President Trump’s new fiscal 2018 budget calls for a “new foundation of federalism” that trusts states to assume more responsibility for health care and other social safety-net programs.
His call for slashing more than $800 billion from Medicaid over the coming decade and transforming the health care program for the poor from an entitlement to a block grant or per capita payment to the states is a prime example of the financial burden that states sometimes unwittingly assume.
Federal funding for 13 major block grant programs for housing, health, and social services has dropped by 27 percent or $14 billion since 2000 or by 37 percent when adjusted for inflation and population growth, according to a recent analysis by the liberal-leaning Center on Budget and Policy Priorities. The harsh reality is that is that funding for block grants tends to decline over time, leaving the states to pick up the budgetary slack.
Now comes Trump’s new budget plan to cut $192 billion from the federal food stamp program over the coming decade, the Department of Agriculture’s Supplemental Nutrition Assistance Program (SNAP) that has been critically important to low-income and working-poor families – especially during hard economic times. The proposed cut would eliminate about a quarter of the program’s overall spending, which supports an estimated 45 million people and provides an average benefit per person of $125.50 per month.
While the proposed cut has gained considerable attention because of the potential for millions of poor and low-income people losing their benefits, it’s far less known that states would bear the brunt of a “massive cost shift,” according to a new report by the CBPP.
The fine print of Trump’s new budget released on Tuesday says states would be required for the first time to pay for 25 percent of SNAP benefits – starting at 10 percent in 2020 and increasing to an average of 25 percent by 2023. That is the equivalent of a cost shift from the federal government to states of roughly $116 billion over ten years.
Trump’s budget document explains that the proposed SNAP reforms “will re-balance the State-Federal partnership in providing benefits” for the first time by establishing a state match. Currently, SNAP benefits are set by federal law and reflect the cost of a modest healthy diet.
Some beneficiaries may not have gotten that healthy diet memo, however. The number one purchase among SNAP users is soda pop, totaling $3.7 billion of the $74 billion spent annually – or 5 percent. An additional 4.3 percent is spent on sugary beverages. Finally, a New York Times report showed that “20 cents of each dollar was spent on a broad category of junk foods that included sweetened beverages, desserts, salty snacks, candy, and sugar.”
Under the Trump approach, the Department of Agriculture would allow states to cut benefit levels as a cost management tool – a radical departure from long-standing practices. The administration is seeking a series of reforms to SNAP to close eligibility loopholes, better target the benefits to the neediest households, and require able-bodied adults to work as a condition of getting the assistance.
Most states operate under a balanced budget mandate, which means that state legislatures and governors would be under pressure to either reduce the benefit or make cuts in other programs to offset the cost. “So they have to hit a balance,” Tracy Dean, an expert on food assistance and the author of the CBPP report, said in an interview Tuesday. “There is enormous pressure on the states, and individuals living in particularly poorer states with less robust governments.’’
Such a cost shift would have “significant consequences” for states’ budgets, according to Dean. In Texas, for instance, 25 percent of SNAP spending --about $1.3 billion per year -- is roughly equivalent to the state’s share of the annual salary of 64,000 state’s teachers. In Pennsylvania, 25 percent of SNAP spending – or about $680 million annually -- is more than twice the state’s spending on community colleges.
What’s more, the next time there’s a recession, SNAP won’t be able to expand its rolls automatically, as it has in the past, because of the budgetary implications for cash-strapped states.
“SNAP is a national success story,” Dean said. “We had a serious problem of hunger and surprising malnutrition in the 1960s. We set up a national response because we thought it was a national problem, and we didn’t want children in Alabama to be treated differently than children in Minnesota.”
“So [Trump’s plan] is a surprise to me – I was almost astonished at the notion of undermining the federal financing structure . . . “That is a break in the commitment to address hunger.”