April 30, 1997

States and Legal Immigrants: Does a Block Grant Make Sense?
By David A. Super and Jennifer Daskal

The supplemental appropriations bill marked up in the Senate Appropriations Committee on April 30 contains $125 million for block grants to ease states' financial burdens resulting from the impending denial of SSI and other benefits to poor legal immigrants. The proponents of this proposal apparently intend it to be the downpayment on a larger block grant that would span several fiscal years. As such, it would be intended to serve largely as a substitute for making specific changes in the provisions of the welfare law that will shortly disqualify most legal immigrants from these benefits.

The details of the proposed block grant may change in the legislative process. Any block grant, however, would contain basic features that raise serious questions about its efficacy as a way of assisting poor legal immigrants. Some senators who understand the need for a permanent solution to immigrants' problems may nonetheless be tempted to support a block grant in the belief that it can do no harm. It is far from clear, however, that a block grant could provide significant relief to immigrants during the remainder of this fiscal year. In addition, inclusion of a block grant in the supplemental appropriations bill could compromise efforts in budget negotiations to win durable relief for poor legal immigrants.

Delaying the termination of SSI for elderly and disabled immigrants for two or three months until a permanent solution is adopted is a preferable approach to the $125 million block grant for a number of reasons:

The reported $125 million block grant would provide only half the amount CBO estimates that poor, elderly and disabled legal immigrants would lose in SSI benefits during the last two months of this fiscal year.

Maintaining SSI benefits for the short-term would be much more efficient and less burdensome to states than trying to establish and operate new programs funded with limited block grant dollars. In some states where legislative approval of their block grant plan would be required, state legislatures are already adjourned or will adjourn shortly. States could also effectively divert use of the block grant funds for other purposes.

The formula used in the appropriations bill creates sharp inequities among states.

Elderly and disabled legal immigrants can ill-afford unforeseen delays or gaps in receiving assistance; many could face the immediate loss of shelter and food.

The block grant approach poses equally serious problems as a permanent solution to the overly harsh provisions of the new welfare law that affect legal immigrants.


Adequacy of Funding Levels

The reported $125 million block grant would provide only half the amount CBO estimates that poor elderly and disabled legal immigrants would lose in SSI benefits during the last two months of this fiscal year. Legal immigrants would suffer additional losses due to the denial of food stamp benefits and, in some states, Medicaid.


States May be Unable to Get Block Grant Aid to the Affected Immigrants in Time

Establishing a new state block grant program, identifying immigrants losing SSI, and enrolling them in the new program could take time and considerable organizational effort. Moreover, in some states the state legislature must approve the state's plan concerning how to use the new block grant funds. A number of state legislatures have already adjourned for the year or will do so shortly.

The problems are likely to be greatest in states such as Florida and Texas that neither provide state supplements for most SSI recipients nor have state general assistance programs into which elderly and disabled legal immigrants who are being terminated from SSI can be placed. In many of these states, there is too little time to establish mechanisms to make timely and effective use of block grant funds when elderly and disabled immigrants are cut adrift this July and August.(1)

Many immigrants are likely to slip between the cracks as a result. Having lost their primary source of income, some will be at immediate risk of eviction. If the goal is to tide over poor elderly and disabled legal immigrants until a permanent solution can be enacted through the budget process, the only workable method is to continue their SSI benefits by delaying the termination of SSI for elderly and disabled legal immigrants by two or three months.


Block Grant Funds Could Be Misallocated

Any block grant would need to contain a funding formula for allocating funds among the states. Such a formula would likely result in the funds not being efficiently allocated to meet the greatest needs.

This appears particularly true of the formula proposed for allocating the block grant funds that the Senate leadership proposes to include in the supplemental appropriations bill. The formula would distribute most of the block grant money based on the proportion of each state's population that consists of legal immigrants on SSI. Two different tiers of minimum funding levels would be established.

