CRS Examines Federal Spending for Low-Income Assistance Programs

The Congressional Research Service (CRS) regularly receives requests about the number, size, and programmatic details of federal benefits and services targeted toward low-income populations. This report is the most recent in a series that attempts to identify and discuss such programs, focusing on aggregate spending trends. The report looks at federal low-income spending from FY2008 (at the onset of the 2007-2009 recession) through FY2015 (after implementation of the Patient Protection and Affordable Care Act, or ACA).

Programs discussed here provide health care, cash aid, food assistance, education, housing and development, social services, employment and training, and energy assistance to low-income people and communities. Despite the common feature of an explicit low-income focus, these programs are extremely diverse in their purpose, design, and target population. They do not include social insurance (e.g., Social Security, Medicare, Unemployment Compensation), which is meant to be universal, or tax provisions, with the exception of two targeted tax credits.

Key findings include the following:

• In nominal dollars (not adjusted for inflation), federal spending for low-income assistance programs grew from $561 billion in FY2008 to $848 billion in FY2015, a 51% increase over the eight-year period.

• This increased spending occurred in two distinct episodes. First, after a sharp spike in FY2009 affecting all categories of benefits and services, low-income spending peaked at $763 billion in FY2011, largely in response to the recession. The second episode was driven almost entirely by health care. Spending growth from FY2013 ($744 billion) to FY2015 ($848 billion) was primarily due to the ACA Medicaid expansion.

• Most low-income spending is for noncash benefits and services; health care is the largest category and Medicaid the largest individual program. In FY2015, noncash benefits and services accounted for 82% of all low-income assistance and cash aid comprised 18%. Health care dominates federal spending for low-income programs, accounting for more than half (52%) of such spending in FY2015. Medicaid alone comprised 45% of all low-income spending that year.

• This report identifies a large number of programs intended to assist low-income people, but spending is concentrated among a few. The four largest programs -- Medicaid, the Supplemental Nutrition Assistance Program, Supplemental Security Income, and the Earned Income Tax Credit -- together accounted for 68% of all low-income spending in FY2015, and the top 10 programs comprised 83%. After the top four, these programs include (in descending size) Federal Pell Grants, the Medicare Part D Low-Income Drug Subsidy, the Additional Child Tax Credit, Section 8 Housing Choice Vouchers, Temporary Assistance for Needy Families, and Title I-A Education for the Disadvantaged grants.

• Spending patterns described here do not reflect congressional decisions about the aggregate size of low-income spending that should occur each year. The size of each program is a function of its design and budgetary classification (mandatory versus discretionary), congressional budget and appropriations processes, external influences affecting the cost of goods and services, and other factors. This report tells a story -- that low-income spending has grown sharply in recent years and is dominated by health care -- but given the diversity among programs that serve low-income people, further generalizations should be made with care.

Federal programs intended to help poor and low-income people are of ongoing interest to Congress. The federal government spends billions of dollars annually on a wide range of low-income benefits and services and lawmakers routinely conduct oversight and consider legislation related to these programs. Deliberations typically focus on individual programs or their overarching authorizing laws. However, Members and staff also look at low-income policy broadly and have questions about low-income programs and spending in the aggregate. For example, how much does the federal government spend altogether each year on programs specifically intended for low-income people? How has this spending changed over time? How is spending allocated among various categories of low-income benefits and services? These questions may appear straightforward but their answers are complex.

This is the third in a series of CRS reports that address these questions.¹ The first task -- seemingly simple but in fact highly challenging -- was to identify which federal activities can be characterized as "low-income" programs; that is, programs that are not intended to be universal but that specifically target benefits or services toward low-income people or communities. A second task was to identify a consistent and reliable source of spending data, so that dollar amounts for individual programs could be meaningfully combined and compared. Finally, programs were grouped into categories (e.g., health care, cash aid, food assistance, etc.), a relatively straightforward process for most programs but more complicated for those with multiple purposes. Appendix A explains how CRS addressed these challenges.

This report focuses primarily on spending trends, both overall and by category. The report includes some limited programmatic details; however, previous versions provide more extensive information on the specifics of each program included in the spending totals.²

The report begins with a discussion of aggregate trends in low-income spending from FY2008 through FY2015. It then looks at trends by category and in the 10 largest low-income programs (which now comprise more than 80% of total low-income spending). Medicaid is the single largest program discussed in the report, and health care is the largest category (due to the size of Medicaid). The report briefly discusses the dominance of health care and explains the decision not to include spending for premium credits and cost-sharing subsidies under the ACA.³ The report continues with a description of trends in spending for non-health low-income programs, both overall and by category. A series of appendices explains the methodology used for the report (Appendix A), provides spending and limited information for each of the programs included (Appendix B), and identifies additional reports that might be of interest (Appendix C).

Key findings appear in the Summary, immediately before the table of contents.

Important Caveats

To draw accurate conclusions from the information in this report, readers should know the following:

• Programs included here are not social insurance. That term refers to programs intended to insure Americans against the loss of wages and work-related benefits due to retirement, disability, or temporary unemployment (e.g., Social Security, Medicare, Unemployment Insurance). Social insurance benefits are generally entitlements earned through work, financed largely through contributions from employers and employees. Social insurance plays a key antipoverty role but its benefits are meant to be universal and not restricted to those with low incomes.

• Programs in this report cannot be collectively characterized as welfare. Welfare is typically thought of as government assistance to help poor people pay for necessities such as food, shelter, and medical care. As defined in this report, low-income programs are much broader, including in-kind benefits and such activities as education, social services, and community development, among others.⁴

• While most of the largest programs in this report are open-ended entitlements, which entitle all eligible people to be served, the overwhelming majority are discretionary and serve only a portion of the potentially eligible population, subject to the availability of appropriations.

