March 14, 2007

Is Rhode Island a Welfare Draw? Part 1: Some Background

Carroll Andrew Morse

A spate of recent op-eds and news stories have challenged the idea that Rhode Island’s welfare policies create incentives for people from other states to move to Rhode Island in search of public assistance. Brian C. Jones of the Providence Phoenix has claimed the idea of Rhode Island as a welfare magnet is as credible as the idea of Bigfoot. Angel Tavares wrote in a February 18 Projo op-ed that it is “common sense” that “high housing costs and lack of job opportunities…would dissuade poor people from finding our state attractive”. And in Sunday’s Projo, Scott Mayerowitz quoted Rhode Island College Poverty Institute Executive Director Kate Brewster as saying that it is “common sense” that Rhode Island’s housing costs would keep people from moving here.

Part of the argument against Rhode Island as welfare magnet is that no one piece of silver-bullet evidence exists proving that it is so. Mayerowitz’s article goes into some detail on this subject…

While arguments rage on both sides of the issue, there is very little information to prove or disprove that there is a large influx of the poor because of Rhode Island’s welfare programs....

“While there is anecdotal evidence, there is no hard data,” acknowledges Carcieri’s spokesman, Jeff Neal.

The only RI data source that officially tracks information on out-of-state origins of welfare recipients is a survey administered to public assistance applicants by the state’s Department of Human Services, but that survey only covers only one of the state’s major poverty programs…
Applicants are asked if they have lived out of state in the last 90 days and, if so, where. Gary Alexander, acting director of the state Department of Human Services, said he doesn’t have enough staff to verify whether the applicants are telling the truth. So Alexander said he is skeptical about the limited data collected. The state does not ask similar questions on applications for subsidized child-care or for RIte Care.
Other critics of the survey's reliability have pointed out that there are incentives for applicants not to answer DHS questions honestly, as current eligibility rules require the rejection of applicants who have spent five years on public assistance in other states.

Jones and Tavares both go beyond the survey data, suggesting that a sustained reduction in the number of people receiving direct cash assistance from the government runs counter to the idea of an influx of assistance-seekers into Rhode Island. Can RI be considered a welfare magnet if the total number of people receiving welfare has dropped by about 50% in a ten year period?

However, the reduction in caseload is not unique to Rhode Island; it is a nationwide phenomena (Jones notes this; Tavares doesn't) resulting from the welfare reform policies enacted during the Clinton administration. In 1996, the last full year of the old Aid to Families with Dependent Children (AFDC) program, government was helping about 4,500,000 families by means of direct cash assistance. Today, the total number of families receiving direct cash assistance is down to 1,800,000, thanks to the reformed Temporary Assistance to Needy Families (TANF) program which began in 1997. (For those interested in the history and results of welfare reform, Kay Hymowitz has an excellent article on the subject in the Spring 2006 issue of City Journal).

But in Rhode Island, the reduction in direct cash assistance has not led to a reduction in total welfare spending. Monies no longer being spent on traditional welfare programs have been re-directed, almost dollar for dollar, into subsidized child-care. Rhode Island has gone from spending a combined $135 million in 1997 on cash assistance and child care (14% to child care) to spending $146 million on the combined programs today (54% to child care). [Source: page 18 of the Poverty Institute's Starting RIght Child Care Report from March 2006].

Yet, according to numbers reported by Mayerowitz, while the spending level has increased slightly, the number of recipients has decreased drastically…

Ten years ago, there were 61,770 people receiving cash assistance in Rhode Island. Today — after a series of changes in the program as part of the national welfare-reform movement — there are 33,000 Rhode Islanders receiving cash assistance.

During that period, the welfare spending has shifted toward more subsidized child-care and health care. In fiscal year 1997, 6,066 people were on the state’s child-care rolls. Last year, that grew to 12,704. In that same period, spending on RIte Care nearly quadrupled.

Add the numbers of cash-assistance plus child care recipients together, and you find that the number of recipients of aid has dropped from 67,836 in 1997 to just 45,704 recipients in 2006 -- all while the total cost of the programs has gone slightly up. The increase in spending is because the size of the child-care subsidy per recipient has doubled, from about $3,100 per recipient in 1997 to about $6,200 per recipient today.

This dynamic is a perfect illustration of why taxpayers are rightly skeptical of bureaucratic poverty programs. Protecting the size of budgets seems to be at least as important a goal as delivering effective aid. If, by some combination of luck, skill, and circumstance, Rhode Island was able to reduce the number of people needing child care and/or direct cash assistance to 30,000, would the state’s poverty advocates still insist that it is absolutely necessary to spend $150 million dollars on whomever is left?

