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State Spending on Social Assistance Programs Over the Business Cycle.

August 2005

Therese J. McGuire, Northwestern University; David F. Merriman, Loyola University Chicago.

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The passage in 1996 of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) brought about a major change in the way the federal government and the states share financial responsibility for cash assistance and related welfare programs. Prior to PRWORA, the federal government provided a matching grant program for Aid to Families with Dependent Children (AFDC), with the federal government responsible for an average of 55 cents out of every dollar of AFDC spending. Since the passage of PRWORA, the federal government has given an annual block grant to the states for funding the AFDC replacement program, Temporary Assistance for Needy Families (TANF). Our goals in this paper are to review the history of federal and state spending on public welfare programs, with a special focus on the business cycles of the past twenty-five years, and to investigate whether state spending on public welfare programs has been affected by the meaningful change in funding brought about by PRWORA...

Social Welfare Programs and Policies, Welfare Reform and the Administration of Welfare Programs