# Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009 > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/crs%3AR41625 ## Record - **Collection:** Congressional research report - **Document type:** CRS Report - **Published:** January 31, 2011 - **Citation:** R41625 ## Text Federal Benefits and Services for People with Low Income: Programs, Policy, and Spending, FY2008-FY2009 (name redacted) Specialist in Domestic Social Policy and Division Research Coordinator January 31, 2011 Congressional Research Service 7-.... www.crs.gov R41625 CRS Report for Congress Prepared for Members and Committees of Congress Federal Benefits and Services for People with Low Income Summary The federal government spent almost $708 billion in FY2009 on programs for low-income people, and nearly $578 billion the previous year. The increased spending between the two years was largely due to the recession, with almost two-thirds coming from the American Recovery and Reinvestment Act (ARRA, P.L. 111-5), the economic stimulus enacted in February 2009. Low-income programs discussed in this report are distinct from social insurance programs, such as Social Security or Medicare, which aim to protect American workers universally against lost wages or benefits when they retire, become disabled, or lose a job. In contrast, programs addressed here focus explicitly on low-income populations. They provide assistance in obtaining basic needs, such as health care, food, or housing, and seek to address the causes of low income through education, training, or other services. While these programs are very diverse, the analysis in this report yields certain general findings: • Health care dominates all other categories of benefits and services, accounting for nearly half of federal spending for low-income people. Cash aid is second but trails far behind, comprising 18% of spending in FY2009. Other categories, in decreasing size, are food assistance, housing and development, education, social services, energy assistance, and employment and training. • Four programs account for 60% of federal spending for low-income people and 10 programs make up more than three-fourths. Medicaid alone accounted for nearly 40% of FY2009 lowincome spending; next were the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Supplemental Security Income, and the refundable portion of the Earned Income Tax Credit. • Elderly and disabled individuals, and families with children are key target populations for much of the spending for low-income people. Federal policy toward families with children generally encourages work and includes incentives to “make work pay.” Other populations served by selected programs include veterans, students, homeless people, Indians, and refugees. • Within broad target populations, programs use different concepts to determine who is eligible. Most spending is on behalf of people determined individually eligible by virtue of their low income or eligibility for another income-tested program. “Low income” is defined in a multitude of ways, using different percentages of the federal poverty guidelines, specific dollar amounts, percentages of local area median income (primarily for housing programs), or other measures. • Many programs distribute funding to states or other entities to provide benefits and services to low-income people, using population-based allocation factors, cost-sharing formulas, or other mechanisms to target resources toward areas or entities with the greatest need. Some of these programs (especially in elementary and secondary education) have no further requirements for individuals to be determined income-eligible. • Programs for low-income people are most likely to use formula grants to distribute funds to states or another unit of government. Under many of these programs, notably including Medicaid, states must spend a specified amount of their own funds to receive federal dollars. State and local governments administer most of these federal programs; however, many of the largest programs provide federal benefits directly to individuals or via a nongovernmental intermediary. Congressional Research Service Federal Benefits and Services for People with Low Income Contents Introduction ................................................................................................................................1 Caveats .................................................................................................................................3 A Brief History of Federal Low-Income Policy ...........................................................................4 Overview of Federal Spending on Benefits and Services for People with Low Income ................7 Change in Spending from FY2008 to FY2009 .......................................................................9 Budgetary Classification of Federal Spending on Benefits and Services .............................. 11 A Look at the 10 Largest Programs............................................................................................ 12 Overview of Benefits and Services by Category ........................................................................ 17 Health Care......................................................................................................................... 17 Cash Aid ............................................................................................................................. 18 Food Assistance .................................................................................................................. 18 Housing and Development .................................................................................................. 18 Education............................................................................................................................ 20 Social Services.................................................................................................................... 20 Energy Assistance ............................................................................................................... 21 Employment and Training ................................................................................................... 21 Defining Individual Eligibility for Benefits and Services ........................................................... 22 Federal Poverty Guidelines ................................................................................................. 