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Posts tagged COVID-19

Beyond jobless rate drop: Little for optimism

Posted August 21st, 2020 to Blog

Iowa’s unemployment rate fell to 6.6 percent in July, down from its peak of 11 percent in April. But larger picture offers little grounds for optimism.

The overall jobs deficit is still substantial. The Iowa economy has shed 97,200 jobs since February — that’s 35,500 more jobs than were lost in the entirety of the Great Recession. And that 6.6 percent unemployment rate is still equal to the highest monthly rate recorded during the Great Recession.

The drop in the unemployment rate is generated less by any observable economic recovery than by the fact that discouraged workers are dropping out of the labor force entirely. Since February, Iowa’s labor force participation rate (the share of the adult population who are working or looking for work) has plunged from 70.9 percent to 65.6 percent — a decline twice as steep as that of the nation as a whole, and steeper than all but one other state (Kentucky).

For those on unemployment (106,392 continuing claims, and 6,544 new claims last week), the uncertainty and insecurity is mounting. It is now almost a month since the $600 “PUC” bump to unemployment benefits expired, and it is unclear when or how the $300/month “Lost Wages Assistance” program established by executive order while kick in as a partial replacement.

Because the Lost Wages Assistance program requires a 25 percent match in state money, it will be unavailable to those who are receiving “Pandemic Unemployment Assistance” (PUA) benefits instead of regular state benefits. Meanwhile, Iowa Workforce Development is aggressively trying to move beneficiaries from the regular state program over to PUA. And, as of September 8, the job search requirements for almost all receiving UI benefits will be reinstated.

It’s hard to spin any of this as good news. While just under 100,000 Iowans have gone back to work, almost 130,000 have dropped out the labor force entirely. For many, the return to work — into the teeth of a pandemic that shows no sign of abating — is driven less by a genuine economic recovery than by an unemployment insurance system whose benefits are that is suddenly less accessible and less generous.

Colin Gordon is a senior research consultant for Common Good Iowa. He is a professor of history at the University of Iowa.

Data clear: New stimulus needed

Posted July 23rd, 2020 to Blog

As the long-awaited next round of federal aid and stimulus remains mired in political infighting, the hardship in Iowa — and around the country — is acute. As a new report from the Center for Budget and Policy Priorities (CBPP) makes clear, households are struggling to pay for the basics now, and that need will only grow if the $600 per week federal “PUC” boost to unemployment insurance benefits expires as scheduled next week.

The receipt of SNAP (food stamps) is up 14 percent in Iowa since February of this year, but the share of Iowans reporting food insecurity continues to grow. According to the CBPP’s analysis of the Census Bureau’s Household Pulse Survey, 1-in-8 (12 percent) Iowa families with children reported (for the last week of June and first week of July) that their household sometimes or often didn’t have enough to eat in the last seven days.

Housing insecurity is also a growing problem. Iowa set up a small fund with CARES Act funds to provide short-term assistance for those unable to make rent or mortgage payments — but disqualified those receiving PUC benefits from even applying. There is about $20 million left in the fund (out of $22 million) but when the PUC expires next week, the demands on this program will skyrocket. According to CBPP, 1 in 6 Iowa tenants are already behind on their rent.

These hardships will be especially stark for Iowa’s Black and Latino workers and their families. Unemployment rates are persistently higher for workers of color. These workers are disproportionately represented among the front-line and manufacturing (especially meat processing) jobs that have posed a higher risk of exposure to the virus. In the absence of meaningful and enforceable workplace protections, the temporary boost to UI benefits provided something of a refuge. As an administrative judge concluded in approving unemployment compensation for a worker who quit because of safety concerns concluded in one recent UI case, “the working conditions at Tyson were unsafe, intolerable and detrimental, and rose to the level where a reasonable person would feel compelled to quit.” But that option evaporates next week.

All of this hardship would be even worse in the absence of the CARES Act provisions for enhanced unemployment insurance, and increased federal support for SNAP, LIHEAP (Low-Income Home Energy Assistance Program), and other social supports. Iowans are suffering with those programs in place, and they will suffer more if social supports are allowed to return to levels previous to COVID-induced shutdowns.

The latest data on initial unemployment claims, released today, show the persistence of Iowa’s economic woes during the pandemic, with nearly 400,000 filing claims in the last 18 weeks.

It is crucial that, with the virus surging in Iowa and other states and the economy projected to remain weak, that our federal representatives move quickly to enact a stimulus package that continues and expands upon these basic protections. We need an extension of expanded unemployment benefits, more opportunities for paid leave, more federal support for child care, SNAP, and LIHEAP, and robust fiscal relief for states and localities. And it is just as crucial that Governor Reynolds and the Iowa Legislature pass along any discretionary state assistance to those in the most need.

Colin Gordon is senior research consultant at the nonpartisan Iowa Policy Project and a history professor at the University of Iowa.

Warning: Edge of a cliff

Posted July 13th, 2020 to Blog

In less than two weeks, the Pandemic Unemployment Compensation (PUC) program — the $600 federal supplement to unemployment insurance benefits — will come to a close. The impact, for Iowa’s working families and for the Iowa economy, is likely to be devastating.

Our regular unemployment insurance system reaches only about half of the workforce and replaces barely half of an unemployed worker’s wages. In order to support those workers thrown out of work by the pandemic and, more broadly, to support the public health goal of sheltering in place, the CARES Act extended eligibility to most of those not covered (Pandemic Unemployment Assistance or PUA) and added $600 a week to the benefit paid under regular UI and the PUA.