Still, this is all an aside to the question we started with: Is there any evidence that people from other states are coming to Rhode Island specifically to collect public assistance. To try to answer that question, we have to see if there are any other data sources available...

Comments, although monitored, are not necessarily representative of the views Anchor Rising's contributors or approved by them. We reserve the right to delete or modify comments for any reason.

Is it still "common sense" that welfare recipients won't move to RI because of high housing costs if those housing costs are also subsidized? Is this typical liberal short sightedness or am I missing something here?

Posted by: frank at March 14, 2007 1:00 PM

From "Poor flow into RI for the welfare" (Feb 11 letter)

Comparing the 1990 to the 2000 census we see that the number of poor single parents in RI grew by 31%. For comparison, Massachusetts dropped by 7%. In 2004, only Tennessee and California had a higher percentage of their population on assistance (“Carcieri seeks faster welfare-to-work route” ProJo 2/5/06). Rhode Island was 176% higher than Massachusetts and over 250% higher than Connecticut.

According to Wikipedia (source US Census), from 2000 to 2005 in RI, “Immigration from outside the United States resulted in a net increase of 18,965 people, and migration within the country produced a net decrease of 4,964 people.”

More interesting data comes from a report titled "Hood or Robin Hood" that compared state spending on entitlements (as measured by taxes) to poverty reduction (1990 - 2000). Big surprise here - RI was the second worst in overall poverty reduction (an increase of 24%) and THE worse in the nation for child poverty reduction (an increase of 26%).

Low tax states decreased poverty by 9.6%, high tax states increased poverty by 1.96%.

When will we realize that limited government (i.e. low taxes) creates economic growth, thus creates prosperity (which enables people to EARN their way out of poverty).

Posted by: WJF at March 14, 2007 1:56 PM

RI may not actually pull welfare recipients from MA or CT......but..... when you compare the 3 states on state tax per capita, RI spends a lot more ($7,000) vs MA ($4200) and CT ($4400). This is a stat where RI may lead the nation.

Posted by: Bob Washburn at March 14, 2007 2:32 PM

Great analyses, Andrew and WJF.

"Protecting the size of budgets seems to be at least as important a goal as delivering effective aid."

Poverty really has become an industry, protected by people like T. Paiva-Weed in the RI General Assembly. Ms. Weed does not wish to encourage people to aspire but is simply protecting a special interest and the jobs of a block of state workers that she believes aggregate votes to herself.

Posted by: SusanD at March 14, 2007 5:59 PM

The only thing exposed by the media coverage on this topic is our lockstep lemming liberal Rhode Island media.
First Jones, then Mayerowitz followed up by Joe Baker writing a column in the Newport Daily News the day after Mayerowitz's story appeared in the Sunday Journal.
I believe they call it collusion and it's disgusting. A free and independent media. What a embarrassing crock!! Always knew the local media was weak and very much a wing of the local Democratic party. Nothing better when they hand deliver validation of that FACT on a silver platter.

Posted by: Tim at March 14, 2007 6:00 PM

Let's also remember last year when Carcieri made it so time spent on welfare in other states counted towards the time allowed on welfare in RI. The Poverty Institute fought this change by saying the following: If a woman is in an abusive relationship in another state, she will be trapped in that relationship if our policies do not allow her to come to RI.

Either our policies influence migration or they don’t. You can’t say they do when it involves saving an abused spouse but they don’t when it involves someone unwilling to find employment.

Posted by: WJF at March 14, 2007 7:28 PM

I see an aweful lot of Jersey plates when I'm downtown.

We all know that the Florida plates belong to all the state retirees who establish Florida residency for the tax savings. But why in the world are there so many NJ plates?

Posted by: Warbucks at March 15, 2007 11:09 AM

THIS is why I love AnchorRising. Great analysis.

Posted by: johnb at March 15, 2007 11:47 AM

Speaking of out-of-state plates ...

I have an acquaintance who lives in NYC (they have a summer home here - like so many others, they realize that while RI is a great place to have a second home, it is a terrible place for making a living or establishing a business, but I digress ...)

Anyway, a couple of years ago he told me that if you drive through the "Dominican section" of NYC you sees lots of cars with RI plates.

He surmised that they "establish residency" in RI in order to get on RI's welfare rolls, but live and work in NYC.

An interesting corollary to those who are "non-welfare" and have second homes here but avoid establishing residency here!

Posted by: Tom W at March 15, 2007 12:10 PM