2022 Georgia Budget Primer

July 2021 Georgia Budget and Policy Institute All rights reserved.

This document may not be quoted without proper citation.

A PDF is available for reference and distribution at www.gbpi.org Georgia Budget and Policy Institute 50 Hurt Plaza SE Suite 720 Atlanta, GA 30303 404.420.1324 www.gbpi.org Georgia Budget and Policy Institute GaBudget GeorgiaBudget Georgia Budget and Policy Institute

Table of Contents About GBPI . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Letter from the Senior Vice President. . . . . . . . . . . . . . . 3 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Budget Basics. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Steps Along Georgia’s Budget Path . . . . . . . . . . . . . . . 8 Georgia by the Numbers . . . . . . . . . . . . . . . . . . . . . 8 Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Georgia’s Revenue System Shaped by

History of Racist Policies . . . . . . . . . . . . . . . . 10

Budget Trends . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Health Care . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Expanding Medicaid Helps Georgians Beyond

Health Care. . . . . . . . . . . . . . . . . . . . . . . . 42

Human Services . . . . . . . . . . . . . . . . . . . . . . . . . 49 Criminal Legal System. . . . . . . . . . . . . . . . . . . . . . 57 Looking Ahead . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Contact Us . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Georgia’s 2022 Budget Primer

About GBPI The Georgia Budget and Policy Institute (GBPI) strives to be an anti-racist research and advocacy organization that advances lasting solutions to expand economic opportunity and well-being for all Georgians.

We examine the state’s budget, taxes and public policies to provide thoughtful analysis and responsible solutions that address inequities in our state. We educate the public about complex issues confronting Georgia and activate Georgians to call for policy solutions that put people first. We aim to inspire informed debate and decision-making, advancing our vision of a fair and inclusive Georgia where everyone can prosper.

If you would like to make a donation or find out more about us, please visit www.gbpi.org/donate or scan our QR code.

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Letter from the Senior Vice President When 2021 began, COVID-19 was at its peak and vital federal relief dollars were promised to our state. Lawmakers faced a choice: to uphold the status quo—one of underfunding critical services and programs— or to build a future where prosperity is within reach for everyone.

Unfortunately, state leaders clung to the status quo. Although some cuts in the Fiscal Year (FY) 2021 budget were restored, the FY 2022 budget maintains the underfunding of schools, health services and agencies meant to support people who are unemployed or living in poverty.

And it was a choice: Lawmakers considered proposals that would help rebalance our tax code so that it more fairly taxes the wealthy and corporations, but they ultimately chose to barely mitigate the nearly $10 billion in estimated tax breaks that will be handed out to special interests this year while ignoring measures that would deliver true economic relief to Georgians affected by the pandemic. This choice will continue to exacerbate inequities in our state, especially for Black and Brown Georgians and those living in rural communities. In the end, our state’s revenues did not necessitate steep cuts; there was no reason for our lawmakers to underfund the critical programs and services Georgians rely on.

The information in this 60-page booklet and associated online resources summarizes Georgia’s 101-page appropriations bill so that you can better understand the effects of state spending on your life.

The 2022 Georgia Budget Primer is GBPI’s signature annual publication that connects the dots between state revenues; investments in education, health care, human services and the justice system; and the effects of the budget on the people in Georgia. We take seriously the opportunity to educate Georgians about how state spending affects our quality of life. Our mission is to advance lasting solutions that expand economic opportunity for everyone.

Dominique Derbigny Sims Senior Vice President

Georgia’s 2022 Budget Primer

Introduction Georgia plans to spend $27.3 billion in state money raised through taxes and fees for the 2022 fiscal year. The budget maintains nearly $850 million in cuts from FY 2020 levels, a reduction equivalent to cutting approximately 4 percent of General Funds from the budget.

Although lawmakers restored about half of the previous year’s cuts to K-12 education, public schools remain underfunded by $416 million compared to pre-pandemic levels. The budget also maintains $145 million in cuts to higher education, $44 million in cuts to health services and programs and continued cuts to the Departments of Human Services and Labor and other critical agencies.

Some federal funding provided under the American Rescue Plan (ARP) was sent directly to agencies; however, these dollars are meant to address additional needs due to COVID-19, not help fund the basic services agencies provide.

The pages that follow are a guide to state spending for public services and programs meant to improve the quality of life for people across Georgia.

The 2022 Georgia Budget Primer is a clear explanation of the state’s revenue collections and spending plan. It is an authoritative reference for the fiscal year that began July 1, 2022. It can help seasoned observers and novices alike understand the budget’s complexities.

The governor proposed the 2022 state budget in January 2021. State lawmakers then modified it before Governor Kemp signed the budget into law in May 2021. Lawmakers will amend the 2022 state budget after the next Legislative Session starts in January 2022. Please visit www.gbpi. org for up-to-date analysis of the changes.

The state budget charts a course for Georgia communities. The pages that follow explain where the state is headed—and opportunities to help every Georgian prosper.

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Budget Basics Georgia’s 2022 fiscal year runs from July 1, 2021 through June 30, 2022. The total available funding to the state is $49.9 billion. That includes $27.3 billion in state funding, $15.6 billion in federal funding and $7.1 billion in agency funds. Before the Great Recession, adjusting for inflation, the state of Georgia spent about $2,649 per person in FY 2008. Under the 2022 budget, the state will spend $105 less per person, a total of about $1.1 billion less than if spending kept pace with the state’s growth in population and inflation.

The state budget outlines Georgia’s priorities, how it plans to spend money and how much revenue it expects to collect. It is the most important piece of legislation lawmakers pass. In fact, the budget is the only legislation that the General Assembly is legally required to pass each year. The Georgia Constitution also requires the state to maintain a balanced budget, which means the government cannot spend more money than it collects in revenues.

The budget process is ongoing. Even as Georgia is implementing its current budget, it is auditing the previous year’s budget and planning for the next one.

Beyond the General Assembly, many others participate in the process, including the governor, state budget director, state economist, agency leaders and budget officials, state auditors and the public.

Advocates need to engage with the budget process yearround. By reaching out to agency leaders in the summer and fall, and to lawmakers in the winter and spring, Georgians can inform the annual debate over the budget.

Georgia’s 2022 Budget Primer

Steps Along Georgia’s Budget Path

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Georgia’s 2022 Budget Primer

Georgia by the Numbers Each day, Georgia’s budget for 2022 touches the lives of millions of people across the state. The spending plan affects the quality of life for more than 10.7 million Georgians across the state’s many diverse communities. The lion’s share of that money is allocated to core investments in the state’s economic future, including education, health care and transportation. Here are some examples of the way the state budget affects the lives of Georgians: 2 million+ Georgians who are seniors, disabled, children or parents with low incomes receive health care coverage and services ($3.7 billion in the 2022 state budget) 1.72 million students, supported by more than 135,000 teachers and administrators, enroll in Georgia’s 2,300 K-12 public schools ($10.5 billion in the 2022 state budget) 445,000 students enroll in Georgia public colleges, universities or technical colleges ($3.9 billion in the 2022 state budget) 258,000 adult Georgians live under correctional control, including 190,000 on probation, 48,000 individuals who are incarcerated and 20,000 Georgians on parole ($1.3 billion in 2022 state budget) 18,000 miles of state highway are overseen by the Department of Transportation, which will also direct $196 million in FY 2022 to help maintain and improve more than 100,000 miles of county roads and city streets ($2 billion total in 2022 state budget) Source: U.S. Census; Georgia Department of Community Health; Georgia Department of Corrections, January 2021 Average Counts; State Board of Pardons and Paroles, population under supervision as of June 30, 2021; Georgia Department of Community Supervision, annual population as of May 2021; Georgia Department of Education; Georgia Department of Transportation, Fact Book; Board of Regents, University System of Georgia Semester Enrollment Report, 2021; Technical College System of Georgia, total enrollment Fall 2021.