The formula would create sharp inequities. By basing part of the distribution on the share that immigrants constitute of a state's population and providing each state a minimum grant of $250,000 regardless of the number of immigrants on SSI in that state, the formula inequitably treats those states in which large numbers of immigrants stand to lose benefits. The amount that states would receive out of the $125 million for each elderly and disabled immigrant losing SSI ranges from less than $250 in Oregon to more than $8,000 in Wyoming (see Table 1).(2)

North Dakota and West Virginia would get almost $3,125 per immigrant losing SSI; Montana, South Dakota, and Vermont would get $2,500.

By contrast, Florida, New York, and Texas, would get about $295, $290, and $280, respectively, per immigrant. Moreover, since states would have to cover the administrative costs of serving these immigrants out of the same pool of money, the amount available to provide benefits to elderly and disabled legal immigrants who are losing SSI (and often food stamps as well) in Florida, New York, and Texas would be even less than this.

California would suffer a $51 million shortfall, as compared with what is needed to provide SSI to all immigrants losing federal aid during the last two months of this fiscal year. Texas would face a $10 million shortfall. (See Table 2.) Meanwhile, more than a dozen states would receive block grant allocations greater than the value of SSI benefits that all legal immigrants in the state who are terminated from SSI would lose during the last two months of the fiscal year.

Another problem concerns the allocation of block grant funds within states. The termination of benefits for large numbers of legal immigrants will have substantial impacts on a number of localities. For example, city health clinics and city and county hospitals are likely to bear increased costs for uncompensated health care. Under a block grant, there would be no assurance that an adequate proportion of the funds a state received would be passed on to the local governments most in need. Since the block grant amounts would be insufficient to offset both state and local burdens arising from the denial of benefits to legal immigrants, states could decide to retain most of the block grant funds to meet costs at the state level and largely leave local governments to their own devices. Public services in areas with large concentrations of immigrants could be hit hard. Furthermore, states could allocate their limited block grant funding in such a manner that suburban jurisdictions with greater clout in statehouses received a larger share of the funds relative to need than did cities with more legal immigrants but less political power in the state.

The problems posed by the need to allocate block grant funds both among and within states are inherent to the block grant approach. Such problems do not arise under the alternative approach proposed by the Administration and a number of Members of Congress of both parties, under which permanent changes would be made in some of the harshest rules in the welfare law affecting the most vulnerable immigrants, such as legal immigrants who have become disabled after entering the United States. That approach automatically targets the funds on the individuals and areas most in need.


A Block Grant Would Abdicate Basic Federal Responsibilities and Place Substantial Burdens on States

The 104th Congress considered and rejected proposals to convert part or all of Medicaid, food stamps, and the children's portion of SSI to block grants to states. Under these programs, the provision of benefits to citizens remains a federal responsibility. To convert these programs to block grants solely for immigrants is inappropriate and poses a series of problems.

Doing so would place unnecessary burdens on states. States will need to create new programs, establishing eligibility criteria to pick and choose among disabled and other immigrants. Maintaining SSI benefits for disabled legal immigrants, as the Administration and some members of both parties have proposed, would be much more efficient and less burdensome to states than trying to establish and operate new state programs funded with limited block grant dollars. As noted, it will be difficult for many states to set up programs within the next couple of months to address the basic needs of the more than 400,000 elderly and disabled legal immigrants who will lose SSI this summer and, in many cases, face immediate crises in keeping a roof over their heads and buying food.

Under the U.S. Constitution, control of immigration policy is exclusively a federal prerogative. States have no control over immigrants' entry into this country. They should not be left with responsibility for fashioning programs to assist immigrants who cannot support themselves.


Block Grant Would Lead to Large State-to-State Differences and Inequities

A block grant also would create large state-to-state differences in immigrants' eligibility for basic assistance. The ability of severely disabled legal immigrants to receive assistance would depend upon the state in which they resided.

The targeted restoration of eligibility for certain vulnerable legal immigrants proposed in the President's budget would address this issue by maintaining nationally uniform eligibility standards for key federal benefits for many of the immigrants in greatest need. Under such an approach, a disabled immigrant's fate would not depend on whether he or she fell from a scaffolding at a construction site, or was paralyzed in a car accident, in Texas, California, or another state.