This means a full-time minimum wage worker who lost their job qualifies for a regular weekly benefit of about $152.00 (Iowa unemployment insurance replaces about 52 percent of wages), and an additional $600 under the PUC — for a weekly benefit of $752.00. An unemployed worker had had been earning the median hourly wage in Iowa ($18.40) qualifies for a weekly benefit of $387.00 and an additional $600 under the PUC — for a weekly benefit of $987.00.

The $600 supplement under the PUC and the entire benefit paid to non-traditional workers under the PUA are all paid for the federal dollars. That has had a huge stimulus effect in Iowa, sustaining not just individual consumption but state and local tax revenues as well. Currently there are 145,875 Iowans either receiving regular UI+PUC or waiting for their claim to be processed, and another 18,456 receiving PUA+PUC. That represents an inflow of over $102 million into the state every week. Come July 25th, when only the federal contribution to the regular PUA benefit is left, and that will slow to a trickle, barely $3 million a week.

The result? Many of the unemployed will see a substantial benefit cut, tumbling from near full replacement of wages for workers earning less than $65,000 to barely half that. At half-wages, few will be able to meet basic expenses. That blow will reverberate throughout the economy. According to new estimates by the Economic Policy Institute, failure to extend the PUC beyond July will cost Iowa another 42,586 jobs over the next year.

Meager benefits and persistently high unemployment, in turn, will put new demands on other forms of social support, including SNAP and rental and utility assistance. And they will press the unemployed — unable to pay their bills — back into the labor force at the expense of their health and the public health. With COVID cases surging in Iowa and many other states, the extension of federal support for unemployment insurance is crucial to fighting this recession — and the virus that caused it.

Colin Gordon is a professor of history at the University of Iowa and is senior research consultant at the nonpartisan Iowa Policy Project in Iowa City.

Encourage Iowans to seek both jobless, housing benefits

Posted June 4th, 2020 to Blog

Amidst the worst employment crisis since the Great Depression, Governor Kim Reynolds and her colleagues seem fixated not on the magnitude of the crisis, but on the generosity of the CARES Act unemployment programs and the obstacle they apparently pose to getting Iowans back to work.

First, Iowa Workforce Development issued a chilling directive (from which they have now retreated) which very nearly suggested that only those actually laid out by the virus had any claim on unemployment insurance. Now the new “Iowa Eviction and Foreclosure Prevention Program,” (which offers rental and mortgage assistance to households “at risk of eviction or foreclosure due to a documented COVID-19 related loss of income”) actually disqualifies those receiving unemployment insurance from applying.

The logic here is difficult to fathom. Those thrown out of work by the pandemic are struggling to make ends meet, and to sustain rent or mortgage payments. Aren’t these exactly the Iowans who should be eligible for a program of rental or mortgage assistance? Instead, the new program offers assistance to “Iowans who have been economically impacted by COVID-19,” in one breath and then snatches it away in the next — penalizing and stigmatizing those most at need by treating receipt of the federal Pandemic Unemployment Compensation (PUC) benefit ($600 a week through July 25) like a failed drug test.

But even if we put aside the savage inequity of this, the Governor’s evident distaste for the federal supplements to unemployment insurance is just bad fiscal policy. Let’s do the math. As of this week, 178,619 Iowans are receiving regular unemployment benefits and another 17,545 are receiving Pandemic Unemployment Assistance (PUA). The $600 PUC benefit (payable to those in regular UI and PUA) and the base benefit for those in the PUA are all paid with federal dollars. That’s an inflow of over $120 million a week into the pockets of working Iowans.

If we assume an effective state income tax rate of 2.3 percent and effective sales tax rate of 5.3 percent (both based on estimates by the Institute for Tax and Economic Policy for Iowans earning between $22,000 and $40,000/year), that’s a boost to state income tax receipts of $2.8 million dollars a week,[1] and a boost to state and local sales tax receipts of $6.4 million dollars a week. In the seven weeks before the PUC expires July 25, that’s a net revenue of gain of $64.5 million — or enough to pay for the mortgage and rental assistance program (which has been allotted $22 million of Iowa’s CARES Act funds) almost three times over.

And these are conservative estimates. The unemployment totals do not include the over 150,000 UI (including those from the last two weeks) that have been filed but not yet processed. They do not include the retroactive benefits payable to those qualifying for UI. They are based on the minimum monthly benefit under the PUA. And they do not include the stimulus or tax revenue impact of state-funded UI benefits.

For the health and safety of working Iowans, we should be encouraging and enabling as many as possible to qualify for unemployment benefits. And, as long as federal government is picking up the tab, we should jump at the chance to backfill state and local budgets with the tax revenues that accompany such benefits.

[1] The state’s June 3 fiscal update echoes this estimate, attributing a $31.4 million increase in state income tax receipts over the 10-week period from March 19 to June 2 ($3.1 million a week) to withholding from UI benefits. This estimate is slightly higher because it includes the withholding from state-funded benefits as well.

Colin Gordon is senior research consultant for the nonpartisan Iowa Policy Project. He is a professor of history at the University of Iowa.

Update: Key counties to watch

Posted May 18th, 2020 to Economic Security, Health

UPDATED THURSDAY, MAY 28

Watching the data on the spread of COVID-19 in Iowa points a spotlight at potential trouble spots ahead, particularly in rural areas. From trends evident in official data, Peter Fisher of the Iowa Policy Project has identified several counties that are apparent COVID-19 trouble spots.

In his latest update of data below, he shows 14 counties had 200 or more new cases for every 100,000 people over the two weeks ending May 27. Of those counties, nine were among 77 counties where Governor Kim Reynolds had eased social distancing restrictions before extending the relaxed rules to the rest of the state last week. Two counties already in double or triple digits on case counts — Wright and Buena Vista — showed a doubling of cases in one week.

