To answer the research questions identified in the Introduction, first we analyzed spending trends and patterns over 24 years for the 50 states plus the District of Columbia by using sample means from Census data and an econometric model estimated from the pooled time series and cross-section data. We supplemented this analysis with site visits an
2 The Food Stamp Program requires a state match for administrative costs.
Spending on Social Welfare Programs in Rich and Poor States. Final Report.. c. Political and Institutional Determinants
State political cultures and institutions might also affect state spending on social welfare programs. But prior research often showed unstable results, and it failed to cover the wide range of program areas dealt with in this study. In political science, the investigation into the effects of political and institutional factors on redistributive p
It is hypothesized that the higher the poverty and other indicators of need, the more the state will spend on programs benefiting the poor. Mogull (1989) suggests that poverty affects expenditures in two ways. First, high levels of poverty increase the pool of eligible persons. Second, increased visibility of concentrations of poor people can incr
Overall, research has found a positive association between fiscal capacity and social welfare spending. One study (Mogull, 1978) found that primarily fiscal resources, measured by per capita personal income and federal aid, determined state and local expenditures on antipoverty programs. Other studies (Jennings, 1980; Orr, 1976; Plotnick & Win
Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 3. Determinants of Social Welfare Spending
We hypothesized that three factors drive state spending on social welfare programs: fiscal capacity, need, and political and institutional factors. Prior literature has attempted to explain the connection between these factors and spending.
Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 2. Measuring Fiscal Capacity
The term fiscal capacity can be measured several ways, although this term is generally used to represent a states potential to raise revenue and not the actual fiscal choices made. Common ways for measuring fiscal capacity include the following:
Spending on Social Welfare Programs in Rich and Poor States. Final Report.. 1. Trends in Spending on Social Welfare Programs
Researchers have tracked changes in spending over time. According to Census data, total real general expenditures on social welfare increased from about $2,000 to about $2,600 per capita from 1988 to 1997, a 30 percent increase. Almost half of the increase in state spending resulted from increased spending for social welfare. Merriman (2000a) foun
Spending on Social Welfare Programs in Rich and Poor States. Final Report.. C. Review of Related Literature
The following literature review touches on the highlights of prior literature on trends in social welfare spending, issues in measurement of state fiscal capacity, and determinants of state and local spending on social welfare, including state fiscal capacity, need for services, and political and institutional factors.
In an effort to understand the relationship between fiscal capacity and state spending on social welfare programs, this study addresses several research questions:
The fact that states spend differing amounts per capita on social welfare is well known; the extent to which these differences relate to differences in state fiscal capacity is less understood. The federal government has long played an important role in offsetting state fiscal disparities. However, significant changes have occurred in federal gran
Social welfare programs strive to improve the well-being of needy and vulnerable populations. Government spending on social welfare programs, although not a guarantee that programs will meet this goal, nonetheless constitutes important tangible evidence of state policies and commitment to social welfare programs. Certainly, a low level of state so
1 “State effects” are separate intercepts estimated in the regression models for each of the 50 states (plus the District of Columbia). They may be viewed as average differences in state spending over the entire period (1977-2000), after controlling for the linear effects of the included variables, such as fiscal capacity and unemployment. S
This study sought to understand how state fiscal capacity affected spending on social welfare programs. It found that low fiscal capacity states spent less on social welfare programs than did high fiscal capacity states and that these differences were greater for cash assistance and non-health social services than for health-related programs.
Study findings emerged from several methods and data sources, including analyses of spending trends, econometric models of state spending on different types of social welfare functions, and the case studies of the six poor states (Arizona, Louisiana, Mississippi, New Mexico, South Carolina, and West Virginia). Five of the six case study states wer
Spending on Social Welfare Programs in Rich and Poor States. Final Report.. What Is Social Welfare Spending? And What Is State Fiscal Capacity?
For the purposes of the study, we defined social welfare spending as programs that supported lower-income households, typically, though not exclusively, programs with means tests.
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 servic
1 Because we are interested in the effects of state fiscal capacity on social welfare spending, we consider only spending that goes through the budgets of state and local governments, not direct expenditures by the federal government. Thus, we do not analyze the federal Earned Income Tax Credit (EITC), the Food Stamp Program (FSP), or, with some
Several important findings emerged from the project: