Making tradeoffs in federal block grant programs: Understanding the interplay between SSBG and TANF

Publius: The Journal of Federalism

Volumn 34, Issue 3, 2004, Pages 131-154

  Lambright, Kristina T ^a   Allard, Scott W ^b  

^a SYRACUSE UNIVERSITY   (United States)

^b BROWN UNIVERSITY   (United States)

Author keywords

[No Author keywords available]

Indexed keywords

EID: 22544458192     PISSN: 00485950     EISSN: None     Source Type: Journal    
DOI: 10.1093/oxfordjournals.pubjof.a005034     Document Type: Review

References (75)

1. PRWORA's reduction in SSBG funding was originally intended to be temporary. In 1996, lawmakers intended to restore the annual entitlement ceiling to $2.8 billion in FY 2003.
2. Robert Lieberman and Greg M. Shaw, "Looking Inward, Looking Outward: The Politics of State Welfare Innovation Under Devolution," Political Research Quarterly 53 (June 2000): 215-240;
3. Joe Soss, Sanford F. Schram, Thomas P. Vartanian, and Erin O'Brien, "Setting the Terms of Relief: Explaining State Policy Choices in the Devolution Revolution," American Journal of Political Science 45 (April 2001): 378-395;
4. and Matthew C. Fellowes and Gretchen Rowe, "Politics and the New American Welfare States," American Journal of Political Science 48 (April 2004): 362-373.
5. Craig Volden, "The Politics of Competitive Federalism: A Race to the Bottom in Welfare Benefits?" American Journal of Political Science 46 (April 2002): 352-363;
6. Michael A. Bailey and Mark Carl Rom, "A Wider Race: Interstate Competition Across Health and Welfare Programs," Journal of Politics 66 (May 2004): 326-347.
7. Jack L. Walker, "The Diffusion of Innovation among the American States," American Political Science Review 63 (September 1969): 880-899;
8. Virginia Gray, "Innovation in States: A Diffusion Study," American Political Science Review 67 (December 1973): 1174-1185;
9. Frances Stokes Berry and William D. Berry, "State Lottery Adoptions as Policy Innovations: An Event History Analysis," American Political Science Review 84 (June 1990): 395-415;
10. Frances Stokes Berry and William D. Berry, "Tax Innovation in the States: Capitalizing on Political Opportunity," American Journal of Political Science 36 (August 1992): 715-42;
11. Sarah A. Soule and Yvonne Zylan, "Runaway Train? The Diffusion of State-Level Reforms in ADC/AFDC Eligibility Requirements, 1950-1967," American Journal of Sociology 103 (November 1997): 733-762;
12. Lieberman and Shaw, "Looking Inward, Looking Outward";
13. and Soss et al., "Setting the Terms of Relief."
14. Paul E. Peterson and Mark C. Rom, Welfare Magnets: A New Case for National Standards (Washington, DC: The Brookings Institution, 1990);
15. Paul E. Peterson, Price of Federalism (Washington, DC: Brookings Institution, 1995).
16. Sanford F. Schram, "Welfare Reform in the United States: A Race to the Bottom?" Publius: The Journal of Federalism 28 (Summer 1998);
17. Scott W. Allard and Sheldon Danziger, "Welfare Magnets: Myth or Reality?" Journal of Politics 62 (May 2000): 350-368;
18. Volden, "The Politics of Competitive Federalism";
19. William D. Berry, Richard C. Fording, and Russell L. Hanson, "Reassessing the Race to the Bottom in State Welfare Policy," Journal of Politics 65 (May 2003): 327-249;
20. and Bailey and Rom, "A Wider Race."
21. U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services, SSBG Legislation Authority and Appropriations. 21 March 2003 http://www.acf.hhs.gov/programs/ocs/ssbg/docs/ legap.htm.
22. The Public Welfare Amendments in 1962 created the first federal categorical grant dedicated to state social services. Prior to this time, state and local governments were primarily responsible for both the funding and provision of social services programs. Federal social services policy continued to evolve with the passage of Title XX in 1975, which consolidated Titles IV-A and VI of the Social Security Act. Another major policy shift occurred when the Omnibus Budget Reconciliation Act was passed in 1981, replacing Title XX with SSBG. Coinciding with the creation of SSBG, the annual entitlement ceiling for social services was cut by approximately 20 percent from FY 1981 to FY 1982. See George E. Peterson, Randall R. Bovbjerg, Barbara A. Davis, Walter G. Davis, Eugene C. Durman, and Theresa A. Gullo, The Reagan Block Grants: What Have We Learned? (Washington, DC: The Urban Institute Press, 1986), p. 8.
