Determinants of AFDC Caseload Growth. b. General Assistance


In our previous work on SSA's disability programs, we identified 20 instances in which individual states significantly reduced their general assistance (GA) caseloads between 1980 and 1993 (Exhibit IV.E.1 in Lewin-VHI, 1995b). The termination of Michigan's GA program in 1991 resulted in the largest single reduction on a per capita basis, over 15 per thousand population, but five other reductions exceeded seven cases per thousand. Four of these six very large cuts occurred in 1991 or 1992. We also found one instance of a substantial increase in a state's program.

We have constructed a "GA reductions" variable to use in the AFDC model following the same methodology that we used in our disability program work. In each state, the GA change is zero in the first quarter of the sample period. When a GA cut or increase occurs in a state, we measure the size of the cut per capita as the difference between the average monthly GA caseload in the three months following the quarter in which the change occurred and in the three months preceding that quarter, divided by the state's population (Exhibit 4.1). The value of the GA reductions variable is set equal to the resulting number for the quarter in which the change occurred. We also experimented with lagged values of this variable.

Exhibit 4.1

General Assistance Caseload Reductions, 1980 - 1993

State Year.qtr GA Caseload Reductions* Cuts per Thousand**
Delaware 1985.1 1,159 2.98
District of Columbia 1981.2 790 1.88
  1992.1 1,330 3.40
Illinois 1992.3 45,421 6.39
Indiana 1987.1 26,535 7.93
Kansas 1987.2 1,852 1.27
Louisiana 1986.1 1,679 0.64
Maine 1992.3 4,070 5.34
Maryland 1992.4 1,307 0.42
1993.4 2,276 0.72
Massachusetts 1992.2 7,216 1.91
Michigan 1992.1 90,946 15.73
Minnesota 1984.3 -9,512 -3.78
1992.1 14,424 5.34
New Hampshire 1981.3 394 0.68
Ohio 1992.2 66,834 9.92
Oklahoma 1986.3 1,247 0.64
Pennsylvania 1983.3 49,774 6.88
Rhode Island 1993.4 4,050 6.59
Virginia 1992.2 2,947 0.71
West Virginia 1987.1 2,146 1.9

* GA caseload reductions are calculated as the reduction in the average monthly GA caseload from the three months before the quarter in which the change occurred to the average in the three months following that quarter. This difference was calculated only for those states which substantially changed their GA caseloads during a year and for which we were able to confirm a program change.

**Cuts per thousand are GA caseload reductions divided by the population (in thousands) age 18 to 64.

Source: Administration for Children and Families and Lewin-VHI calculations.

We consistently found strong evidence that GA reductions were associated with increases in SSI participation in our earlier analysis (Lewin-VHI, 1995b, 1995d). We expected weaker results for AFDC because GA programs generally serve adults who are not custodians of children. It is also possible that GA reductions are associated with reductions in AFDC caseloads and payments because states that are making programmatic changes to reduce GA spending may be making analogous changes to reduce AFDC spending. If the latter changes are not fully captured in the AFDC program variables, they may be captured by the GA change variable.

It must be recognized that the GA change variable is a crude measure of changes in GA programs, for several reasons. First many states do not have state-wide programs. Although major counties in such states often do have programs, their caseloads are not included in the state statistics used to construct the GA change variable. Second, this variable does not distinguish between the many different methods used to reduce caseloads (e.g., time limits versus "able-bodied" restrictions versus reductions in benefit levels). Presumably the size of any effect of a reduction on AFDC would depend on the nature of the reduction, as well as its size.