Advocates For Poor Impatient With State Welfare Budgeting
By Clare Nolan, Senior Writer
As states have piled up a $7 billion surplus in welfare money over the past three years, the Clinton administration and many advocacy groups in Washington have taken a wait-and-see approach, choosing to encourage states to invest more in programs for the poor, rather than criticizing them for not doing enough.
But, this year, angered by decisions in six states to divert funds intended for poor families to other programs, some of the nation's more liberal activists have decided to turn up the heat. The states they say are wasting a "once-in-a-lifetime" opportunity to make significant inroads against poverty.
"It's a disgrace that these funds are sitting idle or being ill-spent at a time when millions of families aren't sharing in our nation's prosperity," said Peter Edelman of the Center on Community Change in Washington.
While the nation's welfare rolls have dropped 51 percent since 1993, the poverty rate has not fallen nearly as fast. Child poverty remains stubbornly high, at 18.9 percent nationwide.
Time is running short, advocates say. Next year, Congress will refocus on welfare as it prepares to renew the program in 2002.
Under Temporary Assistance for Needy Families (TANF), one of the nation's largest anti-poverty programs, Congress awards each state a fixed amount in an annual "block grant." States can use the money for a variety of services for poor families, from child care to wage subsidies. They are also allowed to carry funds over from one year to the next.
"If the money isn't spent and spent well, in the next budget cycle it's going to be hard to get the block grant funded at the same level," said Deepak Bhargava of the Center for Community Change.
The Center for Community Change has helped to organize a new coalition of grassroots activists from 35 states to push for increased spending on child care, tax credits for the working poor and higher cash assistance payments. Last month, the coalition, called the National Campaign for Jobs and Income, issued one of the most scathing critiques to date of state spending since welfare reform.
The report rebukes the 45 states that have left federal welfare funds in the federal treasury. As of October 1999, only five states had spent their entire allocation of TANF funds: Illinois, Kansas, Kentucky, Maine and Rhode Island.
The report condemns six states in particular, Connecticut, Kansas, Minnesota, New York, Texas and Wisconsin, for cutting state spending on key programs and replacing the difference with federal dollars.
In 1999, Minnesota decided to use $100 million from TANF over the next two years to supplant state spending on child care and other social services. At the same time, the state cut personal income taxes by $785 million.
"Money originally intended for poor kids gets transferred into tax cuts for upper-income folks. In my mind, that's not just bad policy, it's immoral. Our first job is to make sure the governor and the legislature do not do that again." said Jason Walsh of the Affirmative Options Coalition in St. Paul.
Last month, Minnesota Gov. Jesse Ventura vowed not to cut state welfare spending in the 2001-2003 budget and proposed using the states' federal grant for large, new investments in low-income housing and other programs for the poor.
New York holds one of the nation's largest welfare surpluses, more than $1.1 billion, an amount equivalent to 46 percent of its annual grant.
According to an analysis by the Fiscal Policy Institute in Albany, New York has cut its own spending on two key programs for the poor and is using about 16 percent of its annual block grant to make up the difference.
In 1999, it cut state contributions to child welfare and tax credits for the working poor by $403 million. As in Minnesota, by replacing the funds with federal dollars, lawmakers were free to spend the windfall on other things -- including tax cuts. In 1999, New York cut personal and corporate taxes by $100 million.
The Fiscal Policy Institute says New York plans to use another $591 in federal anti-poverty funds next year to supplant state dollars.
"This is a once-in-a-lifetime opportunity and the state can be making much better use of the resource," said Frank Mauro, executive director of the Fiscal Policy Institute. "It's not hard to say they are not making the best use of it that they could."
Mauro also found that New York has divvied up its spending among 78 different programs. It is spending $230 million this year on child care, a service many advocates deem absolutely essential for parents making the transition from welfare to work. But, it has also appropriated millions more -- in chunks as small as $600,000 -- to dozens of other programs.
"It would be better to put a lot of money into the real heart-and-soul programs that you know need money," Mauro said. Mauro would like to see the state fund a jobs program for parents on welfare who have no paid work experience.
Last year, Kansas used federal money intended for poor families to prop up its child welfare system. This year, it plans to spend about half of its TANF grant, about $53 million, on child welfare as well.
Kansas has privatized its services for abused and neglected children and the new setup has cost much more than initially expected. Without its surplus of federal TANF funds, Kansas would have had to use its own money to make up the shortfall.
The National Campaign for Jobs and Income also found that Connecticut has cut its own spending on social services by $24 million and tapped TANF funds to make up the difference. Texas used $173 million to supplant $162 million in state spending.
Wisconsin, like New York, shifted the costs of its state tax credits to the federal government. Overall Wisconsin decreased its own funding for anti-poverty programs by more than $100 million in 1999 -- money it then used to fund a property tax cut.
State officials point out there is nothing illegal about what they are doing. The steep drop in cash assistance caseloads was an unexpected bonanza. It takes time, they say, to direct the money into new services.
They also argue the success of their programs has enabled them to free state funds for other things.
Jack Madden, spokesman for New York's Office of Temporary and Disability Assistance calls the criticisms "typical, out-of-date, liberal welfare thinking that if you are not shoveling taxpayer-funded welfare dollars out the door than you are doing a disservice to someone.
"Welfare reform is working in New York State. It's a work in progress. It's not a done job. But the fact is people are moving toward self-sufficiency and they are getting the transitional services they need," he said.
Jack Tweedie who follows welfare reform in the 50 states at the National Conference of State Legislatures says the issue is not so much the diversion of state welfare dollars, but the fact that many states have federal funds they are not spending.
"I think states are finally, after a long time, picking up the pace," he said. "They are actually cutting into the level of reserves."
According to figures compiled by the Center on Budget and Policy Priorities in Washington, 26 states spent all of their federal welfare funds in 1999 and began to tap into the surplus accumulated since 1997, even as the number of families relying on TANF continued to decline.
Another eight states, however, continued to amass large surpluses in 1999. New York's surplus grew from $700 million in 1998 to $1.1 billion. Ohio saved an additional $189 million. Washington amassed $56 million more; Michigan, $57 million; Mississippi $58 million; Georgia, $67 million; and West Virginia, $72 million.
Wisconsin's 1999 budget deal will diminish its surplus of $321 million.
In Wisconsin, Tweedie points out, state Senator Gwendolynne Moore, a Democrat from Milwaukee and a long-time advocate for the poor, agreed to the compromise which allowed the state to save money for tax cuts while also increasing its spending on welfare families.
Wisconsin, Tweedie says, is now spending 390 percent more per family than it did just a few years ago.
Advocates, Tweedie said, "need to work at state levels and try to influence spending within states. That's where the decisions are being made."