Trump administration will allow states to test Medicaid work requirements

U.S. President Donald Trump attends the Women in Healthcare panel hosted by Seema Verma (R), Administrator of the Centers for Medicare and Medicaid Services, at the White House in Washington, U.S., March 22, 2017.

By Yasmeen Abutaleb

WASHINGTON (Reuters) – The Trump administration said on Thursday it would allow states to test requiring some Medicaid recipients to work or participate in community activities such as volunteering or jobs training as a condition of eligibility for the government health insurance program for the poor.

The Centers for Medicare and Medicaid Services issued guidance making it easier for states to design and propose test programs that implement such requirements. States must propose such changes through waivers and receive federal approval.

Seema Verma, the agency’s administrator, said the policy guidance came in response to requests from at least 10 states that have proposed requiring some Medicaid recipients to work or participate in activities that may include skills training, education, job search, volunteering or caregiving. Those states include Kentucky, Maine, New Hampshire, Arizona, Indiana and Utah.

Certain Medicaid populations would be exempt from the rules, including those with disabilities, the elderly, children and pregnant women. Verma also said states would have to make “reasonable modifications” for those battling opioid addiction and other substance use disorders.

“This gives us a pathway to start approving waivers,” Verma said on a call with reporters on Wednesday. “This is about helping those individuals rise out of poverty.”

Under the 2010 Affordable Care Act, former Democratic President Barack Obama’s signature domestic policy achievement commonly known as Obamacare, 31 states expanded Medicaid to those making up to 138 percent of the federal poverty level, adding millions of people to the rolls.

Republicans have repeatedly failed to repeal and replace Obamacare, a top campaign promise of President Donald Trump. Instead, the Trump administration has sought to weaken the program through executive orders and administrative rules.

The Obama administration opposed state efforts to implement work requirements in Medicaid because it could result in fewer people having access to health insurance.

For instance, Kentucky last year proposed work requirements for able-bodied adults to get insurance and establishing new fees for all members based on income. A study found the proposal would reduce the number of residents on Medicaid by nearly 86,000 within five years, saving more than $330 million.

Republicans argue that Medicaid was created to serve the most vulnerable and has become bloated under Obamacare. Verma and other Republicans said implementing work and community engagement requirements could help improve health outcomes by connecting people with jobs and training.

(Reporting by Yasmeen Abutaleb; Editing by Peter Cooney)

Student tax breaks survive the tax bill, make the most of them

Graduates celebrate receiving a Masters in Business Administration from Columbia University during the year's commencement ceremony in New York in this May 18, 2005 file photo. dreams of many college seniors. REUTERS/Chip East/Files

By Gail MarksJarvis

CHICAGO (Reuters) – If you are going to college, getting extra training for a job, or paying off student loans, there are myriad tax breaks worth thousands of dollars to people burdened by college costs.

Although many were threatened in early versions of the tax bills crafted by the Senate and House and Representatives, students can breathe a sigh of relief that the benefits all remain. Tax experts suggest using these strategies before the end of December to get every penny possible:

* Student loan interest deduction

About 12.4 million borrowers make use of this deduction. You can deduct up to $2,500 in interest per year, which can result in tax savings that for some top $600.

The deduction depends on how much you have paid in a single tax year toward your student loans and also depends on your income.

If your loan payments made so far for 2017 do not qualify for the $2,500 maximum deduction and you are still paying off student loans, consider paying more before the end of the year to boost the deduction, said Mark Kantrowitz, publisher of www.Cappex.com. You can find out how much interest you have paid so far this year from the student loan servicer that collects your monthly payments.

To take the full $2,500 deduction, an individual cannot have a modified adjusted gross income over $65,000, and for couples $135,000. For individuals with incomes up to $80,000 and for married couples earning up to $165,000, smaller deductions apply.

Paying extra by Dec. 31 would be particularly wise if your income next year is likely to put you over the income cutoff, said Gil Charney, director of tax and policy analysis for The Tax Institute at H&R Block.

* College credits

Both the American Opportunity Credit and Lifetime Learning Credit provide tax breaks to help pay for education, but apply to different stages.