For further analysis from Fisher, see:

• Original IFP report May 8, Rural COVID cases growing quickly.

• Recent blog: “Faster infection pace, fewer limits.”

Faster infection pace, fewer limits

Posted May 14th, 2020 to Blog

A number of Iowa counties are seeing a surge in coronavirus cases, even as the Governor continues to reopen the Iowa economy and further relax social distancing requirements.

In Wapello County, cases soared from 10 on April 28 to 306 two weeks later. Over that same time period, Crawford County saw an increase from 21 to 207, and Sioux County from 8 to 103. Yet instead of reinstituting social distancing in those hot spots, the Governor has expanded her relaxation of requirements on businesses from 77 counties to all counties statewide.

Given the problems and delays with testing, and the lack of widespread testing, it is difficult to know just how many Iowans are actually infected with the coronavirus, and whether there are other emerging hotspots that remain unidentified. But we do know where there have been major increases in identified cases. For the most recent two-week period, the table below shows the 16 counties with the highest number of new cases per 100,000 population over the past two weeks (through May 12).

When adjusted for population, we see that many rural counties are experiencing more rapid growth than urban centers, many of which (Linn, Johnson, Scott) did not even make this list. Half the counties on the list (indicated by shading) are among the 77 counties where restrictions were first relaxed on May 1.

Most of those eight counties we identified last week as likely hot spots based on the growth in cases up to that point. New additions to the list are Monroe and Osceola, where the total number of cases is not large, but where we may be seeing the beginning of a surge. Six of the eight shaded counties saw their case count more than double in the past week.

It is easiest to see which counties have grown the fastest if we compare the cases per 100,000 population and how this number changed since the county first hit 50 cases. The counties are compared on the basis of when the surge began in their county. Wapello and Crawford have been growing at much the same rate as Woodbury, notably one of the top counties in the entire country in terms of the size and rate of the coronavirus surge.

 

 

 

 

 

 

 

Peter Fisher is research director for the nonpartisan Iowa Policy Project in Iowa City.

Update: More fiscal relief needed

Reserves, existing federal aid will not cover projected revenue shortfalls in Iowa, other states

IFP Policy Brief — By Peter FisherUPDATED MAY 23, 2020

As we noted earlier,[1] the combined effect of the looming recession and the health emergency triggered by the COVID-19 pandemic will have a devastating effect on state and local budgets. Preliminary estimates released by Moody’s Analytics suggested that Iowa will face a tax revenue shortfall of $895 million to $1.14 billion over the rest of this fiscal year and next fiscal year.[2] More recent estimates predict that state budgets collectively will suffer losses more severe than during the great recession of 2009-10: a $350 billion shortfall predicted for next fiscal year, compared to $230 billion in the worst year of the Great Recession.[3] This suggests that the higher estimate provided by Moody’s is more likely.

The four major pieces of legislation passed by Congress to address the crisis include assistance to state and local governments. But more will be needed if the state is to avoid drastic cuts in funding for education, health care, public safety and other crucial public services as they struggle to balance budgets in the face of increasing need and plummeting revenues. Moreover, the impending recession could be both deep and long; the fiscal aid thus far is tied to the health emergency, or is slated to end within the year. It needs to be extended for the duration of the economic crisis.

State revenue losses likely to be 15 percent or more

Moody’s reports fiscal estimates under two scenarios: a baseline and a severe recession, both covering the remainder of the current fiscal year, which ends June 30, 2020, and all of the next fiscal year, which ends June 30, 2021. In the baseline scenario, Iowa general fund revenue falls 11.4 percent, or $895 million; in the severe scenario revenue falls 14.5 percent, or $1.14 billion.

Other estimates of the total revenue losses to the states are even higher than those presented by Moody’s. These revenue estimates are based on the latest projection by the Congressional Budget Office (CBO), which shows unemployment averaging 15 percent for the next six months of this year. This compares to a peak unemployment rate of 10 percent during the Great Recession. According to the CBO, the rate will then fall but will still be 9.5 percent at the end of 2021.[4]

These more recent estimates suggest that the state fiscal shortfalls in fiscal year 2021 will be 52 percent larger than during fiscal 2010, the worst year of the great recession. Iowa general fund revenues in fiscal 2010 were 9 percent below the pre-recession level (FY2008). Losses 52 percent higher would put the revenue decline at about 14 percent, in line with Moody’s “severe” scenario.

The fiscal cliff could well be considerably higher. Goldman Sachs has projected a peak national unemployment rate of 25 percent, rather than 16 percent.[5] Iowa, meanwhile, has seen 313,00 new applications for unemployment benefits since mid-March, a number equal to more than 18 percent of the state’s nonfarm workforce. Iowa’s unemployment rate peaked at 7.3 percent during the Great Recession, which indicates that Iowa — where already the unemployment rate hit 10.2 percent in April — will be facing an unemployment rate this year at least double the Great Recession peak. All of this suggests a decline in revenues much greater than 14.5 percent. 

The revenue losses for the current fiscal year will fall in the final quarter of the year — April, May and June. If we assume Moody’s severe scenario the revenue losses in that quarter would be one-fifth of the total (Moody’s estimated revenue losses cover five quarters), and would amount to $228 million. That decline in revenue would reduce the ending surplus, most recently projected at $539 million, to $311 million, without taking into account additional expenditures.

