The Kids' Share of the Federal Budget

| Posted: April 10th, 2013

What will be the kids’ share of the budget in the future? How can we maintain or grow investments in children in the face of ever-rising costs in health and retirement programs and political opposition to raising additional revenue?

The detailed numbers accompanying this year’s budget release will allow us to analyze how we’re spending federal dollars on children. Last year’s Kids’ Share report found that outlays on children dropped in 2011, the first such decline in nearly 30 years. An even sharper decline in federal dollars spent on children is expected in 2012, as funds provided under the American Recovery and Reinvestment Act of 2009 (ARRA) are nearly exhausted. And the kids’ share of the budget is at risk of declining further over the next decade.

The president’s budget proposes steps to reduce the long-term federal deficit. Such broad-based budgetary packages carry the risk of cutting important children’s programs. Yet, if our country does not adopt budgetary reforms, spending on children and families is at risk of being squeezed by structural forces in the federal budget. Inaction on the budget also saddles our children with a growing long-term debt.

The Budget Control Act of 2011 offers an example of the mixed effects of broad budgetary packages on children. On the one hand, according to our analysis, the Act reduced spending on children in real dollars, but did not cut spending on children in the aggregate by as large a percentage as the overall reduction in the federal budget. The result was a slight increase in the kids’ share of the budget. However, the BCA selectively hits hardest some of the programs most likely to be counted as investments, particularly education.

Programs for children might be cut more radically in future budget plans, if the sequestration and spending caps under the Budget Control Act are replaced by spending restraints that spare defense spending and cut more from non-defense programs. Spending on children also would be harmed if future budgetary packages drop the current exemption of low-income programs from automatic budgetary sequestration, because this exemption protects many children’s programs.

Children’s programs would fare better if we had the political will to enact a package that includes both tax and spending provisions rather than focusing exclusively on the spending side of the budget ledger. I also believe that we should protect future investments in children by adopting proposals that slow the growth in Social Security and Medicare, while still protecting current recipients most dependent on those benefits. The president’s proposal to change the measure of inflation used to calculate future increases in Social Security benefits is a step towards that goal, if it’s adopted with protections for the most vulnerable and as part of a broader budget package.

Photo by Flickr user Listener42 used under Creative Commons license (CC BY-SA 2.0)

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Are Families with Children Covered by Safety Net Programs?

| Posted: March 28th, 2013

As I reported yesterday, 6.2 million children lived in families with at least one unemployed parent in an average month of 2012. This post explores the extent to which children with unemployed parents are covered by unemployment insurance (UI) benefits and other safety net programs.

It turns out that a small proportion—36 percent—of children whose parents were unemployed in 2011 lived in families that received UI benefits. In fact, an issue brief released earlier this week found that children living with at least one unemployed parent were more likely to receive Supplemental Nutrition Assistance Program (SNAP) benefits (39 percent) than UI benefits (see figure below).

Yet SNAP benefits (formerly known as food stamps) do not provide families as much support as UI benefits: in July 2012, SNAP monthly benefits averaged about $278 per household, less than the average weekly benefit of $299 for unemployment benefits (the monthly equivalent of $1,286).

As shown in the figure below, the 36 percent with UI benefits includes 24 percent who receive UI benefits alone and 12 percent who receive a combination of UI benefits with SNAP or TANF benefits. More than one-fourth (29 percent) of children living with unemployed parent turn to SNAP and/or TANF because they do not receive any UI benefits. And more than a third (35 percent) did not receive assistance from any of these three major benefits.

Providing broader coverage to unemployed parents and their children would require modernizing the unemployment insurance system, beyond the initial reforms adopted by states under the American Recovery and Reinvestment Act of 2009. In the modern age, factory work has been replaced by service-sector jobs. Many workers do not face formal layoffs, but instead leave service-sector jobs after struggling to combine erratic hours with family responsibilities. Denial of UI benefits after such “voluntary” quits contributes to low coverage rates, according to research by H. Luke Shaefer. As he notes, one way to expand access—yet guard against encouraging workers to casually quit their jobs—would be to ban benefits for a certain period (perhaps 4 to 12 weeks) after voluntary quits, rather than throughout the total spell of unemployment. Public outreach and reforming the application process also could help address low take-up rates among eligible workers.