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Georgia’s 2022 Budget Primer

Georgia’s Revenue System Shaped by History of Racist Policies The structure of Georgia’s modern revenue system—which determines how much money the state can use to fund Georgia’s budget—developed during the turbulent decades of the 1930s through 1960s, a period during which the state was largely governed by segregationists who resisted New Deal-era federal assistance and struggled to finance basic government programs and services.

Structural racism exists when racist policies, practices, attitudes and other factors combine to create or perpetuate inequities. For example, racist policies such as mass incarceration have worked alongside racism in hiring to create occupational segregation, where many people of color work in jobs that do not pay a living wage.

As a result, unjust policies like a regressive tax code have a disproportionate impact on workers of color and their families.

At the beginning of the twentieth century, Georgia generated most of its revenue from a state property tax, which in the intervening decades was weaponized to systematically disenfranchise, intimidate and economically harm Black Georgians. Property tax was implemented alongside the state’s poll tax—which was maintained until 1945.Property tax assessors were given wide latitude to favorably value white landowners’ property while leveraging tax assessments to push Black land and business owners into poverty and, in many cases, eventually seize their property. In 1929, the state adopted corporate and individual income taxes, and in 1937, established the relatively flat individual income tax bracket structure that continues to form the basis for the current tax code. In 1951, the state enacted a sales and use tax at a rate of 3 percent, which was increased to its current level of 4 percent in 1989. As revenues from income and sales taxes increased, the state phased out its property tax and eliminated it in 2016; local property taxes remain.

Historic injustices and harmful policy choices have resulted in vast disparities in income across race and ethnicity in Georgia. Regressive tax policies at the state and local level worsen those disparities by asking those making the lowest incomes to pay the largest share in taxes.

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In Regressive Georgia System, People of Color More Likely to Pay Higher Share of Income Taxes

Note: Race and ethnicity breakdown shown in order of share of Georgia population.

Source: Institute on Taxation and Economic Policy, June 2021.

Georgia’s 2022 Budget Primer

Where Does Georgia’s Money Come From?

Georgia’s fiscal health depends on the state’s ability to raise money from a variety of sources in a reliable way. Like most states, Georgia collects revenue from a mix of personal and corporate income taxes, sales taxes, gas and vehicle taxes, and various other levies and fees. Income taxes are the cornerstone of Georgia’s revenue system, accounting for half of all state funds. Sales taxes are the second-largest revenue source, representing slightly less than a quarter of annual collections. A fair and reliable revenue system requires both types of taxes.

Income taxes help balance the regressive effects of sales taxes and fees by allowing the state to collect a proportionate share of revenue from the wealthiest earners and most profitable corporations. A healthy income tax is also less sensitive to economic trends, which can boost revenue growth during good times but decline sharply when recessions occur.

Sales taxes provide a less consistent source of yearly revenue, and they fall more sharply on middle-class families and people with lower incomes. Sales taxes also historically lag behind innovations that spur changes in Georgia’s economy. However, sales taxes remain a core funding source that allows the state to generate revenue from consumption and economic inputs that would otherwise be exempt from taxation.

In April 2020, a new Georgia law began requiring most online retailers to collect and remit sales taxes to the state, including marketplace facilitators like Uber’s rideshare services or retailers like eBay. That law was expanded in 2021, with the state’s Hotel Tax now also assessed to lodging marketplaces like Airbnb. The state’s sales tax, however, is not applied to most services and large parts of Georgia’s economy, such as construction labor, the finance industry, attorneys or physicians. Some sales tax exemptions were intentionally created to avoid taxing products families rely on, such as groceries, while sales of items like digital downloads are not taxed because lawmakers have not proactively updated the tax code to include them, although legislation to do so has been introduced in the 2021-22 legislative session.

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Income Tax Largest Source of State Revenue

Source: Governor’s Budget Report Amended FY 2021 and FY 2022; Conference Committee Substitute to HB 81 as signed by the governor.

Georgia’s 2022 Budget Primer

Georgia’s Funding Sources Georgia’s total 2022 budget, including federal funds, is $49.9 billion and is made up of six major funding sources: General Funds – The state-funded portions of education, Medicaid and most other traditional state services are paid for through the $25.8 billion General Fund, which includes money raised by income taxes, sales taxes and a variety of other taxes and fees.

Federal Funds – A large share of Georgia’s overall spending for health care, K-12 education, transportation and other services is paid through the administration of $15.6 billion in federal funds.

Agency Funds – These $7.1 billion in revenue include tuition and fees from colleges and university system research funds, in addition to regulatory fees and revenue raised directly by individual state agencies.

Lottery Funds – These $1.3 billion in revenue are dedicated to preKindergarten programs and scholarships for higher education.

Tobacco Settlement Funds or Grants – This ongoing annual payment, $148 million in FY 2022, resulting from a legal settlement with the country’s four largest tobacco companies over health care costs, can be used for anything in the budget.

Intrastate Transfers – The $4.4 billion of intrastate transfers include payments from the state health plan and are not counted in the $49.9 billion budget.

General and Federal Funds Make Up Most of $49.9 Billion 2022 Budget

Note: Tobacco Settlement Funds or Grants account for $148,469,132 of Georgia’s 2022, a number too low to appear on this chart.

Source: Conference Committee Substitute to HB 81 as signed by the governor.

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General Funds $23.8 Billion (48 Percent of Georgia’s Budget) Georgia’s General Fund derives largely from income taxes on personal and corporate earnings and sales taxes on consumer transactions. The state also taxes motor fuel and assesses provider fees on hospitals and nursing homes. More than 94 cents of every dollar appropriated by the state pays for eight core priorities: • • • • • • •

Pre-K-12 Education (41 cents of every dollar spent) Health Care (19 cents) Higher Education (11 cents) Transportation (8 cents) Corrections, Juvenile Justice and Re-entry (6 cents) Debt Service (5 cents) Department of Human Services (3 cents)

The remaining General Fund spending is for state agencies, boards and commissions dedicated to activities such as economic development, agriculture and forestry, and grant programs. The General Fund also covers the costs of operating the legislative, judicial and executive branches of state government. Not included in Georgia’s General Fund are state lottery proceeds and money dedicated to the Brain and Spinal Injury Trust Fund. Lottery proceeds are not included in the General Fund and account for about 5 percent of total state funds or $1.3 billion.

Motor Fuel Funds $2 Billion (4 Percent of Georgia’s Budget) Georgia’s Constitution restricts spending revenue from state motor fuel taxes to roads and bridges. The money is dedicated to a mix of new construction, maintenance of existing infrastructure and debt service on past investments. Georgia’s 2021 motor fuel rates are 28.7 cents per gallon of gas and 32.2 cents per gallon of diesel, a slight uptick from last year. While the state taxes aviation gasoline at 1 cent per gallon, the state’s Department of Revenue has recognized a permanent tax exemption on the sale of jet fuel, which will cost the state $35 million in FY 2022. The state’s 2022 budget includes a total of $2 billion in motor fuel revenue.

Georgia’s 2022 Budget Primer

Education and Health Care Make Up 71 Percent of State Budget $25.8 Billion General Fund and Motor Fuel Funds Budget (FY 2022)

Source: Conference Committee Substitute to HB 81 as signed by the governor.

Agency Funds $7.1 Billion (14 Percent of Georgia’s Budget) Agency funds include $2.6 billion in tuition and fees collected by the University System of Georgia and the Technical College System of Georgia. The University System of Georgia accounts for $2.4 billion in research funds. The money is retained by the individual schools.

Source: Conference Committee Substitute to HB 81 as signed by the governor.

