EPI Evaluates Proposed Fiscal Year 2025 Budget’s Impacts on Low- and Modest-Income Rhode Islanders
PROVIDENCE, RI: The Economic Progress Institute (EPI) today released its initial evaluation of the proposed fiscal year 2025 amended budget that was approved by the House Finance Committee last week, finding some positives for working Rhode Islanders, but also some missed opportunities to provide low- and modest-income residents with tools they need to build a better life.
“For 25 years, EPI has advocated for economic justice for Rhode Islanders living in poverty and for those with low and modest incomes, who find it persistently challenging to meet their most basic needs and find opportunities to thrive and build generational wealth,” said EPI Executive Director Weayonnoh Nelson-Davies, Esq. “When looking at the state budget, it should reflect the values of all Rhode Islanders.”
HIGHLIGHTS
- The budget provides a 20% increase in cash benefits to recipients of RI Works, the state’s cash assistance and work readiness program for families and children in deep poverty. It also provides higher income disregards, which allows working families to keep more of their income from wages without losing benefits and ensures that children will no longer lose their RI Works benefits if their parents are sanctioned. Family sanctions are punitive measures that have been proven to disproportionately harm children and push already-struggling families deeper into poverty,
- It increases RIPTA funding from $10 million to $15 million, helping the agency close its budget gap and keeping buses running for another year.
- It establishes a new program, called Ladders to Licensure, providing pathways for healthcare paraprofessionals to pursue higher educational degrees and higher-paying professional licenses, which will help address our healthcare provider shortage.
- It moderately expands the family income eligibility level of the Child Care Assistance Program (CCAP) from 200% to 261% of the federal poverty level (FPL) — meaning more low-income workers can afford childcare, go to work, and take care of their families. It also increases the reimbursement rates for childcare centers by 5%, the first rate increases since 2022. This rate increase will catch childcare centers up with the more recent rate increases for family childcare providers.
- The budget also extends the Child Care Assistance Program’s childcare workers pilot program by a year. EPI and other advocates believe this will help alleviate the staffing crisis in the early education workforce.
- Includes a new $1 million program to purchase the medical debts of struggling Rhode Islanders.
- Includes more than $160 million to fully fund the plan recommended by the Office of the Health Insurance Commissioner to raise Medicaid reimbursement rates next year. This amount includes $3.8 million for Early Intervention providers.
- The budget increases funding for Multilingual Learners from a 15% multiplier to a 20% multiplier and was shifted from a categorical fund to be included in the core funding formula, which will help provide increased, predictable, and sustainable funding for school systems.
HOPING FOR IMPROVEMENTS
- In the Highlights section above, we regard the 20% increase in cash benefits to recipients of RI Works — the state’s cash assistance and work readiness program for families and children in deep poverty — as a win. With this increase, the maximum monthly benefit for a family of three is $865 per month, representing 40% of the Federal Poverty Level (FPL) and effectively restoring the benefit amount back to 2021 levels. However, this is why we also evaluate this budget item as needing improvement: because rampant inflation has been diminishing the value of these benefits over time. The federal government defines “deep poverty” as 50% of the FPL. More must be done for families and children living in deep poverty in Rhode Island. By using the Temporary Assistance for Needy Families (TANF) federal block grant, lawmakers can index the benefit amount to at least 50% FPL.
- Similarly, above, EPI regards the 5% reimbursement rate increase for childcare centers through the Child Care Assistance Plan as a win. However, the Right from the Start Coalition has identified an error in Budget Article 11 whereby it specifies this rate increase would go into effect in July 2025, which is fiscal year 2026. We urge lawmakers to make this technical correction to match what we believe was intended, so the rate increase goes into effect in July 2024.
- While the budget provides more funding for Multilingual Learners through the core funding formula, it does not require additional funding to be used for multilingual students. A specific provision that requires this funding to be invested in evidence-based programs that target multilingual learners is needed to improve equity in RI by ensuring that all students have equal opportunities to learn regardless of language barriers.
DISAPPOINTMENTS
- The FY25 budget should raise the state Earned Income Tax Credit (EITC) from its current rate of 16% of the federal EITC level to 30% but does not. It also should establish a Child Tax Credit. These are major omissions because these cost-effective policies have been proven to significantly reduce poverty.
- Critically, the Medicare Savings Program expansion — which would make thousands of elderly and disabled Rhode Islanders newly eligible for healthcare and coverage of out-of-pocket costs of healthcare — did not make it into the budget. This would bring up to $33 million in federal funds into the state if adopted. In the coming weeks, EPI will release its more extensive annual review of the budget and legislation.