• Key target populations for low-income programs, including most of the largest, are the elderly, disabled, and families with children. A separate CRS analysis found that two groups -- families with children and families with a disabled member -- accounted for 78% of the dollars received in FY2012 from nine large low-income programs.⁵ Other target populations for programs included here are veterans, students, homeless people, refugees, and Indians.

• Low-income does not necessarily mean poor, as the federal government officially defines that term. Programs in this report use a variety of criteria to determine eligibility, including multiples of the official federal poverty guidelines and other measures altogether. Some programs target assistance toward low-income communities, with no income eligibility test for participating individuals.⁶ However, again looking at nine large programs in FY2012, CRS found that both the likelihood of benefit receipt and the amount of benefits received were highest among households with the lowest incomes.⁷

• While this report discusses trends in federal spending, a significant amount of non-federal spending (primarily state and local) is also associated with some of the programs included here.⁸ Thus, amounts discussed do not reflect all public spending for low-income programs.

• Unless noted otherwise, all spending amounts cited in this report are nominal dollars and not adjusted for inflation.

The following sections discuss trends in federal low-income spending overall, by category, and for the 10 largest programs. As noted above, "low-income" spending is defined here to include spending only for programs that are explicitly targeted on people or communities with low incomes. In general, spending refers to obligations (as explained in Appendix A).

Overall

The eight-year period under review -- FY2008 through FY2015 -- starts just before the "Great Recession" of 2007-2009.⁹ The national unemployment rate stood at 4.7% in the first month of this period and more than doubled two years later, reaching a peak of 10% in October 2009.¹⁰ The rate then gradually declined and by the last month of the period under review, September 2015, unemployment was down to 5.1%. The poverty rate also increased from 2008 (13.2%) and peaked in 2010 (15.1%). However, unlike the unemployment rate, poverty declined only slightly from its peak and remained at 14.8% in 2014 (most recent year for which data are available).¹¹

Federal spending for low-income programs totaled $561 billion in FY2008 and spiked to $707 billion the following year, as the recession took hold. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5)¹² responded to the economic downturn with an infusion of cash and contributed nearly 60% of the increased spending on low-income programs between FY2008 and FY2009 (see Figure 1). Low-income program caseloads also grew during that period as unemployment rose and incomes declined, making more people eligible for low-income benefits.

Federal low-income spending continued to grow and eventually peaked at $764 billion in FY2011. It fell to $724 billion in FY2012 but never returned to pre-recession levels,¹³ and it ticked up again in FY2013 ($744 billion). Spending rose sharply in both FY2014 ($794 billion) and FY2015 ($848 billion), largely due to the Medicaid expansion included in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended), which took effect in FY2014.

Overall, spending on low-income programs in nominal dollars was 51% higher in FY2015 than in FY2008. FY2015 spending was 11% higher than the initial post-recession peak in FY2011, and it was almost 14% higher than in FY2013 just before the ACA Medicaid expansion took effect (see Table 1).

 

Figure 1. Federal Spending on Low-Income Benefits and Services,

 

ARRA and Non-ARRA, FY2008-FY2015

 

(nominal dollars in billions)

 

 

 

Note: ARRA = American Recovery and Reinvestment Act, P.L. 111-5,

 

Table 1. Federal Spending on Low-Income Benefits and Services,

 

by Category, FY2008-FY2013

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 8.]

 

 

 

 

 

Health care dominates federal spending for low-income programs, accounting for nearly half of such spending each year from FY2008 through FY2014 and more than half (52%) in FY2015 (see Table 2). Given its size, health care spending largely drives the pattern for low-income spending overall; however, the pattern is not necessarily the same in all eight years for all other categories of benefits and services (see Figure 2).

As shown in Table 1, spending for low-income health programs totaled $259 billion in FY2008 and jumped to $319 billion the following year. Health care spending initially peaked in FY2011 at $352 billion and dropped to $328 billion in FY2012. However, spending in this category resumed its upward climb the next year and eventually reached $444 billion in FY2015.

Cash aid trails far behind health care but has consistently been the second largest category of spending during the years covered in this report, rising steadily (except for a one-year drop in FY2012) from $116 billion in FY2008 to $155 billion in FY2015. However, the share of low-income spending devoted to cash aid in FY2015 (18%) was down slightly from most previous years, when it hovered at or near 20%.

The third largest category -- food assistance -- totaled $103 billion in FY2015, just below its FY2013 peak of $107 billion but significantly higher than its pre-recession level of $59 billion in FY2008. As a share of all low-income spending, food assistance accounted for 12% in FY2015, up from 10.5% in FY2008 but below its peak share of 14.5% in FY2012.

Both in dollar size and as a percentage of all low-income spending, the five remaining categories are dwarfed by the three largest (see Figure 3). While obligations for each of these categories were higher in FY2015 than in FY2008, they all saw even higher spending levels in some of the intervening years, primarily as a result of ARRA. Moreover, each of the bottom five categories consumed a smaller share of total low-income spending in FY2015 than in FY2008.

It is noteworthy that total federal obligations for low-income programs ticked upward in FY2013, which was the first year affected by sequestration under the Budget Control Act of 2011 (BCA, P.L. 112-25). Many of the large mandatory low-income programs are exempt from sequestration and tend to be in the top three categories (health care, cash aid, and food assistance), which all saw increased spending between FY2012 and FY2013.¹⁴ However, the bottom five categories largely include programs that are discretionary and more likely to be reduced by sequestration. In fact, these categories all saw somewhat lower spending in FY2013. (See "The Dominance of Health Care" for additional discussion of health care spending and "Trends in Non-health Care Low-Income Spending, FY2008-FY2015" for discussion of the other categories.)

 

Table 2. Percentage of Federal Spending on Low-Income Benefits

 

and Services, by Category, FY2008-FY2015

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 10.]