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Federal Funds $15.6 Billion (31 Percent of Georgia’s Budget) Money from the federal government flows to a range of state programs and services. Georgia spends the vast majority of federal money on the following: • • • •

$9.3 billion for Medicaid, PeachCare and other health care programs $2.6 billion for Pre-K-12 education, which includes school nutrition programs, services for students from families with low incomes and support for students with disabilities $1.6 billion for the Georgia Department of Transportation $1.1 billion for human services, Temporary Assistance for Needy Families (TANF, or cash assistance) and child welfare programs

Federal rules require the state to match federal funding for Medicaid and many other investments that benefit Georgians. As a result, changes in state funding levels typically track changes in federal funding. $15.6 Billion in Federal Funds Mostly Pays for Health Care, Education, Transportation and Human Services

Source: Conference Committee Substitute to HB 81 as signed by governor.

Georgia’s 2022 Budget Primer

American Rescue Plan Act Funds

$12.5 Billion (Included for Reference. Funds are Distributed Between State and Local Governments, Authorities and Other Public Entities) Enacted as part of the sweeping ARP legislation that was signed into law by President Biden in Mach 2021, Georgia is set to receive more than $12.5 billion in federal funding. The funding includes $4.3 billion for Georgia’s elementary and secondary schools, $1.5 billion for the state’s child care programs, $1.2 billion in emergency relief for higher education institutions and students and hundreds of millions more targeted to address needs from hunger to rural public transportation. Most significant to the state government is $4.7 billion in emergency aid, along with $262 million in aid for capital projects to stimulate the state’s economy and address long-overdue needs like rural broadband. This federal aid can be used from the point when it is received until December 31, 2024. The state will receive two payments delivered approximately 12 months apart.

Further underscoring Georgia’s need for this influx of resources is the fact that if state General Fund revenues had grown in FY 2020 at Georgia’s average pace of growth during the three years before the pandemic, $1.2 billion in additional revenue would have been available to meet the needs of Georgians. Georgia’s FY 2021 budget is built on a revenue estimate that expects to generate $3.2 billion less than if the state had continued growing at its recent-year average. As a result, and in part due to significant federal assistance in the form of enhanced unemployment benefits, increased Medicaid payments and COVID relief funds, the state expects to generate a surplus, in which tax collections outpace spending and will be added to the Revenue Shortfall Reserve.

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According to the ARP, Georgia is authorized to use these funds for the following purposes: “(A) to respond to the public health emergency with respect to [COVID–19] or its negative economic impacts, including assistance to households, small businesses and nonprofits, or aid to impacted industries such as tourism, travel and hospitality; “(B) to respond to workers performing essential work during the COVID–19 public health emergency by providing premium pay to eligible workers of the State…government that are performing such essential work, or by providing grants to eligible employers that have eligible workers who perform essential work; “(C) for the provision of government services to the extent of the reduction in revenue of such State…government due to the COVID–19 public health emergency relative to revenues collected in the most recent full fiscal year...; or “(D) to make necessary investments in water, sewer, or broadband infrastructure.”

Georgia’s 2022 Budget Primer

Intrastate Transfers $4.4 Billion (Included for Reference but Not as a Net Increase to Georgia’s Budget) Intrastate transfers are primarily payments from the State Health Benefit Plan, which insures about 665,000 Georgians.

Source: Conference Committee Substitute to HB 81 as signed by the governor.

2022 Tobacco Settlement Fund Budget $148 Million (0.3 Percent of Georgia’s Budget) Georgia receives annual payments from a large settlement signed in 1998 with four of the country’s largest tobacco companies, known as the Tobacco Master Settlement Agreement. Georgia is not required to dedicate these payments for specific purposes. As a result, the use of tobacco settlement money can vary from year to year, though most of the money in the current year budget is allocated to health care.

Source: Conference Committee Substitute to HB 81 as signed by the governor.

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Georgia’s 2022 Budget Primer

Budget Trends The $27.3 billion state budget signed into law by Gov. Kemp for FY 2022, which started July 1, 2021, represents an $849 million decrease in state spending from the state’s 2020 budget that was enacted two years prior—that is, compared to pre-pandemic levels—without adjusting for changes in population and inflation. The FY 2022 budget represents a third consecutive year of austerity, which began when appropriators made cuts to eliminate more than 1,000 vacant state jobs even before COVID-19 led state leaders to respond to revenue shortfalls with deep spending cuts.

Georgia’s FY 2022 budget includes approximately 4 percent in cuts to state spending from pre-pandemic levels, with the largest reductions made to education and health care. Considerable federal resources were made available to finance the state’s response to the COVID-19 pandemic, and the federal government offered significant state savings by paying a higher-than-usual share of the cost of Georgia’s Medicaid program through the duration of the national public health emergency declaration. Nevertheless, the state’s primary response to the ongoing crisis has been to rely on deep spending cuts to balance its budget, with little to no state resources mobilized to relieve the hardship experienced by millions of Georgians.

Compared to pre-pandemic levels, Georgia’s FY 2022 budget underfunds pre-K through 12th grade by $416 million, maintains $145 million in cuts to higher education, continues $44 million in cuts to health services and programs, cuts $14 million from the Departments of Human Services and Labor and reduces funding for other state agencies by $230 million.

Lawmakers could address Georgia’s fiscal shortfall using funds allocated to the state through the federal American Rescue Plan and ensure these funding levels are sustained by raising revenue or eliminating existing tax breaks and loopholes to avoid further passing on the costs of deep budget cuts to local school districts, health care providers and communities across the state.

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State Savings Account Grows as Georgians Shoulder Cost of COVID-19 Pandemic The Revenue Shortfall Reserve (RSR), Georgia’s rainy day fund, provides stability in economic downturns. The fund is like a savings account to pay expenses and maintain services when revenues decline unexpectedly. Maintaining adequate reserve money helps Georgia keep its AAA bond rating, allowing the state to borrow on favorable terms and save millions in interest. Money is not appropriated into the RSR; the balance grows at the end of each fiscal year if there is surplus state revenue (up to 15 percent of prior year revenue). The governor is also authorized to release for appropriation any amount over the minimum balance required—4 percent of prior year revenues—in case of a fiscal emergency. At the current level, as of FY 2021, $1.7 billion in state reserves could be otherwise appropriated.

State leaders, led by Gov. Kemp, have largely rejected using any of the resources the state has accrued to its healthy RSR, and instead, chose to rely on budget cuts alone to balance Georgia’s spending plan. As the state closes FY 2021, it is highly likely that it will again pad its reserves as the RSR approaches the legal limit of 15 percent of prior year general fund revenues, despite continuing to maintain steep cuts to state spending that will underfund K-12 schools for a second consecutive year.

At the close of FY 2020, Georgia’s Revenue Shortfall Reserve stood at $2.7 billion, equivalent to 11 percent of prior year revenues, or enough to fund the state’s operations for approximately 39 days.

The Revenue Shortfall Reserve Remains Mostly Unused Through the Pandemic

Source: The Governor’s Budget Report, AFY 2021 and FY 2022.

Georgia’s 2022 Budget Primer

Georgia’s 2022 Budget Maintains Nearly $850 Million in Cuts to Pre-Pandemic Levels During the 2021 Legislative Session, lawmakers leveraged $90 million in additional savings due to the federal government’s decision to pay a higher-than-usual share of Georgia’s Medicaid program, along with $22 million in funding for other state agencies and $15 million from capital projects to restore a total of about $127 million in cuts initially proposed in Gov. Kemp’s executive budget. Still, Georgia’s FY 2022 budget includes $849 million in cuts from the state’s 2020 funding levels, notwithstanding the growth of Georgia’s population and increased need for programs and services caused by the COVID-19 pandemic. As part of the federal government’s pandemic response legislation, bolstered by multi-year funding authorized by the ARP, state agencies such as the Department of Education and Department of Behavioral Health and Developmental Disabilities have received direct funding that is being used to fill the gaps caused by state budget cuts.