23. The annual entitlement ceiling for SSBG dropped in real terms throughout the next two decades, falling from $4.28 billion in FY 1982 to $3.16 billion in FY 1996 in 2000 dollars. See United States Department of Health and Human Services, Administration for Children and Families, Office of Community Services, SSBG State Allocations, 21 March 2003 http://www.acf.dhhs. gov/programs/ocs/ssbg/docs/allocs.htm.
24. U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services, Social Services Block Grant program: Annual Report on Expenditures and Recipients 2000 (Washington, DC: Government Printing Office, 2002), p. 27.
25. Enacted by Congress in June 1998, the Transportation Equity Act permanently reduced the SSBG annual entitlement ceiling to $1.7 billion and lowered the TANF transfer rate from 10 percent to 4.25 percent beginning in FY 2001. Subsequent legislation restored the 10 percent cap for FY 2001 and FY 2002 only. Congress originally required that states transfer two TANF dollars to CCDF for every one TANF dollar transferred to SSBG. The Balanced Budget Act of 1997 removed this requirement, permitting states to transfer up to 10 percent of their TANF allotment to SSBG, regardless of whether they transfer any TANF funds to CCDF. Although the entitlement ceiling was $2.38 billion, Congress actually appropriated $2.5 billion to SSBG in FY 1997. See Almanac of Policy Issues, Social Services Block Grant, 20 January 2003; http://www.policyalmanac. org/social_welfare/archive/ssbg.shtml.
26. Reflecting reductions in the entitlement ceiling, congressional allocations for SSBG steadily decreased in nominal terms during the late 1990s. Congressional allocations are as follows: $2.299 billion for FY 1998, $1.909 billion for FY 1999, $1.775 billion for FY 2000, $1.725 billion for FY 2001 and $1.7 billion for FY 2002-2004. See U.S. Department of Health and Human Services, Administration for Children and Families, Office of Community Services, SSBG State Allocations.
27. HHS published a combined report on SSBG expenditures and recipients for FY 1995-FY 1997. Separate annual reports were produced for FY 1998, FY 1999, and FY 2000.
28. Because TANF transfers to SSBG can be spent over a two-year period, the percentage of total SSBG spending that is TANF transfers in a particular fiscal year is partially a function of the percentage of its annual TANF award a state transferred in the fiscal year and the prior fiscal year. It is also a function of the size of that state's annual TANF award and the extent to which a state uses TANF transfers to supplement rather than supplant existing SSBG spending.
29. Alternative ways of measuring variation in TANF transfers to SSBG include the percentage of total SSBG spending that was TANF transfers in a particular fiscal year and the percentage of total available TANF funds that was transferred to SSBG in a given fiscal year. Available TANF funds include not only a state's TANF allocation for that fiscal year but also any unliquidated obligations or unobligated funds that state had from prior fiscal years. The primary advantage of using the dependent variable we have chosen is that policy decisions made in prior years do not directly determine its value. This is not the case with either of the alternative measures. In order to make our results as generalizable as possible for future years, we have opted to use data from FY 2000 only because of a change to the rules governing TANF transfers in 1999. The key drawback of using the dependent variable we have selected is its limited variation. Due to the fact that states only have an option of transferring between 0 and 10 percent of their annual TANF award to SSBG, we also tested our models using a dual-censored tobit. While not reported in this article, the tobit results are consistent with our OLS estimates. Tobit results are available on request.
30. Walker, "The Diffusion of Innovation among the American States";
31. Gray, "Innovation in States: A Diffusion Study";
32. Robert L. Savage, "Policy Innovativeness as a Trait of American States," Journal of Politics 40 (February 1978): 212-224.
33. Lieberman and Shaw, "Looking Inward, Looking Outward."
34. Lieberman and Shaw, "Looking Inward, Looking Outward";
35. Soss et al., "Setting the Terms of Relief." We also ran our OLS models differentiating between AFDC innovations that were punitive and AFDC innovations that created positive incentives but found that this did not change our findings.
36. Robert D. Plotnick and Richard F. Winters, "A Politico-Economic Theory of Income Redistribution," American Political Science Review 79 (June 1985): 458-473;
