U.S. aid depends on state’s funding levels
Arizona this week became eligible for more than $100 million in additional aid to needy families, but those families likely won’t see any of it.
In fact, the state could lose more than $400 million in federal funds it already receives if a plan by the Legislature’s Republican majority to fix the state’s budget deficit is enacted. The plan is circulating among lawmakers and agency directors.
Losing the federal funds is “very likely,” a Department of Economic Security spokeswoman said, assuming the state agency’s budget is cut by at least 10 percent.
As a result, when the new fiscal year starts July 1, Arizona may have walked away from more than half a billion dollars in annual federal aid to the working poor. The cuts would make Arizona the first state in the nation to lose its federal welfare program and the assistance it provides to tens of thousands of people.
“It’s beyond comprehension, it’s so bad,” said Timothy Schmaltz, director of the Protecting Arizona’s Families Coalition, an alliance of social-service organizations. “It’s overwhelming to contemplate because of the potential impacts across the board. It’s unraveling 25 years of progress.”
The Temporary Assistance to Needy Families program, known as TANF, provided $264.5 million this year to assist low-income families with rent payments, utilities, job training and other services. The money is distributed directly by the DES and through local agencies, which use it to provide shelter to the homeless and aid domestic-violence victims.
A growing need
Congress created TANF in 1996 as part of welfare reform, replacing Aid to Families with Dependent Children.
In response to a growing need created by the current recession, the White House this week announced up to $5 billion in additional temporary-assistance aid for states.
In order to accept the $100 million, Arizona would have to spend $125 million more on social services.
Given the state’s nearly $3 billion deficit for fiscal year 2010, additional spending is unlikely.
Instead, DES officials are wondering whether they’ll be able to hold on to all the funding they now receive – $717 million from the state’s general fund for 2009.
To qualify for annual grants, states must agree to spend as much on welfare programs as they did in 1994 – $127 million, in Arizona’s case.
The state spends just enough to qualify each year, using much of the rest of its general-fund allocation to qualify for other matching funds and grants. This year, DES leveraged its general-fund money into about $3.8 billion.
With a cut of 10 percent or more, department officials say they would lose matching funds somewhere, and that area is likely to be in welfare.
The draft budget, which is being negotiated behind closed doors by the Republican majority, would cut the DES budget by 13.5 percent.
As a result, the state stands to lose $317.7 million in temporary-aid and child-care grants. The cuts also would trigger the loss of an additional $80 million in federal matching funds.
That is in addition to $45 million in federal matching funds that were lost as part of a fix to the 2009 budget this year.
The potential end of temporary aid comes as the need for services is growing. There are 86,761 recipients in Arizona, a figure that has grown 8.4 percent in the past year.
The taxpayer burden
Republican leaders say the cuts are necessary to balance the state budget. They attribute the $3 billion budget gap to excessive spending in recent years. A steep downturn in tax revenue has exacerbated the deficit, the nation’s second-worst as a percentage of a state’s general fund.
Speaking on the Senate floor Wednesday, Sen. Russell Pearce, R-Mesa, said spending should be reduced to lower the burden on taxpayers who do not receive government aid.
“What we’ve turned into is folks continuing to think that everyone has the right to live off the backs of those who work for a living,” said Pearce, the chairman of the Senate Appropriations Committee. “Most taxpayers have had enough.”
Pearce said Arizona needs to “get back on the track of government doing very little for us.”
Losing TANF funds would mean eliminating:
• Cash assistance to 38,500 families.
• Child-care support to 30,000 families.
• Emergency shelter for 9,000 victims of domestic violence and 10,000 homeless people.
• Utility assistance and crisis services to 3,000 families.
“I’m gravely concerned,” said Eddie Sissons, director of the Arizona Foundation for Behavioral Health. “TANF has been the chewing gum and baling wire for the underlying social safety net.”