[Background Material and Data on Programs within the Jurisdiction of the Committee on Ways and Means (Green Book)]
[Appendices]
[Appendix K. Spending for Income-Tested Benefits, Fiscal Years 1968-2000]
[From the U.S. Government Printing Office, www.gpo.gov]




 
APPENDIX K - SPENDING FOR INCOME-TESTED BENEFITS, 
FISCAL YEARS 1968-2002

CONTENTS
Overview 
Participation in Income-Tested Programs
Trends in Spending
Spending Trends by Level of Government
Federal Government
State and Local Governments
Total Spending
Share of Federal Budget Used for Income-Tested Benefits
List of Income-Tested Benefit Programs
	Medical Aid
	Cash Aid
	Food Aid
	Housing Aid
	Education Aid
	Other Services
	Jobs and Training Aid
	Energy Aid
References
OVERVIEW

The Congressional Research Service (CRS) has found that more than  
80 benefit programs provide cash and noncash aid that is directed
primarily to persons with limited income (Burke, 2003).  Such programs
constitute the public "welfare" system, if welfare is defined as
income-tested or need-based benefits (the programs, and their FY2002
expenditures, are listed at the end of this chapter).  This definition
excludes social insurance programs, such as Social Security and
Medicare.
These income-tested benefit programs in fiscal year (FY) 2002 cost  
$522.2 billion:  $373.2 billion in Federal funds and $149 billion in
State and local funds.  Total welfare spending set a new record, up
$45.3 billion (9.5 percent) from the previous peak of 2001. 
Spending increased for all forms of aid except jobs and training.
Higher medical spending accounted for $32.8 billion of the net increase, 
and 54 cents of every welfare dollar went for medical assistance.  
Expressed in constant FY2002 dollars, welfare spending increased by  
$38.2 billion (7.9 percent) from the 2001 level.  Other real spending
increases by form of benefits included:  education benefits, $4.1
billion; food benefits, $3.3 billion; housing, $2.3 billion; and
services, $1.2 billion.  Real outlays for cash aid dropped by $1.2
billion; and for jobs and training, by $0.5 billion.  In FY2002, 
medical services represented 54.1 percent of total welfare spending; 
cash benefits,19.6 percent; food and housing benefits, 14.3 percent;
education andjobs/training, 7.3 percent; and services and energy aid
accounted for the remaining 4.7 percent. The composition of welfare
spending differed by level of government.  Medical aid consumed 79.7
percent of State and local welfare funds, but only 43.9 percent of 
Federal welfare dollars.
Most income-tested programs provide benefits, in the form of cash,
goods, or services, to persons who make no payment and render no 
service in return. 
However, in the case of the job and training programs and some
educational benefits, recipients must work or study.  Further, the
block grant program of Temporary Assistance for Needy Families (TANF)
requires adults to start work after a period of enrollment, the food

stamp program imposes work and training requirements, and public
housing requires residents to engage in "self-sufficiency" 
activities or perform community service.  Finally, the Earned Income
Tax Credit (EITC) is available only to workers.

PARTICIPATION IN INCOME-TESTED PROGRAMS 

An unduplicated count of welfare beneficiaries is not available. 
Enrollment in TANF and food stamps remained far below 1994/1995 peak
levels during 2000-2002, but Medicaid enrollment set a new record high.
Average 2002 monthly numbers:  Food stamps, 20.2 million recipients;
TANF, 5.1 million; and Supplemental Security Income (SSI), 6.9
million.  In 2002, EITC payments went to 16.8 million tax filers, and
during the year, 50.9 million persons received Medicaid services. 
Census Bureau data indicate that 5.1 million families with children
were poor in 2002 before receiving cash aid from TANF, General
Assistance (GA) or the EITC (compared with 5.1 million in 2001 and with
6.7 million in 1996, the last full year of the pre-TANF welfare
program).  Among these families in 2002, the EITC was received by 53.7
percent of those with a female head and by 71.7 percent of those with a
male present. The Census Bureau examined participation in major
means-tested government programs in 2002 (Census, 2003).  It found that
23 million poor persons (two out of three persons with pre-tax money 
income below the poverty threshold) lived in a household that received
means-tested assistance that year.  More than one-half of the poverty
population (52.7 percent) was in a Medicaid-recipient household.  
Almost one-third of the poor population (32.9 percent) lived in a
household that received food stamps; for means-tested cash assistance,
the proportion was  21.5 percent; and for subsidized or public housing,
17.5 percent.  Out of the total U.S. population (all income levels), 
the Census Bureau reported that 25.1 percent lived in a household that
received some form of major means-tested aid in 2002 (Medicaid, 18.6 
percent; means-tested cash assistance, 6.1 percent; food stamps, 6.7 
percent; and public or subsidized housing, 3.9 percent).


