Ryan and Block-Granting the Safety Net

House Speaker Paul Ryan called again today for combining many safety net programs into a mega-block grant to states.  As we explained when he made essentially the same proposal last year, this would very likely increase poverty and hardship, not reduce them.

Ryan’s 2014 “Opportunity Grant” proposal would consolidate 11 programs — from SNAP (formerly known as the Food Stamp Program) to housing vouchers, child care, and the Community Development Block Grant (CDBG) — into a single block grant.  Though Ryan didn’t provide all the precise details behind his speech, he seems to have in mind something identical or very similar to his 2014 proposal.  Our examination of that proposal found:   

• While Ryan described the proposal as maintaining the same overall funding as the current system for each participating state, that would be a practical impossibility.  His proposal would convert SNAP, the nation’s basic food assistance safety net, from an entitlement that responds automatically to increased need, such as during recessions, into part of a sweeping block grant that gives each state fixed funding for the year and, thus, can’t respond in the same way.  This would be a particularly serious problem when need rises, such as during economic downturns or when states or localities experience events such as plant closings. 

  While Ryan suggested addressing the problem by adjusting annual state grant amounts to reflect changes in state unemployment rates, that’s not an adequate solution.  The block grant levels would be set at the start of the year, likely using unemployment data already several months old.  Moreover, poverty and need rise or fall for reasons that go well beyond the unemployment rate. 

• Funds would likely be shifted away from direct assistance to needy families.  The large majority of the mega-block grant would consist of funding now going to SNAP and low-income rental assistance.  This means that providing some people more services, as Ryan envisioned, would likely require cutting direct assistance that helps poor families put food on the table or keep a roof over their head.  Some of the service programs to which funds would likely be shifted have higher administrative costs than programs like SNAP and rental vouchers, so less would remain for basic assistance to needy families.  And, in some cases, powerful state and local political forces may seek to corral more of the funding.  For example, many state and local officials likely would try to shift former SNAP benefit dollars to CDBG-type “development” proposals that politically powerful local developers (who often make large campaign contributions) often favor.

• While Chairman Ryan says he’s driven by evidence and research, his plan would jeopardize basic nutrition assistance for poor children, which research has shown reduces child malnutrition and improves children’s long-term prospects.  A path-breaking recent study examined what occurred after food stamps gradually expanded nationwide in the late 1960s and early 1970s.  It found that poor children with access to food stamps in early childhood (and whose mothers had access during pregnancy) had an 18-percentage-point higher high school graduation rate — and were less likely as adults to have stunted growth or heart disease or to be obese — than comparable children who lacked access to food stamps because their counties hadn’t yet implemented the program. 

  The Ryan plan would jeopardize these crucial gains by eliminating poor families’ entitlement to SNAP.  Unlike under SNAP’s current structure, families that qualified for the program because of their low incomes might be denied benefits or put on a waiting due to lack of program funding, either because need had increased or because the state had shifted funding to other purposes.

• Total funding to assist low-income families likely would decline, because the block grant would afford state and local officials tantalizing opportunities to use some block grant funds to replace state and local funds now going for similar services.  Ryan said that the federal block grant funds would have to be used for the poor.  But that wouldn’t prevent states and localities from substituting some of these funds for state and local funds now used for some of the same purposes and diverting those state and local funds to other uses, such as plugging budget holes.  That’s what happened under the Temporary Assistance for Needy Families block grant, despite Congress’ efforts to prevent it.  With broad block grants of this nature, some substitution by states and localities is almost impossible to prevent.
• History shows that when policymakers combine a number of programs into a block grant, funding typically declines over time, often dramatically.  Our analysis of all 13 of the major housing, health, and social services block grant programs created in recent decades found that funding for all but one has fallen in inflation-adjusted terms since their inception.  And since 2000, the combined funding for the 13 block grants fell by 27 percent — or $14 billion in 2015 dollars.  When a broad array of programs are merged into a block grant, policymakers find it virtually impossible to identify a specific level of needed federal funding — or the likely human impact of program cuts.  As a result, the broad block grant often becomes easy to squeeze in the competition for federal dollars.