APPENDIX K. SPENDING FOR INCOME-TESTED BENEFITS, FISCAL YEARS 1968-96
CONTENTS
Overview
Trends in Spending
Spending Trends by Level of Government
Federal Government
State and Local Governments
Share of Federal Budget Used for Income-Tested Benefits
List of Income-Tested Programs
Medical Aid
Cash Aid
Food Aid
Housing Aid
Education Aid
Other Services
Jobs and Training Aid
Energy Aid
References
OVERVIEW \1\
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\1\ The Census Bureau (Tin, 1996), based on the Survey of Income
and Program Participation, examines participation in several of the
programs reviewed in this section. These include: Aid to Families with
Dependent Children, general assistance, food stamps, Supplemental
Security Income, Medicaid, and housing assistance. The Census Bureau
study provides measures of how many adults and children actually
receive benefits from these programs.
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The Congressional Research Service (CRS) has found that
almost 80 benefit programs provide cash and noncash aid that is
directed primarily to persons with limited income (Burke,
1998). Such programs constitute the public ``welfare'' system,
if welfare is defined as income-tested or need-based benefits
(the programs are listed at the end of this chapter). This
definition excludes social insurance programs, such as Social
Security and Medicare.
These income-tested benefit programs in fiscal year 1996
cost $367.7 billion: $261.3 billion in Federal funds and $106.4
billion in State-local funds. Total outlays by these programs
amounted to 4.8 percent of the gross domestic product (GDP),
dropping slightly from the record-high share set in fiscal year
1995 (5.1 percent). Federal funds provided 71 percent of the
total. These Federal welfare outlays accounted for 16.7 percent
of the fiscal year 1994 Federal budget.
In fiscal year 1996, medical services represented 48.3
percent of total welfare spending, exceeding combined outlays
for benefits in the form of cash, food, housing, services, and
energy aid (46 percent). The remainder (less than 6 percent)
was invested in ``human capital'' programs; that is, those
providing education, jobs, and training. The composition of
welfare spending differed by level of government. Medical aid
consumed 69.6 percent of State-local welfare funds, but only
39.6 percent of Federal welfare dollars.
Most income-tested programs provide benefits, in the form
of cash, goods, or services, to persons who make no payment and
render no service in return. However, in the case of the job
and training programs and some educational benefits, recipients
must work or study. Further, the program of Aid to Families
with Dependent Children (AFDC) required some able-bodied
recipients to engage in work or a work-related activity. The
block grant program of Temporary Assistance for Needy Families
(TANF), which has replaced AFDC, imposes work requirements as a
condition of eligibility, and the Food Stamp Program also has
work and training requirements. Finally, the earned income
credit (EIC) is available only to workers.
An unduplicated count of welfare beneficiaries is not
available. Enrollment in Medicaid, AFDC, and food stamps
declined from their record-high levels of 1994 or 1995, but the
number of SSI and EIC recipients continued to grow. Numbers of
beneficiaries in 1996: Medicaid, 41.3 million; food stamps,
26.8 million, monthly average; AFDC, 14.6 million, monthly
average; and EIC, 53.7 million persons in 17.9 million
families.
TRENDS IN SPENDING
The CRS data series provides annual spending figures for
24 fiscal years (1968, 1973, and 1975-96). Total expenditures
on cash and noncash welfare programs were almost 23 times as
great in 1994 as in 1968 (table K-1). Even after allowance for
price inflation, spending almost quintupled (rising 399
percent) over the 28 years, a period when the U.S. population
rose 32 percent. Trends shown in table K-1 are consistent with
those in a less inclusive data series maintained by the Social
Security Administration (SSA). The SSA series, called public
aid, is a category within SSA reports on social welfare
expenditures. SSA data on public aid exclude income-tested
child nutrition, subsidized housing, educational benefits,
adoption assistance, foster care, some job training, and other
programs covered in the CRS series. Public aid expenditures
reported by SSA generally are about 30 percent below income-
tested outlays reported by CRS. Adjusted for price inflation,
public aid outlays in the SSA series rose 371 percent, and
income-tested outlays in the CRS series rose 379 percent,
between 1968 and 1992. (For fiscal years 1960-93 public aid
data of SSA, see Bixby, 1996. SSA also maintains a data series
on private social welfare expenditures. See Kerns, 1997.)
