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

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...