Lecture 10: Means-tested cash programs

Question 1

Political and social context

Answer 1

It is most useful to consider programs within a social context
- One might consider: How do beliefs about who a program supports influence support for or against it? How might historical events, changing norms or social change affect these opinions?

Question 2

Means-tested cash assistance

Answer 2

Temporary Assistance for Needy Families (TANF)

Supplemental Security Income (SSI)

General Assistance (GA)

Earned Income Tax Credit (EITC)

Question 3

Means-tested, near cash assistance

Answer 3

Supplemental Nutrition Program (SNAP)

Question 4

How does TANF differ from these other means-tested benefits?

Answer 4

Who is eligible

Opinions about “deserving” vs “undeserving poor”, evolution over time

Changes in norms around women/work/childcare

Changes in the composition of poor women/children over time on the program

Political support for the program has been more volatile

• Poor mothers and children versus
• Poor elderly (SSI) or
• Working poor (EITC)

How benefits are set and programs are funded

Question 5

History of Welfare

Answer 5

The Social Security Act, as part of the New Deal legislation created under President Roosevelt, established two types of cash benefits

• Social insurance
• Public assistance

Social insurance programs included

• A pension for retired workers (informally called Social Security)
• Unemployment Insurance (UI)

Public assistance programs for the poor included
- Aid to Dependent Children (ADC), Old Age Assistance (OAA), and Aid to the Blind (AB)

Question 6

Evolution over time…

Answer 6

In 1956, Aid to the Permanently and Totally Disabled (APTD) was added

In 1962, ADC became Aid to Families with Dependent Children (AFDC)

While, by 1974, Old Age Assistance (OAA), Aid to the Blind (AB) and Aid to the Permanently and Totally Disabled (APTD) were consolidated under SSI, Supplemental Security Income

AFDC came to be regarded as welfare

In 1996, with the introduction of welfare reform, Congress ended the federal entitlement to welfare by replacing AFDC with Temporary Aid to Needy Families (TANF)

Question 7

Personal Responsibility and Work Opportunity Reconciliation Act of 1996

Answer 7

PROWRA marked a major change in US social policy by repealing AFDC (a federal entitlement) and replacing it with TANF (a state block grant)

PROWRA “eliminated the 60-year old federal guarantee of ongoing cash assistance to all qualifying poor families and replaced it with time-limited benefits, for which recopients must work, provided through capped block grants to the states. It also transferred primary responsibility for the operation of welfare programs from the federal government to the states”

Question 8

What is an entitlement?

Answer 8

Government program, good, service or benefit that provides individuals with personal financial benefits
- Special government-provided goods or services to which an indefinite number of potential beneficiaries have a legal right (enforceable in court, if necessary) whenever they meet eligibility conditions that are specified by the standing law that authorizes the program

Question 9

AFDC: What did the program do?

Answer 9

Cash to families
- Modified state by state (eligibility levels; benefit levels)

Low levels of cash assistance
- Below poverty

An Entitlement

Automatic eligibility for Medicaid and other “in-kind” benefits

Modest Work Requirements
- Jobs mandated 20% of recipients in a state be mandated to work

Modest Work Supports
- Jobs program mandated higher “earnings disregards”; transitional child care and Medicaid; as well as job training, basic education and community work experience

Question 10

Welfare Reform

Answer 10

Replaced AFDC with TANF

Question 11

Primary goals of TANF

Answer 11

Provide assistance to needy families so that children
may be cared for in their own homes or in the homes
of relatives

End the dependence of needy parents on
government benefits by promoting job preparation,
work, and marriage

Prevent and reduce the incidence of out-of-wedlock
pregnancies and establish annual numerical goals for
preventing and reducing the incidence of these
pregnancies

Encourage the formation and maintenance of two-
parent families

Question 12

TANF Highlights

Answer 12

Eliminated entitlement to benefits

Work requirements (work activities)

Time limits

• 5-year maximum life time limit on benefit receipt
• States can exempt 20% of caseload

Funding in block grants to states ($16.5 billion/year)
- A pot of money vs. increased federal money to match need

States now design their own programs

Delinked “welfare” w/ food stamps and Medicaid

Increased funding for child care

Increased income eligibility for Medicaid and other
transitional benefits

Strengthened child support enforcement

Family caps and sanctions – allowed states to impose

Others not eligible for federal benefits: illegal immigrants; new legal immigrants (w/ < 5 yrs of residence); those convicted of certain drug felonies; minors living independently

Question 13

Summary of Findings from Longitudinal Studies on Welfare Reform
(Slack et al.)