We will probably not have reliable estimates of the effect of the COVID crisis on the state general fund until August. A recent analysis by the Legislative Services Agency compared state tax revenues from March 21, 2020, through May 13, 2020, with revenues for the same period a year ago.[6] (March 19 was the date that the Iowa Department of Revenue issued an order extending the deadline for filing corporate and individual income taxes to July 31, and initiated the process allowing businesses a 60-day delay in remitting income tax withholding and sales taxes collected, while two days earlier the Governor had issued the proclamation closing selected businesses.) While general fund net taxes were down a whopping 33 percent from a year ago, most of that decline is likely due to delays in payment rather than the economic downturn itself. Some of the 12.4 percent reduction in individual income tax estimated payments may be due to lowered income expectations, and the 18.6 percent reduction in vehicle sales tax may be due to a decline in vehicle purchases as a result of the emergency. The $50.9 million reduction in gaming revenue, which does not go into the general fund, was clearly due to the closing of casinos. Sales tax revenues have decreased by 6.7 percent; some of that is no doubt due to the sales tax remittance deferral program.

Iowa has $767 million in reserve funds to help it weather the economic downturn — $588 million in the cash reserve fund and $179 million in the Economic Emergency Fund (EEF).[7] The Iowa Legislature, in their emergency bill (SF 2408) passed as they adjourned in March, granted the governor authority to spend up to 10 percent of the EEF and authorized the Legislative Council to approve amounts beyond that, up to the full amount in the EEF. It is too early to tell whether the ending surplus combined with the EEF will be sufficient to offset both the revenue shortfalls and the additional spending necessitated by the COVID-19 crisis in the fourth quarter. If it is not, legislative action would be required to draw on the Cash Reserve Fund.

Federal assistance aimed at emergency spending, not revenue shortfalls

The four federal acts dealing with the health and economic emergency provide a number of assistance programs to states and localities. These include grants directly to state governments, educational institutions, health care providers, and transportation systems.[8] Here we focus on the major components of these acts that provide funding to the state and to public schools and colleges; no general relief funds have been provided to cities or counties.

Moody’s Analytics has estimated that Iowa will need an additional $205 to $236 million to cover increased Medicaid claims over the remainder of this year, and next year. The Families First Coronavirus Response Act, enacted on March 18, provides additional federal Medicaid funds for each quarter in which the national emergency caused by COVID-19 remains in effect, with Iowa’s share estimated at $64 million per quarter.[9] That would appear to be sufficient to cover the additional Medicaid costs if the emergency were to stay in effect through March of 2021 (four quarters, starting in April of this year). But given the administration’s eagerness to end the economic shutdown, the declaration of emergency could end much sooner than that. The federal act requires as a condition of the increased aid that states not disenroll anyone currently on Medicaid or hawk-i, which is part of the reason for the projected increase in claims.

The state will also have additional spending needs necessitated by the state response to COVID-19 and increased demand on safety net programs. This additional spending, however, may be covered by the third piece of federal legislation, the Coronavirus Aid, Relief and Economic Security Act (CARES Act). Under that legislation, a Coronavirus Relief Fund (CRF) was created to funnel $139 billion to the states for expenditures related to the COVID-19 public health emergency. Iowa’s share will be $1.25 billion.

The CRF money must go for COVID-19 related expenditures not accounted for in the state budget most recently passed, which would be for the current fiscal year, and only for such expenditures through December 30, 2020.[10] Congress has made it explicit that these funds are not for regular general fund programs seeing a shortfall in revenue due to the economic crisis.[11] This differentiates the CARES Act from the state fiscal relief that during the Great Recession was intended to allow states to maintain services at current levels. The guidance published by the Office of Management and Budget makes this quite explicit: “Although a broad range of uses is allowed, revenue replacement is not a permissible use of Fund payments.”[12] Importantly, the guidance also stated that the CRF cannot be used to cover the state’s share of Medicaid; thus if the increase in Medicaid funding in the Families First Act proves inadequate, the state will have to make up the shortfall from its own revenue sources.

Eligible expenditures necessitated by the coronavirus emergency include not only direct expenses for public health needs but also expenses “incurred to respond to second order effects of the emergency, such as providing economic support to those suffering from employment or business interruptions due to COVID-19 related business closures.”[13] The kinds of expenses that are allowable from Iowa’s CRF allocation include the following, according to recent guidance from the federal government:[14]

  • Payroll for “public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency.” A state or local government “may presume that payroll costs for public health and public safety employees are payments for services substantially dedicated” to the emergency. This could include the payroll costs that had been included in the most recent budget for employees who “have been diverted to substantially different functions” as a result of the emergency, such as diverting education staff to the development of online learning, or redeploying police to enforce stay-at-home orders, or corrections staff to perform sanitation of facilities.
  • Funding of a program to provide assistance to individuals enrolling in a government benefit program who have been laid off and lost health insurance as a result of COVID-19.
  • Payments to the state’s unemployment insurance trust fund to maintain solvency in the face of COVID-19 related increases in benefit claims.
  • Transfers to local governments for expenditures related to the health emergency.
  • Payments to public and private hospitals to cover expenses related to the public health emergency.

