Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 1. Trends in Spending on Social Welfare Programs

07/01/2004

Researchers have tracked changes in spending over time. According to Census data, total real general expenditures on social welfare increased from about $2,000 to about $2,600 per capita from 1988 to 1997, a 30 percent increase. Almost half of the increase in state spending resulted from increased spending for social welfare. Merriman (2000a) found that this increase in social welfare spending was due primarily to growth in federal Medicaid expenditures.

Boyd et al. (2003) analyzed state spending on social service programs other than Medicaid between state fiscal years (FY) 1995 and 1999 in 16 states (Arizona, California, Colorado, Connecticut, Louisiana, Maryland, Michigan, Minnesota, New York, Ohio, Oregon, Rhode Island, Tennessee, Texas, Virginia, and Wisconsin) and the District of Columbia and found that spending on cash assistance declined sharply. In contrast, state spending on child care and work support services increased in all study states and the District of Columbia. State spending on child welfare also increased in 14 study states and the District of Columbia.

The reduction in state spending on cash assistance was generally consistent with the dramatic reductions in welfare caseloads. The caseload decline began in 1994, before welfare reform at the federal level was enacted in 1996. This decline accelerated after 1996, and, as of September 2003, caseloads were 54 percent lower than in 1996. These savings allowed states to undertake new programs designed to move people to work, improve child well-being, or accomplish other objectives of the welfare law.4 Boyd et al. also found that states with higher cash assistance benefits had greater cash assistance savings per person in poverty because they saved more per case that left the welfare roles. These high-benefit states generally had higher per capita income than the low-benefit states.

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