Source: The Governor’s Budget Report, AFY 2021 and FY 2022; House Bill 31.(2019); House Bill 81 (2021).

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Tax Breaks Erode Georgia’s Budget: $10 Billion in Foregone Revenue Collections in FY 2022 Georgia offers a wide array of tax credits, deductions and other tax breaks, also known as tax expenditures, that give preferential treatment to certain taxpayers and corporations to achieve policy goals. The tax breaks will cost the state an estimated $10 billion in lost revenue in the 2022 fiscal year—a new record cost. Even by a more conservative estimate that excludes many of the tax expenditures commonly found in other states, Georgia’s tax breaks for corporations and the wealthiest earners still yield an annual cost of more than $4 billion. In the 2019 tax year, out of a total of 230,838 corporate income tax returns filed, 94 percent, or more than 217,000 corporations, reported taxable income of $0 or less to the state.

Some tax breaks provide key protections for families, such as the sales tax exemption on groceries, while others provide credits or incentives to specific industries or special-interest groups. Several of Georgia’s largest tax breaks deliver outsized gains to select groups or industries—such as manufacturing, film or insurance—often with questionable benefit to the state or its people. Georgia lacks a formal review process to measure and compare costs and benefits of tax breaks, although proposals to improve transparency and accountability in the tax code have passed the state Senate with unanimous support in recent years.

Film Industry, Insurance Companies Receive Largest SpecialInterest Tax Breaks

Source: Department of Audits and Accounts, Georgia Tax Expenditure Report for FY 2022.

Georgia’s 2022 Budget Primer

Notes

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Georgia’s 2022 Education Budget The state budget for K-12 public schools is $10.2 billion in FY 2022. In the 2020 General Assembly, state lawmakers passed a budget with $1 billion in cuts to the Department of Education. Lawmakers restored most of these reductions this session in the amended FY 2021 budget but underfunded the school funding formula by $383 million in both the FY 2021 and FY 2022 budgets. State funding for private school vouchers saw no similar budget cuts and is expected to increase; legislation passed to expand participation in one of the state’s two such programs.

The budget for the University System of Georgia and its associated programs like agricultural extension services is $2.5 billion. The budget for technical colleges and associated programs like Adult Education is $344 million. FY 2022 budgets for colleges and universities add money for two years of previously unfunded enrollment-driven formula increases but do not restore 2021’s large cuts.

Lawmakers appropriated $1.3 billion from lottery sales to fund and administer Georgia’s Pre-K, HOPE and student loan programs. The state has about $1.3 billion in lottery reserves.

K-12 public schools have also been allotted $5.9 billion in federal funds from the Coronavirus Aid, Relief, and Economic Security (CARES) Act, CARES II and American Rescue Plan Act (ARP). This money is not distributed through the same formula that dictates state funding, but rather is granted based on the percentage of students living in poverty.

School districts must spend this money by varying dates over the next three years to help mitigate the harm of the pandemic.

Similarly, Georgia’s public and private colleges and universities can access federal relief funds, half of which must be regranted directly to students, and half of which can be spent on expenses and lost revenues related to coronavirus. The ARP provides up to $949 million for university system schools and $260 million for technical colleges.

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A Generation of Public Underfunding While Private Vouchers Expand FY 2022 will represent the 18th year out of the last 20 that the State of Georgia has failed to meet the minimum threshold for public school funding outlined in the Quality Basic Education formula (QBE, which dictates the majority of state education funding). The current $383 million in cuts to public schools comes after a session where lawmakers expanded an existing private school voucher during a global pandemic.

The racist history of private school vouchers paired with the lack of hardfought protections against discrimination in private schools that do not receive federal funding makes the state’s priorities more concerning.

Federal funding will help address the needs brought about from the pandemic but is no substitute for consistent state funding for public education. School district leaders will continue to face difficult decisions around class sizes, teacher furloughs and non-core academic courses like art and music if the state cannot supply the funding for a quality education.

State Funding for Private School Vouchers Grows as Public Schools Face Additional Budget Cuts

Source: Georgia Department of Education. State allotment sheet FY 2003 – 2021. Georgia Department of Revenue. Qualified Education Expense Tax Credit.

Governor’s Office of Student Achievement. Georgia Special Needs Scholarship Program End of School Year Report 2007-08 – 2019-2020.

Georgia’s 2022 Budget Primer

Gap is Widening Between Wealthy Districts and the Rest of the State Since schools are primarily funded through a combination of state and local taxes, decision-makers built provisions into the Quality Basic Education formula to prorate how much a district receives from the state by the amount they can earn in local property taxes. Georgia’s Local Five Mill Share (LFMS) and equalization grant are common educational finance measures to ensure that lower property-wealth school districts can provide similar educational opportunities to their higher propertywealth neighbors.

Before FY 2013, the state’s equalization grant was given to 75 percent of all school districts. In the wake of the Great Recession the formula was changed so that only school districts in the bottom 50 percent (after removing the top and bottom 5 percent of districts) received this funding.

In FY 2022, the state allocated $798 million in equalization grants, a number that would be millions greater if the state used a true average of all district property wealth instead of taking the top and bottom districts out of the calculation. The graph below shows the stark difference between the earning potential of the wealthiest nine school districts compared to the rest of the state.

Stark Difference Between the Earning Potential of Nine Wealthiest Districts Compared to Rest of State Local Property Wealth Per Student Comparison Between Top 5 Percent, Rest of State (FY 2016 – 2022)

Source: Georgia Department of Education. Mid-term state allotment sheet FY 2016 – 2020.

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Pre-Kindergarten Remains Held Back by Low Wages, Larger Classes Pre-Kindergarten funding increased by $3.9 million in FY 2022 due to consistent lottery proceeds during the pandemic. Funding for Georgia’s universal pre-K program has grown 28 percent since FY 2013 but is still hampered by larger class sizes and low wages for teachers.

Pre-K centers are only provided $16,190 for assistant teachers’ pay regardless of the employee’s training or experience. The General Assembly increased class sizes from 20 to 22 students in FY 2012; they remain that size in FY 2022. Had classes remained at 20 students per classroom, the state would spend $455 more per child in FY 2022.

Inadequate funding keeps Georgia’s Pre-K Program from expanding and providing reimbursements to child care providers for capital improvements such as roof repair or air conditioning. In a recent survey of Georgia’s Pre-K project directors, over 60 percent stated that their center had required at least one capital improvement in the last two years.

Larger Classes Remain in Georgia’s Pre-K Program

Source: Georgia’s amended fiscal year budgets, 2008-2021; Georgia’s fiscal year 2022 Budget (HB 81).

Georgia’s 2022 Budget Primer

University System of Georgia The 2022 budget for the University System of Georgia (USG), which manages 26 colleges and universities and other programs like agricultural extension services, is $2.5 billion. The vast majority, $2.2 billion, is allocated to schools for student instruction, support services and basic operations. The remaining funds go to cooperative extension services between universities and counties to support agriculture and education, public libraries and other programs.

This year’s budget adds funding for two years of enrollment-driven formula increases but does not restore past cuts. It represents a 6.8 percent increase in state funds following the 10 percent cut from last year or a $157 million increase to all programs and $138 million more for colleges. While enrollments continue to increase, current funding is still $104 million less than the pre-pandemic budget two years ago.

The state budget also recognizes up to $949 million available to schools in one-time federal ARP funds. Half of all funds must be regranted directly to students. The other half can be spent on expenses and lost revenues related to coronavirus.

