Poverty rates highest for Montana's youngestchildren.

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Throughout the United States, low-income families and the children who live in them face significant challenges. Historically, these challenges have been compounded in Montana by a lack of job opportunities. Over the past few years, however, the economic outlook

for Montana has been encouraging, with four consecutive years of economic growth, a 3.7 percent unemployment rate, and a 6.3 percent increase in per capita income (www.bber.umt.edu). Despite this growth, the child poverty rate in Montana has not diminished.

Montana's future well-being is tied to the health, education, and stability of its children; many of them are the state's future work force, leaders, and taxpayers. There is undeniable evidence of the importance of cognitive and non-cognitive ability in economic life, and both contribute significantly to leading productive lives. Families are the primary venue for producing these abilities, and the foundation they establish raises a child's productivity in schools and jobs. Gaps in education and social development are more evident in children who grow up in poor families. On the whole, higher-income children do well, as many higher-income parents have the means to get their children any help they may need. Investing in low-income children is necessary; because of their families' financial situation, they have fewer options and less access to the social structures and educational opportunities most middle- and upper-class American families take for granted.

Each year, Montana KIDS COUNT seeks to inform policy-makers, service providers, and all citizens on the progress made by Montana children and the problems they still face. By using consistent and reliable data, the program reports on the demographic, socio-economic, health, and educational status of children in Montana.

Demographics and Family Characteristics

The continuing story on demographics in Montana between 2000 and 2005 is the decline in the number of children. The state's overall population grew by 3.5 percent, but the total number of children under age 18 fell by 11 percent. The decline in the number of children was slightly more for males than for females, 12 percent and 10.5 percent respectively, although counts since 1990 show that males have always outnumbered females. Although the number of both white and American Indian children (the two largest groups in the state) fell, the number of white children fell by 11 percent significantly more than the 1.9 percent decline in American Indian/Alaska Native children.

Social and Economic Status

Poverty rates for Montana's children ages birth to 17 are high. In 2005, 20 percent lived in households below the federal poverty level (FPL), a fairly consistent percentage since 2000. However, that percentage sharply increases to 34 percent for children living in households below 150 percent of FPL. There has been little change in these rates over the past five years. This lack of change holds true for children living in extreme poverty (below 50 percent of the poverty rate), as well as for children living below 250 percent of the poverty rate. The group that represents the largest share (23 percent) of children in poverty is kids under 5 years of age. See Table 5, page 17, for more information on poverty rates.

The number of families receiving benefits through the federal welfare program, Temporary Assistance for Needy Families (TANF), has been decreasing steadily with the enactment of welfare reform which emphasized finding employment. However, the increase in the number of people receiving other forms of public assistance such as Food Stamps and Child Care Subsidies indicates that despite finding work, many former welfare recipients have still not made it out of poverty.

Health and Health insurance

Participation rates in the Medicaid program did not change a great deal between 2004 and 2005. With the increased available funding, the number of children in the Children's Health Insurance Program (CHIP) increased by 10 percent, or by 1,120 children. However, there are still 37,000 children under age 18 in Montana without any form of health insurance, 16 percent of children under 18 compared to 12 percent nationally. Although the 2005 numbers are not yet available, there is no reason to think they will be significantly different.

Education

To comply with U.S. Department of Education requirements, Montana developed and instituted testing mechanisms to assess how well students have learned the Montana content standards for their grade. These tests look at proficiency in reading and math at different grade levels. In the 2003-2004 school year, these tests showed 62.2 percent of Montana students scoring at or above proficiency levels in reading and 58.7 percent scoring at or above proficiency in math. For this past school year, 2004-2005, Montana students raised these percentages to 68.3 percent in reading and 58.7 percent in math.

There are 852 schools in Montana ranging in size from less than 50 students (332 schools) to more than 500 students (50 schools). With the declining number of school-age children in the state, public school enrollment numbers have declined by 1.1 percent--and by 5.9 percent since 2000.

Substance Abuse in Rural and Small-Town America

Based at the University of New Hampshire, the Carsey Institute's recently released report, "Substance Abuse in Rural and Small Town America," is of particular interest to Montana where drug and alcohol abuse among children has been of concern to parents and policymakers alike (www.thehatchergroup.com/). This report compares illicit drug use with alcohol use across the nation and has come up with some key findings concerning minors between the ages of 12 and 17 and 18 to 25 (Figure 1).