 

 

 

 

Figure 2. Federal Spending on Low-Income Benefits and Services,

 

by Category, FY2008-FY2015

 

(nominal dollars in billions)

 

 

 

 

Figure 3. Percentage of Federal Spending on Low-Income Benefits and

 

Services, by Category, FY2015

 

 

 

The 10 Largest Programs

This report covers a large number of programs within the categories shown above. It is important to note that only a few programs account for the vast majority of federal low-income spending (see Figure 4) and the dominance of these programs is growing. In FY2015, the four largest programs accounted for 68% of all low-income obligations, up from 61% in FY2008; the top 10 programs comprised nearly 83% in FY2015, compared to more than 78% in FY2008. The single largest program -- Medicaid -- alone accounted for almost 45% of all low-income spending in FY2015, an increase from 38% in FY2008 (see Table 3).

 

Figure 4. Federal Spending on Low-Income Benefits and Services,

 

by Size of Program, FY2015

 

(nominal dollars in billions)

 

 

 

 

Table 3. Federal Spending on the 10 Largest Low-Income Programs,

 

FY2008-FY2015

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 13.]

 

 

 

 

 

The Supplemental Nutrition Assistance Program (SNAP, formerly known as food stamps) is the second largest program discussed in this report and saw the largest growth rate of any of the top 10 programs; SNAP nearly doubled in size from FY2008 ($38 billion) to FY2015 ($74 billion). The recession of 2007-2009 brought new applicants to the program, and ARRA temporarily expanded SNAP benefits.¹⁸ SNAP spending peaked in FY2013 at almost $80 billion.

Supplemental Security Income (SSI) is the third largest program included here. SSI grew by almost 27% during the period under review, with spending of $62 billion in FY2015 compared to $49 billion in FY2008. However, among the four largest low-income programs SSI saw the slowest rate of growth over the FY2008-FY2015 period.

Rounding out the top four programs is the Earned Income Tax Credit (EITC), which grew by almost 48% between FY2008 ($41 billion) and FY2015 ($60 billion). ARRA included two temporary expansions of the EITC (i.e., a larger credit for families with three or more children, and an increase in the income level at which benefits phase out for married couples with children). These expansions were extended several times after ARRA and made permanent in December 2015 (P.L. 114-113).¹⁹

The next four programs in the top 10 begin with Pell Grants, which grew by 56% between FY2008 ($18 billion) and FY2015 ($28 billion). However, obligations for Pell Grants actually peaked in FY2011 at $42 billion and subsequently declined to the FY2015 level. ARRA provided short-term supplemental funding for Pell Grants in FY2009 and FY2010,²⁰ and significant programmatic changes were enacted over the years that affected the size of the program.²¹

The next programs, in descending size based on FY2015 obligations, are the Medicare Part D low-income drug subsidy, which rose steadily over the period and was 43% larger in FY2015 ($26 billion) than in FY2008 ($17 billion); the Additional Child Tax Credit (ACTC), which saw spending grow by 23% over the period, from $17 billion in FY2008 to $21 billion in FY2015 (although ACTC spending actually peaked in FY2009 at $24 billion); and Section 8 Housing Choice Vouchers, which grew by 24% (from $16 billion in FY2008 to $19 billion in FY2015).

The final two programs in the top 10 are Temporary Assistance for Needy Families (TANF) and Education for the Disadvantaged Grants to Local Educational Agencies (Title I-A of the Elementary and Secondary Education Act). TANF is the only one of the top 10 programs for which spending declined by the end of the FY2008-FY2015 period; in nominal dollars, TANF obligations declined from $17.5 billion to $17.4 billion. TANF spending was highest in FY2009 and FY2010 ($19 billion and $22 billion, respectively) as a result of additional funds provided through ARRA for basic assistance, emergency aid, and employment-related activities under TANF.²² Title I-A education grants grew from $13 billion in FY2008 to $14 billion in FY2015. This program also saw a short-term spike in funding as a result of ARRA, and totaled $21.5 billion in FY2009.²³

Among the 10 largest programs, seven are funded by mandatory spending. Of those seven, all but one are open-ended entitlements to individuals, which means their spending levels are determined by how many people are eligible and apply for the program, regardless of the number, rather than a fixed amount that is specified for the program and then apportioned among participants. One mandatory program -- TANF -- is a capped entitlement to states (rather than to individuals), which means that states are entitled to receive a fixed amount each year that is established in the authorizing law. The remaining three programs are discretionary, with funding determined annually by Congress through the appropriations process.

Table 4 provides an overview of key features of each of the 10 largest programs.

 

Table 4. Key Features of the 10 Largest Programs

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 16.]

 

 

 

 

 

Health care dominates federal low-income spending, as shown. This category consumed about 45%-46% of all low-income spending from FY2008 through FY2013, and its share jumped to 49% in FY2014 and 52% in FY2015. Almost two-thirds (65%) of all new low-income spending between FY2008 and FY2015 was for health care. However, one single program -- Medicaid -- explains the dominance of the health care category; Medicaid comprised almost 83% of low-income health spending in FY2008 and 85% in FY2015.

In addition to Medicaid, only one other health care program is included among the 10 largest examined in this report. That program is the Medicare Part D low-income drug subsidy, which is the 6th largest program but a fraction (about 7%) of the size of Medicaid. Spending for this program was higher in nominal dollars in FY2015 than in FY2008, but its share of health spending had declined slightly, from nearly 7% in FY2008 to less than 6% in FY2015. In fact, as Medicaid consumed a greater share of low-income health spending over the period, most programs in the category saw their share decline, even as nominal spending amounts increased. Exceptions were Consolidated Health Centers and the State Children's Health Insurance Program (CHIP), both of which increased slightly as a share of low-income health spending. Two programs saw slight decreases in obligations: both Family Planning and the Maternal and Child Health Block Grant had lower spending in FY2015 than they had in FY2008. Remaining programs in the health care category include Medical Care for Veterans without Service-Connected Disabilities, the Indian Health Service, the Ryan White HIV/AIDS program, and several smaller programs.