The State of Iowa has received the $1.25 billion allocation from the CRF, but to date has spent only $70 million of it, all of that going to the Small Business Relief Program.[15] The Iowa Economic Development Authority anticipates using an additional $30 million from the CRF for this program, which has so far awarded $74.4 million to 3,946 businesses.[16]

The CARES Act also includes $31.9 million in additional Child Care and Development Block Grant funds (CCDBG), $10.7 million under the Community Services Block Grant, and $14.6 million to the state under the Community Development Block Grant. The Iowa Department of Human Services has prepared a plan for the additional CCDBG funds that would use most of the CCDBG funds to assist child care providers under the state’s Child Care Assistance Program.[17] The Iowa Fiscal Partnership has recommended that a substantial share of these funds be directed towards expanding eligibility to better serve lower wage workers during this economic crisis, and suspending eligibility redetermination.[18]

The other major funding programs in the CARES Act include $691 million in “provider relief funds” to Iowa health care providers, $107.2 million to transit agencies in Iowa and $79 million to airports.[19]

CARES Act offsets some of the losses to universities, public schools

The CARES Act provided some fiscal relief directly to public colleges and universities. However, that funding would offset only about 12 percent of the losses projected by Iowa’s three regents’ institutions, as shown below. The universities have estimated their losses in tuition revenue and residence hall refunds, as well as additional spending necessitated by the health crisis, totaling $193 million. While the CARES Act will send about $45 million to the three institutions, half of that must be used for student financial assistance. The remaining funds will cover only $22.7 million of the losses for the three universities. If tuition is not to be raised, the state must increase state funding to the regents institutions to avoid substantial cuts. Covering the entire net loss would represent a 30 percent increase over the $576.4 million state appropriation for FY 2020.

The CARES Act also has provided $64.4 million to Iowa from the Elementary and Secondary Schools Emergency Relief (ESSER) Fund that will be distributed to public and non-public school districts throughout the state.[20] The $64.4 million represents less than 1 percent of total public school district budgets; Iowa’s K-12 schools spent $6.7 billion in 2017.[21] Iowa also is eligible for $26.2 million from the Governor’s Education Relief Fund, and has received $7.2 million from ESSER for grants and statewide emergency expenses.[22]

Districts will experience loss of revenue due to increased property tax delinquency, and a decline in the school infrastructure sales tax and the income tax surcharge revenue. In addition, school districts face additional costs for things such as on-line technology, sanitizing facilities, staff training, and compensating for the special needs of lower income children, English language learners, racial and ethnic minorities, and those with disabilities. Those revenue losses and additional expenses may add up to well over 1 percent of school budgets. If additional direct federal support is not forthcoming, the state could distribute part of the CRF to public school districts to cover their additional costs necessitated by the emergency.

Much more federal fiscal assistance needed

Most analysts agree that federal fiscal assistance to states provided in the CARES Act will prove woefully inadequate. As noted above, the funds are for emergency related purposes beyond what the state budget normally covers. But the substantial drop in state revenues expected for next fiscal year means that all general state funding — K-12 school aid, support of regents institutions and community colleges, public safety, infrastructure, and general operations of state agencies — will have to be slashed below current budget levels unless federal funds replace lost revenue. Not only are state general fund revenues falling dramatically, but regents’ institutions, public schools, and cities and counties will need financial help well beyond what the CARES Act provides as their own revenue sources shrink and expenditures rise. The state will have no ability to offset those revenue losses and costs given the state’s own bleak fiscal outlook.

Such broader fiscal support eventually may be forthcoming in a fifth piece of federal legislation dealing with the COVID-19 emergency. The bill that passed the House on May 15 included nearly $1 trillion in additional aid to state and local governments. While that bill is unlikely to get a serious look in the Senate, some further stimulus package may be viable in the next few months. That support must be extended beyond December of this year, and should be tied to the length of the economic recession, not the health crisis that triggered that recession and that may well have largely ended long before the economy recovers.

Additional aid is essential not only to support the low-paid essential workers struggling to make ends meet, the small businesses barely keeping afloat, and the millions of newly unemployed, but to bolster the economy in the face of an unprecedented shutdown of major sectors and the prospect of a worldwide recession lasting will into next year. Consumer spending is the mainstay of the economy, and shoring up that spending requires maintaining jobs wherever possible, including the jobs of teachers, police officers, firefighters, construction crews, nurses, and all the other essential public employees.

[1] Peter Fisher, COVID-19 poses threats to Iowa state and local services, Iowa Fiscal Partnership, April 16, 2020. http://www.iowafiscal.org/covid-19-threatens-state-local-services/

[2] Dan White, Sarah Crane, and Colin Seitz. Stress-Testing States: COVID-19. April 14, 2020. Moody’s Analytics. https://www.economy.com/economicview/analysis/379097/StressTesting-States-COVID19

[3] Michael Leachman. New CBO Projections Suggest Even Bigger State Shortfalls. Center on Budget and Policy Priorities, April 29, 2020. https://www.cbpp.org/blog/new-cbo-projections-suggest-even-bigger-state-shortfalls

[4] Michael Leachman, New CBO Projections..,(see above). See also Elizabeth McNichol, Michael Leachman. And Joshuah Marshall. States Need Significantly More Fiscal Relief to Slow the Emerging Deep Recession. Center on Budget and Policy Priorities, April 14, 2020. https://www.cbpp.org/research/state-budget-and-tax/states-need-significantly-more-fiscal-relief-to-slow-the-emerging-deep and NGA: “National Governors Association Outlines Need for ‘Additional and Immediate’ Fiscal Assistance to States.” https://www.nga.org/news/press-releases/national-governors-association-outlines-need-for-additional-and-immediate-fiscal-assistance-to-states/

[5] Michael Leachman. “Projected State Shortfalls Grow as Economic Forecasts Worsen,” Center on Budget and Policy Priorities, May 20, 2020.  https://www.cbpp.org/blog/projected-state-shortfalls-grow-as-economic-forecasts-worsen

[6] Legislative Services Agency, Fiscal Update, May 22, 2020. “State Tax Revenue Update — COVID-19 Impact.”

[7] Legislative Services Agency, May 14, 2020. ”State of Iowa Financial Update: Revenue and Budget Implications of COVID-19.” The balance in the EEF is after a $17 million transfer to the Small Business Disaster Assistance Program.

