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

07/01/2004

30 In 2004, after the case studies were completed, Mississippi enacted program changes that may eliminate eligibility for 65,000 Medicaid recipients, mostly elderly and disabled people. Although most of these recipients were eligible for Medicare benefits, some estimates indicated that about 5,000 were not. However, the strong political reaction to the cuts led the state House and its leadership to seek to rescind the changes soon after passage. As of mid-June 2004, the final resolution was still unclear.

31 Of these six states, only South Carolina offered more than a negligible SSI state supplementation benefit (U.S. House Ways and Means Committee 2000, pp. 266-267).

32 "Earned income disregard" refers to the amount of earnings excluded when determining a family's eligibility for cash benefits or the size of the benefit. Under AFDC, states disregarded $120 plus one-third of the remaining earnings for the first four months on a job when calculating benefits. For the next 8 months, the disregard was reduced to $120, and thereafter (after 12 months) to $90. Most states increased their earned income disregards under TANF; most (i.e., 30 out of 51) also eliminated the time-dependency of earnings disregards in calculating benefits. Of the six states in our sample, earnings disregards in calculating benefits are reduced after a person is on assistance for several months in Louisiana, Mississippi, New Mexico, and South Carolina (Administration for Children and Families 2003). "Child support pass-through policies" refers to the amount of child support money a state passes along to a family on welfare. Although the family receives TANF benefits, the state might retain current support and arrearages it collects up to the cumulative amount of TANF benefits that have been paid to the family. Under AFDC, states had to pay, or pass through, the first $50 of collections to the family.

33 Time limits either restrict the number of months a family may receive assistance before work requirements begin, or they limit the number of months a family may receive assistance regardless of their employment status. Arizona, Mississippi, South Carolina, and West Virginia required family heads to work immediately, and New Mexico required them to work after 3 months on assistance-all lower than the 24 months required under federal law. Arizona, Louisiana, and South Carolina also had special "intermittent" time limits that precluded families' receiving assistance for more than 24 months during some overall time period (i.e., either 60 or 120 months). "Sanctions" refer to the loss of benefits if the family head or heads fail to comply with TANF work requirements. Full family sanctions (i.e., the complete elimination of the benefit) are imposed at the first violation in Mississippi and South Carolina for 1 to 2 months, and partial sanctions lasting at least 3 months are imposed for the first violation in Louisiana and West Virginia. The more typical initial sanctions, sometimes full though usually partial, are imposed until compliance (i.e., there is no minimum period) (Administration for Children and Families 2003).

34 TANF Maintenance of Effort (TANF-MOE) requirements were, in general, not particularly constraining for these six low fiscal capacity states. TANF-MOE provisions impose financial penalties on states for failing to spend state funds on low-income children and families at a level equal to at least 80 percent of their FY 1994 level (or 75 percent if they meet the minimum work participation rates). However, in low fiscal capacity states, the required TANF-MOE spending levels tend to be low. For example, in the six poor states, the minimal (75 percent) MOE requirements constituted, on average, only 30.5 percent of the states' federal TANF grants (FY 2001). For all states, the same average was 61.4 percent. In wealthy states, such as New York and Massachusetts, the MOE spending requirements were equal to their TANF grants (i.e., these states had to spend state funds at least 100 percent of their TANF grant to satisfy the MOE requirement). Since TANF grants were also typically smaller on a per capita basis in the low fiscal capacity states, TANF-MOE requirements were generally easier to meet in poor states than in wealthy states.

35 As noted in the literature review in the first section of the report, this literature includes studies by Brown (1995), Plotnick and Winters (1985; 1990), Gais and Weaver (2002), and Kousser (2002).

36 Although social welfare spending, based on the Census data, increased more rapidly than non-social welfare spending in the late 1980s and early 1990s in the six poor states analyzed here, little change occurred in the ratio during the middle and late 1990s. The average percentage of total state and local expenditures going to social welfare, not including the public hospital category, was about 18 percent from 1977 to 1989. It then rose to 26 percent by 1993, after which it drifted slightly downward to just under 25 percent in 2000. The highest percentages were in the southern and border states, which ranged between 27 percent (West Virginia) to 31 percent (Mississippi) in 2000. Arizona (14 percent) and New Mexico (21 percent) invested much smaller parts of their total budgets to social welfare spending.

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