It will be hard to persuade state legislatures to expand access to benefits, given the strain on state unemployment trust funds during this recession. In fact, current policy debates focus on whether to cut safety net programs. For example, the budget resolution the House passed last week would cut SNAP benefits by $135 billion, or 18 percent, over the next 10 years. If enacted, such cuts would weaken a critical support to children of the unemployed.

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Unemployment from a Child's Perspective

| Posted: March 27th, 2013

Millions of Americans lost their jobs during the Great Recession, and millions are still unemployed. As a result, millions of children have experienced the hardship of parental job loss. An analysis published Monday finds that 6.2 million children lived in families with at least one unemployed parent in an average month of 2012. And almost half (45 percent) of these children, 2.8 million, are living with parents who have been looking for work for six months or longer.

One of the earliest signs children suffer after parental job loss is declining school performance. Several studies have documented lower math scores, poorer school attendance, and a higher risk of being held back among children whose parents have lost their jobs. Some negative effects can last into adulthood, with one study finding that low-income youth whose parents lose their jobs have lower rates of college attendance  and another finding that boys whose fathers lost their jobs when plants closed in the early 1980s had annual earnings about 9 percent lower than similar children whose fathers did not experience such job losses.

Children with unemployed parents live throughout the country. According to the most recent data, nearly 1 million (976,000) of them live in California, reflecting both the size of the state’s population and the severity of its economic problems. More than a1 in 10 children in California (11 percent) live with at least one unemployed parent. Other states with particularly high incidence of children living with unemployed parents include Kentucky, Mississippi, Nevada, Rhode Island, and the District of Columbia, as shown in the map below.

While the depth of the problem varies across states, all saw a sharp rise in children affected by unemployment during the recession, and little improvement since then. For example, the most recent data show that a dozen states have more than twice as many children with unemployed parents in 2012 than they did five years ago: Alabama, Delaware, Florida, Hawaii, Idaho, Indiana, Maryland, Nevada, New Jersey, New York, North Carolina, and Pennsylvania. (For growth rates in other states, see appendix tables in full brief).

Some metropolitan areas have particularly high numbers of children living with unemployed parents, including Modesto, California (20 percent); Bakersfield, California (17 percent); Riverside-San Bernadino-Ontario, California (16 percent); and Toledo, Ohio (15 percent). At the other extreme, only 3 percent of the children in Des Moines-West Des Moines, Iowa are living with an unemployed parent (see appendix tables of full brief for rates across the 100 largest metro areas).

In tomorrow's post I will explore the extent to which children with unemployed parents are covered by unemployment insurance and other safety net programs.

This post was updated to correct the names of the metro areas with the highest and lowest shares of children living with unemployed parents.

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Child poverty rates predicted to remain high through 2012

| Posted: December 5th, 2012

Children’s economic well-being has shown little improvement over the past year, according to several measures. One positive sign is that the number of children with an unemployed parent is modestly down from a year ago. On the other hand, the economy remains weak and the number of families applying for nutrition assistance continues to rise in most states.

Child poverty rates, which provide the most direct measure of children’s economic well-being, are available with a time lag: 2012 poverty statistics will be available next September. To track children’s well-being in a more timely manner, I have developed state-by-state predictions for current child poverty, based on partial-year data on unemployment and nutrition assistance, and lagged child poverty rates. My latest predictions, released yesterday and depicted in the map below, suggest that child poverty will increase in 4 states (Mississippi, Montana, New Jersey, and New York) and decrease in 7 states (Illinois, Indiana, Michigan, Minnesota, Nebraska, Ohio, and South Carolina). The remaining 40 states will not see significant changes in the child poverty rate (i.e., changes larger than the margins of error surrounding the estimates).

I predict that the national child poverty rate will remain close to the 22.5 percent rate reported in the 2011 American Community Survey. The model’s precise prediction is 22.4 percent; the actual rate may be half a percentage point higher or lower, judging from past experience. Over the past two years, the model has correctly predicted the general upward trend in child poverty, and its predictions have been within 0.4 percentage points of the national rate.

While child poverty rates appear to be leveling off in 2012, they remain much higher than before the recession. I predict that twice as many states will have child poverty rates of 20 percent or higher in 2012 as before the recession (28 vs. 14 states).

