The Decline Of States In Financing The U.S. Safety Net: Retrenchment In State And Local Social Welfare Spending, 1977-2007

Source: Thomas Gais, Lucy Dadayan, Suho Bae, Nelson A. Rockefeller Institute of Government, November 2009

This paper examines social welfare spending on the eve of the recession to understand the likely trajectory of funding for different elements of state and local social welfare systems. It finds that state and local spending outside of medical assistance lost much of its real fiscal value since the last recession of 2001-02, especially when inflation-adjusted expenditures are compared to measures of need. Other trends include a growing concentration of state social welfare budgets around medical assistance, declines in federal assistance to states, and growing differences in social service spending across states of different fiscal capacities. The recession may exacerbate most of these developments and, along with the federal stimulus package, reduce the role of state governments in funding the national social welfare system.