Answer 13

On average, household income, earnings, and wages
improved among former and current welfare recipients,
although such improvements appear to do little to lift families out of poverty. Strong labor markets are important for gains to be realized

Most former welfare recipient families continue to experience economic hardship and to rely on other types of public benefits (e.g., Food Stamps, SSI).

Health insurance coverage for respondents remained relatively stable over time

Question 14

What is an entitlement?

Answer 14

Some examples of entitlement programs, at the federal level, in the United States, would include:

• Social Security
• Medicare
• Medicaid
• Most Veterans’ Administration programs
• Federal employee and military retirement plans
• Unemployment compensation
• Food stamps
• Agricultural price support programs

Question 15

What is a block grant?

Answer 15

A block grant confers monies to the state from the federal government

The state has discretion, under certain broadly stated federal goals, in the dissemination of these funds

Question 16

How do benefits vary by groups served?

Answer 16

TANF

Strong behavioral components around marriage and family
formation
- Lifetime limits
- Work requirements
- State discretion around eligibility, benefit amount

Marked variation across states
- Benefits range from $215 for a family of three (AL) to $628 for a family of three (WI)

Benefits are not adjusted for cost of living so the value erodes over time

Question 17

Residual “Welfare”

Answer 17

General Assistance (GA)

• a residual program with limited availability for groups who do not fit into either TANF or SSI
• poor, non-aged childless adults
• “non-deserving poor”
• meager benefits, scarce availability

Question 18

General Assistance- State Programs

Answer 18

General assistance is not usually known by that name

• Maryland and Rhode Island call it “General Public Assistance”
• more common is the term “General Relief”, but very different names are used in some jurisdictions
• – New Jersey calls the program “State Aid”
• Indiana uses “Township Poor Relief”
• Tennessee has 3 equivalent terms: “Poor Relief”, “Emergency Relief”, and “Paupers Relief”

Question 19

Main features of General Assistance

Answer 19

Eligibility requirements and payments levels for general assistance vary from state to state, and often within a state

Payments are usually at lower levels and of shorter duration than those provided by federally financed programs (ex. SSI)

General assistance is administered and financed by State and local governments under their own guidelines

Question 20

Summary of General Assistance

Answer 20

For the most part, the federal government has left it up to
states to provide basic assistance to childless adults in need of assistance

States have never provided significant support for this group, this limited support has weakened significantly over time

Question 21

Supplemental Security Income (SSI)

Answer 21

Means tested

Federally-administered income assistance program authorized by Title XVI of the Social Security Act

Established in 1972 (Public Law 92-603) with benefits first paid in 1974

SSI provides monthly cash payments in accordance with uniform, nationwide eligibility requirements to needy aged, blind, and disabled persons

SSI replaced the federal-state programs of Old Age Assistance and Aid to the Blind established by the original Social Security Act of 1935 as well as the program of Aid to the Permanently and Totally Disabled established by the Social Security Amendments of 1950.

Question 22

Vision for SSI

Answer 22

A basic national income maintenance system for the aged, blind, and disabled which would differ from the state
programs it replaced in a number of ways.
- Administered by the SSA in
a manner as comparable as possible to the way in which benefits were administered under the Social Security Program.

Congress intended the new SSI program to be more than just a federal version of the former state adult assistance programs which it replaced

“The Committee bill would make a major departure from the
traditional concept of public assistance as it now applies to
the aged, the blind, and the disabled. Building on the present Social Security program, it would create a new federal program administered by the SSA, designed to provide a positive assurance that the nation’s aged, blind, and disabled people would no longer have to subsist on below poverty level
incomes”

Question 23

Eligibility: who, how?