FY 2022 Budget to University System Adjusts for Enrollment Growth but Keeps Cuts

Source: GBPI analysis of HB 81 and Governor’s Budget Reports, FY 2016‒FY 2021. Adjusted for inflation. Enrollment for 2022 projected at 1 percent increase.

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Technical College System of Georgia The technical college system includes 22 colleges that provide technical and core academic education for a wide range of students.

The 2022 budget for the technical college system is $344 million. About $308 million is allocated to technical education, and the remainder is for programs like Adult Education for individuals without a high school diploma and customized training for businesses.

The budget adds money for two prior years of enrollment increases but does not restore past cuts. The 2022 budget represents less than a million dollars more (0.3 percent) for technical colleges, following a $32 million budget cut from last year. However, the cut also coincided with a nearly 10 percent drop in enrollment from Fall 2019 to Fall 2020.

Funding formulas lag behind actual enrollment by two years, so the impact of enrollment decreases will potentially be seen in future budgets.

The state budget also recognizes up to $260 million available for technical colleges through the federal ARP. Half of all funds must be directly regranted to students. Other funds can be used for expenses and lost revenues related to coronavirus.

FY 2022 Technical College System Budget Maintains Previous Cuts While Enrollment Drops

Note: AFY 2019 includes $35 million for a new Aviation Academy at the Paulding Northwest Atlanta Airport.

Source: GBPI analysis of HB 81 and Governor’s Budget Reports, FY 2016–FY 2021. Adjusted for inflation. FY 2021 academic year enrollment based on 9.8 percent decrease in fall semester. Enrollment for 2022 projected at 1 percent increase.

Georgia’s 2022 Budget Primer

Lottery Funds Support Georgia’s Pre-K and HOPE Georgia’s lottery funds are constitutionally dedicated to supporting education programs and are accounted for separately in the budget.

The 2022 budget maintains awards funding for HOPE scholarships and grants and increases funding for the operation of pre-K classrooms by $1.7 million. Lawmakers appropriated $1.3 billion from lottery sales to fund and administer the following education programs.

Source: HB 81, Georgia Student Finance Commission, Governor’s Office of Planning and Budget Performance Measures Report.

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HOPE Changes Vary by Program The costs of the different HOPE programs have changed at different rates. The full-tuition Zell Miller Scholarships have grown fastest as more students qualify and tuition increases. Funding for all HOPE Grants for technical college students has declined, even with the addition of the HOPE Career Grant, following enrollment decreases. The HOPE GED Grant, which helps students who earn a GED with college costs, has decreased the most.

HOPE Scholarship Spending Grows and HOPE Grant Spending Declines

Source: Georgia Student Finance Commission.

Zell Miller Scholarship recipients at public colleges and universities are not representative of in-state undergraduates overall: 70 percent are white, 6 percent Black, 6 percent Hispanic/Latinx and 12 percent Asian, compared to total students who are 49 percent white, 29 percent Black, 10 percent Hispanic/Latinx and 7 percent Asian. Thirtyone percent of Zell Miller Scholarship recipients are from families with more than $120,000 annual income, far above the median income of $42,000. HOPE Grant recipients closely represent technical college students overall.

Georgia’s 2022 Budget Primer

Lottery Reserves Now Exceed Lottery Proceeds Every year unspent lottery dollars transfer to reserves managed by the State Treasury. At the end of the 2020 fiscal year, about $39 million in surplus was transferred to the lottery reserves.

Since 2011, state law requires the lottery shortfall reserve to hold an amount equal to 50 percent of the previous year’s net lottery proceeds.

If lottery ticket sales underperform, the state can draw on this reserve to fund HOPE. After reaching the 50 percent target, additional reserves are considered unrestricted. At the end of FY 2020, the required Shortfall Reserve Balance was $604 million, and the state exceeded that by $781 million. Total reserves now stand at 112 percent of lottery proceeds.

Total Lottery Reserves Top $1.3 Billion

Source: State Accounting Office, 2014-2020 Georgia Revenues and Reserves Reports, 2011-2013 Selected Summary Financial Information.

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Georgia’s 2022 Health Care Budget The Departments of Community Health, Behavioral Health and Developmental Disabilities and Public Health are the three primary agencies focused on the state’s health care and public health systems.

Georgia plans to provide $5.6 billion in total state funds for these three agencies in the 2022 budget year, or about 20 percent of overall state spending. General Fund appropriations for these agencies account for $4.9 billion, or 87 percent of total state funds, while other sources account for about $696 million. General Fund dollars for these three agencies increased by $409 million from 2021 to 2022.

The Department of Community Health (DCH) accounts for $4.1 billion, or 73 percent, of total state spending on health care. It operates Georgia’s Medicaid and PeachCare programs, conducts some planning and regulatory functions and administers the State Health Benefit Plan that provides health care to state employees and teachers. Funding for the state health plan comes from school districts, state agencies and their employees and retirees.

Georgia plans to spend about $1.2 billion, or 22 percent of Georgia’s 2022 health care expenses, on behavioral health and services for people with developmental disabilities. This includes some services funded through Medicaid, but largely relies on general funds to provide services for uninsured and underinsured Georgians.

The Department of Public Health (DPH) operates a variety of populationbased programs such as immunizations, health screenings and infectious disease control. It receives $288 million, or about 5 percent of Georgia’s 2022 health spending.

Health Spending by Agency

Source: FY 2022 Budget document from Conference Committee House Bill 81.

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Medicaid and PeachCare Enrollment and Spending Medicaid and PeachCare serve about 2 million Georgians, or 1 in 5 residents. The programs are a major source of health coverage for children, pregnant women, seniors with low incomes and people with physical and developmental disabilities.

Medicaid and PeachCare cover about 1.4 million children, or half of all children in Georgia. Medicaid also pays for more than half of all births in Georgia. PeachCare is a separate program serving children from families with incomes above the Medicaid threshold, but who often lack access to employer-sponsored coverage. PeachCare is mostly funded by the federal Children’s Health Insurance Program (CHIP).

Medicaid is the main source of health coverage for Georgians with longterm health care needs, both in nursing homes and in community-based settings. Medicaid is the primary payer for three-fourths of nursing home patients in Georgia. Medicaid also helps pay Medicare premiums for more than 200,000 older Georgians.

Low-Income Medicaid serves children, pregnant women and some parents with very low incomes. The Aged, Blind and Disabled portion of the program serves the elderly and people with a qualifying disability.

Most Medicaid enrollees qualify through the low-income program, but most of the spending is for elderly and disabled patients.

Most Georgia Medicaid Enrollees are Children, Seniors and People with Disabilities

Source: FY 2022 Budget document from Conference Committee House Bill 81.

Georgia’s 2022 Budget Primer

Medicaid Program Provides Flexibility to Meet Health Needs Medicaid is a partnership between the state and federal government, with the federal government paying about 67 percent of the state’s total Medicaid costs. This federal support is beneficial for states when facing emergencies or economic downturns, and the federal government can also provide relief by paying more.

Georgia faced budget cuts due to the COVID-19 pandemic and continues to see more people facing economic hardship and enrolling in Medicaid coverage. In response, the federal government is providing a higher matching rate of 73 percent throughout the public health emergency. This amounted to about $165 million in savings in last year’s budget and will continue to produce savings in the 2022 budget year.

With these savings, Georgia is taking steps to build on the Medicaid program. The state received approval this year to extend postpartum Medicaid coverage to six months after delivery, instead of two months.

The $20 million allocated for this extension in 2021 remains in the 2022 budget. The 2022 budget also funds Medicaid reimbursement rate increases for certain providers, including skilled nursing centers, home and community-based service providers and select primary and dental care services.

