Spending on Social Welfare Programs in Rich and Poor States. Final Report.. D. Cash Assistance

07/01/2004

We found a different type of decision-making in TANF cash assistance programs. Medicaid was a high visibility program that sometimes commanded the attention of governors and often drew the attention of legislators and organized lobbyists, but TANF cash assistance programs drew attention only sporadically from legislators and from few others outside the state bureaucracies. Although many changes were made in Medicaid rates, service coverage, eligibility levels, and other elements in annual state budget processes, policies governing cash assistance changed much less often.

As already noted, most of these states had low maximum benefit levels, especially in the southern states. Other rules governing cash assistance also tended to be stricter among these states. Time limits were more likely to be shorter than required by federal law. Sanctions were usually stricter, applying to the entire household. Earnings disregards were in all but one case time dependent (i.e., they became less generous or disappeared altogether after 4 to 12 months of working while on assistance.) That provision is atypical among the non-poor states, most of which had earnings disregards that remained the same indefinitely.

These benefit levels and other rules were changed infrequently. Until 2000, Mississippi had not changed its nominal benefits for more than 2 decades. Nor had most of these states revisited many of their newer, welfare-reform rules-such as sanction policies or earnings disregards-that they had established when they enacted their AFDC waivers or TANF programs in the middle 1990s. West Virginia was, as noted, one exception. It did reduce its earnings disregard in the face of budget pressures but took that action only after a special advisory board was established to recommend changes. In the normal course of budget politics, these rules were not reconsidered. In fact, there was considerable reluctance to revisit them.

The rules, benefit levels, and eligibility standards that applied to cash assistance were usually established by legislation, and in these states, some deference was shown to the legislature on such matters. One state, where the agency administering TANF benefits believed it had the authority to change the maximum benefits, refused to do so on its own even though agency officials believed an increase was overdue. State decision-making about cash assistance was thus dominated by the legislative process, and changes occurred occasionally rather than regularly as a part of the budget process.

The lack of change in cash assistance policies in some of the case study states appeared to reflect a reluctance to engage in a policy discussion that was often ideologically and racially divisive. The intertwined issue of race and welfare was brought up during a number of the site visits, although usually indirectly. For example, officials spoke of the poor reputation of the state departments of social services (DSS)-"welfare agencies"-in the state legislatures, and how some of this poor reputation was attributable to negative views of their clients. In some instances, the political problems faced by cash assistance programs appeared to be reinforced by restrictive policies, which limited the number of participants in the program to the neediest families in the state. According to a DSS report from a state with low maximum benefits, only 2 percent of families in the state received cash assistance, and 86 percent of these recipients were African American.

As noted in our literature review, several studies of social welfare spending found that welfare spending was influenced by the racial composition of the state population or the state welfare caseload.35 Consistent with this literature, among the six states studied, the lowest levels of spending on cash assistance, the lowest benefit levels, and the strictest regulations were found among three states with the highest proportions of assistance caseloads composed of African Americans. This relationship held more generally with poor states, not just those in our sample. As Exhibit IV-13 demonstrates, the relationship between the proportion of African Americans in a state and the estimated state effects for cash assistance was negative for states in the lowest quartile for fiscal capacity. The proportion of African-Americans in a state may be a proxy for other demographic and economic variables, and it is interesting to note that his relationship failed to appear among wealthier states (those in the first three quartiles of fiscal capacity). There also was little relationship between the proportion of African Americans in a state and estimated state effects for either Medicaid or non-health social services. This supports our belief that there are distinct decision-making modes for each of the major functional areas in social services - cash assistance, Medicaid, and non-health social services.

Exhibit IV-4.
Relationship Between State Effects for Cash Assistance and Average Percentage of African American Population, Lowest Quartile for State Fiscal Capacity

Relationship Between State Effects for Cash Assistance and Average Percentage of African American Population, Lowest Quartile for State Fiscal Capacity

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