NCPA - National Center for Policy Analysis

Welfare Reform Leaves States With Unspent Dollars

February 25, 2000

Welfare rolls across the nation have declined by more than 50 percent since Congress initiated reform of the system. Despite the decline, Washington continues to send $16.5 billion to the states each year. So these allotments are building up in many state treasuries.

  • Of the $45 billion in federal funds the states have received since 1997, $7 billion remains unspent.
  • Welfare case loads have dropped from 14.4 million in 1994 to fewer than 7 million today -- and state surveys show that 60 percent of ex-recipients get jobs.
  • Under the 1996 welfare reform law, states are allowed to use federal funds to replace state dollars -- which, in turn, are used for non-welfare programs -- and New York, Texas, Wisconsin, Minnesota, Connecticut and Kansas have done so.
  • Only Illinois, Kansas, Kentucky, Maine and Rhode Island have spent all their money.

Groups which promote government spending on the poor are fighting the accumulation of funds by the states. "If we can't spend the money now to do something about poverty, when will we be able to?" asks Deepak Bhargava, of the National Campaign for Jobs and Income, a coalition of anti-poverty groups.

But states "don't have anything to apologize for in terms of the way welfare reform has been going," counters William Waldman of the American Public Human Services Association.

Congress is likely to consider cutting the funds sent to the states when the current welfare law expires in 2002.

Source: Richard Wolf, "Welfare Drop Leaves States $7B," USA Today, February 25, 2000.


Browse more articles on Tax and Spending Issues