The CRS data series is somewhat different from one
presented in a recent study by Rector and Lauber (1995) of the
Heritage Foundation. The list of 80 major programs included in
their analysis (see their appendix one, pp. 45ff) is similar to
the CRS list. However, the Rector and Lauber list includes some
programs (grants to local education authorities for
educationally deprived children and programs of community
development aid) not in the CRS series, which is restricted to
programs that provide benefits to individuals or families who
meet a needs test. Moreover, the Rector and Lauber study
provides estimates for years (1965-67; 1969-72; and 1974) that
are not covered in the CRS study.
TABLE K-1.--EXPENDITURES FOR INCOME-TESTED BENEFITS, SELECTED FISCAL YEARS 1968-96
[In billions of dollars]
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Total spending
-------------------------------
Fiscal year Federal State/local Current Constant 1996
dollars dollars
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1968................................................. $11,406 $4,710 $16,116 $73,755
1973................................................. 26,876 10,054 36,930 134,259
1975................................................. 39,461 14,753 54,214 162,851
1976................................................. 49,954 16,990 66,944 187,684
1977................................................. 55,113 18,892 74,005 192,884
1978................................................. 63,964 20,151 84,115 204,824
1979................................................. 70,172 21,304 91,476 202,183
1980................................................. 80,043 24,633 104,676 203,595
1981................................................. 87,936 29,045 116,981 204,752
1982................................................. 88,977 31,706 120,683 196,834
1983................................................. 93,830 33,982 127,812 201,291
1984................................................. 99,151 36,191 135,342 204,651
1985................................................. 105,064 38,230 143,294 209,161
1986................................................. 107,775 40,811 148,586 211,527
1987................................................. 114,789 43,364 158,153 218,938
1988................................................. 125,047 46,580 171,627 228,247
1989................................................. 134,715 51,587 186,302 236,454
1990................................................. 151,478 61,064 212,542 256,965
1991................................................. 177,899 73,943 251,842 289,845
1992................................................. 208,211 88,130 296,341 331,016
1993................................................. 223,528 88,736 312,264 338,594
1994................................................. 246,302 102,396 348,698 368,346
1995................................................. 258,382 108,212 366,594 376,763
1996................................................. 261,311 106,401 367,712 367,711
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Source: Burke, 1997.
Even so, results from the two studies are similar. The
most recent year for comparison of results is 1993. In that
year, Rector and Lauber estimate total (Federal and State)
welfare spending at $324.4 billion, as compared with $311.2
billion in the CRS analysis. Almost all of the difference
between the two estimates is accounted for by the education and
community development programs included in the Rector and
Lauber analysis. For the period 1965-93, the Rector and Lauber
study estimated that a total of $5.4 trillion in constant 1993
dollars was spent by Federal and State governments on the
programs included in their analysis. For fiscal years 1968,
1973, and 1975-94, total spending in the CRS series was $4.5
trillion in fiscal year 1994 dollars.
Measured in constant 1996 dollars (calculated by use of the
Consumer Price Index for Urban Consumers), the annual rate of
growth in spending for income-tested benefits over the whole
period, 1968-96 was 5.9 percent in the CRS study. However, the
growth pattern was uneven. During the first 8 years (1968-75)
spending climbed at an annual rate of 12.9 percent; in the next
8 years (1976-83) the annual rate of increase dropped to 1.7
percent (in 1 year, 1982, real spending declined, and it
remained below the 1981 level until 1985); from 1985 to 1995
growth resumed and averaged an annual rate of 6 percent.
However, real spending declined 2.4 percent in 1996.
Total per capita welfare spending grew in constant 1996
dollars from $367 in fiscal year 1968 to a peak of $1,434 in
fiscal year 1995 and receded to $1,386 in fiscal year 1996.