Are ACA Premium Credits and Subsidies "Low-Income" Benefits?

A primary goal of the ACA was to increase access to health care. Among other things, the law requires individuals to maintain health insurance coverage or pay a fine for noncompliance (a provision known as the individual mandate). To help make the purchase of insurance affordable, the law provides subsidies to eligible individuals. Depending on their income and other factors, individuals without access to subsidized health insurance may be eligible for premium tax credits and cost-sharing subsidies.²⁴ Both the individual mandate and the subsidies took effect in 2014.

The ACA premium tax credit is refundable, which means up to the full amount can be claimed by an eligible individual who owes little or no federal income tax. It may be applied only toward the cost of purchasing a private health plan through a health insurance exchange. In addition, cost-sharing subsidies may reduce cost-sharing limits (i.e., the cap on annual out-of-pocket expenses) and cost-sharing requirements (e.g., annual deductibles) under private insurance plans purchased through an exchange.

As discussed in the methodology appendix to this report (Appendix A), there is no universal definition of "low-income" and programs characterized as serving low-income people rely on widely differing income eligibility levels. To be eligible for ACA premium credits, individuals must meet certain insurance-related requirements and have incomes no lower than 100% of the federal poverty guidelines and as high as 400% of poverty.²⁵ Individuals eligible for the premium tax credit who meet certain insurance-related criteria are also eligible for cost-sharing subsidies if their incomes are no higher than 250% of the federal poverty guidelines.

FY2014 was the first fiscal year in which federal spending occurred under the ACA premium credit and cost-sharing subsidies. Obligations in that year totaled $13 billion and rose to $30 billion in FY2015; they are projected to reach $58 billion in FY2017.²⁶ If these obligations were included in the spending amounts in this report, the health category would total $474 billion, rather than $444 billion, and would comprise 54%, rather than 52%, of all low-income spending in FY2015.

The ACA provisions are distinct from other programs included in this report because there is a lower bound on income eligibility; in other words, those with income below the poverty level are generally not eligible for these provisions, largely because they are assumed to have Medicaid or other subsidized coverage. Future editions of this report might include all or a portion of spending under these provisions. However, as of mid-2016 insufficient information is available to determine the extent to which these provisions are benefitting those at the lower end of the income eligibility spectrum, rather than those with incomes as high as 400% of poverty in the case of premium credits or 250% for cost-sharing subsidies. Thus, these ACA benefits are not included in the spending totals presented in this version of the report.

Trends in Non-health Care Low-Income Spending, FY2008-FY2015

As the health care category has grown as a share of all low-income spending, a declining share has gone to the remaining categories of benefits and services: cash aid, food assistance, education, housing and development, social services, employment and training, and energy assistance. Because health care dominates low-income spending and masks trends in the other categories, the following sections discuss spending solely for non-health programs, overall and by category.

Overall

Federal obligations for non-health low-income programs totaled $302 billion in FY2008 and rose by 33% to $404 billion in FY2015 (see Table 1); this compares with a 71% increase in low-income health obligations over the same period. Most of the growth in non-health spending occurred in the first year of the period. Specifically, non-health low-income spending grew by 28% between FY2008 and FY2009 and then rose slowly until its peak in FY2011. Spending declined by 4% in FY2012 and remained relatively flat in the subsequent years. Non-health low-income spending in FY2015 was almost 2% lower than the FY2011 peak (see Figure 5).

 

Figure 5. Federal Spending on Low-Income Non-health Benefits and

 

Services, by Category, FY2008-FY2015

 

(nominal dollars in billions)

 

 

 

By Category

Despite an increase in nominal spending for most non-health categories over the eight-year period, food assistance is the only category for which obligations grew as a share of non-health spending from FY2008 to FY2015. As food assistance has consumed a greater share, the remaining categories have each comprised a smaller share of all non-health low-income spending (see Table 5).

Specifically, food assistance represented less than 20% of non-health low-income spending in FY2008 but consumed almost 26% in FY2015. Spending in nominal dollars for this category grew by more than 75% during the period, from $59 billion in FY2008 to $103 billion in FY2015 (with peak spending of $107 billion in FY2013). The food assistance category includes SNAP, the second largest program included in this report, which saw a near-doubling of spending over the period. (See discussion of SNAP in "The 10 Largest Programs" section.) SNAP accounted for more than 70% of all food assistance obligations in FY2015.

Cash assistance is the largest of the non-health categories of low-income benefits and services; it represented 38% of all non-health spending in both FY2008 and FY2015, although it consumed a slightly smaller share in some of the intervening years. Five programs are included in this category and four of them are among the 10 largest programs included in the report (as discussed in "The 10 Largest Programs" section). Spending for cash assistance under TANF was largely unchanged in nominal dollars over the period,²⁷ but the remaining programs in this category all saw some spending growth. Nonetheless, as a share of non-health low-income spending cash assistance was the same in both FY2008 and FY2015.

The bottom five categories of benefits and services collectively and individually accounted for a smaller share of non-health low-income spending in FY2015 than in FY2008. Together, these categories -- education, housing and development, social services, employment and training, and energy assistance -- represented almost 42% of non-health obligations in FY2008. By FY2015, this share had declined to 36%. Each of the categories saw ARRA-related spending increases in FY2009, but this additional spending subsequently tapered off. Four of the five categories (employment and training being the exception) had higher spending in nominal dollars in FY2015 than in FY2008. However, when adjusted for inflation social services and employment and training had declined by almost 3% and almost 7%, respectively.

