In Minn., more turn to cash-starved state for help

The state is preparing to cut the very services people are leaning on as the economy crashes.

Unemployment claims are surging and applications for food stamps, public health care programs and welfare are ticking up, even as Minnesota faces a $5.27 billion deficit through mid-2011. Social services like the transitional housing program that stabilized life for Obi, 35, and her two children, ages 7 and 3, are particularly vulnerable as lawmakers try to avoid cuts to public schools, the state's biggest expense.

"These are not statistics we're cutting - they're people."

"If the state's in trouble, when are the people not going to be in trouble?" said Michael Dahl, who heads the Minnesota Coalition for the Homeless.

Health and welfare programs will be scrutinized for savings when the Legislature convenes on Jan. 6.

Gov. Tim Pawlenty frequently highlights growth in those programs as spending the state can't keep up with. Finance officials project a $1.8 billion increase in those costs in the coming two-year budget cycle as the recession pushes more people onto subsidized health care.

Rep. Paul Kohls, R-Victoria, said it's time to jettison programs such as General Assistance Medical Care for childless adults, one of the growth areas. State-funded health care for that population isn't available in many states, and he said eliminating it would free up resources for other priorities.

"Do we want to make sure that the people who really need a hand up rather than a handout are getting that? Right now there's a lot of people who are getting a handout," said Kohls, R-Victoria.

One in four Minnesotans uses a state human services program, ranging from home-delivered meals for seniors to pregnancy care for the uninsured.

In Bloomington, Obi took a break from her job at UnitedHealth Group on a late December weekday to talk about how Minneapolis-based Simpson Housing Services' transitional housing program has helped her put her life back together. Obi, who lives in Brooklyn Park, gets a rent subsidy and help with everything from budgeting to tutoring for her daughter, Andrea.

"They can't even think about cutting it," she said.

At the Minnesota Capitol, advocates for the homeless filled a Senate hearing room earlier this month to press for continued state aid for housing programs. They fear spending will plummet from those services as foreclosures and layoffs land more people in economic straits they haven't faced before.

"These are not statistics we're cutting - they're people," said Sen. John Marty, the Roseville Democrat who leads the Senate Health, Housing and Family Security Committee.

Nonprofit groups that get state money - including Lakes and Pines Community Action Council in Mora - are seeing more first-time clients as the recession deepens, said Mary Everett, director of community services. They need help finding help.

Minnesota unemployment claims are reaching new highs: 32,045 people filed initial claims in November, the most since the state started tracking in 1950. The number is adjusted for seasonal fluctuations in joblessness.

Officials are bracing for more. Next year, Minnesota is projected to pay out $1.3 billion worth of unemployment benefits, emptying the state's unemployment fund and forcing the state to tap a federal fund in early 2010 unless lawmakers adjust formulas.

"This program will be busier than it has ever been in history," said Lee Nelson, chief attorney for the agency's unemployment insurance program.

There is usually a lag between an economic downturn and higher enrollments in state poverty programs including subsidized health care and welfare, according to the Minnesota Department of Human Services. But the numbers are already on their way up in programs including food support and cash assistance for impoverished childless adults.

Obi said she is on the path to success. Her children are doing well, her job is stable and she uses her few spare hours to study to be a Pentecostal minister, a passion. She said the church has become her family since she left Nigeria a decade ago. She expects to graduate from the transitional housing program in June and support her family without extra help.

"Even when you're going through stuff, you have to keep going," she said. "You can't stop. Once you stop, you know, you're not being a good example for your kids. ... You just have to keep going. So I kept going."

(Copyright 2008 by The Associated Press. All Rights Reserved.)

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