It’s been a field day for the Milwaukee Journal Sentinel reporting on the huge payments going to fraudulent day care providers. But there’s really a far deeper institutional problem here, one started by former Gov. Tommy Thompson back in the 1990s, and aided and abetted by his successors, Govs. Scott McCallum and Jim Doyle, as well as the administration of Milwaukee County Executive Scott Walker.
To understand what went wrong, you have to go back to the old welfare system, Aid to Families with Dependent Children, or AFDC. It was a simple program that provided a monthly payment to poor, unemployed mothers. The annual welfare check for a mother with three children was $647 per month in 1996 or $7,764 yearly. It was a bare-bones, poverty-level payment that had barely budged (it was $637 per month in 1985).
When W-2 was created, the goal was to force all these women to get jobs. But just what jobs would be available that they could do? The answer was day care. In essence, the state would pay women to swap their children. They could run day care programs out of their homes and get paid to take care of each other’s kids, though they may have no degree and no training in how to run a day care. Incredibly enough, under the system Thompson set up, it was all perfectly legal.
It was also far more expensive. The average state payment for one child receiving day care under Wisconsin Shares is about $480 month; if two mothers with three kids swap their kids and start a day care, they would each earn $17,280 annually – or 222 percent more than they would have received under AFDC. And that’s the average payment; the payment for preschool kids (who get all-day care) is much higher than for children attending school (who need after-school care). A day care may charge more than $12,000 for a child under the age of 2. So a mother providing day care to three pre-school children could easily pull in more than $25,000 year, or $17,000 more than a mother of three on AFDC.
Back when W-2 was started, experts suggested the program could fail because if all the women on welfare got jobs, there simply wouldn’t be enough day care providers for all the children. (Then-U.S. Rep. Tom Barrett was among that group.) The Thompson administration was understandably concerned that this could kill the program, so they set up a system with loosey-goosey rules for day care providers.
For instance, a welfare mother who may lack any education or training could run a day care out of her home serving as many as eight children. That really doesn’t sound like the most desirable situation for the kids. But it’s lucrative for the day care provider. A study by the UW-Milwaukee Employment & Training Institute found that in 2002, the majority of licensed family day care providers in Milwaukee pulled in more than $50,000 a year, meaning some could be serving at many as eight children.
As a result of the W-2 approach, spending on subsidized day care in Milwaukee exploded, rising tenfold, according to the ETI study. “Growth in employment and businesses related to day care flourished as subsidies were spent primarily in central city neighborhoods,” the study noted.
It’s really pretty ironic. A Republican who preached fiscal conservatism created what may have been the biggest public employment program in Milwaukee history. Many of the AFDC recipients essentially went to work for the government as day care providers. As for the “tough-love” approach of W-2, its insistence that all mothers cope with the real-world workplace of the private sector, not much of that happened. The dearth of jobs in the inner city and low skills and inadequate education of many welfare mothers was not a problem that could be licked by can-do sloganeering.
For all the complaints about the old AFDC system (and it certainly had problems), it was much cheaper for taxpayers. There were welfare cheats, of course, but the payments were so low that even someone with several false identities wasn’t likely to collect that much. By contrast, the loosely regulated day care program that blossomed under W-2 inevitably became a temptation for those looking to game the system, and the JS series has found day care providers who’ve made millions fraudulently.
Just how far back in time this kind of fraud goes is unknown. But it seems clear that Thompson’s successors, including Gov. Doyle, who’s now run the program for more than six years, made little or no attempt to more strictly regulate the day care program. Nor has Scott Walker, the local administrator of the program in Milwaukee County, where most of the fraud has occurred and most of the day care money is spent. Had officials at either the state or county level cared to, they probably could have uncovered some of the problems found by the media. But the idea of ending “welfare dependency” and requiring everyone to work was so popular that no one wanted to scrutinize the details – even if ending “welfare as we knew it” was actually far more expensive for taxpayers.
And: Herb Kohl Wants a Handout
It’s autumn, and that means it’s time to hear Herb Kohl’s annual plea that taxpayers build a new basketball arena for the Milwaukee Bucks. JS writer Don Walker dutifully revisited the issue last week and the comments from the team’s owner are always about the same. “At some point, Milwaukee needs a venue for the next 25 years,” Kohl insisted. “Not just because of the Bucks, but because we compete for events with cities all over the country.”
Actually, the need for a new arena is only because of the Bucks. The place works fine for the Marquette Golden Eagles and other tenants, or for touring arena rock shows and the like. The only real problem for the Bradley Center is that it doesn’t spin off as much revenue for the Bucks as other, newer NBA arenas. This leaves Milwaukee with a lower payroll and, odds are, a less-competitive team.
“Kohl is keenly aware that some fans and taxpayers have suggested that he should build or put a down payment on a new arena with his personal wealth,” Walker wrote. Indeed. And there is good reason for them to feel that way. While Kohl has probably lost some money on a year-to-year basis with the team, he has seen the franchise’s value rise 14-fold, from $19 million when he bought it in 1985 to $278 million, according to the last estimate by Forbes magazine. One reason the team is now so much more valuable is the charitable dollars that paid for the Bradley Center, and the tax exemption that lowers its costs of operation.
The team’s value would rise all the more if a new arena is built to replace the Bradley Center, but Kohl hasn’t offered to repay the taxpayers from any of the new wealth he would gain. So we invest the money, and he gets all the return.
That’s the standard, rotten deal all pro sports owners offer to communities, of course, but the difference is that Kohl is an elected U.S. senator. If he tried to blackmail taxpayers by threatening to move the team, they would probably throw him out of office. As a result, the ever-diplomatic Kohl is quite careful in how he raises the issue. “People are hurting and governments are hurting,” he noted. In the midst of the Great Recession, he seemed to concede, maybe it’s not the right time to ask taxpayers for a handout for millionaire players and a mega-millionaire owner.
In reality, of course, there will be no bailout for the Bucks until Kohl steps down as senator – or sells the team. But you can expect the annual pitch from Kohl again, about a year or so from now.
The Buzz
-The Milwaukee School Board has passed a resolution asking the legislature to get rid of the sole citywide district (now held by Bruce Thompson). The ostensible goal is to create a Latino-dominated district, but they could do this by simply reshaping the boundaries of the neighborhood districts. Is it just a coincidence that the Milwaukee teachers union also wants to get rid of the citywide district, where it perhaps has less impact on the election?
-Word has it that the Journal Sentinel, which has lost most of its critics, has asked movie critic Duane Dudek to take on the TV beat.
-And New York Times critic Nicolai Ouroussoff wrote a Sunday column on the boom in new art centers in which he damned the Milwaukee Art Museum as the sort of failure where “you walk by … every morning on your way for coffee shaking your fist.” Talk about overstatement. Yes, a number of critics have condemned the building, but it still seems quite popular with the masses, including, I suspect, all those fist-shaking coffee drinkers on the lookout for architectural blunders.
-Pressroom online has a juicy argument between former Journal writer Frank Aukofer and his boss Steve Hannah.
-And just to show what an editorially balanced Web site this is, the Sports Nut counts the reasons to love the Bucks this season.