The 2022 budget also includes $76 million for DCH and the Department of Human Services to implement a partial Medicaid expansion with work requirements and premiums. This program is expected to enroll about 30,000 people in the first year, but is pending approval due to concerns about the work reporting requirements presenting an unreasonable burden on enrollees, especially during the pandemic. Georgia could cover over 500,000 people by putting these funds toward a full Medicaid expansion and taking advantage of $1.4 to $1.9 billion in new federal money available to the 14 states—including Georgia—who have yet to implement a full expansion of Medicaid to adults with low incomes.

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Inequities in Health Care Access In addition to COVID-19, Georgia faces several health care challenges such as having the third-highest uninsured rate in the nation, rural hospital financial strains, health care worker shortages, rising health care costs and a growing need for mental health and substance use disorder prevention and treatment. Georgia also ranks poorly in several health measures; for example, the state ranks No. 46 for child health, No. 49 for maternal mortality and No. 47 for access to mental health care.

Black and Brown Georgians face worse outcomes for many of these measures. Black women are three to four times more likely to die from pregnancy-related causes. The uninsured rate for Latinx Georgians is over 2.5 times higher than for white Georgians. These differences are the result of structural racism, a collection of discriminatory policies and racial biases across several facets of life (e.g., medical providers underestimate Black patients’ pain) that negatively affect outcomes for people of color. Georgia leaders must treat racism as a public health crisis and pursue solutions to undo these inequities.

Recent state efforts to extend postpartum coverage and streamline enrollment for uninsured children into Medicaid by using Supplemental Nutrition Assistance Program (SNAP) data help address these disparities. Georgia can also increase health care access by expanding Medicaid coverage to more than half a million Georgians, with 90 percent of the costs funded by the federal government. Rural Georgia counties, especially in Southwest Georgia and the area known as the Black Belt where counties have larger Black populations, have higher uninsured rates and faced a higher proportion of COVID-19 cases and deaths.

Rural residents and hospitals stand to benefit the most from expansion, but every region of the state would see benefits.

Rural Georgia Faces High Uninsured Rates

Source: 2017 United States Census Data.

Georgia’s 2022 Budget Primer

Expanding Medicaid Helps Georgians Beyond Health Care Access to health care is an essential part of life. Unfortunately, Georgians across our state persistently struggle to gain or afford health coverage, leaving them unable to access the critical care they need, affecting their ability to work and harming their overall livelihood.

Georgia continues to have one of the highest uninsured rates in the nation. Hundreds of thousands of Georgians fall into the coverage gap, which means their incomes are too high to be eligible for Medicaid but below the minimum income eligibility to receive tax credits that help many afford insurance through Healthcare.gov. About 47 percent of Georgians in the coverage gap are Black, and 9 percent are Latinx.

These disparities are exacerbated by Georgia leaders’ refusal to fully expand Medicaid, even though this option would benefit Georgia communities while remaining fiscally responsible. Under the Affordable Care Act, states can expand Medicaid eligibility to people with incomes up to 138 percent of the federal poverty level—roughly $17,774 for an individual. Medicaid expansion would bring billions of dollars in federal aid to our state in order to extend coverage to hundreds of thousands of Georgians, stabilize rural health systems and provide myriad economic benefits.

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Medicaid is not only vital to health. This program has a long history of supporting Georgia’s K-12 students.

Research shows health coverage has a significant impact on educational achievement and future earnings.

In higher education, the student uninsured rate in nonexpansion states is nearly double that of states that have adopted full Medicaid expansion. A lack of access to health care can keep students out of classrooms longer and make it difficult to complete classwork.

Medicaid is also a crucial component of our safety net. Research shows links between increased health coverage and the ability to work regularly or search for employment. Expansion can also help lift many Georgia families out of poverty because more families would be able to avoid costly payments for health care services they need. Research shows states participating in Medicaid expansion are more likely to generate increased early access to health insurance, providing opportunities for greater economic mobility from one generation to the next.

Expansion also matters for our state’s criminal legal systems. People who were previously incarcerated in non-Medicaid expansion states like Georgia have the worst chances of getting health coverage and care despite having the highest likelihood of chronic illness. Full expansion can provide a gateway to link incarceration-exiting Georgians to health coverage, which will improve their health, reduce emergency room visits and reduce recidivism because people can access the physical and mental health services they need.

Economic benefits also come with expansion. Medicaid expansion could bring more than 64,000 jobs to Georgia.

New federal incentives to encourage states to expand Medicaid would send between $1.4 to $1.9 billion to Georgia. This funding would more than cover the cost of expansion, providing extra dollars to address other state priorities like rural broadband, additional support for K-12 students living in poverty and more.

Medicaid expansion is the clear choice for the health of Georgians, hospitals and our state budget.

Georgia’s 2022 Budget Primer

Behavioral Health and Developmental Disabilities The Department of Behavioral Health and Developmental Disabilities (DBHDD) operates a variety of programs that serve Georgians with mental health needs, substance use disorders and developmental disabilities. The department also operates programs for forensic evaluation and treatment for Georgians under court jurisdiction. DBHDD receives almost $1.2 billion in 2022 from the General Fund along with $10.3 million in Tobacco Funds, a combined increase of $58.9 million compared to 2021. Through the ARP, the agency is also set to receive $45 million in federal block grants funds for community mental health services and $46 million for substance use disorder prevention and treatment to be spent by federal fiscal year 2025.

Georgia entered into a legal settlement in 2010 with the U.S. Department of Justice that laid out a plan for the state to increase its mental health and developmental disability services in home or community settings rather than institutions. The state has invested over $256 million since 2011, including supportive housing for people moving out of institutions, strengthening the behavioral crisis response system and adding new community-based behavioral health services. But the agency faced $91 million in cuts in 2021 and has ongoing needs to address in the settlement.

Mental Health, Developmental Disabilities More Than Two-Thirds of DBHDD Budget

Source: FY 2022 Budget document from Conference Committee House Bill 81.

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Public Health The Department of Public Health operates a variety of programs focused on health promotion, disease prevention and health-related disaster response and preparedness. The department receives $273 million from the General Fund and $13.7 million in Tobacco Settlement money in 2022. The Trauma Care Network Commission, which is included in the department’s budget, receives $14.4 million from the General Fund in 2021. The largest state-funded programs provide financial assistance to county health departments, aim to prevent the spread of infectious disease and provide treatment and health promotion services aimed at children and infants. The department’s 2022 budget increased by $3.8 million compared to 2021.

Georgia’s public health programs also receive significant federal support.

Federal money accounts for 57 percent of the department’s $690 million budget in 2022, while state funding accounts for the rest. This does not include additional federal relief for COVID-19. The federally funded Special Supplemental Nutrition Program for Women, Infants and Children, also known as WIC, makes up almost half of the department’s federal funds. Georgia’s WIC program will receive an additional $13.2 million through the ARP, which allows states to increase the amount of the cash-value voucher program that provides participants with money to purchase only fruits and vegetables.

Much of Public Health Funding Flows to County Health Departments

Source: FY 2022 Budget document from Conference Committee House Bill 81.

Georgia’s 2022 Budget Primer

Budget Cuts Remain for Behavioral Health and Public Health Due to enhanced federal funding in the federal COVID-19 relief packages, the Medicaid agency did not have to make any cuts to eligibility, benefits or reimbursement rates. But the behavioral health and public health agencies did face budget cuts in areas such as mental health services, peer support services, housing vouchers for people with mental illness, funds that would have expanded residential substance use disorder treatment and cuts to health promotion program and trauma center readiness. These funds were partially restored in the 2022 budget.

About $59 million of the $91 million in 2021 budget cuts was restored for the Department of Behavioral Health and Developmental Disabilities.