24 Other Income Measures ...................................................................................................... 26 Specific Dollar Amounts ............................................................................................... 26 Median Income ............................................................................................................. 26 “Need Analysis”............................................................................................................ 27 Lower Living Standard Income Level............................................................................ 27 Treatment of Income ..................................................................................................... 28 Asset/Resource Limits ........................................................................................................ 29 Categorical and Behavioral Requirements and Exclusions ................................................... 29 A Note About Noncitizens............................................................................................. 30 Automatic Eligibility........................................................................................................... 30 Targeting Federal Resources According to Need........................................................................ 32 Formula Allocation Factors ................................................................................................. 33 Cost-Sharing Rules ............................................................................................................. 35 Limited Eligibility for Areas or Entities............................................................................... 37 Types of Federal Grants and Grantees ....................................................................................... 37 Formula-Based Grants ........................................................................................................ 38 Competitive or Discretionary Awards .................................................................................. 39 Direct Benefits to Individuals.............................................................................................. 40 Matching and Related Requirements ................................................................................... 41 Policies Affecting Indian Tribes........................................................................................... 42 Policies Affecting U.S. Territories ....................................................................................... 43 Benefit Levels Under Selected Cash and Near-Cash Programs................................................... 43 Final Notes and Outstanding Questions ..................................................................................... 46 Congressional Research Service Federal Benefits and Services for People with Low Income Figures Figure 1. Federal Spending on Benefits and Services for Low-Income People, FY2008 and FY2009, by Category ...........................................................................................8 Figure 2. Federal Spending on Benefits and Services for Low-Income People, FY2008 and FY2009, with and without ARRA Spending, by Category ..................................................8 Tables Table 1. Federal Spending by Major Category on Benefits and Services for People with Low Income, FY2008, FY2009, and ARRA .............................................................................9 Table 2. Spending for 10 Largest Programs for People with Low Income, FY2008, FY2009, and ARRA ................................................................................................ 12 Table 3. Key Features of the 10 Largest Programs ..................................................................... 15 Table 4. Concepts Used in Determining Individual Eligibility for Federal Benefits and Services for Persons with Low Income................................................................................... 23 Table 5. Concepts Used in Targeting Federal Resources According to Need............................... 33 Table 6. Cash and Near-Cash Benefit Amounts: As of July 2008, July 2009, and July 2011.............................................................................. 45 Table B-1. Spending for Federal Benefits and Services for People with Low Income, by Program: FY2008, FY2009, and ARRA ................................................................................. 53 Table B-2. Target Populations and Concepts Used to Determine Individual Income Eligibility Criteria and/or Target Federal Resources, by Program............................................ 60 Table B-3. Types of Grants or Awards, and Eligible Immediate Grantees or Beneficiaries, by Program ............................................................................................................................ 67 Table C-1. Guide to Program Fact Sheets and Page Numbers.................................................... 73 Appendixes Appendix A. Methodology of Report......................................................................................... 49 Appendix B. Detailed Program Tables....................................................................................... 52 Appendix C. Program Fact Sheets ............................................................................................. 73 Appendix D. Sources of Additional Information on Selected Income Measures and Eligibility Tests .................................................................................................................... 173 Contacts Author Contact Information .................................................................................................... 174 Acknowledgments .................................................................................................................. 