SPENDING TRENDS BY LEVEL OF GOVERNMENT
Federal Government
Measured in constant 1996 dollars, Federal spending for
income-tested benefits climbed from $52.2 billion in fiscal
year 1968 to $261.3 billion in fiscal year 1996, an increase of
401 percent (table K-2). Cash aid was the leading form of
Federal welfare until 1980, when it was overtaken in value by
medical benefits. Two years later, in 1982, Federal welfare
spending declined for all forms of aid except subsidized
housing, in which case outlays reflected earlier commitments,
and education benefits. In 1983, Federal spending declined
further for medical benefits. For the next 12 years, aggregate
real Federal welfare outlays climbed steadily, from $147.8
billion in fiscal year 1983 to $265.6 billion in fiscal year
1995. However, in fiscal year 1996, real Federal welfare
spending declined by $4.2 billion or 1.6 percent. Decreases
occurred for all forms of income-tested aid: medical benefits,
down $0.6 billion; cash aid, $0.2 billion; food benefits, $0.7
billion; housing benefits, $0.5 billion; education benefits,
$0.2 billion; jobs/training, $0.8 billion; services, $0.7
billion; and energy aid, $0.5 billion.
State and Local Governments
Measured in constant 1996 dollars, State-local spending
for income-tested benefits climbed from $21.6 billion in fiscal
year 1968 to $106.4 billion in fiscal year 1996, an increase of
392 percent (table K-2). Cash aid was overtaken by medical
benefits as the dominant form of State-local welfare spending
in 1976. Unlike Federal welfare spending, which fell below 1981
levels in real value in 1982-86, State-local spending rose
steadily in all years except three, 1978, 1993, and 1996. The
1996 decline totaled $4.8 billion (4.3 percent): cash aid, down
$2.3 billion; medical benefits, down $1.2 billion; services,
down $0.8 billion; housing, down $0.3 billion; and jobs/
training, down $0.2 billion.
Between 1983 and 1996, State-local spending for income-
tested benefits almost doubled in real value, rising by $52.8
billion. More than four out of five of these extra dollars
($44.3 billion in all) were spent on medical benefits. In both
years medical benefits and cash aid together consumed 90
percent of State-local welfare dollars, but their shares were
drastically changed. The share spent on medical aid climbed by
14 percentage points (to 70 cents out of the benefit dollar);
the share spent on cash aid declined by 13 percentage points
(to 21 cents out of the benefit dollar).
TABLE K-2.--FEDERAL AND STATE-LOCAL SPENDING FOR INCOME-TESTED BENEFITS BY FORM OF BENEFIT, SELECTED FISCAL YEARS 1968-96
[Millions of constant fiscal year 1996 dollars]
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Medical Food Housing Education Jobs/ Services/ Energy
Fiscal year benefits Cash aid benefits \1\ benefits benefits training other \2\ aid Total \3\
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Federal spending:
1968.......................................... $12,544 $23,052 $4,087 $3,583 $3,936 $3,245 $1,753 0 $52,200
1973.......................................... 24,209 31,174 14,015 12,208 6,620 3,356 6,126 0 97,708
1975.......................................... 28,792 38,266 19,342 13,019 6,548 6,455 6,113 0 118,535
1976.......................................... 30,685 41,833 21,653 14,887 10,356 12,913 7,634 $79 140,051
1977.......................................... 34,352 40,912 20,215 15,742 9,062 14,134 8,439 787 143,644
1978.......................................... 35,469 39,075 20,720 17,876 9,903 23,620 8,428 665 155,756
1979.......................................... 36,272 37,424 22,936 18,696 10,633 20,480 8,074 581 155,096
1980.......................................... 37,731 36,912 25,458 18,684 9,511 16,776 7,265 3,347 155,684
1981.......................................... 38,949 36,686 27,460 19,007 8,379 13,155 6,761 3,516 153,914
1982.......................................... 37,578 35,189 25,564 19,218 12,697 6,506 5,061 3,308 145,121
1983.......................................... 37,127 35,279 28,499 19,653 11,690 7,098 5,203 3,222 147,773
1984.......................................... 37,567 35,962 28,300 19,408 12,113 8,131 5,200 3,245 149,926