These predictions and other measures show that millions of children and families are worse off than they were five years ago. As policymakers debate broad budgetary packages of spending cuts and revenue increases, it is important to recognize the recession’s ongoing impact on children and families. In my view, this is not the time to make major cuts in nutrition assistance or other major elements of the social safety net, given the large number of families still struggling to regain the economic ground lost during the recession.

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How Should We View the Growth of Food Stamps Across the Nation?

| Posted: November 1st, 2012

The record-high number of Americans receiving food stamps has attracted attention in the presidential debates. Nearly 15 percent of the population—more than 46 million people—are currently receiving benefits under the Supplemental Nutrition Assistance Program (SNAP, the modern version of food stamps), based on average monthly recipient statistics for January–June 2012. This is a dramatic increase from the first half of 2007, when 9 percent of the population, or 26 million people, were receiving SNAP benefits. In total, caseloads grew by 77 percent over the past 5 years.

Almost half of SNAP participants are children, leading to the startling statistic that more than one in four American children receive food stamps. With monthly benefits averaging $277 per family, most recipients supplement their SNAP benefits with cash from paychecks and disability or retirement benefits to pay their grocery bills.

Some parts of the country draw more heavily on the federally funded SNAP program than others, even though all families must meet uniform national eligibility guidelines to participate. More than one-fifth of the population in Mississippi, New Mexico, Oregon, Tennessee, and the District of Columbia receives SNAP benefits. At the other extreme, the SNAP recipiency rate is less than 10 percent in Colorado, Nebraska, North Dakota, New Hampshire, New Jersey, Utah, and Wyoming (see figure below).

Economic conditions explain much of the recent growth in SNAP caseloads and the variation across states. SNAP caseloads rise with increases in unemployment and poverty, and fall as the economy recovers. Thus, we find very high SNAP recipiency rates in Mississippi and New Mexico, which also rank among the poorest states. In contrast, New Hampshire and New Jersey stand out as having both very low SNAP recipiency rates and low poverty rates.

Outreach and enrollment procedures also matter, however, as can be seen by comparing two neighboring states, Oregon and California. Both states have slightly higher than average poverty rates (17.5 and 16.6 percent, respectively), yet the SNAP recipiency rate is twice as high in Oregon as in California (21.9 vs. 10.4 percent). One possible reason that Oregon has the third highest recipiency rate in the nation is that its Department of Human Services, in collaboration with the Oregon Food Bank and a state Hunger Relief Task Force, undertook deliberate policy efforts to improve access and outreach for nutrition assistance, following Oregon’s high ranking in studies of food insecurity by state.

Alternatively, one could argue that Californians are more self-reliant and have stronger moral fiber than Oregonians. I doubt such an argument would be taken seriously when comparing states, but a tone of blame, and what many observers characterize as coded racism, does enter some of the political discourse about SNAP benefits. I would encourage readers to think about the high rates of SNAP participation relative to poverty in Oregon (and Maine and Vermont), and the much lower rates in California (and Colorado, Utah, and North Dakota), the next time they hear politicians hint that high use of SNAP benefits is a sign of unhealthy dependency. In my view, the rise in SNAP benefits is a sign of ongoing economic problems—and a sign that this critical element of the safety net is supporting millions of needy Americans.

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Child Poverty Rate Rising in Many States

| Posted: September 20th, 2012

On September 19, the Census Bureau released data from the 2011 American Community Survey, allowing a closer look at child poverty rates across the states. Child poverty increased in many states, with the result that 27 states now have child poverty rates of 20 percent or higher.  Before the recession began, only about half as many states–14 mostly southern and southwestern states–had these high rates.

As shown in the map below, states throughout the South, much of the West, and portions of the Northeast and Midwest have high child poverty rates. In these states, one in five children—or more—grows up in a family with very low income (roughly less than $18,000 for a family of three and $23,000 for a family of four).  Mississippi, New Mexico, and the District of Columbia top the list, with child poverty rates of more than 30 percent. Another 17 states have rates between 15 and 20 percent; only 7 states in the country have child poverty rates of less than 15 percent.

Averaged across all states, the national child poverty rate is 22.5 percent, according to these new ACS data, a substantial increase from the 21.6 percent rate in the 2010 ACS data. However, the more commonly cited national poverty statistics, released a week ago, indicate that child poverty rates calculated from Current Population Survey (CPS) data were essentially flat between 2010 and 2011, at roughly 22 percent. Note that the Census Bureau recommends using CPS data for national poverty rates and ACS data for state and more localized rates, even though these two surveys sometimes show slightly different trends.