 

Table 5. Percentage of Federal Spending on Low-Income Non-health

 

Benefits and Services, by Category, FY2008-FY2015

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 20.]

 

 

 

In nominal dollars, federal spending for low-income programs rose by half (51%) over the eight-year period from FY2008 through FY2015. This growth was fueled initially by responses to the recession, as ARRA pumped additional money into the economy and high unemployment and declining incomes qualified more people for benefits. The economy slowly improved and stimulus spending subsided; however, overall spending levels did not return to pre-recession levels. Congress enacted the ACA in 2010, which authorized an expansion of Medicaid and further drove up low-income spending in FY2014 and FY2015.

Health care is the largest category of low-income benefits; it now accounts for more than half of such spending due to the disproportionate size of Medicaid. In its rate of growth, health care is second only to food assistance, which grew slightly faster than health care over the eight-year period. Spending for the other non-health categories also rose over the period but at a slower rate. Further, most of the increased spending in non-health categories occurred in the early years of the period in direct response to the recession. Food assistance is the only non-health category to have increased its share of low-income spending from FY2008 to FY2015. Other categories either remained flat or declined as a share of spending.

These spending patterns do not reflect congressional decisions about the amount or composition of low-income spending that should occur in the aggregate in any given year. Programs included in these spending totals were created independently of one another, at different times and in response to different perceived policy problems. Their size is a function of their design and budgetary classification (mandatory, including whether open-ended or capped, versus discretionary); congressional budget and appropriations processes; external influences affecting the cost of goods and services; and numerous other economic, demographic, social, and political factors.

Important distinctions among low-income programs are masked when looking at total spending. For example, most low-income health spending occurs under Medicaid, but the category also includes programs targeted on the specific needs of certain elderly individuals, veterans, women and children, Indians, refugees, individuals living with HIV or AIDS, people living in medically underserved areas, and others. Moreover, Medicaid itself is a multitude of programs, with each state operating its own program within federal parameters and providing both primary and acute health care, in addition to long-term services and supports, to a diverse population including children, pregnant women, adults, individuals with disabilities, and the elderly.

Cash aid is the category that most resembles traditional perceptions of "welfare." This category includes cash assistance under TANF, which was the successor to the New Deal-era program of Aid to Families with Dependent Children (AFDC). However, cash assistance under TANF is a relatively small program within this category ($6.4 billion in FY2015), which also includes the much larger EITC and ACTC ($81 billion combined in FY2015). These two refundable tax credits are available only to people who are working and primarily benefit working families with children. The cash aid category also includes SSI ($62 billion in FY2015), which is exclusively for low-income elderly and disabled individuals, and pensions for needy veterans.

While food assistance does not directly provide cash, SNAP subsidizes the purchase of food and arguably frees up income that would otherwise be needed for this basic necessity. SNAP, like Medicaid, is an open-ended entitlement to individuals, so that anyone eligible is served if they apply. On the other hand, housing assistance -- which also frees up income otherwise required for a necessity -- is made up primarily of discretionary programs, such as Section 8 and Public Housing, and serves a relatively small fraction of eligible households.²⁸

Collectively, the programs in this report provide income support through cash or near-cash benefits, but also provide services (e.g., education, community development, social services, employment and training) intended to improve the well-being and self-sufficiency of low-income people and communities. Some benefits are provided directly to individuals but many are delivered through state and local governments and private nonprofit organizations. In addition to income eligibility criteria, some programs impose other requirements on beneficiaries, including rules regarding work or participation in training.

In summary, programs included in this report are extremely diverse in their purpose, design, and target population. The report tells a story -- that low-income spending has grown sharply in recent years and is dominated by spending for health care -- but given the diversity among programs that serve low-income people, further generalizations require additional information and should be made with care.

Programs were selected for inclusion in this report series²⁹ if they (1) have provisions that base an individual's eligibility or priority for service on a measure (or proxy) of low income; (2) target resources in some way (e.g., through allocation formulas, variable matching rates) using a measure (or proxy) of low income; or (3) prioritize services to low-income segments of a larger target population. No universal definition or specific dollar amount was used to define low income for purposes of this report. However, most programs use a multiple of the federal poverty guidelines or other measures to target resources toward people and communities at the low end of the income distribution.

A few programs without an explicit low-income provision were included because either their target population is disproportionately poor or their purpose clearly indicates a presumption that participants will be low-income. Such programs that disproportionately serve low-income people include the Indian Health Service, Homeless Assistance Grants, Indian Education programs, Title I Migrant Education, and Indian Human Services. Programs with purposes that presume a low-income target population include Adult Basic Education and the Social Services Block Grant.

Federal student loan programs were initially considered for inclusion because they determine benefit levels through the same need-analysis system used for Pell Grants and several smaller postsecondary education programs. However, this system results in students from relatively well-off families receiving assistance, as there is no absolute income ceiling on eligibility. Pell Grants are structured in such a way that the majority of recipients are low-income and the lowest-income students receive the largest benefits. Student loan programs are not as specifically targeted and therefore are not included in the report.

Deliberations about whether to include the Additional Child Tax Credit (ACTC) reached a different conclusion. The regular Child Tax Credit (CTC) is a nonrefundable credit and phases out at relatively high income levels. The ACTC is a refundable credit that allows families with no or insufficient tax liability to get all or part of the benefit they would otherwise receive from the CTC. Because of the refundable nature and other design features of the ACTC, it serves predominantly lower-income families. For example, for tax year 2013, 89% of returns that claimed the ACTC were filed by families with adjusted gross income (AGI) below $40,000 and 88% of the credit went to such families.³⁰ Thus, the ACTC is included in the report.