37. Robert B. Albritton, "Impacts of Intergovernmental Financial Incentives on State Welfare Policymaking and Interstate Equity," Publius: The Journal of Federalism 19 (Spring 1989): 127-141;
38. Soss et al., "Setting the Terms of Relief."
39. U.S. Department of Health and Human Services, Administration for Children and Families, Percent Change in AFDC/TANF Families and Recipients, August 1996-September 2001, 24 March 2003 http://www.acf. dhhs.gov/news/stats/afdc.htm.
40. For example, 45 states received a total of $1.4 billion in surplus TANF funds in 1997 because of substantial public assistance caseload declines. See U.S. General Accounting Office, Welfare Reform: Early Fiscal Effects of the TANF Block Grant (Washington, DC: GAO, 1998), p. 10, GAO/AIMD-98-137.
41. As an additional state welfare policy environment factor, we created a variable for the ratio between a state's SSBG funding cut between FY 1995 and FY 2000 and total available TANF funds in FY 2000. However, this variable is excluded from our final models as it was not significant and did not change our other findings.
42. Robert C. Lieberman, Shifting the Color Line: Race and the American Welfare State (Cambridge: Harvard University Press, 1998);
43. Sanford F. Schram, Joe Soss, and Richard C. Fording, eds., Race and the Politics of Welfare Reform (Ann Arbor: University of Michigan Press, 2003);
44. and Fellowes and Rowe, "Politics and the New American Welfare States."
45. Urban Institute, Fast Facts on Welfare Policy, 24 March 2003 http://www.urban.org/content/Research/NewFederalism/Newsroom/ FastFacts/Race_Ethnicity/FFRace.htm.
46. Ideally, we would use the ratio between the percentage of TANF recipients who are non-white and the percentage of SSBG beneficiaries who are non-white to assess the potential impact of race. States, however, are not asked to provide the federal government with the racial composition of SSBG beneficiaries.
47. We also ran our OLS models substituting the percentage-point change in the elderly and individuals with disabilities between 1990 and 2000 for our two demographic variables, but this did not change our findings.
48. There is no guarantee that the relationship between CCDF and SSBG decisions is unidirectional, creating a conundrum. Omitting the percentage a state transfers to CCDF is likely to bias our results, while including it creates concerns about endogenity. In order to test the severity of the endogenity, we conducted a Hausman Test using the percent of children under 13 living in low-income families with working parents, the number of child care centers per 10,000 children, and the number of family child care establishments per 10,000 children as instrumental variables for our Hausman Test. There was no significant, systematic difference between the coefficients in the models including and excluding TANF transfers to CCDF. Based on these results, we decided including TANF transfers to CCDF in our model would not seriously bias our results.
49. A scatterplot of the percentage of its FY 2000 TANF award a state transferred to SSBG and CCDF is an inverted U-shaped curve.
50. Plotnick and Winters, "A Politico-Economic Theory of Income Redistribution";
51. Peterson and Rom, Welfare Magnets;
52. Jack Tweedie, "Resources Rather than Needs: A State Centered Model of Public Assistance Policymaking," American Journal of Political Science 38 (August 1994): 651-672;
53. Anne E. Winkler, "State Experimentation with Time Limited Benefits: What Differentiates Reform Minded States from Others?" Public Finance Review 26 (March 1998): 155-183.
54. Robert Tannenwald, "Fiscal Disparity among the States Revisited," New England Economic Review (July-August 1999): 3-25;
55. and Robert Tannenwald and Jonathan Cowan, "Fiscal Capacity, Fiscal Need, and Fiscal Comfort among U.S. States: New Evidence," Publius: The Journal of Federalism 27 (Summer 1997): 113-125.
56. Soss et al., "Setting the Terms of Relief."
57. Plotnick and Winters, "A Politico-Economic Theory of Income Redistribution."
58. Kim Quaile Hill and Jan E. Leighley, "The Policy Consequences of Class Bias in State Electorates," American Journal of Political Science 36 (May 1992): 351-365;
59. and Kim Quaile Hill, Jan E. Leighley, and Angela Hinton-Andersson, "Lower-Class Mobilization and Policy Linkage in the U.S. States," American Journal of Political Science 39 (February 1995): 75-86.