Notable additions include 100 added New Option Waiver Program (NOW) and Comprehensive Support Waiver Program (COMP) slots for home- and community-based services, restoring funds for services for people on the waiver waiting list, increasing reimbursements for intellectual and developmental disability providers, expanding the APEX school-based mental health program and funding to allow about 4,000 more people to get outpatient mental health services and about 3,000 more people to get outpatient substance use disorder services.

For the Department of Public Health, about $3.8 million of the $8.2 million cut in 2021 have been restored. While the governor’s proposed 2022 budget did not add new money for public health during COVID-19, pointing to new federal money supporting the agency, the House and Senate wanted to provide state dollars to help support the agency as they face ongoing capacity needs and non-COVID-19 related activities.

Funds were restored for several health promotion programs, and new money was added for three leadership positions and maintenance for the state’s vaccine management system.

Total Public Health Spending Per Person Over Time

Source: GBPI analysis of U.S. Census Bureau population numbers and Georgia state budget documents from FY 2009 through FY 2022.

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Georgia Health Agencies Respond to COVID-19 Public Health Emergency Gov. Kemp declared Georgia’s first public health state of emergency on March 14, 2020. DPH and the Georgia Emergency Management Agency (GEMA) are leading the state’s response to the COVID-19 public health emergency and are tasked with preventing the spread of the virus. The amended 2020 budget that passed in March included $100 million from the state’s Revenue Shortfall Reserve to help GEMA and DPH in its COVID-19 response efforts. GEMA also received $54.5 million from the Governor’s Emergency Fund in their work to build treatment and testing capacity and distribute supplies to hospitals and health departments.

DPH aimed to hire nearly 1,000 contact tracers to assist in identifying and mitigating virus hotspots. DPH also responded with additional services such as a COVID-19 Hotline for individuals to access health care if they suspect they are infected, an online monitoring tool and a state data dashboard to track the virus. DPH runs the state’s vaccination management system and supports local health departments in their role to administer vaccines—along with health care facilities, pharmacies and mass vaccination sites.

DCH is also helping with the response through changes to Medicaid.

The agency submitted federal waivers to ease health care provider enrollment in Medicaid, expand the use of telehealth services and pause the requirement for current enrollees to renew coverage or pay copayments during the emergency period. The department is also responsible for the oversight of nursing homes and is utilizing existing funds to track COVID-19 cases and deaths and study the impact of COVID-19 on the financial viability of these facilities. The Department of Behavioral Health and Developmental Disabilities (DBHDD) is tracking COVID-19 cases in the state’s five psychiatric hospitals.

Georgia’s 2022 Budget Primer

Notes

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Georgia’s 2022 Human Services Budget The $817 million FY 2022 budget for the Department of Human Services (DHS) increases spending from FY 2021 levels by $20 million to protect the safety of Georgia’s most vulnerable children and families. The Department remains $13 million below FY 2020 spending levels, which were reduced due to anticipated declines in state revenue because of COVID-19.

The largest share of state funding for the agency will remain in child welfare and foster-care-related services in FY 2022. The Division of Family and Children Services’ efforts to protect vulnerable children account for nearly 60 percent of the agency’s overall budget.

The state invests state dollars to maintain eligibility staff for federal low-income assistance programs such as Medicaid, the Supplemental Nutritional Assistance Program (SNAP), or food assistance, and Temporary Assistance for Needy Families (TANF), or cash assistance.

Smaller yet vital programs such as vocational training for adults with disabilities and elder protection services account for the remaining funds.

Sustained Cuts to Georgia Human Services Budget for FY 2022

Note: GA Vocational Rehab Agency: Departmental Administration had $1,970,447 in funding in FY 2020, compared to $1,335,952 in FY 2022, a number too low to appear on this chart.

Source: Georgia’s 2022 Fiscal Year Budget (HB 81), signed by the governor.

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Child Welfare and Foster Care Georgia will spend a combined $518 million on Child Welfare, Foster Care and Adoption Services in FY 2022. Thirty percent of the previous budget’s spending cuts are restored towards FY 2020 pre-pandemic levels, as addressing the needs of Georgia’s youth in foster care and investigating the abuse of children remain top priorities for the Department of Human Services.

Child welfare funding will increase by $1.2 million as contracts are restored for educational services with the Multi-Agency Alliance for Children and contract funds are increased for vocational training services and court-appointed special advocates for the development of select underserved counties.

Adoption Services funding will increase to serve caseload growth and compensate for a reduction in the Federal Medical Assistance Percentage (FMAP) from 67.03 percent to 66.85 percent, while a net reduction in foster care spending follows trending declines in foster care placements.

Modest reductions to foster care will occur naturally as a result of more youth exiting the foster care system.

More Children Are Exiting Georgia’s Foster Care System Number of Children in Foster Care, 2018-2021

Source: Georgia Department of Community Supervision Annual Reports 2015-2020.

Georgia’s 2022 Budget Primer

COVID-19, Unemployment and Underemployment in Georgia The COVID-19 pandemic exacerbated economic hardship in Georgia.

Claims for unemployment benefits have totaled more than 4.7 million, with nearly 60 percent of Georgia’s pre-pandemic labor force turning to the unemployment safety net at some point during the last year.

Before the pandemic, Georgians in many pockets of the state were already struggling with unemployment, jobs offering low wages and fewer hours than they were willing to work or simply a scarcity of quality job opportunities. Moreover, Georgians of color and women were disproportionately represented in jobs that fail to offer economic mobility.

The COVID-19 crisis has exposed the employment security vulnerabilities unique to Georgians with low incomes, as well as the general lack of support for these families. From January 2020 to March 2021, employment rates for Georgians with low incomes declined nearly 6 percent, while increasing by at least 13 percent for middle- and highincome Georgians. These unique challenges have led to greater demand for safety net support, which would normally require that the agency add additional caseworkers to administer benefits and help individuals find work that pays family-supporting wages.

Although overall unemployment filing trends have steadily declined since peaking in April 2020, Black workers remain consistently overrepresented among unemployment claimants. And while Georgia’s economy further heals as workers resume seeking and finding suitable jobs, Black and Latinx workers show signs of slower recovery.

Economic Recovery Has Been Slowest for Black and Hispanic/ Latinx Georgians Changes in Unemployment Insurance Claims by Race/Ethnicity, from April 2020 to April 2021

Source: US Department of Labor/Employment and Training Administration.

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Cuts to the Safety Net Will Worsen Economic Hardship The FY 2022 budget maintains two-thirds of the cuts in safety net spending that were mandated last year because of state revenue shortfalls, reducing spending from $121 million in FY 2020 to $117 million in FY 2022. Unlike child welfare and foster care, low-income support programs administered by the department depend overwhelmingly on federal dollars. However, state funds support the systems that make access to those federally-funded programs possible, and Georgia cuts those state funds. Maintaining the $4 million cut means there are fewer dollars available to pay the salaries of the hundreds of state employees who administer federal safety net programs, which are meant to provide a base level of support for people until they get back on their feet. The funds are also used to contract with community-based organizations that help people with low incomes enroll in public assistance and access job training opportunities.

For example, the budget reduces funding for Georgia Gateway, the state’s online eligibility system, and also cuts funding for community partnerships that help people with low incomes find employment, a requirement to access Georgia’s TANF program. Finally, Georgia cuts funding for direct cash assistance as well, and has, since the Great Recession, used federal TANF funds to supplant state funds in child welfare and foster care.

Georgia’s 2022 Budget Primer

ARP Funding for the Department of Human Services During the 2021 Legislative Session, state lawmakers allocated $190 million of ARP funding to selected programs within the Department of Human Services.

