2004 National Conference on Community Volunteering and National Service
Presented by
Thomas Gais
Roundtable on Religion & Social Welfare Policy
Rockefeller Institute of Government, SUNY
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