For undergrads, the American Opportunity Credit is worth up to $2,500 per year, but can be used only for the first four years of college. Students must attend at least half-time.

If you have not paid enough tuition and fees to qualify for the full credit this year and have been billed for the first quarter or semester in 2018, consider paying the bill now to maximize the 2017 credit, Charney said. The credit covers 100 percent of the first $2,000 in tuition and fees paid in a year; then 25 percent of the next $2,000.

Remember, there are income limits. You can’t get the full credit with modified adjusted gross income over $80,000; $160,000 for couples.

If your income will exceed the limit in 2018 but qualifies in 2017, this would be the year to capture as much as possible.

The same strategy applies to the Lifetime Learning Credit, which is valuable to part-time students, graduate students or workers trying to enhance job opportunities with an extra course or training.

The Lifetime Learning Credit is worth $2,000, or 20 percent of the first $10,000 spent in a year. So consider paying ahead for 2018 education, especially if you are near an income cutoff: over $56,000 in modified adjusted gross income for individuals, or $112,000 for couples for the maximum credit.

Keep in mind that if two spouses are going to school they cannot both claim the $2,000; it is a maximum per household. The American Opportunity Credit is kinder because it applies per student. Parents with three children in college at the same time could claim the credit for each child and do it annually for the four years a child is in an undergraduate program.

For more details, see IRS Publication 970

The opinions expressed here are those of the author, a columnist for Reuters.

(Editing by Beth Pinsker and Leslie Adler)

An update on winners and losers on the U.S. tax scorecard

A man walks the campus of the City College of New York in the Harlem borough of New York, U.S., December 16, 2017. REUTERS/Eduardo Munoz

By Beth Pinsker

NEW YORK (Reuters) – In the lead-up to the conference agreement for the U.S. Tax Cut & Jobs Act released on Friday, there were too many moving parts for most Americans to know how it would affect them.

Until the bill is voted into law, the various provisions are still a moving target, but taxpayers now have a better sense of the real math of what it means to them.

Here is an update on what some of the key issues would mean to your wallet:

* EDUCATION

Graduate students pleaded with Congress not to adopt the U.S. House of Representatives’ proposal to make tuition waivers count as taxable income. In the end, the conference bill left that provision out.

The final bill still allows for individuals to deduct up to $2,500 in student loan interest and retains the current selection of higher education tax credits.

Teachers can continue to deduct up to $250 in supplies. Employees can still receive tuition without claiming it as income.

However, the bill changes the rules for the use of contributions to 529 college savings plans. In the past, the funds could only be distributed for higher education expenses. The final bill allows for $10,000 a year to be taken for each child’s K-12 expenses.

* CHARITABLE DEDUCTIONS

The charitable deduction was never going to go away, but experts predict many fewer people will itemize deductions under the new rules, which almost double the standard deductions and get rid of personal exemptions.

People who expect not to itemize their taxes in the future should think about making major donations before Dec. 31 to capture as many tax advantages as they can.

The compromise in the tax bill to double the estate tax exemption also would affect charitable giving because fewer wealthy people will need to donate assets to avoid going over the limit and sticking their heirs with a tax bill.

* CHILD TAX CREDITS

The conference bill settles on a $2,000 per child deduction, with $1,400 of it refundable to people with no income tax liability. The deduction is now phased out at a much higher income level.

These credits will help offset the tax bill’s removal of personal exemptions, which would hit families with children hard.

* MEDICAL DEDUCTIONS

There is good news for those worrying that the tax overhaul will do away with the itemized deduction for medical expenses.

The conference bill not only keeps the deduction, it also makes it available for expenses above 7.5 percent of adjusted gross income for the next two years, rather than the recently established 10 percent threshold.

* ALIMONY

Get ready for a flood of divorces in 2018. The final bill does away with a tax deduction for paying alimony and with the need for those receiving alimony to claim it as income, but it delays this until 2019.

Those who were rushing to get divorced by Dec. 31 can take a deep breath. But as the news sinks in, expect couples where one spouse is anticipating alimony to file for divorce sooner rather than later, or face tough negotiations on how much he or she might get.

* STATE AND LOCAL TAXES

The compromise in the final bill is that filers will be able to claim $10,000 in some combination of state and local taxes, including real estate taxes. The cap on mortgage interest was bumped down from $1 million to $750,000.