Allocation Formula Fails to Address Wide Variations in the Time it Takes to Naturalize

For the majority of states, a $125 million block grant is insufficient to provide SSI benefits for the last two months of the fiscal year to immigrants losing these benefits. Among those who will lose benefits will be many immigrants who have applied for citizenship but whose applications have not yet been processed.

In some parts of the country, INS backlogs are so large that it takes up to two years for INS to process applications for citizenship. In other areas, the processing time is substantially shorter. In states where there are large backlogs of applicants for citizenship (which includes some states with large immigrant populations), a larger portion of legal immigrants will be cut off this summer. The proposed formula for allocating block grant funds among states fails to take into account differences in the ability of local INS offices to process naturalization requests expeditiously. It is almost impossible to factor such variations into a block grant formula. Legislation extending SSI eligibility to poor elderly and disabled legal immigrants, however, would automatically respond to these variations in need.


Historical Evidence Suggests Funding for a Block Grant Could Rapidly Shrink

Whatever initial level is set for the block grant, it is likely to erode over time. A similar block grant -- the State Legalization Impact Assistance Grant program (SLIAG) -- was established under the Immigration Reform and Control Act of 1986 (IRCA) to compensate states for the cost of providing services to immigrants gaining legal status under IRCA's amnesty provisions. Although SLIAG was a capped entitlement to states, that did not prevent the appropriations committees from reducing SLIAG funding by almost two-thirds in SLIAG's third year in order to shift funds to discretionary programs in the Labor-HHS-Education appropriations bill. In the fifth year, SLIAG's funding fell to zero as a result of funding shifts.

The cause of SLIAG's political weakness was clear -- most of the SLIAG funds went to the handful of states that contained the bulk of the immigrants. With only a handful of state congressional delegations to support it, SLIAG lost out in competitions with health, education and other programs that benefit most or all states.

Any new block grant to aid poor legal immigrants facing hardship because of the provisions of the welfare law would have a similarly narrow base of support and would likely suffer the same fate. Even under the inequitable formula proposed for this block grant, more than 70 percent of the funds would go to just four states. In fact, with the caps on discretionary spending certain to be much tighter over the next several years than when SLIAG was being dismembered, the appropriations committees would likely be under greater pressure to divert immigrant block grant funds to other priorities. This is one of a number of reasons that the block grant approach is a poor substitute for modifying the overly harsh immigrant benefit provisions of the welfare law.

Table 1: States' Shares of Proposed Block Grant
  Block Grant Amount* Immigrants Estimated to be Terminated from SSI** Funds Provided Per Immigrant Losing Benefits
Alabama $250,000 360 $694
Alaska $250,000 380 $658
Arizona $1,272,064 4,390 $290
Arkansas $250,000 250 $1,000
California $48,750,805 165,380 $295
Colorado $854,695 2,760 $310
Connecticut $726,665 2,560 $284
Delaware $250,000 190 $1,316
District. of Columbia $750,000 500 $1,500
Florida $11,591,577 39,440 $294
Georgia $759,874 2,650 $287
Hawaii $750,000 2,310 $325
Idaho $250,000 290 $862
Illinois $3,821,180 13,260 $288
Indiana $250,000 700 $357
Iowa $250,000 630 $397
Kansas $250,000 800 $313
Kentucky $250,000 460 $543
Louisiana $415,707 1,460 $285
Maine $250,000 290 $862
Maryland $1,297,006 4,330 $300
Massachusetts $3,987,463 13,590 $293
Michigan $1,222,179 4,290 $285
Minnesota $1,104,118 3,850 $287
Mississippi $250,000 250 $1,000
Missouri $299,309 1,080 $277
Montana $250,000 100 $2,500
Nebraska $250,000 370 $676
Nevada $394,090 1,390 $284
New Hampshire $250,000 210 $1,190
New Jersey $3,681,502 12,780 $288
New Mexico $750,000 1,960 $383
New York $18,939,616 66,080 $287
North Carolina $432,335 1,320 $328
North Dakota $250,000 80 $3,125
Ohio $887,950 3,060 $290
Oklahoma $250,000 670 $373
Oregon $708,357 2,890 $245
Pennsylvania $1,885,647 6,470 $291
Rhode Island $750,000 1,940 $387
South Carolina $250,000 360 $694
South Dakota $250,000 100 $2,500
Tennessee $250,000 800 $313
Texas $9,105,649 32,410 $281
Utah $250,000 860 $291
Vermont $250,000 100 $2,500
Virginia $1,127,398 3,890 $290
Washington $2,188,282 7,970 $275
West Virginia $250,000 80 $3,125
Wisconsin $796,495 2,930 $272
Wyoming $250,000 30 $8,333
United States $125,000,000 415,300 $301