[8] A listing of the various components can be found in: Legislative Services Agency, May 14, 2020. ”State of Iowa Financial Update: Revenue and Budget Implications of COVID-19.”

[9] Legislative Services Agency, Fiscal Update, March 20, 2020, “COVID-19 Economic Stimulus Package — Medicaid,” And Legislative Services Agency, May 14, 2020. ”State of Iowa Financial Update: Revenue and Budget Implications of COVID-19.” The additional funding is provided by raising the FMAP — the percentage of Medicaid expenses covered by the Federal government rather than the state. The additional match covers regular Medicaid and the hawk-i program, but not the Iowa Health and Wellness Program (the expansion program for those from 100 to 138 percent of poverty).

[10] Legislative Services Agency, Fiscal Update, March 31, 2020. “H.R. 748 Coronavirus Aid, Relief, And Economic Security Act Appropriations.”

[11] The CARES Act states: “Coronavirus Relief Fund payments may not be used to directly account for revenue shortfalls related to the COVID-19 outbreak.”

[12] Coronavirus Relief Fund Guidance for State, Territorial, Local, and Tribal Governments, April 22, 2020.

[13] Legislative Services Agency, Fiscal Update, May 15, 2020, “COVID-19 – Iowa Coronavirus Relief Fund.”

[14] U.S. Department of the Treasury: “Coronavirus Relief Fund: Frequently Asked Questions,” updated as of May 4, 2020.

[15] Legislative Services Agency, Fiscal Update, May 15, 2020, “COVID-19 – Iowa Coronavirus Relief Fund”

[16] Legislative Services Agency, Fiscal Update, May 22, 2020, “COVID-19 – Iowa Small Business Relief Program Update”

[17] Legislative Services Agency, May 14, 2020. ”State of Iowa Financial Update: Revenue and Budget Implications of COVID-19.”

[18] Iowa Fiscal Partnership: COVID-19: Stabilizing child care. May 8, 2020. http://www.iowafiscal.org/covid-19-stabilizing-child-care/

[19] Legislative Services Agency, May 14, 2020. ”State of Iowa Financial Update: Revenue and Budget Implications of COVID-19.”

[20] Legislative Services Agency, Fiscal Update, May 7, 2020, “Elementary and Secondary School Emergency Relief Funding for COVID-19.”

[21] U.S. Bureau of the Census, 2017 Census of Governments. Total K-12 school expenditure, from all sources, including own revenues and state aid.

[22] Legislative Services Agency, May 14, 2020. ”State of Iowa Financial Update: Revenue and Budget Implications of COVID-19.”

Peter Fisher is research director for the nonpartisan Iowa Policy Project (IPP) in Iowa City. He holds a Ph.D. in economics from the University of Wisconsin-Madison, and is professor emeritus of Urban and Regional Planning at the University of Iowa. A national expert on public finance, Fisher leads Iowa Fiscal Partnership research on tax and budget policy and conducts analysis of economic development subsidies, as well as critiques of business climate reports that are published on a separate website, www.GradingStates.org.

The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonpartisan, nonprofit Iowa-based organizations, the Iowa Policy Project and the Child and Family Policy Center. Reports are at www.iowafiscal.org

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Sheltering the data in place

Posted April 8th, 2020 to Blog

Governor Kim Reynolds over the past few weeks has moved incrementally to close more kinds of businesses, to the point where Iowa’s restrictions now resemble those of states that have a blanket statewide “shelter in place” order. Significant distinctions remain: a proper and comprehensive shelter in place order closes all businesses except those specified as essential, leaving no ambiguities and loopholes, and comes with clear and enforceable restrictions on travel and social activities.

The governor continues to assert that her recommendations are driven by the same four metrics that have guided her since the beginning and that only recently became partly public information due to efforts by the press. We provided a thorough analysis of that guidance several days ago. On Tuesday, we finally learned about one of those metrics: There are three long-term care facilities with a sufficient number of COVID-19 cases to be classified as a facility with an outbreak.

We now know enough to construct the point system in spite of stonewalling by the Governor’s Office.

The first of the four measures — percent of population age 65 or over — can be found from census data. The second — cases per 100,000 population — can be calculated because the number of cases has been released by IDPH by county. The third — outbreaks at care facilities — is now known, with locations, because of a question at a press conference.

That leaves the fourth — hospitalizations as a percent of cases — that is unknown by county or region because the governor still refuses to release the data. But we know the total score by region because it shows up on the maps that are intermittently released at press conferences (but remain unavailable on the IDPH website). Thus by subtraction we can determine that all four regions must be at the highest level, a 3, on the hospitalization rate score.

From here on out, the only thing that can change is the cases per 100,000 population and the number of care facility outbreaks. Region 5 is already at the maximum on the cases measure, and regions 1 and 6 will likely get there soon, leaving all three regions with a score of 9, 1 short of 10, the number that supposedly triggers shelter in place. So those regions, covering a large majority of the state’s population and COVID-19 cases, can get to 10 only with another outbreak at a care facility.

The governor on the one hand argues that we already have the equivalent of shelter in place, and at the same time the metric that she says still guides her decisions shows that shelter in place is not yet warranted anywhere in the state. Has that metric really been used thus far, and in what way? How do you get from the metrics to a list of particular additional businesses to close? What will happen when a region reaches 10? Will the governor order more stringent measures in just that region? Or will the whole thing be scrapped once a proper forecasting model is developed that meets with her approval?

One thing is clear: transparency has been sadly lacking, and for no apparent reason.

