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Published on Sunday, April 2, 2000 in the Boston Globe
Despite Unprecedented Affluence, States Are Shortchanging The Poor
by Robert Kuttner
The 1996 welfare reform law ended Aid to Families with Dependent Children as a federal entitlement and gave the state's antipoverty block grants. Supporters argued that this would create new flexibility. Opponents warned that since the poor were an unpopular constituency, the states were likely to shortchange recipients.

This warning has proven all too accurate. The states have failed to spend fully $7 billion of available federal money for the poor. In several states, money intended for the poor has been diverted to other uses.

Supporters of the new approach to welfare point to the dramatic decline in caseloads, which are down by more than half since 1993.

While this trend is undeniable, much of the credit goes to the full employment economy and increases in the minimum wage and earned income tax credit laws, which make work pay more than it used to.

However, welfare reform, formally known as Temporary Assistance to Needy Families, deliberately included funding for support services such as child care, which make it possible for poor single parents to take paid employment without neglecting their children.

Here is where the states are shortchanging the poor, big time.

A recent report by the Center for Community Change finds that 45 states have not spent their full allotment of available federal antipoverty money on the poor. Indeed, the states failed to spend so much money, reserving it for the proverbial rainy day, that last fall Republicans in Congress nearly succeeded in taking $3 billion of it back. Forty states actually spent less money on the poor in 1999 than they did in 1994.

Seemingly, this rollback makes sense, since fewer poor people are receiving welfare checks and more are in the work force. However, poverty rates have barely budged. The official overall poverty rate is stuck around 13 percent, and the rate of child poverty is a deplorable 19 percent.

In the grand bipartisan bargain that eliminated AFDC, Congress promised the states funding to facilitate the transition from welfare to work. But the states need to keep their part of the bargain by making sure that the money actually reaches the poor.

It costs more money today to be poor. In the years since welfare reform, the strong economy has pushed up housing costs. Going to work is more expensive than being on welfare. Work incurs costs such as clothing, transportation, and, above all, child care.

The rationale for welfare reform was not just to make the poor sing for their support. It was to put poor families on a path to self-sufficiency.

One key provision of the 1996 welfare reform law required states to spend at least 75 percent of what they had spent on the poor in fiscal year 1974, in order to qualify the new federal block grant. The purpose was to make sure that the states would not simply use the new federal funds to replace their own funding, leaving the poor with reduced aid.

As it turned out, the 75 percent figure created a huge loophole. Today, only one state, West Virginia, is actually spending more on the poor than it did six years ago. Forty-nine states and the District of Columbia are spending less.

Six states, according to the Center for Community Change and the General Accounting Office, have actually diverted temporary assistance funds to other budgetary uses, including tax cuts.

Here in Massachusetts, there is good news and bad news. Unlike many states, the Commonwealth has spent nearly all of the available federal antipoverty money. More poor families have access to subsidized child care.

However, Massachusetts has also used creative accounting to have federal funds replace state funds, so the Commonwealth is spending less of its own money on needy families than it did five years ago. So in effect, much of the federal funding for the needy has gone not to the poor but to pay for some of the general state budget.

Nationally, the get-tough climate has caused many states to deny benefits to which low-income families are legally entitled, such as health insurance for children and food stamps. Only 15 percent of eligible families are getting child care.

In the 1996 welfare compromise, liberals and conservatives gave each other half a loaf. The new program was more punitive than liberals wanted, and it included more social supports than conservatives wanted.

But in practice the program is harshly conservative. Disgracefully, America seems unwilling to help the working poor, even in an era of unprecedented affluence.

Copyright 2000 Globe Newspaper Company.


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