2004 National Conference on Community Volunteering and National Service

Presented by

Thomas Gais

Roundtable on Religion & Social Welfare Policy

Rockefeller Institute of Government, SUNY

gaist@rockinst.org

www.religionandsocialpolicy.org

State Fiscal Changes, Social Program Spending, and Faith

Based Organizations

2004 National Conference on Community Volunteering and National Service

Questions

What’s happened to funding streams for social programs used by faith-based organizations (FBOs)?

1. What have been the effects of state fiscal crises, long-run trends in social service spending, and federal budgets?

2. How have these effects varied across states?

3. What are the prospects for the future?

Conclusions

1. Funding streams differ in FBO access2. Fiscal problems differ between rich & poor states3. Long run trends in spending show greater growth in

spending for programs not accessible to many FBOs4. Long run trends also show a squeeze, especially in poor

states, on funding streams accessible to FBOs5. State budget crises continued, even accelerated these

trends6. Tighter state budgets hurt programs that did not serve

core constituencies and performance requirements—including many programs operated by FBOs

7. Recent federal funding decisions and proposals do not compensate for these problems and may exacerbate them

8. Greater flexibility for FBOs—but in places where there’s less $

Sources of information

• Administrative spending data for programs

• Census Bureau spending data• Field research studies on social

welfare spending (forthcoming ASPE report)

• Study of role of FBOs in Medicaid• Analyses of federal budgets &

initiatives

What funding streams do FBOs rely on? Estimates of FBO involvement• Higher levels of involvement:

– Temporary Assistance for Needy Families & State MOE programs

– National & Community Service Programs– Social Services Block Grant– Emergency Food and Shelter Program– Substance Abuse and Mental Health– Community Development Block Grant

• Lower levels of involvement:– Child Care Development Block Grant– Foster care and adoption– Child nutrition programs– Training and employment programs (e.g., WIA)

• Lowest levels of FBO involvement:– Medicaid– SCHIP (except outreach)

FBO Reliance on Medicaid

• Largest involvement through institutional providers–hospitals, nursing homes– Catholic Health System: full range of

institutional providers– Lutherans, Presbyterians: few hospitals,

sizeable long term care– Smaller involvement in mental health, home

care– Somewhat greater in Medicaid/CHIP outreach

• But most of these institutions are usually little different from secular institutions

Barriers to Medicaid participation

• High sunk costs:– Facility license required– Expensive, professional personnel

required: physicians, nurses, psychologists, social workers

• No front end support; reimbursement for services rendered

What was the state fiscal crisis? How did it affect different states? And is it over?

Fiscal crisis: very large drop in state revenues, beginning in 2002

State Tax Revenue Has Fallen Far More Sharply Relative to EconomyThan in 1980-82 and 1990-91 Recessions

1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

State Fiscal Year

Sources: U.S. Bureau of Economic Analy sis, U.S. Bureau of the Census, Significant Features of Fiscal Federalism - 1984 (ACIR), Fiscal Survey of the States (NGA), Rockef eller Institute of Gov ernment

-8

-6

-4

-2

0

2

4

6

% C

hange

Real GDP per capita, calendar y ear in which f iscal y ear began Real state tax rev enue per capita, adjusted f or legislation

-7.4

-2.0

-3.0-3.5

-1.8

-0.7

Per capita state tax revenues, adjusted for inflation, 1992-2004

90

95

100

105

110

115

120

125

130

1992

1993

1993

1994

1995

1996

1996

1997

1998

1999

1999

2000

2001

2002

2002

2003

States by fiscal capacity(Based on per capita personal income, mean 1977-2000)

State Tax Revenues:Average percentage change in state tax revenues, by state fiscal capacity, 2001-2003

5.47

2.44

1.09

0.020

1

2

3

4

5

6

Poorest Q2 Q3 Wealthiest

Poverty grew in poor states:State poverty rates, by state fiscal capacity,2000-2002

0

5

10

15

20

Poorest Q2 Q3 Wealthiest

20002002

Food Stamp recipients per thousand population,by state fiscal capacity, 2000-02

0

10

20

30

40

50

60

70

80

90

100

Poorest Q2 Q3 Wealthiest

2000

2002

How do these state fiscal crises interact with long-run trends in state spending on social programs?

To analyze long run spending trends:Spending categories, based on Census Bureau data• Medicaid: “vendor payments to medical providers”

in Census Bureau data; largely Medicaid

• Cash assistance: direct cash assistance to people, such as state SSI supplements and cash benefits under TANF/AFDC

• Non-health social services: includes many services, such as public homes for elderly, veterans; child care & other work supports; foster care, adoption, protective services; social services for physically disabled; case management; other administrative expenses; etc.