There has been a lot of worry that the proposed changes would dampen home sales because it will change the math on affordability. While the final bill ended up better for homeowners than expected, there are still lingering questions about its impact.

* BRACKETS AND AMT

For those on the lower end of the income scale, the change in brackets will probably not be top of mind, at least until the Internal Revenue Service sorts out the final tax tables and starts to adjust withholding rates, probably sometime in late winter.

Wealthy Americans are getting somewhat of a mixed bag, however. The top rate is dropping to 37 percent, but the Alternative Minimum Tax remains.

While this sounds like something to mourn, the AMT might not have as big an impact as people generally believe.

* RETIREMENT SAVINGS

When the tax overhaul process started, the way we save for retirement was on the table for big changes, including to workplace 401(k) retirement savings plans. In the end, however, Congress left it all pretty much alone.

(Editing by Lauren Young and Lisa Von Ahn)

Thousands of protesters disrupt traffic in India’s financial capital

Thousands of protesters disrupt traffic in India's financial capital

By Rajendra Jadhav

MUMBAI (Reuters) – More than 200,000 protesters poured into India’s financial capital on Wednesday, disrupting traffic and straining the railway network, to press their demands for reserved quotas in government jobs and college places for students.

Rising unemployment and falling farm incomes are driving farming communities across India, from the state of Haryana in the north to Gujarat in the west, to redouble calls for reservations in jobs and education.

“Farming is no longer profitable and jobs are not available,” said one protester, Pradip Munde, a farmer from Osmanabad, a town more than 400 km (250 miles) southeast of Mumbai. “Reservation can ensure us better education and jobs.”

Two-thirds of India’s population of 1.3 billion depend on farming for their livelihood, but the sector makes up just 14 percent of gross domestic product, reflecting a growing divide between the countryside and increasingly well-off cities.

Young people and senior citizens of western India’s Maratha community waved saffron flags in a protest police said was free of incidents of violence, with more than 10,000 policemen on guard amid an estimated turnout of 200,000 demonstrators.

Traffic came to a halt in many parts of the business district, while protesters jammed suburban trains.

It was the concluding protest of a series of 57 marches last year across the surrounding western state of Maharashtra, organized by the state’s Maratha community to press its demands.

The city’s famed dabbawalas, who deliver packed lunches to hundreds working in offices across Mumbai, suspended operations for the day, as did schools in the affected area.

(Reporting by Rajendra Jadhav; Editing by Clarence Fernandez)

Bond market braces for impact of New York’s free tuition plan

Graduates celebrate receiving a Masters in Business Administration from Columbia University during the year's commencement ceremony in New York in this May 18, 2005 file photo. REUTERS/Chip East/Files

By David Randall

NEW YORK (Reuters) – Little known private colleges that are already struggling to grow their revenues are facing a new threat that could further weaken their finances and make borrowing harder: free tuition at public universities.

The State of New York passed in April a bill that will by 2019 offer free tuition at community colleges and public universities in the state to residents whose families make less than $125,000 per year. At least six other states are considering similar laws, to ease the burden of student debt that has doubled since 2008 to over $1.3 trillion, according to the Federal Reserve Bank of New York.

Fund managers expect that such initiatives, combined with other pressures that have long been building up, will cause bonds issued by smaller private colleges to fare far worse than the broader market if interest rates continue to rise.

So far the bond market has largely ignored such a threat as historically low rates encourage many investors to take on greater risks in search for better yields.

“There are many schools that are going to be losers in this game,” said R.J. Gallo, a portfolio manager at Federated Investors in New York.

Gallo, who owns debt issued by well-known institutions such as Northeastern University in Boston and Northwestern University in suburban Chicago, said that bonds of lower-rated schools yield only about 1.3 percentage points more than AAA-rated ones. That, for him, is not enough to compensate for the additional risk.

Nearly 80 percent of college-age students in New York qualify for the scholarship, according to state estimates. While the state has yet to say how many new students it expects to take advantage of the plan, analysts say that they expect a significant number forgoing private colleges located in the Northeast and opting for public options instead.