What do we know about how children are faring in 2012? The indicators that help predict child poverty rates are mixed. On one hand, unemployment rates are declining slowly, which might portend a modest decline in child poverty. On the other hand, caseloads for food stamps (now called the Supplemental Nutrition Assistance Program) are still slightly rising, suggesting that child poverty may also be rising. With mixed trends, I am not yet ready to predict child poverty rates for 2012, but will do so in early December, publishing my third annual prediction of state child poverty rates. My December 2011 prediction that state child poverty rates would continue to rise in 2011 has been largely borne out by today’s data, an outcome that speaks well to my model’s predictive abilities, but poorly about the state of our economy.  Too many millions of families with children are still struggling economically in the wake of the recession.

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Falling Behind Before the First Day of School: The School Readiness of Poor Children

| Posted: August 29th, 2012

Back-to-school time is around the corner, and children and parents around the country are getting ready. The start of school is particularly exciting for five-year-olds entering school for the first time.

Unfortunately, only about half (48 percent) of poor five-year-olds who enter kindergarten this fall will be “school-ready” in terms of having early math and reading skills, good physical health, and age-appropriate behaviors (some ability to pay attention and work on task, not too many temper tantrums or other problem behaviors). By comparison, 75 percent of children from families with moderate and high incomes will enter school ready to learn (see figure below). Whether this disparity is because of poor families’ inability to secure the resources needed for healthy development (such as nutritious meals, high-quality child care settings, and neighborhoods free of crime and pollution) or because of the negative effects of poverty on parental stress and family dynamics, large numbers of poor children lag behind their peers and start school at a disadvantage from day one.

Figure 1: Likelihood of Being Ready for School at Age Five, by Poverty Status at Birth

Many poor children face a combination of risk factors that threaten their development during early childhood, as detailed in a paper I wrote on the school readiness of poor children. For example, mothers of poor children are more likely to be depressed than other mothers and less likely to exhibit warmth and sensitivity (during videotaped observations of parent-child interactions) or to read books or sing songs to their children. Many poor mothers also lack a high school diploma, another factor contributing to their children’s lower levels of early academic skills.

What can be done to improve the school readiness of poor children? Policies to increase family income, through earned income tax credits or other wage supplements, have been shown to have a positive impact on children’s academic skills during early and middle childhood. Money really does matter, as Greg Duncan and his colleagues conclude from a rigorous analysis of findings from experimental welfare-to-work programs. Children also can benefit from services that address specific parental characteristics, such as maternal depression (see my colleagues’ project on “Linking Depressed Mothers to Effective Services”). And they can benefit from parenting programs such as the nurse home visiting program, which coaches first-time, low-income mothers on a range of parenting issues.

In my paper, I simulated the possible effects of three interventions to improve school readiness—expanding preschool programs to all poor four-year-olds, providing smoking cessation programs to poor pregnant mothers who smoke, and offering nurse home visiting programs to all poor mothers. Of the three, I found that preschool programs for four-year olds has the most promise for improving school readiness at age five.

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Downward Trends in Federal Spending for Children

| Posted: July 31st, 2012

Federal spending on children fell for the first time since the early 1980s, according to the recent Urban Institute report, “Kids’ Share 2012: Report on Federal Expenditures on Children through 2011.” An even larger decrease is projected for fiscal year 2012, with the largest declines in federal education programs. Gloomy forecasts through 2022 show federal outlays on children falling from 10 to 8 percent of the federal budget and also falling as a share of the economy, from 2.5 to 1.9 percent of GDP, below the pre-recession level of investment.

Why this downward trend? In the short run, the decline is driven by the exhaustion of funding from the American Recovery and Reinvestment Act of 2009.  While expected, the loss of these temporary funds comes at a hard time. Many families still face economic hardships in the wake of the recession. States and localities have been hard hit by the recession and will be severely challenged to make up for this decrease.

Moreover, the drop in spending on children is not part of a general belt-tightening. In fact, total federal outlays increased by nearly $80 billion last year, after adjusting for inflation. Bottom line: it is the share of the budget spent on children, not federal spending as a whole, that is falling.