1985.......................................... 40,695 35,741 28,262 20,600 13,890 5,685 5,183 3,300 153,358
1986.......................................... 42,386 37,481 27,251 18,884 14,314 5,162 4,826 3,125 153,428
1987.......................................... 48,588 38,013 27,539 18,289 13,522 5,236 4,993 2,729 158,907
1988.......................................... 51,345 40,315 26,885 19,551 14,824 4,984 5,970 2,426 166,300
1989.......................................... 53,805 42,090 26,444 20,212 15,845 4,842 5,675 2,068 170,980
1990.......................................... 60,680 44,062 28,860 21,216 16,637 4,806 4,938 1,939 183,138
1991.......................................... 71,813 48,651 32,231 21,822 17,106 5,051 5,992 2,079 204,744
1992.......................................... 87,817 54,416 36,648 24,487 15,194 5,605 6,524 1,882 232,574
1993.......................................... 92,151 57,848 37,704 25,975 15,520 5,173 6,341 1,663 242,376
1994.......................................... 98,891 66,969 38,142 25,506 15,462 5,135 8,051 2,025 260,181
1995.......................................... 104,149 69,807 37,818 25,640 15,557 4,754 6,179 1,645 265,550
1996.......................................... 103,568 69,637 37,116 25,096 15,320 3,955 5,452 1,167 261,311
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State and local spending:
1968.......................................... $9,432 $11,395 0 0 0 $197 $531 0 $21,555
1973.......................................... 15,142 19,257 0 0 0 204 1,949 0 36,551
1975.......................................... 19,859 20,279 $1,679 0 $430 117 1,953 0 44,316
1976.......................................... 21,879 21,504 1,775 0 437 109 1,929 0 47,633
1977.......................................... 23,168 21,307 2,119 0 482 149 2,015 0 49,239
1978.......................................... 23,769 20,459 2,126 0 577 153 1,985 0 49,069
1979.......................................... 24,613 18,951 873 0 555 172 1,923 0 47,087
1980.......................................... 25,674 18,956 889 0 556 158 1,679 0 47,911
1981.......................................... 27,357 19,248 1,015 0 511 147 2,559 0 50,837
1982.......................................... 28,634 18,222 1,173 0 439 122 3,099 $24 51,712
1983.......................................... 29,739 18,600 1,233 0 476 124 3,307 39 53,518
1984.......................................... 31,045 18,730 1,436 0 457 118 2,873 65 54,724
1985.......................................... 31,470 19,195 1,502 0 663 118 2,810 45 55,803
1986.......................................... 32,840 20,104 1,570 0 705 104 2,705 71 58,099
1987.......................................... 34,064 20,516 1,616 0 707 98 2,741 288 60,031
1988.......................................... 36,113 20,471 1,515 0 723 96 2,793 235 61,947
1989.......................................... 39,363 20,928 1,475 0 692 123 2,665 228 65,474
1990.......................................... 44,244 21,532 1,493 0 760 323 5,324 150 73,827
1991.......................................... 54,621 22,271 1,510 0 630 505 5,435 130 85,101
1992.......................................... 63,846 23,577 1,612 $2,569 686 532 5,522 98 98,442
1993.......................................... 62,896 23,260 1,698 1,442 831 609 5,405 77 96,218
1994.......................................... 71,545 24,214 1,870 1,706 954 691 7,105 81 108,166
1995.......................................... 75,249 24,332 1,881 2,389 981 833 5,464 83 111,214
1996.......................................... 74,007 22,036 1,921 2,113 955 612 4,684 73 106,401
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\1\ The spending ``decline'' in 1979 represents a change in accounting. Data for 1975-78 include State-local funds used for free and reduced price
school lunches. For later years these estimates could not be made.
\2\ ``Other'' represents State Legalization Impact Assistance Grants, which funded medical, cash, education, and other benefits for legalized immigrants
in fiscal years 1988-94.
\3\ Housing data represent HOME and HOPE Programs, begun in 1992. HOME includes some private funds (amount not available).