As explained earlier in "Are ACA Premium Credits and Subsidies "Low-Income" Benefits?", premium credits and cost-sharing subsidies provided under the ACA are not included in this report. FY2014 is the first year in which spending occurred under these provisions and data are not yet available on the incomes of those who received the benefits. Individuals with incomes below 100% of the federal poverty guidelines are generally precluded from benefiting, and eligibility goes as high as 400% of poverty for the premium credits and 250% for cost-sharing subsidies. As income data become available, the question of whether to include these obligations in future versions of the report will be revisited.

Because the report includes only mandatory and discretionary spending programs, it does not include tax provisions except mandatory spending for the refundable portion of the Earned Income Tax Credit (EITC) and the refundable ACTC.

Two programs have been added since the previous report in this series was published in 2015. Guardianship Assistance under Title IV-E of the Social Security Act had seen spending since FY2010; however, obligations for that program did not reach that report's $100 million threshold for inclusion until FY2015. Preschool Development Grants had been inadvertently overlooked in previous reports in the series, although spending under that program (and its predecessor) had exceeded the $100 million threshold since the program began in FY2011. Preschool Development Grants have now been added to the spending totals in all relevant years.

Categorization of Programs

Most programs are easily assigned to broad categories, such as health care, cash aid, food assistance, or education. A few, however, have multiple purposes or allowable activities. For some of these programs, spending can be disaggregated into the relevant categories. For example, using state reporting of actual expenditures, it is possible to estimate the amount of TANF obligations attributable to cash aid, social services, and employment and training. Other programs cannot be disaggregated and must be assigned to a single category. For example, Transitional Cash and Medical Services for Refugees was categorized as health care, and Indian Human Services was categorized as social services although it also provides cash and housing assistance.

The social services category, in general, is not well-defined and some analysts might assign some programs -- and therefore dollars -- differently. Head Start, for example, could be considered an education program because its purpose is to promote school readiness; however, it supports a very broad range of activities (including activities for children ages 0-3 in its Early Head Start component) that can best be characterized collectively as social services. Foster Care and Adoption Assistance both give cash to families or other care providers, but income support is not these programs' purpose or sole use of funding. Foster Care subsidizes maintenance payments and administrative activities (including case planning) on behalf of children who cannot remain safely at home, and Adoption Assistance helps facilitate the adoption of children who would otherwise lack permanent homes. Thus, these programs, as well as Guardianship Assistance, were categorized as social services and not cash aid. Likewise, Maternal, Infant, and Early Childhood Home Visiting was included in social services, rather than health care, because of the broad range of its intended purposes.

Selection of Spending Measure

New obligations incurred in the indicated fiscal year were chosen as the measure of spending for this report, although for many programs readers may be more accustomed to seeing budget authority (primarily appropriations) or outlays. These spending concepts are related. Congress and the President enact budget authority through appropriations measures or authorizing laws. Budget authority in turn allows federal agencies to incur obligations, through actions such as entering into contracts, employing personnel, and submitting purchase orders. Outlays represent the actual payment of these obligations, usually in the form of electronic transfers or checks issued by the Treasury Department.³¹ Obligations are used in this report because they are the most consistent measure available at the necessary level of detail for the majority of programs. The source of obligations data is the U.S. Budget Appendix for the second fiscal year (e.g., FY2017 budget appendix for final FY2015 obligations, FY2016 budget appendix for final FY2014 obligations).

Obligations were not available or not appropriate, for reasons explained below, for a small number of programs. Because obligations were not available at the necessary program level, appropriations were used for the following: Transitional Cash and Medical Services for Refugees, Breast/Cervical Cancer Early Detection, the Title I Migrant Education Program, Preschool Development Grants, Social Services and Targeted Assistance for Refugees, and Foster Grandparents.

For veterans' medical care, the U.S. Budget Appendix shows obligations for the entire program and not solely the income-tested component. For the 2011 and 2015 reports in this series, CRS calculated estimated obligations for Priority Group 5 veterans (needy veterans without service-connected disabilities), using data from the Department of Veterans Affairs (VA) on obligations for Priority Groups 1-6 and 7-8 and the number of patients receiving care by individual priority group. For this report, however, CRS obtained data directly from the VA on expenditures specifically for Priority Group 5 veterans.

The U.S. Budget Appendix also does not show obligations solely for the low-income subsidy portion of the Medicare Part D prescription drug program. Therefore, this report uses aggregate reimbursements for the low-income subsidy for the calendar year (instead of fiscal year), available from the annual report of the Medicare trustees.³²

As noted above, TANF obligations provided in the U.S. Budget Appendix were disaggregated into the categories of cash aid, social services, and employment and training based on states' reporting to the Department of Health and Human Services of their actual expenditures.

The U.S. Budget Appendix includes obligations for the Section 502 single-family rural housing loan program in combination with other programs in an aggregate amount for the Rural Housing Insurance Fund Account. Thus, loan subsidy budget authority (also found in the U.S. Budget Appendix) was used for the Section 502 program in the 2015 report and this report. In the 2011 report, loan subsidy outlays were used, adjusted for re-estimates provided in the Federal Credit Supplement to the U.S. Budget for the relevant years; however, budget authority has since been chosen as a simpler and more consistent measure.

Finally, this report uses obligations from the U.S. Budget Appendix for the ACTC in FY2009 to FY2015. However, for FY2008 ACTC obligations shown in the U.S. Budget Appendix also include an unspecified amount for a one-time $300 per child tax rebate, authorized by the Economic Stimulus Act of 2008 (P.L. 110-185), that was not targeted on low-income families. That figure, which overstates the amount spent for the ACTC alone, was used in the 2011 report with appropriate caveats. For the 2015 report and this report, however, data from the Internal Revenue Service Statistics of Income for tax year 2007 are used to provide a more accurate picture of the ACTC in FY2008.