175 Congressional Research Service Federal Benefits and Services for People with Low Income Introduction People and communities with limited resources are a major focus of public policy. While policymakers might disagree in theory on whether or to what extent government should act to protect the economic well-being of individuals and families, the federal government in fact spends large sums of money on numerous programs targeted toward those with limited income and assets. This report attempts to identify and analyze these programs and provide a broad overview of the policies underlying them. In FY2009, federal spending on programs for people with low income was almost $708 billion, and totaled nearly $578 billion the previous year. Most of the growth between the two years was related to the recession and associated policy responses, with almost two-thirds (64%) of the increase coming from the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 1115). In both years, four programs accounted for almost 60% of total spending, and 10 programs accounted for more than 75%. The distinguishing feature of federal programs examined here is their explicit focus on lowincome populations, as distinct from social insurance programs such as Social Security, Medicare, or Unemployment Insurance. Social insurance programs aim to protect American workers universally against lost wages and work-related benefits due to retirement, disability, or temporary periods of unemployment. They are financed in large part through contributions from workers and employers and their aggregate spending is much larger than programs intended specifically for those with low income. Social insurance programs play a major role in reducing poverty among significant segments of the population.1 In contrast to social insurance, programs examined in this report are funded through general revenues and provide benefits and services to people with limited income either by explicitly tying eligibility to a measure of income, or by targeting assistance through funding allocation formulas or other need-related mechanisms. They attempt to ameliorate or mitigate the effects of low income by providing cash or noncash benefits to help people meet basic needs, such as food, housing, and health care. They also seek to address root causes of economic disadvantage by providing education, training, and other services to improve people’s employability and earnings capacity. Some programs combine these purposes by conditioning aid on participation in work or training or providing incentives to engage in these activities. Finally, some programs target assistance to communities with significant concentrations of low-income people to compensate for their low tax capacities, and help provide revenues to support benefits and services to residents. These programs are extremely diverse in their purpose, design, and target populations. Many were created independently of one another, at different times and in response to different perceived policy problems. They also changed over time in response to various societal and other factors. “Social welfare,” “social safety net,” and “public welfare” are generic terms sometimes 1 See, for example, House Ways and Means Committee 2008 Green Book, Appendix E, “Poverty, Income Distribution, and Antipoverty Effectiveness,” pp. E-65-E-76: http://democrats.waysandmeans.house.gov/media/pdf/110/appE.pdf; and CRS Report RL33289, Social Security’s Effect on Child Poverty, by (name redacted). Congressional Research Service 1 Federal Benefits and Services for People with Low Income used to refer to these programs; however, there is no single label that best describes all programs included in this report.2 Key findings of the report are presented in the Summary, above. The body of the report is organized as follows: • The report begins with a very brief history of federal low-income policy, to provide context for the subsequent discussion of current programs. The report then gives an overview of current federal spending on benefits and services for low-income people, including a review of the budgetary classification of these funds (mandatory or discretionary). • The next section looks specifically at the 10 largest programs, which together account for three-fourths of all spending in the report, followed by an overview of all programs, organized by major category in order of FY2009 spending: health care, cash aid, food assistance, housing and development, education, social services, energy assistance, and employment and training. • The next two sections look in greater detail at the ways in which benefits and services are directed toward people with limited income, either by establishing explicit eligibility criteria for individuals or families, or by targeting assistance toward communities or entities based on a measure of need. These sections look at use of the federal poverty guidelines and other income measures in defining eligibility or otherwise targeting assistance, as well as criteria that enable certain categories of people to qualify automatically. • The form of federal assistance—formula grants, competitive or discretionary awards, direct payments to individuals—is the focus of the next section, which also looks at the immediate recipients of federal funds, such as states, local governments, and nonprofit organizations. The section discusses matching or other requirements for nonfederal spending, and very briefly addresses the participation of Indian tribes and U.S. territories. • The report generally does not discuss the value of benefits or services provided; however, the next section shows maximum benefit levels under selected cash and near-cash benefit programs. The report concludes by identifying potential questions for further analysis. • The report includes several appendixes: Appendix A discusses the methodologies used to prepare the analysis; Appendix B provides overview tables of programs included in the report; and Appendix C is a series of short fact sheets on each program. Appendix D gives references to information about the federal poverty guidelines and other income measures and eligibility tests. 