NA--Not available.
Source: Burke, 1997.
SHARE OF FEDERAL BUDGET USED FOR INCOME-TESTED BENEFITS
The share of the Federal budget used for income-tested
benefits climbed from 6.4 percent in fiscal year 1968 to 17.1
percent in fiscal year 1995, then declined slightly, to 16.8
percent, in fiscal year 1996 (table K-3). Most of the 1968-96
increase of 10.4 percentage points was accounted for by medical
benefits (5.1 percentage point gain). Measured in percentage
points, increases for other forms of aid were: cash benefits,
1.6; food aid, 1.9; housing benefits, 1.2; education, 0.5;
services, 0.2. Federal spending for income-tested jobs/training
benefits declined as a percent of the budget (down 0.2
percentage points), and energy aid was not provided in 1968.
TABLE K-3.--SHARE OF FEDERAL BUDGET USED FOR INCOME-TESTED AID, BY FORM OF AID, SELECTED FISCAL YEARS 1968-96
[In percent]
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Medical Cash Food Housing Education Jobs/
Fiscal year aid aid aid aid aid training Energy Services
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1968................................... 1.54 2.83 0.50 0.44 0.48 0.40 0.00 0.22
1973................................... 2.71 3.49 1.57 1.37 0.74 0.38 0.00 0.69
1978................................... 3.18 3.50 1.85 1.60 0.89 \1\ 2.11 0.06 0.75
1983................................... 2.92 2.77 2.24 1.54 0.92 0.56 0.25 0.41
1988................................... 3.63 2.85 1.90 1.38 1.05 0.35 0.17 0.42
1990................................... 4.00 2.91 1.90 1.40 1.10 0.32 0.13 0.33
1991................................... 4.71 3.19 2.12 1.43 1.12 0.33 0.14 0.39
1992................................... 5.69 3.53 2.37 1.59 0.98 0.36 0.12 0.42
1993................................... 6.03 3.79 2.47 1.70 1.02 0.34 0.11 0.41
1994................................... 6.40 4.34 2.47 1.65 1.00 0.33 0.13 0.52
1995................................... 6.69 4.48 2.43 1.65 1.00 0.31 0.11 0.40
1996................................... 6.64 4.46 2.38 1.61 0.98 0.25 0.07 0.35
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\1\ In fiscal year 1978, jobs and training benefit outlays were $9.7 billion of this total; $5.8 billion
represented public service employment and $2 billion, employment and training services.
Source: Burke, 1997.
LIST OF INCOME-TESTED PROGRAMS
Below is the list of programs providing income-tested
benefits. Within each category, the programs are listed in the
order of their total cost in fiscal year 1996 to Federal and
State-local governments. Amounts shown are millions of dollars.
Medical Aid
1. Medicaid ($159,357)
2. Medical care for veterans without service-connected
disability ($8,697)
3. General assistance (medical care component)--no Federal
dollars ($5,429)
4. Indian health services ($1,984)
5. Maternal and child health services block grant ($1,105)
6. Community health centers ($615)
7. Title X family planning services ($193)
8. Medical assistance to refugees and Cuban/Haitian entrants
($131)
9. Migrant health centers ($65)
Cash Aid
10. Supplemental Security Income (SSI) ($30,367)
11. Aid to Families with Dependent Children (AFDC) ($23,677)
12. Earned income tax credit (EITC) ($21,566)
13. Foster care ($5,853)
14. Emergency assistance for needy families with children
($3,185)
15. Pensions for needy veterans, their dependents, and
survivors ($3,086)
16. General assistance (nonmedical care component)--no Federal
dollars ($2,880)
17. Adoption assistance ($897)
18. Cash assistance to refugees and Cuban/Haitian entrants
($64)
19. General assistance to Indians ($61)
20. Dependency and indemnity compensation (DIC) and death
compensation for parents of veterans ($37)
Food Aid
21. Food stamps ($27,344)
22. School Lunch Program (free and reduced price segments)
($4,784)
23. Special Supplemental Nutrition Program for Women, Infants,
and Children (WIC) ($3,688)