Peter Fisher is research director of the nonpartisan Iowa Policy Project.

pfisher@iowapolicyproject.org

IFP Statement: Disclose data, plans

It is past time to provide all Iowans with COVID-19 data, plans

A new policy brief by Iowa Policy Project research director Peter Fisher examines the arbitrary and backward-facing approach of the metrics that the administration of Governor Kim Reynolds has disclosed that Iowa officials are using in their response to the spread of the novel coronavirus. See that brief on the Iowa Fiscal Partnership (IFP) website.

The Iowa Fiscal Partnership released the following statement from Mike Owen, executive director of the Iowa Policy Project, about the lack of transparency in Iowa’s COVID-19 response.

“In a public health crisis like living Iowans and Americans have never seen, our leaders should welcome the value public scrutiny and perspective can bring to decision-making.

“It should not have taken an enterprising news reporter to coax out the short list of metrics[1] that Governor Kim Reynolds and her administration are using to make decisions about public safety. Responding to the crisis is public business, as consequential as most of us have seen. Iowans not only need to know what data is being used, and its sources, but how choices are being made with that information.

“Are other measures being considered? What measures have been dismissed? Who are the analysts? What comparisons are being made to other data and other states’ actions? These are only a few of the questions that logically arise. Not enough testing is being done to make the Governor’s metric of an infection rate meaningful, for one thing.

“The Governor asserts her actions thus far are as strong as official ‘shelter-in-place’ orders in other states. Even if comparisons wind up backing that claim, we need more information.

“Do we have the resources to make sure front-line health workers and all public and private workers handling essential services are protected? From medical care to corrections to seniors’ housing to day-care centers, do workers have the personal protective equipment to do their jobs safely? Do they have sufficient resources to protect the people in their care? Any of us could be among those needing care in the coming weeks.

“It is fair for Iowans to ask how they can expect that the state will avoid an overwhelmed health care system when we are relying on looser rules for social interaction than they are seeing in other states. Should we not build into public policy the findings of analysis that illustrate the benefit of reducing travel in preventing the spread of the virus?[2]

“It is not possible for Iowa to have all hands on deck to respond without knowing what resources we have, what we can reasonably expect to need, and to know how our leaders plan to bridge any gap.

“Yes, we are owed the information. It affects us all, and without it we cannot contribute with ideas to make solutions better or bring them along faster.

“It is time — past time — that all Iowans are brought to the table.”

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The Iowa Fiscal Partnership is a joint public policy analysis initiative of two nonpartisan, nonprofit, Iowa-based organizations — the Iowa Policy Project in Iowa City, and the Child and Family Policy Center in Des Moines. Find reports at www.iowafiscal.org, and the IPP and CFPC websites, www.iowapolicyproject.org and www.cfpciowa.org.

[1] Zachary Oren Smith, Barbara Rodriguez, Jason Clayworth, Des Moines Register, April 2, 2020. https://www.desmoinesregister.com/story/news/health/2020/04/02/shelter-in-place-iowa-covid-19-benchmark-guidance-tool-waits-for-hospitalization-outbreaks/5111747002/

[2] The New York Times, “Where America Didn’t Stay Home Even as the Virus Spread.” April 2, 2020. https://www.nytimes.com/interactive/2020/04/02/us/coronavirus-social-distancing.html?algo=top_conversion&fellback=false&imp_id=603400842&imp_id=967213594&action=click&module=trending&pgtype=Article&region=Footer

COVID metrics arbitrary, backward facing

State, health-care workers and public need more information to prepare for shortages and help find solutions

By Peter Fisher [updated April 6]

All but five states have now issued a shelter-in-place order, or have such orders covering parts of the state.[1] They have done so not just to reduce the spread of the disease and the number of residents dying, but to forestall a surge of cases that would overwhelm the health care system in their state. In doing so, they have relied on epidemiological data and projections indicating when their health care systems will face a shortage of hospital beds, intensive care units, and ventilators without serious restrictions on travel, business operations, and social activities.

One of those projections, by the Institute for Health Metrics and Evaluation (IHME) of the University of Washington and updated April 5, shows the wide range of possibilities. They predict a peak day of April 26, with Iowa needing between 53 and 438 ICU beds, and 150 as the best estimate, compared to 246 available beds. They predict a need for between 42 and 367 ventilators, and a peak of 17 deaths per day (with a range of 0 to 100), with 263 to 711 total deaths in the state by August.[2] These predictions assume that Iowa takes more serious measures in seven days — a stay-at-home order and mandatory closure of all nonessential businesses. If the governor still sees no need for further restrictions by then, the situation could be worse.

So what is the Governor relying on that leads her to believe that halfway measures are adequate to protect our health care workers and our citizens, and to prevent such shortages? The “metrics” and “data,” referred to repeatedly but vaguely in press briefings, became clear to the public only on Wednesday, when the “Guidelines for Implementing Public Health Mitigation Measures” were obtained by the Iowa City Press-Citizen. While we now know something of how the guidelines work, much remains a mystery. We do not know why this scoring system was adopted, who developed it, what science is behind the measures and the scores, whether any other state or country has used anything like it, or whether it was vetted by any qualified epidemiologists at Iowa universities or hospitals. The matrix cannot be found anywhere on the IDPH website, and the underlying data have not been released despite repeated requests by members of the media and others.

What we do know is that the application of the model does not give much hope to the many groups pressing the governor for more aggressive measures, most recently the Iowa Board of Medicine.[3] Suppose you live in the southeast portion of Iowa, where the overall incidence of COVID-19 is the highest in the state. Even there you are not going to get a shelter-in-place order from the governor anytime soon, as long as she is wedded to the IDPH matrix.

