Determinants of AFDC Caseload Growth. c. Supplemental Security Income


Parents and children with sufficiently severe disabilities in AFDC families are eligible for SSI. While individuals cannot receive benefits from both programs, families can -- family members who are receiving SSI benefits are not counted in the AFDC family unit. Although SSI benefits are greater than AFDC benefits, AFDC family members who qualify for SSI may not apply for benefits, for a variety of reasons: the SSI application process is difficult and the outcome is uncertain; parents may be unaware that they or their children qualify; or parents may be misinformed about the effect of obtaining SSI benefits on AFDC eligibility and benefits for other family members.

Increases in SSI benefits would presumably increase the number of individuals in AFDC families that obtain SSI benefits, and therefore reduce average monthly payments. In some cases, the whole family may switch, thereby reducing the AFDC caseload. Changes in the determination of disability for SSI could also have an impact on AFDC payments and participation.

The federal SSI payment schedule has not changed in real terms since the inception of the program in 1974. Many states supplement the federal payment, however, and over the period under examination the real value of the sum of the supplement and the federal benefit have changed substantially in some states. In our work on SSA's disability programs, we found that increases in the real value of the maximum SSI payment (federal plus state supplement) relative to average monthly earnings were strongly associated with increases in SSI participation.

Here, we use the log of the maximum payment variable as an explanatory variable. Other things constant, we expect to find a negative, but relatively weak, association between this variable and AFDC caseloads, and a stronger negative relationship between the same variable and recipients, child recipients, and average monthly benefits.

Changes in SSA's criteria for determining whether an individual has a sufficiently severe disability to qualify for SSA may also have an impact on AFDC participation and benefits. In 1990 and 1991 the eligibility criteria for children were expanded substantially as a result of the Supreme Court decision in the case of Sullivan v. Zebley, and subsequent changes to the criteria for determining the severity of mental illness among children. There were large increases in the number of child SSI recipients in all states, and there is anecdotal evidence that many of the new child SSI recipients came from AFDC families. Thus, during this period especially we would expect an increase in child SSI recipients to be associated with a decline in child AFDC recipients, total recipients, average monthly benefits, and perhaps even caseloads.

We use two alternative variables to try to capture any impact of SSI expansions for children on AFDC participation and expenditures. The first is the number of child SSI recipients. We obtained data on SSI child recipients for December of each year from 1977 through 1994 from the Social Security Bulletin, Annual Statistical Supplement. The second variable is the number "Zebley children," children who received an SSI award as direct consequence of the Zebley. Charles Scott of the Social Security Administration provided us with data on SSI Zebley child recipients for June and December of each year from 1991 through 1994. We interpolated both biannual series to construct quarterly series.(16) In the final series, the variables are equal to the natural logarithm of the average monthly number of SSI child recipients in the given quarter and the natural logarithm of the average monthly number of SSI Zebley child recipients in the given quarter. We experimented with several specifications of these variables including lagged specifications and moving averages of the last four quarters.