24. School Breakfast Program (free and reduced price segments)
($1,088)
25. Child and Adult Care Food Program ($945)
26. Nutrition Program for the Elderly ($691)
27. Summer Food Service Program for Children ($258)
28. Commodity Supplemental Food Program (CSFP) ($87)
29. The Emergency Food Assistance Program (TEFAP) ($80)
30. Food Distribution Program on Indian Reservations ($70)
31. Special Milk Program (free segment) ($1)
Housing Aid
32. Section 8 low-income housing assistance ($15,015)
33. Low-rent public housing ($4,710)
34. Home Investment Partnerships Program (HOME) ($3,136)
35. Rural housing loans (section 502) ($2,716)
36. Section 236 interest reduction payments ($651)
37. Rural rental assistance payments (section 521) ($538)
38. Rural rental housing loans (section 515) ($151)
39. Home Ownership and Opportunity for People Everywhere (HOPE)
Programs ($79)
40. Rural housing repair loans and grants (section 504) ($61)
41. Section 101 rent supplements ($59)
42. Section 235 home ownership assistance for low-income
families ($31)
43. Farm labor housing loans (section 514) and grants (section
516) ($25)
44. Rural housing self-help technical assistance grants
(section 523) and rural housing site loans (sections
523 and 524) ($14)
45. Indian housing improvement grants ($13)
46. Rural housing preservation grants (section 533) ($11)
Education Aid \2\
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\2\ Dropped from the fiscal year 1996 list of income-tested benefit
programs were two education programs that ended in fiscal year 1995:
Follow Through and Child Development Associate Scholarship Program.
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47. Federal Pell grants ($6,144)
48. Head Start ($4,461)
49. Subsidized Federal Stafford loans ($3,339)
50. Federal Work-Study Program ($617)
51. Supplemental educational opportunity grants ($583)
52. Federal Trio Programs ($463)
53. Chapter 1 Migrant Education Program ($305)
54. Perkins loans ($158)
55. State Student Incentive Grant (SSIG) Program ($127)
56. Fellowships for graduate and professional study ($33)
57. Health professions student loans and scholarships ($32)
58. Migrant High School Equivalency Program (HEP) ($8)
59. Ellender fellowships ($3)
60. College Assistance Migrant Program (CAMP) ($2)
Other Services
61. Social Services Block Grant (title XX) ($6,095)
62. Child care for recipients (and ex-recipients) of AFDC
($1,737)
63. Child Care and Development Block Grant ($935)
64. At-risk child care (to avert eligibility for AFDC) ($487)
65. Community Services Block Grant ($436)
66. Legal services ($278)
67. Emergency Food and Shelter Program ($100)
68. Social services for refugees and Cuban/Haitian entrants
($69)
Jobs and Training Aid
69. Job Opportunities and Basic Skills Training Program (JOBS)
($1,280)
70. Job Corps ($1,094)
71. Adult training ($850)
72. Summer Youth Employment and Training Program ($625)
73. Senior Community Service Employment Program ($446)
74. Youth training ($127)
75. Foster grandparents ($94)
76. Senior companions ($51)
Energy Aid
77. Low-Income Home Energy Assistance Program (LIHEAP) ($1,064)
78. Weatherization assistance ($175)
REFERENCES
Bixby, A.K. (1996). Public Social Welfare Expenditures, Fiscal
Year 1993. Social Security Bulletin, 59(3), pp. 67-75
Burke, V. (1998). Cash and noncash benefits for persons with
limited income: Eligibility rules, recipient and
expenditure data, fiscal years 1994-96. (98-226 EPW).
Washington, DC: Congressional Research Service.
Rector, R., & Lauber, W.F. (1995). America's failed $5.4
trillion war on poverty. Washington, DC: Heritage
Foundation.
Kerns, W.L. (1997). Private social welfare expenditures, 1972-
94. Social Security Bulletin, 60(1) pp. 54-60.
Tin, J. (1996, July). Who gets assistance? Current Population
Reports (Household Economic Studies, P70-58).
Washington, DC: U.S. Bureau of the Census.