* Senate Finance Committee calculations, April 27, 1997.

** Social Security Administration (SSA) estimate of the number of legal immigrants currently receiving SSI that are likely to be ineligible under the welfare law, provided in a press release on March 21, 1997. These figures are conservative because they do not include the 300,000 whose citizenship status is unknown to SSA. Some of these 300,000 will also be ineligible for SSI.

Table 2: States' Shares of Proposed Block Grant
As Compared to Federal Benefit Levels, FY 1997
  Block Grant
Estimated Federal SSI $ Denied, FY 97
(in $ thousands)**
Nominal Surplus or Deficit from Block Grant, FY 97
(in $ thousands)***
Alabama $250,000 218 32
Alaska $250,000 230 20
Arizona $1,272,064 2,654 -1,381
Arkansas $250,000 151 99
California $48,750,805 99,972 -51,221
Colorado $854,695 1,668 -814
Connecticut $726,665 1,548 -821
Delaware $250,000 115 135
District of Columbia $750,000 302 448
Florida $11,591,577 23,841 -12,249
Georgia $759,874 1,602 -842
Hawaii $750,000 1,396 -646
Idaho $250,000 175 75
Illinois $3,821,180 8,016 -4,194
Indiana $250,000 423 -173
Iowa $250,000 381 -131
Kansas $250,000 484 -234
Kentucky $250,000 278 -28
Louisiana $415,707 883 -467
Maine $250,000 175 75
Maryland $1,297,006 2,617 -1,320
Massachusetts $3,987,463 8,215 -4,227
Michigan $1,222,179 2,593 -1,371
Minnesota $1,104,118 2,327 -1,223
Mississippi $250,000 151 99
Missouri $299,309 653 -354
Montana $250,000 60 190
Nebraska $250,000 224 26
Nevada $394,090 840 -446
New Hampshire $250,000 127 123
New Jersey $3,681,502 7,726 -4,044
New Mexico $750,000 1,185 -435
New York $18,939,616 39,945 -21,005
North Carolina $432,335 798 -366
North Dakota $250,000 48 202
Ohio $887,950 1,850 -962
Oklahoma $250,000 405 -155
Oregon $708,357 1,747 -1,038
Pennsylvania $1,885,647 3,911 -2,025
Rhode Island $750,000 1,173 -423
South Carolina $250,000 218 32
South Dakota $250,000 60 190
Tennessee $250,000 484 -234
Texas $9,105,649 19,592 -10,486
Utah $250,000 520 -270
Vermont $250,000 60 190
Virginia $1,127,398 2,352 -1,224
Washington $2,188,282 4,818 -2,629
West Virginia $250,000 48 202
Wisconsin $796,495 1,771 -975
Wyoming $250,000 18 232
United States $125,000,000 251,049 -126,048

* Senate Finance Committee calculations, April 27, 1997.

** These figures are based on an average $403 SSI benefit. Social Security Administration (SSA) estimates that half of all newly ineligible immigrants will be terminated before their August checks are issued and that all will be terminated before September payments are made.

*** Analysis does not include administrative costs.

End Notes

1. Even where a state has an SSI state supplement, too little time may remain in which to convert it to an SSI substitute for immigrants losing federal benefits.

2. The amounts that states would receive for each legal immigrant terminated from SSI were determined by dividing the amounts each state would receive under the block grant, as reflected in a table the Senate Finance Committee distributed this week, by the number of legal immigrants the Social Security Administration estimates will be terminated from SSI in each state.