Spending on Social Welfare Programs in Rich and Poor States. Final Report.. Appendix B: Field Visit Documentation

The study "Spending on Social Welfare Programs in Rich and Poor States" examined the policies, institutions, and processes of six states with low fiscal capacity and high social needs to better understand how these states make decisions in funding social welfare programs, and to identify factors that influence their social welfare spending. The six states selected for analysis were Arizona, Louisiana, Mississippi, New Mexico, South Carolina, and West Virginia. This Appendix includes a brief discussion of the fiscal capacity and need measures for the six states examined and the methodology used for this study component. Also included are narratives that briefly describe significant features of each state's budget process, its reaction to federal welfare reform, and trends in non-Temporary Assistance for Need Families (TANF) federal programs that influence state social welfare spending decisions.

Per capita personal income data suggest that the six states selected for analysis have less potential to raise revenue than most states. As noted in Exhibit Appendix B-1, Mississippi and West Virginia rank the lowest in ability to raise revenue in 1995 and 2001, 50 and 49 respectively, using per capita personal income as the measure of fiscal capacity. New Mexico, Louisiana, and South Carolina rank in the lowest quartile of states, and Arizona falls in one of the bottom two quartiles depending on the year analyzed.

The six states also rank low in fiscal capacity using other measures such as representative tax system and total taxable resources. Exceptions are Louisiana and New Mexico, which rank somewhat higher using total taxable resources. This can probably be explained, for the most part, by income from oil and natural gas production that may not be captured by other measures.

Poverty and unemployment data suggest that the six study states have high social needs when compared to the rest of nation. As noted in Exhibit Appendix B-2, all of the selected states have poverty rates above the national rate. New Mexico, Louisiana, Mississippi, Arizona, and West Virginia had poverty rates in 1995 that were among the highest in the nation. Although poverty rates in general improved from 1995 to 2001, Arizona's improvement was somewhat greater than other states, moving from the fourth highest rate in the nation in 1995 to the twelfth highest in 2001. Four of the states selected for further analysis, Louisiana, Mississippi, New Mexico, and West Virginia, had unemployment rates higher than the national rate from 1995 to 2003 (see Exhibit Appendix B-3). Although unemployment declined in general from 1995 to about 2000, West Virginia's decline was greater than other study states, falling from 7.9 percent in 1995 to 4.8 percent in 2001. Arizona's unemployment rate remained close to the nation's average rate from 1995 to 2001. South Carolina's rate was also about average until about 2000 when it increased more rapidly.

Exhibit Appendix B-3:
State Social Need - Unemployment Rates

Source: Calendar year unemployment rates calculated by Rockefeller Institute staff using U.S. Department of Commerce, Bureau of Labor Statistics seasonally adjusted data.

As noted in Section II.C., Arizona, Louisiana, Mississippi, New Mexico, South Carolina, and West Virginia were selected for further analysis using a three-step process that examined measures of state fiscal capacity and need for social welfare services. Staff from the Rockefeller Institute of Government and The Lewin Group spent approximately three days in each state interviewing executive budget and program officials; legislators and staff; and high-level agency staff responsible for the state's TANF, Medicaid, child welfare, welfare employment, and child care programs. The site visits took place from August to November 2003. Project researchers visited West Virginia and Arizona in August, South Carolina and New Mexico in September, and Louisiana and Mississippi in November.

Interview questions covered state budget formulation and implementation; social welfare policies and spending; state response to changes in federal programs; program constituencies; and state support of social welfare programs during the recent economic boom and downturn. Project researchers also reviewed public documents including state social welfare legislation and regulations; federally required state plans, performance reports and expenditure data for large social programs; federal and state agency reports; state budget bills and summaries; newspaper articles; and, where available, previous work completed by Rockefeller Institute and other researchers.

The six states selected for further analysis have fiscal years that begin July 1. All have annual budget cycles except for Arizona, which has a biennial cycle. Each state had enacted its state fiscal year (SFY) 2003-04 budget prior to the project's site visit and state officials were in the process of developing their SFY 2004-05 budget proposals when visits were completed. The governors of three study states, Arizona, New Mexico, and South Carolina, were in their first year of office when interviews were completed. Two study states, Louisiana and Mississippi, have sworn in new governors since the site visits were completed. The narratives for Louisiana and Mississippi that follow include information on the goals and priorities of the new governors where possible.

For each state, we use National Association of State Budget Officers (NASBO) 2002 data to provide information on total state expenditures, TANF expenditures, and Medicaid expenditures. There are interesting observations when comparing spending patterns for the six states selected for further analysis to the nation. For example, Arizona, Louisiana, Mississippi, and South Carolina spent a lower proportion of their total expenditures on TANF compared to the nation, whereas New Mexico and West Virginia spent a higher proportion of their total expenditures on TANF. Arizona, New Mexico, and West Virginia spent a lower proportion of their total expenditures on Medicaid compared to the nation, whereas Louisiana, Mississippi, and South Carolina spent a higher proportion of their total expenditures on Medicaid.

¹ Information in this section is from Nelson A. Rockefeller Institute of Government field reports written by John Hall et. al. (1997 and 2002) , public documents, and interviews with state officials.

² The eleven agencies are: Department of Corrections, Department of Education, Department of Economic Development, Department of Health and Hospitals, Department of Social Services, Governor's Office of the Workforce Commission, Louisiana Community and Technical College System, Governor's Office of Women's Services, Supreme Court, Governor's Office of Community Programs, and Louisiana State University. The TANF initiatives are targeted towards programs and services involving literacy, employment and family stability.

³ Information in this section is from a Nelson A. Rockefeller Institute of Government field report written by Chris Plein (2002), public documents, and interviews with state officials.