Policy Challenge – How to Expand Safety Net

Mounting job losses, millions of home foreclosures and rising food, fuel and heating costs have put poverty at the top of state agendas. As the nation undergoes the worst recession in a generation, states are asking the Obama administration and Congress to loosen red tape and infuse billions to shore up aid programs.

The states will probably get much of what they want. But welfare reform instituted in the 1990s has made it nearly impossible for people without a job or prospects of one to receive public assistance. Welfare, or cash assistance – typically the first thing people think of when they hit hard times – now represents less than 2 percent of the nation’s safety net, and the money available does not increase as the poverty rate climbs.

Instead of cash, state welfare workers can offer families in financial trouble a complex array of targeted aid programs such as children’s health insurance, nutrition programs for women and infants, work training and job placement services, subsidized child care, housing vouchers, substance abuse and mental health care, and home energy assistance – but many of these programs require reams of applications that can take weeks or months to process.

One of the first lines of defense is Food Stamps – now known as the Supplemental Nutrition Assistance Program. That’s because middle-class people accustomed to paying their bills on time tend to cut back on food and medicine before they default on their mortgage or fail to make a car payment.

The local unemployment office is also a first stop for middle-class workers who lose permanent, full-time jobs. But low-wage workers – the most likely to be laid off – are least likely to qualify for benefits because they often work part time or hold temporary jobs.

In this recession, prospects for low-income working families are better than they were 20 years ago, but the picture is much worse for those without jobs, said Robert Greenstein, executive director of the Center on Budget and Policy Priorities , which advocates for the poor.

By the end of 2008, 2.2 million people had been out of work for more than six months, the largest number in a quarter century, according to the U.S. Bureau of Labor Statistics . Food Stamp applications reached the highest level since the program began in 1964, and food pantries and homeless shelters were struggling to meet demand.

Adding to the problems, governors and mayors were forced to make “breathtaking” cuts in Medicaid and other social services by eliminating programs and tightening eligibility rules, Greenstein said. “We’re still in the early stages of what is going to be a long recession. Poverty rates are going to keep going up.”

Last year, Congress extended unemployment insurance for 20 weeks beyond the maximum 26 weeks allowed in most states and added 13 more weeks for laid-off workers in states with high jobless rates. Congress and the Bush administration also made it easier to apply for Food Stamps and boosted funding to help poor families pay their heating bills.

This year, Congress will consider billions more in aid for low-income Americans, including another boost in nutrition programs, a greater federal share of Medicaid and an expansion of the so-called State Children’s Insurance Program.

President Barack Obama also has promised to bail out states facing severe budget deficits and to invest billions in infrastructure and green projects to help create jobs.

Still, front line welfare workers – particularly in states where shrinking budgets have resulted in staff cutbacks – will be hard pressed to meet the growing demand for public assistance.

At least 20 states have launched high-level anti-poverty programs to find better ways to help people maintain financial self-sufficiency. New York City Mayor Michael Bloomberg (I) has joined the chorus, vowing to update the way the city measures poverty so assistance gets to those who need it most.

In addition, nearly every state, county and city responded to rising demand for social services last year by working to eliminate bureaucratic barriers to delivering much-needed services as quickly as possible, said Jerry Friedman, executive director of the American Public Human Services Association , which represents social services administrators.

Among the streamlined measures: Food Stamp administrators stopped requiring in-person visits; people on Medicaid were automatically enrolled in home-heating assistance programs; and more states made applications available online for a variety of programs.

“Now more than ever – with empty state coffers and dwindling federal dollars – it is essential that states and the federal government work together to find better, more efficient ways to use their limited resources to help the most people,” said Richard Nathan, co-director of The Nelson A. Rockefeller Institute of Government, which studies state policies.

Like the nation’s highways and bridges, federally funded anti-poverty programs were created decades ago and are in need of repair. Even the so-called federal poverty level – the standard for allocating billions of federal dollars to states and deciding who qualifies for assistance – is outmoded. The U.S. Census Bureau’s 1960s-era formula fails to account for regional cost differences in housing, transportation, health care and other basic needs.

Jared Bernstein, economic policy adviser to Vice President Joe Biden, said an updated poverty measure is a top priority for the administration. In addition, Obama has pledged to expand earned income tax credits, which provide a federal subsidy to those who don’t earn enough to pay taxes.

Obama also plans to modernize unemployment insurance so that workers who lose part-time and temporary jobs – often the lowest wage earners – are eligible for benefits, Bernstein said.

For more than a decade, states have asked Washington to knit together the separate federal-state assistance programs that have developed piecemeal since the Great Depression. But efforts to eliminate unnecessary paperwork and bureaucratic waste have foundered, and experts agree that in the midst of an economic crisis, the new administration will be able to make only small improvements to the tattered safety net.

Meanwhile, federal and state money spent on low-income assistance programs has grown by nearly 36 percent over the last decade. And Medicaid has ballooned to more than 22 percent of state budgets, according to the Rockefeller Institute.

A tally of spending on existing state and federal safety net programs – by Stateline.org and the Rockefeller Institute – came to $605 billion in 2006, the most recent year for which data are reported.

Every year, state and federal assistance funds go unused because many families don’t know the benefits exist, don’t realize they qualify or are reluctant to resort to what they consider government handouts. Others give up; studies show that individuals and families often are daunted by the confusing labyrinth of federal, state, nonprofit and faith-based relief programs and the tangle of rules that accompany them. It’s especially cumbersome for families to apply if they have small children or transportation problems or if they’re trying to hold on to one or more jobs.

Of the more than 10 million families living in poverty in the United States, only 7 percent receive all four major types of support – tax credits, Medicaid, Food Stamps and child care – for which they qualify, and one in four families living below the poverty line receives no benefits at all, according to SingleStop USA , a nonprofit group that helps poor families navigate the public assistance network.

For state social workers, the job of helping each person or family involves intensive interviews to determine what problems the family is experiencing, followed by numerous applications to programs that have often conflicting eligibility rules. In many cases, people are directed to multiple offices in far-flung corners of the county.

A typical state administrator must be familiar with more than 200 federal, state and county programs, including nonprofit and faith-based projects that states refer families to for services not offered by the state.

“There’s not one door a person can walk through to get assistance,” Friedman said. “Most families have four or five problems they need solved. No single program can help them.”

See Related Stories:

Poverty gap among states widens (9/16/2008)

Census – Uninsured down, poverty up (8/26/2008)

States adopt bold anti-poverty measures (8/7/2008)

States retool welfare under new TANF rules (7/9/2006)