TRENDS IN SPENDING

The CRS data series provides annual spending figures for 30 fiscal
years (1968, 1973, and 1975-2002).  Total expenditures on cash and
noncash welfare programs were 32 times as great in 2002 as in 1968 
(see Table K-1).  Even after allowance for price inflation, spending
sextupled (rising 523 percent) over the 32 years, a period when the
U.S. population rose by an estimated 43 percent.  
Measured in constant 2002 dollars,  the annual rate of growth in
spending over the whole period was 5.5 percent.  However, the growth
pattern was uneven.  Real spending almost tripled in the first 10 
years, declined in some years (1982, 1996, and 1997), and in the last 
5 years rose at an annual rate of 3.9 percent. Total per 
capita welfare spending grew in real terms (constant FY2002 dollars)
from $416 in FY1968 to a peak of $1,826 in FY2002.
The rise since the late 1960s in overall need-tested spending tabulated
by CRS is sharper than the increase in spending reported by the Social
Security Administration (SSA) for a smaller group of need-tested
programs.  The SSA data series, called public aid, is a category within
SSA reports on social welfare expenditures, and it excludes numerous
income-tested programs that are in the CRS series.  Not counted as
public aid in the SSA series are the Earned Income Tax Credit, child
nutrition, subsidized housing, educational benefits, adoption
assistance, foster care, some job training programs, and others.  Some
of these programs did not exist 32 years ago, and many have grown 
rapidly.  Adjusted for price inflation, public aid outlays in the SSA
series rose 268 percent between 1968 and 1995 (the most recent year for
which SSA data are available). For fiscal year 1995 social welfare 
expenditure data of SSA, see Bixby, 1999.  SSA also has published data
on private social welfare expenditures.  (See Kerns, 1997.)
In nominal dollars, total spending by programs in the CRS series more
than doubled from FY1990 ($213.1 billion) to FY2000 ($437 billion)-an
increase of  105 percent.  Calculations by Robert E. Rector of the
Heritage Foundation also found that nominal spending more than doubled
during the decade.  The Rector data series (which includes more than 70
means-tested programs) showed total Federal and State spending of $215 
billion in FY1990 and $434 billion in FY2000-an increase of 102 percent
(Rector, 2001).
TABLE K-1--EXPENDITURES FOR INCOME-TESTED BENEFITS, 
                              SELECTED FISCAL YEARS 1968-2002 
                              
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

SPENDING TRENDS BY LEVEL OF GOVERNMENT 

FEDERAL GOVERNMENT 
Table K-2 presents 1968- 2002 Federal welfare spending
in constant 2002 dollars, by form of benefit.  Measured
in constant 2002 dollars, Federal spending for income-tested
benefits climbed from $59.4 billion in fiscal year 1968 to  $373.2
billion in fiscal year 2002, an increase of 529 percent.  As the table
shows, cash aid was the leading form of Federal welfare until 1980,
when it was overtaken in value by medical benefits.  Two years later,
in 1982, Federal welfare spending declined for all forms of aid except
subsidized housing, in which case outlays reflected earlier commitments,
and education benefits.  In most subsequent years, aggregate real
federal welfare outlays steadily increased.  Declines occurred in 
1986, 1996, and 1997.  

STATE AND LOCAL GOVERNMENTS  

Table K-3 shows that State and local spending for income-tested
benefits, measured in FY2002 dollars, climbed from $24.5 billion in
fiscal year 1968 to  $149 billion in fiscal year 2002, an increase of 
508 percent.  Cash aid was overtaken by medical benefits as the
dominant form of State and local welfare spending in 1976.  State and
local spending rose steadily in all years after 1979 except for 1993
and 1996.