Some significant conclusions from the report are:

* Alcohol abuse far exceeds illicit drug abuse. The only group at an equally high risk for both is Native American youth.

* Young adults show the highest rates of alcohol and illicit drug abuse. It is in young adulthood that sex differences emerge.

* Less educated young adults are more likely to have an illicit drug abuse problem.

* Unemployment appears to be an especially crucial marker for illicit drug abuse for all ages.

* Unmarried young adults and adults in rural areas are more likely to have alcohol and illicit drug abuse problems than are their married counterparts.

National Survey of Child Health

The National Survey of Child Health (NSCH) was released in 2006. Using data from the National Center for Health Statistics of the Centers for Disease Control and Prevention, this special, one-time release looks to establish some benchmarks for measuring child well-being at the state level. It uses a survey of parents to determine these measures and relies on a point-in-time parental perception of one child in the household. In Montana, 1,941 parents were surveyed, and sophisticated methodological techniques were used to determine the measures. Despite an often low number of respondents and the potential pitfalls of relying on parental perception, some of the measures are useful as they are seldom available for the state and indicate how families feel about these health issues. See Table 2 for state and national results.

Policy Section

National research has shown certain policies enacted at the state level can be supportive of children growing up with the best possible chance of success in today's highly competitive, global economy. In this short space, it is impossible to include and cover the complexities and broad ramifications of all possible policy options. However, those listed below are ones that have been shown to address some of the persistent poverty issues experienced in Montana, despite the state's improving economic condition. Listed under each measure is information on what Montana is or is not doing specific to that measure. The policies are taken from the January 2006 "Policy Matters" report by the Center on the Study of Social Policy (www.cssp.org).

Income and Asset Growth Policies

While Montana's economic growth numbers are encouraging, poverty rates for Montana's children ages birth to 17 are high. In 2005, 20 percent lived in households below the federal poverty level (FPL), a fairly consistent percentage since 2000. However, that percentage sharply increases to 34 percent for children living in households below 150 percent of FPL. Thus there is a section of the population that is not reaping the reward of economic growth. Income and asset growth policies are designed to reward and encourage work, which in turn leads to more stable and financially secure families. In Montana, efforts are under way to introduce more measures to help working families build their assets.

1. Protection Against Predatory Lending

a. Predatory mortgage lending prohibitions that exceed basic protections in federal law. Montana is one of 22 states with no law; 10 states significantly exceed the federal law. All others minimally exceed the federal law.

b. Payday lending restrictions on abusive payday lending and forbidding lending companies from partnering with out-of-state banks to avoid restrictions. Montana is one of 19 states with restrictions on abusive payday lending, but not on out-of-state partnering. Only two states do both; all others have no restrictions.

2. Targeted Tax Relief

a. Percent of the federal Earned Income Tax Credit (EITC) (1) at which the state offers a refundable state EITC. Montana is one of 23 states with no state EITC offered, but efforts are under way to introduce legislation to establish one.

b. The percent of the FPL that the state sets as its personal income tax threshold. Montana is one of 17 states setting the personal income tax threshold at 51 to 100 percent of the FPL. Twenty-four states set it at 100 to 151 percent of the FPL.

Employment Policies

In research conducted by The University of Montana Bureau of Business and Economic Research (BBER), employers reported that finding and retaining good employees is an overall problem--and not restricted to low-skill, low-paying jobs (www.bber.umt.edu). This is especially true at this time, when Montana's unemployment rate is at an all-time low. Policies that are seen to support families in finding and keeping jobs include:

1. Child Care Subsidies (2)

a. Child care assistance income eligibility levels at a percentage of the state's median income. Montana and 29 other states set eligibility at 50 to 74 percent of state median income.

2. Income and Work Support

a. The degree to which the state integrates the Temporary Assistance for Needy Families (TANF) and work force systems. Montana and 12 other states have strong collaboration at both state and local levels. Only four states have full integration at both levels.

b. Percentage of FPL at which state sets TANF cash-benefit level. Montana is one of 18 states setting TANF at 20 to 29.9 percent. Twenty-five states set it at 30 percent or above.

