Expenditures

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 3. Cyclical Models

To confirm that the effects estimated for the unemployment per capita variable were truly state labor market effects and to get a better sense of how spending changed in response to unemployment changes alone, we estimated simple linear relationships between spending per capita in each category and the state unemployment rate with and without per

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. f. Need Effects

When we repeated the regressions separately by quartile, poverty continued to exert consistently negative signs only for the richest states (Quartile 1) and generally had more positive signs for the other quartiles. However, the only statistically significant and positive effects of the poverty variable occurred for cash assistance in quartiles 2

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. e. Federal Grant Effects

When we estimated the regression separately for each quartile, the signs of the effects of federal grants reverse or the coefficients are estimated with less statistical significance for the poorest states (Quartile 4), indicating weak grant income effects for those states, as shown in Exhibit III-11.

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. d. Fiscal Capacity Effects

From Exhibit III-11, we can see that when the states are separated by quartiles based on average per capita personal income, differences across quartiles in the estimated effects emerge. For example, for cash assistance and non-health social services, the effect of personal income for the richer states (Quartiles 1 and 2) is statistically signific

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 2. Results by Quartile

Exhibit III-11 shows results for the same regression model estimated separately for each of the 4 quartiles defined by mean real per capita personal income. Below, we summarize the general findings from this analysis by quartile and spending category for the explanatory variables of greatest interest: (1) fiscal capacity, (2) federal grants, (3) n

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 1. Results for All States

Exhibit III-10 displays the regression results for the five regressions with dependent variables defined as respective categories of per capita state and local spending (CA - cash assistance, M - Medicaid, NSS - non-health social services, PH - public hospitals, and non-social welfare - NW) for all states. 21 Below the estimated coefficients, t-s

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. B. Overall Results of Econometric Analysis

Using conventional ordinary least squares, we estimated the 50-state econometric model on pooled time series and cross-section data on state and local spending for the 24 years from 1977 to 2000. We conducted standard tests for auto-correlation of residuals, which sometimes constitutes an issue for time series analysis. 19

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 2. Changes Over Time

Averages over time cannot show changes in the relationships between state fiscal capacity and spending on social welfare programs. Yet those relationships changed enormously between 1977 and 2000. To see these developments, we traced changes in average spending levels in each of these quartiles and for each category of social welfare spending.

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 1. State Fiscal Capacity and Average Spending on Social Welfare

When averaged over the entire period from 1977 to 2000, per capita spending on social welfare was positively correlated with state fiscal capacity, as shown in the chart at the top of Exhibit III-2. 17 A similar pattern exists for spending per poor person, shown at the bottom of Exhibit III-2. When public hospital payments were included, the weal

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. A. Historical and Cross-State Perspective: Trends and Patterns

The connections between state fiscal capacity and spending on social welfare have undergone vast changes in recent years. Between 1977 and 2000, major shifts occurred in how much was spent on social welfare programs, how states allocated funding across different social welfare functions, and how state fiscal capacity was related to these developme

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. Chapter III: Findings and Results

Organized into two subsections, section III, Findings and Results, lays out the report's findings. Subsection A provides an overview of trends and patterns in social welfare spending observed over the period from 1977 to 2000, based primarily on Census data. Subsection B presents the results from the 50-state econometric model.

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

7 The Census defines this category, which is primarily Medicaid spending, as "payments to medical vendors."

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. D. Integrated Analysis Between Econometric Model and Site Visit Data

We designed our field research in part to help interpret the estimated econometric models and extend the range of factors whose influences might be assessed. At the most general level, the analyses of the econometric data posed and sharpened the questions for the site visits and related analyses of the six states.

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 3. Selection of Poor States

Selected for site visits through a three-step process, the six states were Arizona, Louisiana, Mississippi, New Mexico, South Carolina, and West Virginia. First, we ranked all states by an index composed of state fiscal incapacity (i.e., per capita personal income, inversely scored) and social needs (i.e., federal poverty rates) and eliminated the

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 2. Approach

The site visits consisted of discussions with state officials in each of six states about state budget processes and choices involving major social programs, including TANF cash and non-cash assistance, child care subsidies, child welfare, Medicaid, SCHIP, SSBG, and others. We met with high-level agency administrators responsible for these program

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 1. Purpose

The study included site visits to six states for in-depth answers to questions about how state fiscal capacity affects state spending on social programs. We visited states with low fiscal capacity and high social needs to understand how such states coped with this seeming imbalance. Three questions were of particular interest:

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. C. Site Visits

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 2. Overview of Data Sources and How the Data Were Used

We considered several data sources on state spending for estimating the 50-state econometric model, including data from the U.S. Census Bureau (Census Bureau), the National Association of State Budget Officers (NASBO), the National Conference of State Legislatures (NCSL), and federal departments. No data source provides comprehensive, detailed mea

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. c. Cyclical Models

An important question is how state and local spending responds to changes in the level of overall economic activity such as booms and recessions and changes in state labor market conditions. To some extent, the unemployment variable in the need analysis incorporates the effects of unemployment on state and local spending. In addition, we developed

Spending on Social Welfare Programs in Rich and Poor States. Final Report.. b. Linear Expenditure Models

Following McGuire (1978) for the basic theoretical model, we assumed that the decision-maker is the combined state and local system. This approach allowed us to model state and local spending on both public and private goods in a consistent way. The budget constraint consists of state fiscal capacity augmented by federal grants. The state and loca

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