Medicaid:Mean spending per capita, by state fiscal capacity, 1977-2000 (adjusted with CPI Medical Index)

50

100

150

200

250

300

1977 1981 1985 1989 1993 1997

RichestQuartile 2Quartile 3Poorest

Cash assistance:Mean per capita spending by state fiscal capacity, 1977-2000 (adjusted with GDP Price Deflator)

20

40

60

80

100

120

140

160

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

RichestQuartile 2Quartile 3Poorest

Nonhealth social services:Mean spending per capita, by state fiscal capacity, 1977-2000 (adjusted with GDP price deflator)

50

70

90

110

130

150

170

190

210

230

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

RichestQuartile 2Quartile 3Poorest

Composition of social welfare budgets changed, 1980 to 2000

42 49 5262 65

74

30 22 2013 10

728 29 28 25 25 19

0%

20%

40%

60%

80%

100%

Rich1980

Poor1980

Rich1990

Poor1990

Rich2000

Poor2000

Pct

of

soci

al w

elfa

re s

pen

din

g

Non-health socialservices

Cash assistance

Medicaid

Did these long-run trends continue, accelerate, or what under state fiscal crises?

Medicaid Budget Changes, FY 2003 and 2004

• Small cuts widespread, but in most states, no large-scale rollbacks:– Provider rate cuts, not large– Some eligibility limitations– Reductions in enrollment outreach– Capacity reductions

• Spending continued to climb, driven by drug costs, enrollments, etc.

Per capita spending on Medicaid, by state fiscal capacity, 2000-2003

400

500

600

700

800

900

1000

1100

1200

1997 1998 1999 2000 2001 2002 2003

PoorestQuartile 2Quartile 3Richest

Specific effects of budget changes on FBOs

• Rate cuts limited–not large• Outreach–some FBO involvement

TANF basic assistance—cash benefits:Per capita spending by state fiscal capacity, 2000-2002

0

10

20

30

40

50

60

70

80

90

1998 1999 2000 2001 2002

PoorestQuartile 2Quartile 3Wealthiest

TANF services (nonassistance)Per capita spending, by state fiscal capacity, 1998-2002

0

10

20

30

40

50

60

70

80

1998 1999 2000 2001 2002

PoorestQuartile 2Quartile 3Wealthiest

General criteria used to make cuts in TANF and related services

• Less likely to cut core TANF constituencies—cash assistance recipients and recent leavers

• Less likely to cut logically necessary services to achieve performance requirements, e.g., child care for leavers

• More likely to cut programs involving FBOs: youth/teen services, after-school programs, parenting programs, fatherhood programs, pregnancy prevention

• Widespread cuts in administrative staff, resulting in higher caseloads; also cuts in offices, especially in rural areas

• Greater competition for block grant money from wider range of programs, e.g., child welfare, pre-K programs

Changes in federal funding for social service programs, 2000-2005, by estimated FBO involvementEstimated growth in spending

Higher involvement

Lower involvement

Greatest barriers

More than 30 percent increase

Natl & Comm Service

Child Care Dev SCHIP

Medicaid

10-30 percent increase

Substance Abuse

Emerg Food/Shelt

Child nutrition

Foster care/adopt

Training & employ

Less than 10 percent increase

TANF

CDBG

Soc Serv BG

Changes in Per Capita Federal Spending, Emergency Shelter and Homeless Assistance, By State Fiscal Capacity, 1998-2002

0

1

2

3

4

5

6

7

8

9

Poorest Q2 Q3 Wealthiest

1998

2000

2002

Changes in Per Capita Federal Spending, Social Services Block Grant, By State Fiscal Capacity, 1998-2002

0

2

4

6

8

10

12

Poorest Q2 Q3 Wealthiest

1998

2000

2002

Conclusions revisited

• Funding streams most accessible to FBOs are among the ones most vulnerable

• Medicaid survives in most states without truly large cuts in most states, but faith-integrated programs have less access to such funds

• TANF services are vulnerable, especially in poor states, and especially for services that don’t have clear and immediate connections to basic performance requirements

• Yet many of the faith initiatives serve people not in the core TANF clientele and are intended to produce longer-run effects

Conclusions, continued

• Other programs that would help support FBO programs are either not growing or are growing little in low fiscal capacity states– Declining growth rate of spending on nonhealth

social services

• Federal funding changes are unlikely to compensate for these financial challenges—and they may exacerbate them

• One opportunity for FBOs: helping people deal with complex human service systems

Prospects for the Future

• Severity of budget problems has been helped by surpluses and one-shot revenue sources—but those are nearly gone

• Recent revenue turnaround is helping, but tight budgets will continue—Medicaid & education growth

• Basic institutional problem:– Medicaid has strong constituencies yet little access– Cash assistance offers few savings in future– Nonhealth services have become tighter and are

often allocated on basis of criteria on which FBOs fare poorly

• Long-run state revenue problems