3. Food Security

a. Improved access to Food Stamps for working families through transitional benefits for families leaving cash assistance or using simplified definitions of income and/or resources for eligibility. Montana and 14 other states do neither. Nine states do both.

4. Unemployment Insurance

a. Unemployment benefit eligibility extended to part-time workers seeking part-time work. Montana and 28 other states extend benefits to this group. All other states do not.

b. Unemployment benefit eligibility extended to cover an alternate base period. Montana and 30 other states do not consider the most recent quarter of work.

c. Assistance with the transition back to employment through a children's allowance, indexing benefit levels, and adopting extended benefit triggers. (3) Montana provides assistance through indexing benefit levels to state wage growth levels. Montana and 19 other states give assistance through one of three of these provisions. Only four states provide all three.

5. Housing Location and Affordability

a. Prohibition of discrimination against the use of housing vouchers. Montana is one of 39 states with no state prohibition.

b. States promoting access to affordable housing through a state housing trust fund. Montana is one of 39 states with a state housing trust fund.

c. States that provide tax incentives to developers for producing affordable housing. Montana is one of 35 states without incentives to developers.

d. Targeting federal credits to key vulnerable populations, including families that have/are special needs, very low-wage jobs, large families, are homeless, are at-risk, or are minorities. Montana is one of 13 states with three out of six of these preferences; in Montana, they include families with special needs, very low wages and large families.

Health Policies

To be productive, workers must be physically and mentally healthy. To reduce absenteeism, their children also need to be physically and mentally healthy. Access to health care either through an employee benefit package or through public health programs is part of a national debate as the cost of providing access rises. Employers are struggling to contain costs, and national public health programs continue to grow--to 16 percent of the Gross National Product. In 2004, Montana spent $4.6 billion on health care (www.bber.umt.edu). Many states are attempting to address this issue, with Montana seeking policy solutions over the past several legislative sessions; although these solutions can be seen as incremental, they are still important.

1. Health Insurance Coverage

a. Eligibility level for public health insurance (Medicaid and Children's Health Insurance Program). Montana and three other states set CHIP eligibility at 100 percent to 150 percent of the FPL, the lowest level set. Other states set it from 151 percent to 251 percent. Montana is proposing to expand CHIP to 200 percent of the FPL.

b. Cost-sharing mechanisms, such as co-payment and premiums for children's health services. Montana and eight other states use co-payments as a cost-sharing mechanism. Nine states have no cost-sharing mechanism.

c. Parental eligibility for Medicaid set at percent of FPL. Montana and 18 other states set eligibility at 51 percent to 100 percent of FPL Montana is proposing to raise the income standard for Medicaid eligibility for children ages 6 to 19 to 133 percent of the FLP.

2. Health Care Benefits

a. Level of coverage for mental health and substance abuse treatment. Montana is one of 25 states offering coverage for select groups only; 11 states offer broad or comprehensive coverage.

b. Dental services for adults in the Medicaid program. Montana is one of 18 states providing limitations on preventive, restorative, and/or further treatment.

3. School Health and Nutrition

a. Years of physical education required in elementary and secondary school. Montana is one of only four states requiring more than 10 years with no substitutions. All others have lower requirements or allow substitutions.

4. Cigarette and Alcohol Taxes

a. Amount of the state cigarette tax. Montana is one of 18 states with $1.01 or more per pack (other states are between $0.50 to $1.00 per pack).

b. Amount of the state tax on beer. Montana taxes beer at $0.14 per gallon and is one of 18 states with taxes up to $0.15 per gallon. All other states tax $0.16 to $0.46 per gallon.

Education Policies

It has long been known that children age 5 and under are in the most vulnerable period of their lives in terms of forces that can hinder or promote social, psychological, and intellectual development. Montana has 63,347 children 5 years old and younger who are at this critical juncture of development. Early childhood experts know that 85 percent of a child's core brain structure is formed by age 3. It is this remarkable growth that creates the opportunity and the increasing recognition that investing at this age is an important investment in human capital with high rates of return (www.mineapolisfed.org). Thus, education policies often start with preschool and then continue up the age continuum.