Answer 23

(For adults)
- Disability is defined as the inability to engage in substantial gainful
activity (SGA)
by reason of a medically determinable physical or
mental impairment expected to result in death or last at least 12 months
- the worker must be unable to do any kind of work that exists
in the national economy, taking into account age, education, and work experience

(Children under age 18)
Has an impairment that results in “marked and severe” functional limitations

(For adults aged 65 or older)
Can qualify for SSI benefits without being disabled

Most adult SSI recipients have other income
- Countable income is subtracted from the federal benefit rate to determine their SSI eligibility and payment amount

Question 24

Federal benefit levels- 2011

Answer 24

Maximum federal SSI payment (adults)

• $674 monthly- individual
• $1,011 monthly- couple

Average monthly SSI payments

• $595.10 for children <18
• $515.10 for adults aged 18 to 64
• $404 for adults aged 65 or older

Adjusted annually to reflect cost of living

SSI recipients are automatically eligible for Supplemental Nutrition Assistance Program (SNAP)

Question 25

How do benefits vary by groups served

Answer 25

SSI

• Federal benefit
• Uniform across states
• Automatic eligibility for SNAP
• Higher benefit levels
• Adjusted annually for cost of living

Question 26

Main points

Answer 26

Health care dominants all other categories of benefits and services, accounting for nearly half of federal spending for 2008/2009 and a bit more than half for 2015

Cash aid is second but trails far behind, comprising 18% of spending in FY2009 and 2015

Other categories, in decreasing size, are food assistance, housing and development and education

Question 27

SUPPLEMENTAL NUTRITION ASSISTANCE (SNAP) - Income/Asset tests

Answer 27

Households may have $2000 in countable resources

• Ex. bank account
• Or $3250 in countable resources if at least one person is age 60 or older, or is disabled

Certain resources are NOT counted, such as a

• Home and lot
• Resources of people who receive SSI
• Resources of people who receive TANF
• Most retirement and pension plans

Procedures for handling vehicles are determined at the state level

• Number of States exclude the entire value of the household’s primary vehicle as an asset
• In States that count the value of vehicles, the fair market value of each licensed vehicle that is not excluded is evaluated

39 States exclude the value of all vehicles entirely

11 States totally exclude the value of at least one vehicle per household

Question 28

SNAP- work requirements

Answer 28

Able-Bodied Adult Without Dependents (ABAWD) work requirements were implemented in 1996 as part of federal welfare reform
- If not working at least 20 hours a week- 3 months of SNAP in a 3 year period

ABAWD provision suspended as part of the American Reinvestment and Recovery Act (ARRA) of 2009
- Provision reinstated as of October 1, 2012

Question 29

SNAP

Answer 29

acts as an important anti-recessionary tool to ease
consumption

Traditionally, SNAP participation has been pro-cyclical (Mabli et
al. 2009), such that improvements in the economy have resulted in decreases in program participation.

Research suggests that knowledge of and access to SNAP benefits is mediated by state-specific behavior that either facilitate or restrict SNAP participation

SNAP has be found to have a multiplier effect, it is estimated
that every $5 in SNAP benefits generates as much as $9 in
total economic activity (USDA, 2011)

Question 30

Means-tested programs

Answer 30

Supplementary Security Income (SSI) – CASH BENEFIT

• Federal aid to the aged, blind, disabled
• Uniform national eligibility

Temporary Assistance to Needy Families (TANF)– CASH BENEFIT
- Federal funds to state as a block grant/State MOE funds

General Assistance –
CASH BENEFIT/IN-KIND IN SOME PLACES
- State funds/not available in every state

Medicaid – IN-KIND BENEFIT

• Health insurance
• Federal/State funds

SNAP – “NEAR CASH”/ENTITLEMENT

• Vouchers/EBT card for food items
• Federal funds/administered at the state level
• ABWD work requirements