Block Grants – Success or Failure? You Be the Judge

By Jocelyn Guyer

Whether you view something as a success or failure often depends upon which side of the field you are standing.

On one side of the block-granting field, we have low-income families who lost the helping hand they needed during tough economic times as the block-granted TANF program failed to respond to the recession.   They have a lot of so-called “skin in the game” as they have nowhere else to turn when they are out of work and out of options.  From their perspective, block-granting looks like a failed policy that has shifted responsibility from the federal government to states ill-equipped or unwilling to respond to the increased demand during the latest recession.  It has led to more families and children living in deep poverty with nowhere to turn to for help.

On the other side of the field, the team of pro-block-granting budget cutters are patting themselves on the backs for cutting costs and caseloads with seemingly no regard for the aftermath of those policy changes.   In fact, they are so happy with the results, they would like to replicate it by block-granting more programs starting with the Supplemental Nutrition Assistance Program (SNAP-formerly known as Food Stamps) and Medicaid.

To determine whether block-granting the former Aid to Families with Dependent Children program into TANF was a success that should be replicated or a destructive policy that failed low-income Americans just when they need it the most, let’s look at the facts.

During the “stress test” of the recession, did the block-granted TANF program live up to its intended purpose of providing a lifeline to low-income families?

Poverty increased substantially during the recession, from 12.5 percent in 2007 to 15.1 percent in 2010.  TANF’s purpose is to help those falling into poverty, but according to research by the Center on Budget and Policy Priorities, it came up short in fulfilling its intended purpose.  In 2010, over 7 million families with children were living in poverty but less than 2 million of them received welfare assistance through TANF.  CBPP estimates thatTANF serves only 27 families for every 100 families in poverty, down from 68 families for every 100 families in poverty before welfare reform.  With TANF funds being diverted by states to other purposes and no additional TANF funds available from the federal government to help states respond to the large increase in the number of impoverished families and immense state budget pressures, most states froze benefits in 2011 and 7 states actually cut TANF cash assistance.

How well did TANF serve its purpose in comparison to programs that have not succumbed to the block-granters whims such as Medicaid and SNAP?

SNAP and Medicaid faced the same economic pressures during the recession as TANF, however, they were far more successful in fulfilling their missions according to research by CCF and CBPP.  As more people found themselves in poverty and the poor became poorer during the recession, SNAP responded effectively and kept many families out of poverty and  lessened the severity of poverty for millions of others.

Medicaid also performed extraordinarily well under pressure with only two states reducing coverage and 29 states actually taking steps to improve coverage last year.  This thanks to the responsiveness of Medicaid’s financing structure and the health reform law’s requirement that states hold steady in their coverage of Medicaid and CHIP.  As childhood poverty increased by 14% during the recession, the rate of uninsured children fell to record lows, with Medicaid (and CHIP) stepping in to fill the gap left by declining employer-sponsored insurance [link to ACS brief].  (Medicaid was not as successful in meeting the needs of uninsured parents and childless adults as many of them are excluded from participation under current rules but that will change when the Affordable Care Act takes full effect in 2014.)

There was one other important factor in the success of Medicaid and SNAP in serving their intended purpose during the recession.  Both Medicaid and SNAP are cost-effective programs with federal standards in place to ensure funds are used to help low-income families and individuals.  On the other hand, the “flexibility” of the block-granted TANF program has allowed states to divert as much as 44% of block grant funds from helping the poor to such unrelated purposes as road repairs or closing state budget holes.

So you be the judge – does block-granting important public programs work?