RECORD HIGH ‘DISCOUNT RATES’

The prospect of competition from free public programs comes at a time when many private colleges are already forced to offer incoming students discounts because of stagnant personal incomes and years of above-inflation tuition hikes.

The proportion of gross tuition revenue that is covered by grant-based financial aid averaged a record 49.1 percent for full-time freshmen in the current school year, according to a May 15 report by the National Association of College and University Business Officers.

The average U.S. private non-profit four year institution charges $45,370 per year in tuition, room and board, a 12 percent increase over the last five years, according to the College Board. Graphic: http://tmsnrt.rs/2qHVUBj

Moody’s forecasts that financial pressures will triple the number of schools that close their doors nationwide from today’s rate of two to three schools per year. Free public education will add to those pressures, said Christopher Collins, an analyst at Moody’s.

“It’s a highly competitive sector and there’s also now the fact that these really small schools are competing with public colleges and universities with a much lower price,” he said.

Given that there are more than 1,000 private colleges and universities nationwide, closures are rare.

Earlier this year, Connecticut’s Sacred Heart University and St. Vincent’s College announced plans for a potential consolidation. Last November, Dowling College in Long Island, New York, filed for bankruptcy after defaulting on $54 million in debt issued through local government agencies.

New York’s scholarship plan alone is unlikely to cause any private school to go under, said college financial aid expert Mark Kantrowitz, the president of consulting service Cerebly Inc. Instead, regional private schools that tout their small class sizes may lose their appeal if the competition from free programs forces them to lower tuition and they try to offset that by increasing enrollment.

“These colleges justify their costs by saying that you will get a more personal education, but will increasingly start to fail,” he said, adding that he expects to see more private colleges closing their doors over the next decade.

Nicholos Venditti, a bond fund manager at Thornburg Investment Management in Santa Fe, New Mexico, said he has been cutting his funds’ exposure to private college debt in part because other states could soon emulate New York’s model.

“If free tuition becomes a widespread phenomenon, it puts pressure on every higher education model throughout the country,” he said.

(Reporting by David Randall; Editing by Jennifer Ablan and Tomasz Janowski)

Chicago school system plans to borrow up to $389 million

FILE PHOTO: Chicago Mayor Rahm Emanuel speaks during the U.S.-China Joint Commission on Commerce and Trade Investment Luncheon Program in Chicago, Illinois, U.S., on December 17, 2014. REUTERS/Andrew Nelles/File Photo

By Dave McKinney

CHICAGO (Reuters) – Chicago’s cash-strapped public school system plans to seek up to $389 million in short-term loans to avoid closing schools early for the summer and to make required pension payments next month, the mayor’s office said on Friday.

The fix will be secured through short-term financing against $467 million in delayed block grant funding by Illinois’ fiscally paralyzed state government, which has not passed a full-year operating budget in 23 months.

Escalating pension payments have led to drained reserves, debt dependency and junk bond ratings for Chicago Public Schools.

The planned borrowing follows Republican Governor Bruce Rauner’s veto in December of legislation that would have funneled $215 million in state funds to the nation’s third-largest school system to help it make a required $721 million pension payment next month.

A school-funding overhaul that would direct more money to Chicago’s schools passed the Illinois Senate this week but drew immediate criticism from Rauner’s education chief, casting serious doubts on the measure’s long-term prospects.

Absent any movement in the state legislature on school funding, Chicago Mayor Rahm Emanuel described the borrowing plans as a short-term bridge.

“While we work with state lawmakers on long-term solutions to Illinois’ education funding challenges, in the short-term, (we) are doing what is necessary to keep our students in the classroom and on the path to a brighter future,” Emanuel said in a statement.

Terms of the borrowing were not immediately known. The Emanuel-appointed Chicago school board expects to vote on the new borrowing authority at its May 24 meeting.

The grant money upon which the borrowing will be secured is part of $1.1 billion in state payments Illinois owes to more than 400 school systems. The state has been unable to distribute those grant payments because of the unrelenting budget stalemate.

The mayor’s office said CPS expects to receive its allotment of state grant funds in “coming months.” But Abdon Pallasch, a spokesman for Illinois Comptroller Susana Mendoza, said on Friday his office has no idea when the money will be disbursed.