COVID-19 has heightened Georgia children and seniors’ vulnerability to abuse, neglect and economic instability. Reductions to the state budget have posed additional challenges to the department’s ability to serve their heightened needs. ARP funding provides an opportunity to fill those gaps, through: •

$970.7 million for child care stabilization grants

•

$606.9 million for a Child Care and Development Block Grant

•

$139.9 million for low-income energy and family assistance

•

$37.7 million for elderly community living services

•

$26.7 million for Head Start

•

$17.5 million in Child Care and Development Fund mandatory and matching funds

•

$12.3 million for aging supportive and senior centers

•

$8.4 million for community-based child abuse prevention grants

•

$3.3 million for child care and child welfare services

•

$642K for the Capital Assistance Program for Elderly Persons and Persons with Disabilities

•

$274K for long-term care Ombudsman services

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Child Care The Department of Early Care and Learning provides access to affordable child care for working families with low incomes. Parents who receive child care subsidies experience fewer work disruptions, stay employed longer and enjoy higher family earnings.

The FY 2022 budget maintains a $7 million spending reduction for the Quality Rated Subsidy Grants offered to providers, which create child care slots for families with low incomes. This impacts nearly 2,000-3,000 slots; however, the agency will allow the impacted families to convert to a traditional Childcare and Parent Services (CAPS) scholarship using existing federal funds and will boost state funding by $3.5 million to further assist low-income families with access to affordable child care. The COVID-19 pandemic caused many child care providers to close permanently, decimating Georgia’s child care infrastructure. As of May 2021, 36 percent of licensed child care providers were reported to be open. DECAL was allocated $1.6 billion in federal funds in the ARP. The annual cost of child care for two children in Georgia was about $15,000 in 2018. Child care expenses can consume more than half of a low-income family’s budget. The state’s child care assistance program serves about 50,000 children per week, but it is likely more than 364,000 income-eligible children in working families with low incomes need it. More funding is needed to ensure all Georgia parents can afford high-quality child care and parents are not left behind in the state’s economic recovery.

Georgia’s 2022 Budget Primer

Notes

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Georgia’s 2022 Department of Corrections Budget The Georgia Department of Corrections (GDC) budget for FY 2022 is $1.12 billion. The department oversees all aspects of the state’s prison system, including contracts carried out by private prisons. Corrections officers make up most of the department’s workforce.

The most recent reform efforts focus on more cost-efficient spending related to housing people who are incarcerated and improving reentry outcomes for those who are ending their period of incarceration. Since 2012, several major reform bills have been enacted that address issues related to prison length of stay, mandatory minimum sentencing and probation and parole eligibility. Several bills recently passed in the latest Legislative Session provide new reforms as well, including the streamlining of early termination of probation for eligible Georgians.

As reforms began in 2012, the state’s prison population was 54,895.

After several years of only small fluctuations, the prison population reached 55,047 by 2019. Notably, the prison population saw substantial declines in 2020 that can be partially credited to measures that were taken in response to COVID-19. An increase in early releases and decline in crime and arrest rates over the last year of the pandemic led to a prison population of 46,315 by March 1, 2021. This remaining population is 60 percent Black, 36 percent white and 4 percent Hispanic.

Despite budget growth in the department in the years preceding the pandemic, the FY 2022 budget maintains a 7 percent, or $82.9 million, cut to the GDC budget. No federal funding from the ARP has been allocated to the GDC budget.

Majority of GDC FY 2022 Budget Funds State Prisons

Note: County Jail Subsidies account for $5,000 of the GDC budget, a number too low to appear on this chart.

Source: FY 2022 Budget document from Conference Committee House Bill 81.

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Continued Rising Costs of Correctional Control in Georgia Georgians under correctional control, as defined by the Prison Policy Initiative, include those in state prison, federal prison, local jail, youth confinement, involuntary confinement, jails in Indian Country or under probation or parole. In 2020, the Department of Community Supervision (DCS) supervised 256,398 people. For every 100,000 Georgians, 3,943 are on probation, ranking Georgia as the leading state for people under correctional control. This represents nearly four times the national rate and at least three times the rate of any other state in the Southeast.

DCS was created in 2015 to take over the state’s major re-entry initiatives and oversee its probationers who were sentenced to courtimposed community supervision in lieu of incarceration. The FY 2022 budget allocates $166 million to its operations. Probation, referred to in the budget as Field Services, accounts for 92 percent ($152 million) of the DCS budget. The state’s probation budget nearly doubled between 2012 and 2020, but after mandated cuts last year because of revenue shortfalls, budget reductions have been maintained, placing the FY 2022 probation budget $10 million below its pre-pandemic budget. Additional federal funding from the American Rescue Plan Act has yet to be allocated to DCS to shore up operations impacted by the pandemic.

Georgia Has the Highest Number of People Under Correctional Control Because of Probation Number of People on Probation in Georgia

Source: Georgia Department of Community Supervision Annual Reports 2015-2020.

Georgia’s 2022 Budget Primer

Looking Ahead Georgia’s FY 2022 budget maintains steep cuts to services and programs meant to support Georgians’ health, education and economic well-being. Every community will see the effects of these cuts, but people of color and rural Georgians will feel them most acutely.

Education and health investments account for more than half of state spending year after year. That holds true again for Georgia’s 2022 budget. Still, many of Georgia’s 180 school districts will struggle to balance the books as the state continues cuts of nearly $400 million in funding for public education.

Lawmakers do have an opportunity to restore these and other cuts in the coming year. Our state is set to receive a total of $4.7 billion in emergency federal aid due to the passage of the ARP. These dollars can be used to restore budget cuts and support other investments in Georgia’s people.

During the 2022 General Assembly, lawmakers can build on the potential of these dollars by pursuing commonsense opportunities to help restore funds meant to flow to Georgians’ needs. They can raise revenues by eliminating the “double deduction,” a loophole that only benefits Georgia’s top earners; lifting the tobacco tax from 37 cents to the national average; and trimming back special-interest tax breaks that do not deliver on their promise. They can embrace full Medicaid expansion to give health coverage to hundreds of thousands more Georgians while drawing down federal funds. And, once our budget is restored, they can work to ensure it adequately reflects our state’s values by addressing racial disparities, modernizing the school funding formula, supporting Georgia workers and boosting health outcomes.

This future can be realized. It all comes down to raising revenues and budgeting priorities. And the prosperity of 10.6 million Georgians is riding on it.

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Contact Us The Georgia Budget and Policy Institute 50 Hurt Plaza SE, Suite 720 Atlanta, Georgia 30303 www.gbpi.org | 404.420.1324

GBPI Leadership Team: Dominique Derbigny Sims, Senior Vice President, dderbignysims@gbpi.org Lindsey Garland, Development Director, lgarland@gbpi.org Caitlin Highland, Director of Strategic Communications,

chighland@gbpi.org Amanda Hollowell, Director of Strategic Campaigns, ahollowell@gbpi.org Crystal Johnson, Director of Administration & Human Resources,

cjohnson@gbpi.org David Schaefer, Research Director, dschaefer@gbpi.org Jessica Woods, Finance Director, jwoods@gbpi.org

Research Team: Laura Harker, Senior Health Care Policy Analyst, lharker@gbpi.org Danny Kanso, Senior Tax and Budget Policy Analyst; Government

Relations Coordinator, dkanso@gbpi.org Ray Khalfani, Worker Justice and Criminal Legal Systems Policy Analyst, rkhalfani@gbpi.org Jennifer Lee, Senior Higher Education Policy Analyst, jlee@gbpi.org Stephen Owens, Senior K-12 Education Policy Analyst, sowens@gbpi.org

GBPI Staff: Kevin Amaya, Development Associate, kamaya@gbpi.org Tasnim Mosabber, Outreach Manager, tmosabber@gbpi.org Alex Welch, Digital and Media Manager, awelch@gbpi.org

Georgia’s 2022 Budget Primer