2 As these terms are commonly understood, they are either too broad or too narrow to collectively characterize programs included in this report. “Social welfare” and “social safety net” are sometimes understood to include social insurance programs in addition to programs explicitly targeted on low-income populations. “Public welfare” often is understood as a more narrow set of programs that primarily provide cash or near-cash benefits to low-income people. While such programs are included here, programs that provide in-kind benefits and services also are discussed. “Income-tested” or “means-tested” might be used to describe programs in this report, although (as discussed later) some programs target assistance toward low-income communities or entities but do not specifically apply an income or means test to individual participants or beneficiaries. Congressional Research Service 2 Federal Benefits and Services for People with Low Income Caveats The analysis in this report required numerous decisions about which programs to include, how to categorize them, and what measure of federal spending to use. The methodologies chosen are described in Appendix A. Readers should be aware, however, of the following caveats: • The report refers to the target population of these benefits and services as persons with “low” or “limited” income, rather than “poor” people. Although some programs limit participation to individuals with income below federal poverty guidelines, income eligibility criteria vary widely and frequently include people with income above the federal definition of poverty. • The number of programs included in this report is not meaningful. While fact sheets are presented for 82 “programs,” some could have been characterized as more than one program and others could have been consolidated. In addition, only programs with new obligations of $100 million or more in a given year are included. If smaller programs were included, the overall number of programs would be larger, but the analysis would essentially be unchanged. • The assignment of programs—and therefore dollars—to broad categories (health care, cash aid, food assistance, etc.) is not perfect. Certain programs provide multiple types of assistance and spending could not be disaggregated, so spending was assigned to a single category. Some programs are ambiguous; different analysts might categorize them differently. The analysis might be changed somewhat if different assignments had been made. • The report does not include tax programs, with the exception of direct spending for the refundable portion of the Earned Income Tax Credit and the refundable Additional Child Tax Credit. • The report does not provide long-term trend data on spending. For reasons explained in Appendix A, obligations are generally used as the measure of spending. While obligations are the most consistent program-specific measure available for the majority of programs included here, they are difficult to trace backward. Spending is provided for FY2009 because it is the most recent year for which final amounts are available for all programs included. Because FY2009 was an unusual year, however, with a large infusion of funding from the economic stimulus law (ARRA), FY2008 spending is also shown. • The report provides a snapshot of policies and spending for low-income programs in FY2008 and FY2009. It does not address the effectiveness of these programs in meeting their policy goals. • Readers familiar with the CRS series of reports entitled Cash and Noncash Benefits for Persons with Limited Income should know that this report is not an update of that earlier series. This report is meant to replace that series but it uses different methodologies and is therefore not comparable to the Cash and Noncash reports. See Appendix A for an explanation of the differences. Congressional Research Service 3 Federal Benefits and Services for People with Low Income A Brief History of Federal Low-Income Policy A review of the evolution of federal policy for low-income people provides useful context for understanding today’s programs and policies. The following is a quick overview of key milestones, such as the New Deal of the 1930s and the Great Society of the 1960s. While many current programs trace their roots to these eras, few exist today in the same form. Today’s programs reflect policy changes enacted over many decades in response to numerous factors, particularly the shift in societal expectations about mothers working outside the home. Federal aid initially focused on groups who were not expected to work, including mothers of dependent children; however, federal policy today generally favors work among able-bodied aid recipients and includes incentives to “make work pay.” Federal policy also expanded over time to include efforts to address root causes of poverty and disadvantage, in addition to helping people meet their basic needs. Federal involvement in providing benefits and services for people with low income generally began in the first part of the 20th century, largely after the Great Depression overwhelmed the resources of states, local governments, and private organizations, which previously had borne primary responsibility for helping the disadvantaged. With some key exceptions, such as veterans’ benefits and tax credits for low-wage workers, state and local governments still play a significant role in most programs intended for low-income populations, regardless of whether they are partially or fully federally funded. Benefits for veterans, initially to meet the medical needs of those who became disabled during service, are among the oldest in the United States, and date back in some form to the beginning of the country.3 By the early 1900s, these benefits had grown to include medical care and cash assistance for the indigent as well as veterans with disabilities, including assistance for dependents and survivors of veterans. These were the primary benefit programs administered by the federal government until the Great Depression of the 1930s. The New Deal was the federal government’s response to the Depression, and the Social Security Act of 1935 was its cornerstone. The act brought the federal government into the fields of social insurance and cash relief for populations who either could not work or who society at that time did not expect to work. 4 The original act established income security programs for aged and retired workers and for temporarily unemployed workers (the beginning of today’s Social Security and Unemployment Compensation programs). It also authorized federal grants to states to make cash aid payments to two groups, in addition to the elderly, who were not expected to work. These groups were fatherless (dependent) children and the blind, although within these categories, the act gave states the authority to define specific eligibility and benefit levels. Aid to Dependent Children, as created in 1935, was amended over the succeeding decades and became Aid to Families with Dependent Children in 1962. Aid was provided to parents (typically single mothers) in addition to the children. However, at the same time, expectations about mothers’ work began to change. Starting