The matrix consists of scores of 1 to 3 on each of four measures and is applied to each of six regions in the state. Only when the score reaches 10 is a shelter in place order justified under the IDPH guidelines. The southeast region, which includes Johnson, Washington and Scott counties, along with 12 others, scores only a 7. Getting 3 more points will require either an outbreak at two nursing homes plus another 100 cases, or an outbreak at 3 nursing homes. That’s the only way the score will get to the magic number of 10 because the region can’t get any more points out of the other two measures. Only one nursing home outbreak, but 500 more cases, or 1,000 more cases? Too bad; the score is still stuck at 9.

That is just how arbitrary and rigid this matrix is.

So how does it work? We were able to construct at least part of the scores for each region based on data by county for population by age and the number of COVID-19 cases reported as of April 3. We relied on images of the regional map published in the press, and translated those to actual county boundaries.

The scores in the regional map above are the official scores being used as of April 6, according to The Des Moines Register. The Iowa Department of Public Health is not promoting this information prominently on its website. Because of a lack of data being made available in some of the official metrics from which the scores are compiled, the origin of the scores in some cases cannot be determined.

First, a region gets a score of 1 to 3 depending on the percent of the population age 65 or older. For most regions, the score is 2 because the share is between 15 and 19 percent. The central region, No. 1, which includes the Des Moines metro area, is a little younger, and gets only 1 point here. The north central region, No. 2, on the other hand gets 3 points, with more than 21 percent of the population over 65.[4] None of those scores are going to change. It just means that central Iowa is going to have a harder time getting to 10, north central an easier time.

Second, the region is scored on the percent of cases needing hospitalization. Statewide, that percent in Iowa has hovered between 26 percent and 28 percent for the last several days.[5] This is substantially higher than national rates, but this may reflect nothing more than low rates of testing among those without substantial symptoms in Iowa. The more we test among those potentially exposed to the virus, whether or not they are symptomatic, the more the number of cases will rise and the lower the percent needing hospitalization. However, it seems unlikely that this factor will fall below 15 percent, so we can pretty much assume it is 3 points statewide, and probably in each region. (Hospitalizations by county has not been released by IDPH).

More to the point, why is this rate in the decision matrix at all? It is a characteristic of the virus; is there any reason to expect it to be more severe, and therefore more likely to require hospitalization, over time, or in one part of the state than in another? Surely the total number of people requiring hospitalization at the projected peak is the critical number; the historical percent is irrelevant.

The third measure is COVID-19 cases per 100,000 population. A number from 6 to 20 is worth 1 point, 21 to 49 is 2 points, 50 or more cases is 3 (the maximum). As of April 3, this measure ranged from 7 in the northwest (region 3) to 29 in region 5 (which includes Linn County) and 35 in the southeast, which includes Johnson County.[6] That gives regions 1-4 each 1 point, regions 5 and 6, 2 points. The latter regions could be well over 100 cases per 100,000 people soon, but no matter how high it goes the most they will get is 3 points.

Finally, the matrix assigns one point for each outbreak at a long-term care facility, up to a maximum of 3. As of April 3, the only such outbreak that had been reported in the press was at a Linn County care facility. Does an outbreak at one nursing home predict a shortage of ICU beds over the entire population in a region? Probably not.

The arbitrariness of the measures, the score cutoffs, and the maximum scores are not the only problems with the matrix. The scoring is entirely backward looking. This is particularly dangerous for a disease that spreads so easily and where, as we all know by now, cases and hospitalizations grow exponentially, everywhere that the disease has been found. Historical data in Iowa and in places where the diseases arrived much earlier is useful, but only because it allows one to determine the rate at which the disease is spreading. The fewer the number of days it is taking for the number of cases to double, the sooner we will arrive at a peak, the sharper that peak will be, and the more likely it is that we face a potential health disaster. Again, projected cases and hospitalizations is the goal, not history.

The governor has complained that the IHME projection does not take into account measures already undertaken in Iowa — the now-mandatory closing of schools and the mandatory closing of some kinds of businesses. But she has offered no alternative projections, no projections at all. The state should be planning for the worst-case scenario, not the best case, but she has not disclosed what she sees as either scenario.

The IDPH matrix is not science-based guidance for decision-making. It is an arbitrary scoring method divorced from all the epidemiological analysis and modeling that is taking place elsewhere. It tells us nothing about when or by how much our health care system will face critical shortages. It is an embarrassment.

[1] The New York Times. https://www.nytimes.com/interactive/2020/us/coronavirus-stay-at-home-order.html

[2] University of Washington, Institute for Health Metrics and Evaluation, April 1, 2020, update. https://covid19.healthdata.org/projections

[3] Barbara Rodriguez, The Des Moines Register, April 3, 2020. https://www.desmoinesregister.com/story/news/health/2020/04/03/coronavirus-board-medicine-recommends-iowa-governor-issue-mandatory-shelter-place/2940467001/

[4] These scores are based on the counties included in the six regions according to the map released by the Iowa City Press-Citizen, in combination with the data on population by age and county from the most recent five-year average of the American Community Survey.

[5] IDPH data for April 1-3 shows that on average the sum of deaths, current hospitalizations, and hospitalized but released equals the total number of cases in Iowa that have at some point required hospitalization, assuming that those who died were first hospitalized. This number divided by total confirmed cases equals 28 percent.

[6] Analysis by the author using cases per county as reported by IDPH on the afternoon of April 3, and county population according to the American Community Survey.

Peter Fisher is research director for the Iowa Policy Project. An economist and one of Iowa’s leading experts on tax policy, he has published several analyses of criteria used in indexes of state tax systems, available at GradingStates.org. Fisher is professor emeritus in the School of Urban and Regional Planning at the University of Iowa.