Spending Threshold

Programs are included in this report if they had obligations in any year from FY2008 through FY2015 of at least $100 million. To simplify the analysis without significantly changing the overall picture, smaller programs were excluded, even if they met the low-income criteria. A few programs had spending above the threshold in some years but not in others.³³ Spending totals cited throughout this report include these programs only for the years in which their obligations equaled or exceeded $100 million. In other words, each year's spending total is a snapshot of spending in that year for low-income programs that had obligations totaling at least $100 million in that year. (See Appendix Table B-2 for all spending amounts for all programs in each year.)

Comparison with Predecessor CRS Report Series

From 1979 to 2006, CRS issued a series of reports, typically every other year, called Cash and Noncash Benefits for Persons with Limited Income. That series was conceived and produced (except for the last edition in 2006) by Vee Burke, Specialist in Social Policy, who retired from CRS in 2004. In 2011, CRS began a new series of reports intended to replace the Cash and Noncash series. This report is the third in that series.

The new report series uses different methodologies to select and categorize programs and measure spending; therefore, it cannot be considered an update of Cash and Noncash for various reasons. For example, the older series did not include certain programs that are now included, such as the low-income subsidy under Medicare Part D, Title I-A of the Elementary and Secondary Education Act, and Community Development Block Grants. The older series also had no minimum spending threshold, so it included smaller programs that are not included here. In addition, the older series included student loans, which are no longer included for reasons explained above. Several programs were also categorized differently in the previous series (e.g., Head Start was categorized as education, Foster Care and Adoption Assistance as cash aid, and Homeless Assistance Grants as social services). The older series used different measures of spending for different programs, while the new series uses obligations wherever possible. The older series also provided estimates of state-local spending, which are not included here because a consistent and reliable source is not available. Finally, the older series traced spending back to 1968, which is beyond the scope of the current series. Changes in programs and appropriations accounts over time make it virtually impossible to trace obligations backward with precision.

Table B-1 lists all programs included in the report and indicates the federal administering agency and CFDA number for each program. The table also identifies a more detailed CRS report for each program, where available.

Table B-2 shows obligations (or another measure of spending, as noted) for each program from FY2008 through FY2015. The table also indicates each program's budgetary classification (mandatory or discretionary).

Table B-3 identifies, for each program, the general target population and the concept(s) used to determine individual income eligibility and (if relevant) the concept used to target federal resources broadly based on need. The table indicates the general concept used but not the specific application. For example, the table might indicate that federal poverty guidelines (FPG) are used as a concept in determining income eligibility for a particular program but it does not indicate the specific percentage of FPG that is used. Likewise, the table might show that a program uses formula allocation factors to direct federal resources toward areas with the greatest need but it does not identify the specific factors or their weighting. Readers are referred to the CRS reports listed in Table B-1 or agency websites for these details.

Table B-4 shows the type of federal assistance provided (typically formula grants, competitive or discretionary grants, or direct benefits) and the immediate recipients of this assistance. As noted in the table, immediate recipient refers to the level of government or the organization that directly receives the federal grant or award. Many programs require that funds be further distributed (by formula or other criteria) to other units of government or organizations. For example, federal grants may be awarded by formula to states, but states are then required to subaward these funds to local governments or other entities. Those subawards are not shown in the table. The table also indicates whether a program has provisions for participation by U.S. territories or residents or organizations located within the territories. The specific details of these provisions are not provided in the table; readers are referred to statutory language or federal agency websites for this information.

Both Table B-3 and Table B-4 were originally prepared for inclusion in the first of the current report series, which included more detailed discussions of the concepts presented. See CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009.

 

Table B-1. Individual Programs Included in

 

This Report's Spending Totals

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 28.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table B-2. Federal Spending on Low-Income Benefits and Services,

 

by Program and Budgetary Classification, FY2008-FY2015

 

(new obligations unless otherwise noted;

 

nominal dollars in millions)

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 34.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table B-3. Target Populations and Concepts Used to Determine

 

Individual Income Eligibility Criteria and/or Target Federal

 

Resources, by Program

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 42.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Table B-4. Types of Grants or Awards, and Eligible Immediate

 

Grantees or Beneficiaries, by Program

 

 

[ Editor's Note: For a searchable version of the table,

 

see , p. 50.]

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

* * * * *

 

 

Appendix C. Related Reading

 

CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009, by Karen Spar.

Amber Wilhelm prepared the graphics for this report.

² See footnote 1. Both earlier reports include brief overviews of the categories and short fact sheets on each included program; see CRS Report R43863 for the most recent information. Also see Table B-1 for links to program-specific CRS reports.

³ FY2014 was the first year for such spending under the Patient Protection and Affordable Care Act (ACA, P.L. 111-148, as amended). Although spending for premium credits and cost-sharing subsidies is not included here, the report does include spending under the ACA Medicaid expansion.

⁴ See Appendix B for a list of all programs included in the spending totals discussed in this report.

⁵ See CRS Report R44327, Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals, by Gene Falk et al. The nine programs examined did not include Medicaid. Programs included were the Supplemental Nutrition Assistance Program, Earned Income Tax Credit, Supplemental Security Income, Housing Assistance (Section 8 and Public Housing), Additional Child Tax Credit, Special Supplemental Nutrition Program for Women, Infants and Children (WIC), cash aid under Temporary Assistance for Needy Families, Child Care and Development Fund, and Low-Income Home Energy Assistance Program.

⁶ For a discussion of measures and concepts used in low-income programs to determine eligibility and target resources to low-income communities, see the sections titled "Defining Individual Eligibility for Benefits and Services" and "Targeting Federal Resources According to Need" in CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009, by Karen Spar.

⁷ See footnote 5.

⁸ For a brief description of non-federal spending in federal low-income programs, see the section titled "Matching and Related Requirements" in CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009, by Karen Spar.