Over the longer term, structural forces in the federal budget are placing a squeeze on spending on children. Specifically, as the retired population grows and health costs continue to rise, spending on Medicare, Medicaid, and Social Security is increasing so dramatically that more than half (51 percent) of the federal budget is projected to be spent on these entitlement programs by 2022. At the same time, federal revenues fall short of federal spending levels every year, resulting in a growing debt. By 2017, we will be spending more on interest payments than on children. With automatic growth driving spending for more than 60 percent of the budget, competition will be fierce for the remaining share.

While current projections suggest that the kids’ share of the budget will drop from 10 to 8 percent, the future could be even more grim. These projections assume that the spending caps in the Budget Control Act are followed—and defense spending is actually cut from 20 to 13 percent of the budget and “all other spending” (e.g., agriculture, commerce, the environment, transportation, etc.) declines from 23 to 16 percent (see figure below).

Kids Slated to Get Declining Share of Federal Budget

Children’s programs might be cut more radically if the Budget Control Act were replaced with a budget package that cuts less from defense and more from non-defense programs. Or a package that dropped the current exemption of low-income programs from automatic budgetary sequestration (an exemption that serves to protect many children’s programs). On the other hand, children’s programs would fare better if we had the political will to consider not just spending cuts, but also revenue increases, and if broad budget packages included proposals to stem the growth in Social Security and Medicare while still protecting current recipients dependent on those benefits.

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Children: Invisible Victims of the Foreclosure Crisis

| Posted: June 20th, 2012

Whether they live in owner-occupied homes or rental housing, children are often invisible victims of the foreclosure crisis. Mortgage records do not show how many children are living in a house, and information about children in multifamily housing units under foreclosure is even harder to come by. In a policy brief I wrote shortly before joining the Urban Institute, I combined Census Bureau data on children’s living arrangements with foreclosure estimates from the Center on Responsible Lending to get a rough sense of how many children are affected by the foreclosure crisis. The answer may be higher than you would think. An estimated 8 million American children, or more than one in 10 kids, have been or will be affected by the nation's foreclosure crisis, according to my estimates.

The national estimate includes 5.3 million children in owner-occupied homes with an additional 3 million children in rental housing. The number in rental units is too rough to break out by state, but a map of children in owner-occupied homes shows striking differences across the country (see map below). In Nevada, almost 1 in 5 children (19 percent) lived or live in owner-occupied homes that were lost to foreclosure or are at risk of being lost, much more than the 7 percent nationwide. The numbers are also quite high, 10 percent or higher, in Florida, Arizona, California, and Michigan—other states hit hard by the housing crisis.

Percentage of Children Affected by Foreclosures of Owner-Occupied Homes

Source: Julia Isaacs “The Ongoing Impact of Foreclosures on Children.” The estimates are based on data from the Center for Responsible Lending (CRL) and the American Community Survey

How are children affected by the foreclosure crisis? We have never experienced a foreclosure crisis as bad as this one, so we are still learning. But we do know, from studies dating back to the Great Depression, that when families suffer financial losses, their children suffer. This is partly because families have fewer resources to invest in their children, but also because financial stress affects family interactions. Parents under economic stress sometimes engage in harsh and less supportive parenting, with negative consequences for their children’s social and academic adjustment. In addition, a body of literature finds that children who switch schools, whether because of foreclosure or other reasons, have lower levels of math and reading achievement and are more likely to drop out of school than their more stable peers, even after controlling for poverty and other characteristics. Also, children living in neighborhoods with high concentrations of foreclosure face the detrimental effects of living in a community with more vacant houses, lower social cohesion, and a lower tax base. And these children also face the potential loss of their own home.

Unfortunately, the crisis is not over. The 5.3 million estimate of children in owner-occupied homes includes 2.3 million children who have already lost their homes due to foreclosure and an even larger number—3.0 million children—in homes that are already seriously delinquent (by 60 days or more) and at immediate risk of foreclosure. The number of children in rental housing who are affected by foreclosure is also on the rise, at least according to local studies in Baltimore and the District of Columbia. While the foreclosure crisis may have peaked in regions, it is still growing in others. And beneath the surface, as the number of foreclosures continues to rise, so do the risks of adverse consequences for children.

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