Decline of the American City: Restricting Assistance through Block Grants

The American city is experiencing deep decline. Housing prices continue to plummet, numerous mortgages are still underwater and there are little signs of job growth. Cities like Phoenix, Dallas and Los Angeles still face significant population decline as residents search for employment elsewhere. As manufacturing industries are still flat on their back, city officials have not managed deteriorating infrastructure. As a result, residents who cannot leave their homes in declining cities have little access to valuable and intact resources. Social services have taken a significant hit and will continue to do so especially since elected officials like House Budget Committee Chairman Paul Ryan plan to convert essential programs for disadvantaged Americans into block grants. The transformation of the Supplemental Nutrition Assistance Program (SNAP) into a block grant will restrict resources to families who typically qualify to receive assistance.

Economic well being and educational attainment go hand-in-hand. Supporting disadvantaged parents of young children by providing assistance in gaining employment, pursuing education and off-setting costs associated with work and other factors is crucial in combating poverty and rebuilding cities. Inequitable management and funding of declining cities, segregation and lack of support for low-income families have impacted schools and communities. Subsequently, educational reform needs to transcend schools. Assistance programs included in Medicaid need to remain whole to help parents gain access to resources that will help provide a better future for themselves and their children.

A new study published by the Brookings Institute describes the effects and impact of taxes, public benefits and out-of-pocket costs on child poverty rates in Wisconsin. The study illustrates that SNAP and earned income tax credits (EITC) significantly reduced poverty. However, the study found poverty increased among working families due to the burden of work expenses associated with child care expenses. Below are the results of the study:

The study found that child poverty would have been lower in Wisconsin if expenses related to child care, transportation and other work related expenses were reduced. The federal government does offer a Child Care and Development Block Grant which provides subsidized child care. In 1996, the program was converted into a block grant which introduced limitations to the funds. For instance, regulations prohibited states from expending more than 5% of grant funds on administrative costs. These costs include eligibility determination and maintenance of computerized child care information systems. Consequently, child participation in the Child Care and Development Block Grant dropped as funding remained stable. On average, nearly half of the states participating in child care block grants served fewer children in 2008 than in 2007 even though more children were eligible for services. Below is a chart illustrating this drop in participation:

More than 60% of Child Care Development Block Grants serve children from birth to age 6. Eligible families are currently facing waiting lists to receive funds. As the Wisconsin study shows, child care block grants need to be reformed in order to help reduce child poverty. SNAP currently influences child poverty. 75% of SNAP benefits go to families with children. Converting the program into a block grant will result in fewer eligible parents and children receiving services.

More importantly, arguments that program costs are rising and the program is too large are heedless. Formidable unemployment and the housing bust are causing more families to gain eligibility for assistance in unrestricted non-blocked programs. Once unemployment decreases and disadvantaged families get back on their feet SNAP and other non-blocked programs will shrink. The following charts were taken from the Center on Budget and Policy Priorities:

While elected officials battle over the federal budget, they need to keep in mind that restricting assistance to impoverished families through block grants will compromise future educational outcomes for children. Lack of services will impose barriers on families and will inhibit self sufficiency. Even more concerning, impoverished families will not be able to accommodate the development of their children when needed and will face additional hardship to meet the demands of raising their children.

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