⁹ The National Bureau of Economic Research dates the recession as starting in December 2007 and ending in June 2009.

¹⁰ Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, http://data.bls.gov/timeseries/LNS14000000. Unemployment data are provided for context about the time-period reviewed in the report; however, readers are reminded that Unemployment Insurance is a form of universal social insurance and not included in the numbers or discussion in this report.

¹¹ See CRS Report R44211, Poverty in the United States in 2014: In Brief, by Joseph Dalaker.

¹² For an overview of ARRA, see CRS Report R40537, American Recovery and Reinvestment Act of 2009 (P.L. 111-5): Summary and Legislative History, by Clinton T. Brass et al..

¹³ This remains true even when adjusting dollars for inflation. In current (FY2015) dollars, spending for low-income programs would have totaled $623 billion in FY2008 and exceeded that amount in every subsequent year through FY2015.

¹⁴ None of the 10 largest programs included in this report are subject to sequestration under the BCA except Section 8 Housing Choice Vouchers and Title I-A Education for the Disadvantaged Grants. See (archived) CRS Report R42050, Budget "Sequestration" and Selected Program Exemptions and Special Rules, coordinated by Karen Spar.

¹⁵ See Table B-1 in CRS Report R43847, Medicaid's Federal Medical Assistance Percentage (FMAP), by Alison Mitchell.

¹⁶ Under the ACA Medicaid expansion, states receive an enhanced federal matching rate resulting in the federal government paying the vast majority of costs associated with the expansion. For FY2014 and FY2015, states received a 100% federal matching rate for the cost of individuals who were newly eligible for Medicaid due to the expansion.

¹⁷ See CRS In Focus IF10399, Overview of the ACA Medicaid Expansion, by Alison Mitchell. Although the ACA Medicaid expansion was the main reason for the large growth in Medicaid spending, the so-called "woodwork effect" also contributed to increased spending within Medicaid. This is the term for uninsured individuals who are eligible for Medicaid without the expansion but who decide to enroll in the program due to increased media attention and outreach efforts associated with the ACA. See CRS Report R42640, Medicaid Financing and Expenditures, by Alison Mitchell.

¹⁸ See CRS Report R41374, Reducing SNAP (Food Stamp) Benefits Provided by the ARRA: P.L. 111-226 and P.L. 111-296, by Randy Alison Aussenberg, Jim Monke, and Gene Falk.

¹⁹ See CRS Report R43805, The Earned Income Tax Credit (EITC): An Overview, by Gene Falk and Margot L. Crandall-Hollick.

²⁰ See CRS Report R40151, Funding for Education in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), by Rebecca R. Skinner, David P. Smole, and Ann Lordeman.

²¹ See CRS Report R42446, Federal Pell Grant Program of the Higher Education Act: How the Program Works and Recent Legislative Changes, by Cassandria Dortch.

²² See CRS Report R41078, The TANF Emergency Contingency Fund, by Gene Falk.

²³ See CRS Report R40151, Funding for Education in the American Recovery and Reinvestment Act of 2009 (P.L. 111-5), by Rebecca R. Skinner, David P. Smole, and Ann Lordeman.

²⁴ See CRS Report R44425, Eligibility and Determination of Health Insurance Premium Tax Credits and Cost-Sharing Subsidies: In Brief, by Bernadette Fernandez.

²⁵ There are exceptions to the lower bound income threshold of 100% of the federal poverty guidelines. One is for lawfully present aliens with incomes below 100% of poverty, who are not eligible for Medicaid for the first five years that they are lawfully present in the United States. The ACA allows such lawfully present aliens to be eligible for premium credits. Also note that income is measured under the ACA using the Modified Adjusted Gross Income (MAGI) definition; see CRS Report R43861, The Use of Modified Adjusted Gross Income (MAGI) in Federal Health Programs, coordinated by Evelyne P. Baumrucker.

²⁶ FY2014 obligations break down as follows: $11 billion for premium credits and $2 billion for cost-sharing subsidies (Office of Management and Budget, FY2016 Budget Appendix, p. 1046). FY2015 obligations break down as follows: $24 billion for premium credits, $5 billion for cost-sharing subsidies, and $1 billion for the "basic health program," which states may establish instead of offering eligible individuals coverage through an exchange (Office of Management and Budget, FY2017 Budget Appendix, pp. 1061-1062).

²⁷ TANF is one of the 10 largest programs in this report; however, only a portion of TANF spending is included in the cash assistance category. TANF spending is apportioned among three categories: cash assistance, social services, and employment and training. Total spending for TANF declined over the period, by less than 1%.

²⁸ CRS found that about 18% of eligible individuals received subsidized housing assistance in FY2012. See CRS Report R44327, Need-Tested Benefits: Estimated Eligibility and Benefit Receipt by Families and Individuals, by Gene Falk et al.

²⁹ The series includes CRS Report R41625, Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009, by Karen Spar, published in 2011; CRS Report R43863, Federal Benefits and Services for People with Low Income: Programs and Spending, FY2008-FY2013, by Karen Spar and Gene Falk, published in 2015; and this report.

³⁰ Internal Revenue Service, Statistics of Income (SOI) Tax Stats -- Individual Income Tax Returns Publication 1304, Table 3.3. The most recent data available are for 2013.

³¹ See CRS Report 98-410, Basic Federal Budgeting Terminology, by Bill Heniff Jr.

³²2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds, June 2016, Table IV.B10.

³³ These programs include the Food Distribution Program on Indian Reservations, the Fresh Fruit and Vegetable Program, Indian Education Grants to Local Education Agencies, Education for Homeless Children and Youth, College Access Challenge Grants, Single-Family Rural Housing Loans, the Tax Credit Assistance Program, and Guardianship Assistance. See Table B-2.