Rauner’s office did not have an immediate reaction to CPS’s new borrowing.

(Editing by Chizu Nomiyama and Matthew Lewis)

Historically black university in Texas cancels Senator’s speech

FILE PHOTO: Senator John Cornyn (R-TX) speaks during a news conference following party policy lunch meeting at the U.S. Capitol in Washington, U.S. on August 4, 2015. REUTERS/Carlos Barria/File Photo

By Gina Cherelus

(Reuters) – U.S. Senator John Cornyn will no longer deliver the commencement address at Texas Southern University this weekend, the school said on Friday, after U.S. Education Secretary Betsy DeVos was booed at another historically black university.

More than 800 people signed a petition started by a Texas Southern University student who opposed the university’s invitation to the Republican senator to speak at Saturday’s graduation in Houston.

The petition said Cornyn’s backing of DeVos and Attorney General Jeff Sessions, among other things, showed that he supported “discriminatory policies and politicians.”

“We have the right to decide if we want to refuse to sit and listen to the words of a politician who chooses to use his political power in ways that continually harm marginalized and oppressed people,” the petition said.

The university, which will graduate more than 1,100 students on Saturday, said every effort had been made to ensure its ceremony was a celebration that would be remembered for the right reasons.

Cornyn has been invited to meet with Texas Southern University students in the future, the school said in a statement.

Libby Hambleton, a spokeswoman for Cornyn, said in an email that the senator was honored to have been invited to speak, but that he “respects the administration’s decision and looks forward to continuing to engage with the university in the future.”

It was not immediately clear who would replace Cornyn at the ceremony.

Texas Southern University’s action came after graduates at Bethune-Cookman University in Daytona Beach, Florida, booed, jeered and turned their backs on DeVos in protest on Wednesday as the education secretary gave a commencement speech.

Bethune-Cookman students, alumni and political activists, angered by comments DeVos has made about historically black colleges and universities, gathered tens of thousands of signatures on petitions seeking to have the invitation to DeVos rescinded.

DeVos, who is a proponent of school choice, said in February that such schools were “real pioneers” when it came to choice, without acknowledging racism as the main factor that led to the creation of such institutions.

She subsequently noted that historically black colleges were created because other institutions were not open to African-Americans.

(Reporting by Gina Cherelus in New York; Editing Daniel Wallis)

Without school, children of Mosul feared lost to poverty and conflict

Falah, 11, sells vegetables and fruits in a market in eastern Mosul, Iraq April 20, 2017. REUTERS/ Muhammad Hamed

By Ahmed Aboulenein

MOSUL, Iraq (Reuters) – Ahmed Abdelsattar was 14 when Islamic State swept into Mosul and declared a caliphate in 2014. Fearing he would be indoctrinated and sent to fight by the militants, his parents took him out of school.

Three years later, he sells ice cream at a refugee camp for internally displaced Iraqis. His family have lost their home and his father is too old for the manual labor positions at the camp, which means he is his family’s sole breadwinner.

Coupled with a shortage of teachers, books and supplies, the 17-year-old sees no reason to go to the makeshift schools set up in the Khazar camp near Erbil.

“Going to school is now useless. I am helping my family,” he said. He adds that it is too late for him anyway. Had his education not been interrupted, Abdelsattar would be graduating in a few weeks.

Abdelsattar is one of tens of thousands of children orphaned or left homeless by the war on Islamic State and forced to work to support their families in Mosul, the militant’s last major city stronghold in Iraq.

Returning these children to school is a priority for Iraq to end the cycle of sectarian violence fueled in part by poverty and ignorance, the United Nations says.

“Investment in education is urgently needed, without which Iraq could lose an entire generation,” said Laila Ali, a spokeswoman for the UN’s children agency UNICEF.

“Children from different ethnicities and religions, in the same classroom, will promote a cohesive society and will get children to think differently.”

Even in the half of Mosul east of the Tigris River that has been retaken by Iraqi forces, where 320 of the 400 schools have reopened, Reuters interviewed dozens of children working as rubbish collectors, vegetable vendors or mechanics.

