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

07/01/2004

Conducted over 21 months, the study involved two major activities:

Analysis of expenditures across 50 states. Our analysis examined variation in spending patterns across the 50 states and the District of Columbia. Our team analyzed 24 years of data on state and local social welfare spending patterns for four categories of social welfare spending and a residual category of all other state and local spending. These categories encompassed cash assistance; Medicaid; non-health social services, such as child care, child welfare, energy assistance, and services to the aged and disabled; public hospitals; and all other non-social welfare spending.

We approached the analysis of spending in three ways: (1) employing descriptive data to analyze trends and patterns, (2) developing and estimating econometric models of state spending to estimate how differences in states' fiscal capacity affect spending, and (3) using the results from the descriptive and econometric analysis to better understand the spending variations we observed between rich and poor states.

Case studies. We collected and analyzed qualitative and quantitative data from six states- Arizona, Louisiana, Mississippi, New Mexico, South Carolina, and West Virginia-selected for their high needs relative to their fiscal capacities. Findings from the econometric analysis were used to compare states on their propensities to spend on certain types of social welfare. Comparisons were drawn between rich states (i.e., states with high fiscal capacity) and poor states (i.e., states with low fiscal capacity) and among the six states selected for case studies.

To obtain in-depth information about how state fiscal capacity affects state spending on social programs, we conducted site visits to case study states. Four questions guided our interviews:

  • How do states with the greatest needs and the least resources make financial decisions regarding their social welfare programs?
  • How do these states respond to short-term financial challenges, such as the recent state fiscal crises?
  • Why do some poor states spend more on social welfare programs than other poor states? And why did some spend more on certain programs and less on others?

Our analyses cover spending from 1977 through 2003, though the econometric study ends in 2000.

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