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

07/01/2004

How does a state’s fiscal capacity affect its spending on social welfare programs? Do “poor states” (i.e., states with low fiscal capacity as measured by per capita personal income) differ from richer states in how much they spend on social welfare programs or how they allocate expenditures across cash assistance, Medicaid, and social services for low-income populations? And how do economic downturns and recent changes in federal policy affect state social welfare spending?

To address these questions, the Office of the Assistant Secretary for Planning and Evaluation (ASPE) of the U.S. Department of Health and Human Services (HHS) sponsored a study of the relationship between state fiscal capacity and social welfare spending in the U.S. from the late 1970s through the early 2000s. The study was conducted by the Lewin Group and the Nelson A. Rockefeller Institute of Government of the State University of New York. Our research included econometric analyses of more than two decades of state social welfare spending and case studies of six states with low-fiscal capacities and high needs for social welfare services. This brief presents key findings from the research. More information on the econometric models and the poor-state analyses may be found in the project’s final report.

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