60. Other researchers have found that welfare policy decisions are influenced by the proportion of high-income citizens who vote compared to the proportion of low income-citizens who vote. See Fellowes and Rowe, "Politics and the New American Welfare States." We estimated models using the proportion of high-income citizens who voted in the most recent statewide election from 1997 to 1999 divided by the proportion of low-income citizens who voted in that same election. This ratio of high-to-low income voters was not statistically significant.
61. Gerald C. Wright, Robert S. Erikson, and John P. McIver, "Public Opinion and Policy Liberalism in the American States," American Journal of Political Science 31 (November 1987): 980-1001.
62. David A. Super, Sharon Parrott, Susan Steinmetz, and Cindy Mann, The New Welfare Law, 20 September 2001 http://cbpp.org/WECNF813.HTM;
63. and Mark H. Greenberg, Racing to the Bottom? Recent State Welfare Initiatives Present Cause for Concern, 26 May 2004 http://www.clasp.org/DMS/ Documents/1037122230.12/clrace.html.
64. William D. Berry, Evan J. Rinquist, Richard C. Fording, and Russell L. Hanson, "Measuring Citizen and Government Ideology in the American States," American Journal of Political Science 42 (January 1998): 327-348.
65. Scores are calculated using interest group ratings of a state's congressional delegation and party control of both houses of the state legislature and the governorship.
66. The sample size for all of our models is 47 states. Alaska, the District of Columbia, Hawaii, and Nebraska were excluded from our analysis. The District of Columbia and Nebraska were omitted due to lack of data for some of our independent variables. We also ran a model with our variables from Model 1 as well as regional dummies. These results are excluded from the final analyses, as they were not found to be statistically significant and did not improve our model fit.
67. Interview with Kathryn Dyjak, senior legislative associate for the American Public Human Services Association, 21 October 2003.
68. The services assigned to the first four categories are based on SSBG service clusters that HHS has developed to group services based on common goals and clientele. Child day care services are separated from other types of services for children and families because it is the only service that states can support by transferring TANF funds to either SSBG or CCDF. Miscellaneous services for children and families include services that were not classified in the first four service categories but are clearly services intended for children and families based on HHS's uniform service definitions. Services other than child day care that promote the self-sufficiency are classified as services consistent with TANF goals. All of the services not included in the first six service categories are considered to be "other services."
69. There is also the potential for overlap between the different populations served by SSBG. For instance, states can use TANF transfers for programs serving individuals with disabilities, if those programs served disabled individuals in families with earnings below 200 percent of the poverty level. Our data, however, cannot capture such nuances.
70. FY 1995 data was not available for the following states: Alaska, Connecticut, Kansas, Kentucky, Massachusetts, New Hampshire, Ohio, Rhode Island, Tennessee, Vermont, and Wisconsin. The following six states did not classify spending of TANF transfer funds by service in FY 2000: Illinois, Michigan, Nevada, New Mexico, Washington, and Wisconsin. Wisconsin also did not complete a post-expenditure report for FY 1995.
71. 4l Rather than being evidence of strategic decision-making, it is also possible that any observed spending changes are the result of natural shifts in states' SSBG priorities.
72. The median is calculated for only states that used TANF transfers to fund SSBG services in FY 2000 and categorized these expenditures by service.
73. In the case of CCDF, TANF transfers can be used to provide child day care services to families earning up to 85 percent of their state's median income. This is roughly comparable to SSBG's requirement that states can use TANF transfers to support SSBG services for children and their families living below 200 percent of the poverty line.
74. Mark C. Greenberg, Spend or Transfer, Federal or State?: Considerations in Using TANF and TANF-Related Dollars for Child Care, 6 February 2003 http://www.clasp.org/DMS/Documents/1011364478.64/view_html.
75. Peterson and Rom, Welfare Magnets.