TOTAL SPENDING

Table K-4 shows total (Federal plus State and local) spending on income-
tested benefits in FY2002 dollars.  Total spending rose from $83.9
billion in FY1968 to $522.2 billion in FY2002, an increase of 523
percent. Aggregate spending rose in all years except 1979, 1982, 1996,
and 1997. Real spending for medical benefits, education benefits, and
services reached new historic peaks in fiscal year 2002.  For other
forms of benefits, peak spending took place in earlier years:  Jobs and
training, 1978; energy, 1981; cash aid, 1995, food aid, 1994, and
housing benefits, 1996. 

SHARE OF FEDERAL BUDGET USED FOR INCOME-TESTED 
BENEFITS

The share of the Federal budget used for income-tested benefits climbed
from 6.4 percent in fiscal year 1968 to 17.3 percent in fiscal year
1995, then declined slightly, to 17.0 percent, in fiscal year 1998, but
resumed climbing thereafter, and reached a new record peak of 18.6
percent in 2002 (see Table K-5).  Most of the 1968-2002 increase of 
12.2 percentage points was accounted for by medical  benefits (6.6
percentage point gain). Measured in percentage points, increases for 
other forms of aid were: cash benefits, 1.3; food aid, 1.4; housing
benefits,  1.3; education, 1.0; services, 0.6; and energy aid, 0.1. 
Federal spending for income-tested jobs/training benefits declined as
a percent of the budget (down  0.1 percentage point).



 TABLE K-2-- FEDERAL SPENDING FOR INCOME-TESTED BENEFITS BY FORM OF
 BENEFIT, SELECTED FISCAL YEARS 1968-2002 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE K-3-- STATE AND LOCAL SPENDING FOR INCOME-TESTED BENEFITS BY FORM
OF BENEFIT, SELECTED FISCAL YEARS 1968-2002 

 [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

TABLE K-4-- TOTAL SPENDING FOR INCOME-TESTED BENEFITS BY FORM OF
BENEFIT,SELECTED FISCAL YEARS, 1968-2002 

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]


			
TABLE K-5-- SHARE OF FEDERAL BUDGET USED FOR INCOME-TESTED AID, BY FORM

[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

1In FY1978, jobs and training benefit outlays were $9.7 billion. 
Of this total, $5.8 billion represented public service employment and
$2 billion employment and training services.

Source:  Table prepared by Congressional Research Service (CRS).




LIST OF INCOME-TESTED BENEFIT PROGRAMS

Below is the list of programs providing income-tested
benefits.  Within each category, the programs are
listed in the order of their total cost in fiscal year
2002 to Federal and State and local governments. 
Amounts shown are in millions of dollars.

MEDICAL AID

1.  	Medicaid ($258,216)
2.  	Medical care for veterans without service-connected disability
($8,185)
3.  	State Children=s Health Insurance (S-CHIP) ($5,407)
4.	General assistance (medical care component) - no Federal
dollars ($4,956)

5.  	Indian health services ($2,758)
6.  	Consolidated health centers  $1,328)
7. 	Maternal and child health services block grant ($1,279)
8. 	Title X family planning services ($265)
9.  	Medical assistance to refugees, asylees, other humanitarian
cases ($74)        

CASH AID

10.  Supplemental Security Income (SSI) ($38,522)
11.  Earned Income Tax Credit (EITC) -- refundable portion only
($27,830)
12.  Temporary Assistance for Needy Families (TANF) ($13,035)
13.  Foster care ($8,618)
14.  Child tax credit - refundable portion only  ($5,060)
15.  General assistance (nonmedical care component)--no Federal dollars
($3.251)
16. Pensions for needy veterans, their dependents, and survivors, 
($3,177)
17. Adoption assistance ($2,472)
18. Dependency and indemnity compensation (DIC) and death compensation
for parents of veterans ($84)
19. General assistance to Indians ($66.5)
20. Cash assistance to refugees, asylees, other humanitarian cases($41)



FOOD AID

21.  Food stamps ($24,054)
22.  School lunch program (free and reduced price segments) ($6,064)
23.  Special Supplemental Nutrition Program for Women, Infants, and
Children (WIC) ($4,350)
24.  Child and adult care food program, lower-income components($1,638)
25.  School breakfast program (free and reduced price segments)($1,515)
26.  Nutrition program for the elderly ($801)
27. The Emergency Food Assistance Program (TEFAP) ($361) 
28.  Summer food service program for children ($307) 
29.  Commodity Supplemental Food Program (CSFP) ($105)
30.  Food distribution program on Indian reservations ($74)
31.  Farmers' market nutrition programs ($36)	
32.  Special milk program (free segment) ($1)