1. Pre-kindergarten

a. Amount invested per 3-year-old or 4-year-old in expanding pre-kindergarten access. Montana is one of 11 states with no investment to expand pre-kindergarten access. Montana is undertaking some significant efforts to improve educational programs for children ages 0 to 5. Thus, progress to investing in expansion of pre-kindergarten access, while not in place, is being studied by state policy-makers.

2. Kindergarten

a. Financial incentives to local districts to offer full-day kindergarten. (4) Montana is one of 19 states considered to have a disincentive. Again as with pre-k, work in Montana is progressing to reverse this and to move toward offering a full-day kindergarten option.

3. Higher Education

a. Public four-year college affordability through tuition and need-based financial aid. Montana is one of 18 states rated as having moderate affordability, with tuition lower than the national median, but with aid lower than national median.

b. Public two-year college affordability through tuition and need-based financial aid. Montana is one of nine states rated as having lower affordability, with tuition being higher than the national median and aid lower than the national median.

Conclusion

In many of these policy measures, Montana stands in the middle--often with the majority of other states. In some measures, Montana has yet to move forward, although as with full-day kindergarten there are initiatives being considered. However, it is not enough to enact policy without first being sure the investment can be tied to better child outcomes. Without this assurance, Montanans must question the use of their resources. A 2005 research study (5) examined the relationship between public expenditures and child outcomes, and determined that they are related to better outcomes across a wide range of indicators, including measures of child mortality, elementary school test scores, and adolescent behavioral outcomes. Some examples taken from the study are:

* An extra $1,000 spent on education is associated with a 10 percent reduction in low math and reading scores, a 15 percent reduction in the high school dropout rate and a 10 percent reduction in the teen birth rate.

* An extra $100 per child spent on Medicaid is associated with a 7 percent reduction in the child death rate.

References

(1) Earned Income Tax Credit--page 6, "Policy Matters"

The EITC is considered the most effective tax policy in history for lifting working families out of poverty. In 2002, some 4.9 million people, including 2.7 million children, escaped poverty as a result of this credit. States can provide a state tax credit to supplement the federal credit. States also can make the state tax credit refundable (like the federal EITC), thereby increasing tax refunds for low-wage working families.

(2) Child Care Subsides--page 16, "Policy Matters"

The federal government allows states to determine the income level at which families are eligible to access child care subsidies, but sets a maximum eligibility level equal to 85 percent of a state's median income (SMI). States can expand access to child care by increasing eligibility up to that level. Raising the income eligibility level will not improve access to child care unless the state also provides adequate funding to ensure that all eligible families receive the assistance.

(3) "Assistance.... 3) adopting extended benefit triggers."--page 33, "Policy Matters"

During protracted economic downturns, benefit payments sometimes expire before the economy begins to regain a sufficient number of jobs. To extend UI benefits during these times, states have an option of implementing a "trigger" policy that automatically extends unemployment benefits during periods of high unemployment, thereby providing greater access to federal funds.

(4) "Financial incentives to local districts to offer full day kindergarten"--page 66, "Policy Matters"

State funding formulas can create incentives for local districts to provide full-day kindergarten by providing a funding amount to cover the full-day cost. Alternately, state formulas can create a disincentive for local districts to offer full-day programs by forcing local districts to supplement state money with local funds to cover the cost difference between full-day and half-day programs.

(5) Harknett, Kristen et al, 2005, "Are Public Expenditures Associated with Better Child Outcomes in the U.S.? A Comparison across 50 States" The Society for the Psychological Study of Social Policy, vol 5, No. 1, 2005, pp 103-125.

Daphne Herling is director of community research for Montana Kids Count and BBER, This article reports research conducted by Steve Seninger, Ph.D.

