Substance abuse prevention and treatment cuts also embody short-term thinking, as studies have found current programs generate $2.21 in savings for every $1 spent. Yet 2,549 fewer Minnesotans will be admitted for treatment as a consequence of next year’s cuts.

These cuts represent just some of the many short-sighted actions the sequester embodies. The federal budget deficit and our nation’s debt represent real problems that do need to be addressed, but we can’t accept short-term cuts that do long-term damage and ultimately cost society more than they save. We need long-term thinking that recognizes the positive return on investment that results from much of our public spending.

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