“I did not go to school because Islamic State came and they would teach children about fighting and send them to fight,” says 12-year-old Falah by his vegetable cart in Mosul.

Within earshot, fighting was still raging. Just across the river, government troops, artillery and aircraft were attacking Islamic State’s last stronghold in western Mosul.

Falah has four younger brothers. None of them have ever been to school.

ONE PLUS ONE EQUALS TWO

Huzayfa studied up to the fifth grade but stopped when Islamic State came. The militants taught math using bullets, rifles and bombs, said the 12-year-old, who sells scrap metal.

“They taught us ‘one bullet plus one bullet’ and how to fire weapons,” he said.

The local education department in Nineveh province, of which Mosul is the capital, estimates 10 percent of children in east Mosul are still out of school. There has been no official count for almost four years, it said.

There are also no official statistics on the dropout rate, a spokesman for Iraq’s Education Ministry said, especially as many families have fled Mosul or Iraq altogether.

“We are counting on parent-teacher conferences and local officials to convince parents to send their kids back to school,” said Ibrahim al-Sabti.

Government funds normally allocated to education have been depleted by corruption and mismanagement, lawmakers and non-governmental organizations say, citing the results of investigations in 2014 and 2016.

Oil-rich Iraq historically had very high literacy rates and primary school enrolment was 100 percent in the 1980s.

Illiteracy became rampant after international sanctions were imposed due to the August 1990-1991 occupation of Kuwait. Economic hardship was made worse by the civil war that broke out after the 2003 U.S.-led invasion that toppled Saddam Hussein.

LOST FUTURE

Schools in east Mosul started reopening in January and so far around 350,000 students are back in class, compared to 183,229 in 2013, with much of the increase due to displaced people from west Mosul and surrounding villages.

UNICEF estimates around 1.2 million Iraqi children are not in school nationwide.

The Iraqi military expects to dislodge Islamic State from the rest of Mosul in May but the militants are mounting a strong resistance in the densely populated Old City.

Iraqi troops began their offensive in October backed by a U.S.-led international coalition providing air and ground support. The militants are fighting back using booby traps, suicide motorcycle attacks, sniper and mortar fire and sometimes shells filled with toxic gas.

For children like Ahmed Abdelsattar, whether or not the group is finally ousted from Mosul has little bearing on their fate.

If he is lucky, he will return to where his home used to be in western Mosul’s Al-Jadida district, an area where local officials and eyewitnesses have said as many as 240 people may have died in March when a building collapsed after a blast, burying families inside.

“The future is lost,” he said with an air of resignation.

(Reporting by Ahmed Aboulenein; Editing by Sonya Hepinstall)

Trump seeks to shrink federal role in education with new order

U.S. President Donald Trump signs an executive order on education as he participates in a federalism event with Governors at the White House in Washington, DC, U.S. April 26, 2017. REUTERS/Carlos Barria

WASHINGTON (Reuters) – President Donald Trump on Wednesday ordered Education Secretary Betsy DeVos to review the U.S. government’s role in school policy, which supporters cheered as the first step in creating more local control in education and critics worried could lead to lower quality schools in poorer neighborhoods.

DeVos has 300 days “to review and, if necessary, modify and repeal regulations and guidance issued by the Department of Education with a clear mandate to identify places where D.C. has overstepped its legal authority,” said Rob Goad, a Department of Education official, according to a transcript of a White House call with reporters.

The second most powerful Republican in the House of Representatives, California’s Kevin McCarthy, said the federal government had in recent years exceeded its legal authority in creating regulations and guidance

“Different people in different states and communities will have different goals and ways of achieving those goals. That is something we should celebrate and enable, not try to stop,” he said in a statement.

The Democratic National Committee, though, said the order was politically motivated, with Trump wanting something to show in school policy in his first 100 days.

The head of the American Federation of Teachers union, Randi Weingarten, said the current education law, Every Student Succeeds Act, already reduces federal power over schools, especially when it comes to standards and teacher assessments.

“What the new law doesn’t do is abandon the requirement for the federal government to protect the civil rights of our students, even if those rights run counter to what states and districts want to do,” she said in a statement.

(Reporting by Lisa Lambert; Editing by Marguerita Choy)