Table 1
State Social and Economic Data Trends

* Indicators from DPHHS and OPI are State Fiscal Year
beginning with the year at top of column--all others
are for calendar years

                                        MONTANA

                                       Base Year

                                  2000          2005

DEMOGRAPHICS AND
FAMILY CHARACTERISTICS
Population under age 18         228,370       204,994
  Children under age 5           54,596        53,559
  Children ages 5 to 17         173,774       151,435
Child population by gender
  Males under age 18            117,351       104,647
  Females under age 18          111,019       100,447

SOCIAL AND ECONOMIC

Monthly average
# of families w/dependent
children participating
in TANF                           4,641         3,938

Monthly average
# of recipients
(all ages) receiving
Food Stamps                      59,660        81,665

% of children enrolled
in pre-kindergarten
to 12th grade eligible
for free/reduced lunch            32%         34.59%

Number of women,
infants and children
enrolled in WIC Program         22,353        19,785

Children in
poverty (100%)                    17%           20%

Children below
150% poverty                      33%           34%

Children in extreme
poverty (50%)                     4%            7%

Children under
age 5 in poverty                  17%           20%

HEALTH & HEALTH
INSURANCE

Number of children
per month enrolled
in the CHIP Program              8,770        12,019

Medicaid Mental
Health monthly
average number
of cases                         7,867         8,731

Percent of children
18 and under
without health
insurance                         16%           16%

Children 0-5
without health
insurance                         16%           17%

                                School        School
                                 Year          Year
EDUCATION                      2000/2001     2005/2006

Total school
enrollment (K-12)               166,864       157,467

Public enrollment               154,700       145,416

Private enrollment               8,537         8,084

Home school                      3,627         3,987

Count of students
with disabilities,
ages 3-22                       19,039        19,259

High school
student dropout                  4.20%          NA

Total Head Start
enrollment                       4,377         5,405

VITAL STATISTICS

Infant mortality
rate (rater per
1,000 live births)               5.76          6.99

Child death rate                 0.63          0.36

Sources: Montana Department of Public Health and Human
Services (www.dphhs.mt.gov), U.S. Census Bureau
(www.census.gov), The Annie E. Casey Foundation
(www.aecf.org), Montana Head Start Program
(www.headstartmt.org), Montana Office of Public
Instruction (www.opi.state.mt.us).

Table 2
National Survey of Children's Health, 2003

                                   National   Montana
                                   Percent    Percent
OVERALL HEALTH

Medical home care: % who
have a personal doctor or
nurse from whom they receive
coordinated health care             46.10      40.90

Socio-emotional difficulties:
% of 3 - 17 year olds with
moderate or severe difficulties      9.20       8.20

Mental health care: %
children who received
some type of mental
health care during
past year                           58.70      68.40

LIFE IN THE FAMILY

% ages 0 - 5 who are
read aloud to by
family every day
during past week                    47.80      50.80

% who live in
households where
someone smokes                      29.50      26.30

LIFE IN THE NEIGHBORHOOD

% living in neighborhoods
parents describe as
supportive                          81.40      87.10

% living in neighborhoods
or communities parents
feel are usually or
always safe                         83.80      91.80

% ages 0 - 5 whose parents
changed child care
arrangements in past
month or a job change for
child care reasons in
the past year or both               33.20      36.1

Source: National Survey of Children's Health, 2003,
Montana State Profile.

Table 5
2006 Federal Poverty Levels
by Size of Household

 PERSONS     Poverty
   IN         Income
HOUSEHOLD   Thresholds

    1         $9,800
    2         13,200
    3         16,600
    4         20,000
    5         23,400
    6         26,800
    7         30,200
    8         33,600

The amounts above represent 100 percent of the FPL. The
FPL is used to determine eligibility for poverty programs. For
instance, a family of four lives in poverty if the household
earns $20,000 or less in one year. Different programs use
different levels of income to determine eligibility; some may
use 150 percent of the FPL or in the case of some Medicaid
programs 51 percent to 100 percent of the FPL. A family of
4 at 150 percent of the FPL would be earning $30,000
(20,000 x 1.5). A family of 4 at 200 percent of the FPL
would be earning $40,000 (20,000x2).

Source: http://aspe.hhs.gov/poverty/06poverty.shtml

Figure 1
Substance Abuse of U.S. Rural Residents
by Age and Sex, 2003

                   Illicit Drugs    Alcohol

Males 12-17              5%            7%
Females 12-17            5%            8%
Males 18-25             10%           22%
Females 18-25            6%           12%

Source: www.thehatchergroup.com

Note: Table made from bar graph.