HOUSING AID

33.  Section 8 low-income housing assistance ($18,499)
34.  Low-rent public housing ($8,213)
35.  Rural housing loans (section 502) ($3,499)
36.  Home investment partnerships (HOME) ($2,500)
37.  Housing for special populations (elderly and disabled) ($895)
38.  Rural rental assistance payments (section 521) ($705)
39.  Section 236 interest reduction payments ($579)
40.  Housing opportunities for people with AIDS (HOPWA) ($314)
41.  Rural rental housing loans (section 515) ($114)
42.  Rural housing repair loans and grants (section 504) ($62.4) 
43.  Farm labor housing loans (section 514) and grants (section 516)
($61.8) 
44.  Section 101 rent supplements ($53.7. 
45. Rural housing self-help technical assistance grants (section 523)
and rural housing site loans (sections 523 and 524) ($27.1) 
46.	Indian housing improvement grants ($19.6)
47.  Section 235 homeownership aid ($10.8)
48.  Rural housing preservation grants (section 533) ($8.6)
49.  Home ownership and opportunity for people everywhere (HOPE) ($3.8)

EDUCATION AID

50.  Federal Pell grants ($11.364)
51.  Head Start ($8,172)
52.  Subsidized Federal Stafford loans and Stafford/Ford loans ($7,523)
53.  Federal work-study program ($1,000)
54.  Federal Trio programs ($827)
55.  Supplemental educational opportunity grants ($760)
56.  Chapter 1 migrant education program ($395)
57. Perkins loans ($166)  
58. Leveraging educational assistance partnerships (LEAP) ($134)
59. Health professions student loans and scholarships ($58) 
60.  Fellowships for graduate and professional study ($45)
61.  Migrant high school equivalency program (HEP) ($23)
62.  College assistance migrant program (CAMP) ($15)
63.  Close Up fellowships ($1.5)

OTHER SERVICES

64.  Child care and development block grant ($8,589) 
65.  TANF services ($6.147)
66.   Social services block grant (Title XX) ($2,743)
67.  TANF child care ($2,322)
68.  Homeless assistance ($1,044)
69.  Community services block grant ($739)
70.  Legal services ($329)
71.  Social services for refugees, asylees, other humanitarian cases
($159) 72. Emergency food and shelter program ($143)

JOBS AND TRAINING AID

73.  TANF work activities ($2,727)
74.  Job Corps ($1,532)
75.  Youth activities ($1,000)
76.  Adult activities ($950)
77.  Senior community service employment program ($494)
78.  Welfare-to-work grant program ($413)
79.  Food stamp employment and training ($410)
80.  Foster grandparents ($155)
81.  Senior companions ($69)
82.  Targeted assistance for refugees, asylees, other humanitarian
cases ($49.5)
83.  Native employment works (NEW) ($7.6)

ENERGY AID

84.  Low-income home energy assistance program (LIHEAP) ($1,800)
85.  Weatherization assistance ($352)



REFERENCES

Bixby, A.K. (1999).  Public Social Welfare Expenditures, Fiscal Year
1995. Social Security Bulletin, 62 (2), p. 86-94.
Burke, V. (2003) Cash and Noncash Benefits for Persons with Limited
Income:  
Eligibility Rules, Recipient and Expenditure Data, Fiscal Years 2000-
2002. (forthcoming)  Washington, DC: Congressional Research Service. 


Rector, R.  (2001).  The Size and Scope of Means-tested Welfare
Spending.  
Testimony. August 1, 2001.  
[http://www.heritage.org/Research/Welfare/Test080101.cf]
Kerns, Wilmer L. (1997), Private social welfare expenditures, 1972-94.
Social Security Bulletin, 60 (1) p. 54-60.
U. S. Bureau of the Census  (2003).  Program Participation Status of
Household -- Poverty Status of Persons in 2002.    Unpublished table 
(POV26).   
Current Population Survey.   Annual Social and Economic Supploment.
  Current dollars were translated into FY2002 constant value dollars
  by use of the Consumer Price Index for all urban consumers (CPI-U).