in the late 1960s and continuing over the next 30 years, 3 VA History, Department of Veterans Affairs, http://www4.va.gov/about_va/vahistory.asp. 4 See CRS Report 86-45EPW, Social Security Benefits, Cash Relief, and Food Aid: A Short History, by (name redacted) (out-of-print; available upon request). Also see CRS Report R40946, The Temporary Assistance for Needy Families Block Grant: An Introduction, by (name redacted). Congressional Research Service 4 Federal Benefits and Services for People with Low Income Congress imposed work registration and work or training requirements on certain parents receiving cash benefits. In 1996, Congress replaced AFDC with Temporary Assistance for Needy Families (TANF), which established time limits on the receipt of benefits and conditioned cash aid on participation in work activities. States continue to make key decisions regarding eligibility and benefit levels under TANF, and have the added flexibility to use funds for noncash services. (In fact, the majority of TANF funds are now used for noncash services, such as social services and employment-related activities.) The 1996 law also gave states more federal funding for child care for low-income working families. The 1930s also marked the federal government’s entry into the field of housing.5 In response to trouble in the mortgage market resulting from the Depression, the U.S. Housing Act of 1934 encouraged lending for housing construction through a new Federal Housing Administration. The U.S. Housing Act of 1937 subsequently created the low-rent Public Housing program, which required states to establish quasi-governmental local public housing authorities (PHAs) to administer the program. In 1949, Congress declared the federal goal of “a decent home and a suitable living environment for every American family,” and over the next two decades it enacted provisions to provide affordable housing through incentives to private developers to build lowcost housing. The Housing Act of 1974 created a new rental assistance program, known as Section 8, which provided rental subsidies for private properties, in lieu of development subsidies. Section 8 was later expanded to include portable rental vouchers administered by PHAs. While Section 8 vouchers have effectively replaced subsidies for new development, many housing units that were subsidized under these earlier programs still provide affordable housing today. They are administered by PHAs or private properties, under contract with the federal Department of Housing and Urban Development (HUD). An early version of food stamps existed for several years during the Depression and was revived in 1961 as a small pilot program.6 The program became permanent during the Great Society, through the Food Stamp Act of 1964. Originally, states set their own eligibility rules, and benefits varied regionally. This changed in 1971 when the program was effectively converted to a national income guarantee, providing an amount of food stamps to participating households sufficient to buy items equivalent to the Agriculture Department’s “economy diet.” However, recipients had to contribute a monthly “purchase requirement” based on their income in order to obtain benefits. The law set nationally uniform eligibility rules and federally paid benefit levels, but states continued to administer the program. Congress enacted a number of major policy changes to the Food Stamp program over the next three decades, including removal of the purchase requirement in the late 1970s, allowing automatic eligibility for those receiving other public assistance benefits or services in 1985, and limiting access for able-bodied adults without dependents in 1996. In 2008, the Food Stamp program was renamed the Supplemental Nutrition Assistance Program (SNAP). States continue to administer SNAP and have some leeway in determining eligibility through application of the automatic eligibility rules, but benefit levels remain federally financed and nationally uniform. A central feature of the Great Society was the War on Poverty, and the Economic Opportunity Act of 1964 was its primary legislative vehicle. That act and its subsequent amendments authorized numerous programs that sought to address the causes of economic disadvantage, and to 5 See CRS Report RL34591, Overview of Federal Housing Assistance Programs and Policy, by (name redacted) et al. See CRS Report 86-45EPW, Social Security Benefits, Cash Relief, and Food Aid: A Short History, by (name redacted) (out-of-print; available upon request). 6 Congressional Research Service 5 Federal Benefits and Services for People with Low Income ameliorate its effects. Programs were designed to meet the multiple needs of low-income preschool children and their families, and the employability needs of low-income youth and adults, and to give low-income people a formal role in planning services for their communities.7 Modern-day programs with origins in the War on Poverty include Head Start, Job Corps, Adult Basic Education, components of the Workforce Investment Act, the Legal Services Corporation, Weatherization Assistance, the Low-Income Home Energy Assistance Program, School Breakfast,8 the Summer Food Service Program, the Child and Adult Care Food Program, and the Community Services Block Grant. The Great Society also focused on education; both the Elementary and Secondary Education Act and the Higher Education Act became law in 1965. The Great Society also saw the creation of Medicare and Medicaid, which have grown into the nation’s largest health care programs. Medicare was created in 1965, providing health coverage as a form of social insurance to elderly and disabled individuals with a significant attachment to the workforce. The same legislation created Medicaid, a means-tested entitlement that finances medical services and long-term care for specified low-income and categorical groups. Medicaid replaced two earlier programs of federal grants to states that provided medical care to welfare recipients and the elderly.9 Both Medicare and Medicaid have been amended numerous times over the years, expanding both eligible populations and services. A prescription drug benefit was added to Medicare in 2003, which includes a subsidy for low-income beneficiaries. And most recently, the 2010 health reform law—the Patient Protection and Affordable Care Act (P.L. 111148, as amended by P.L. 111-152)—significantly expanded Medicaid, so that, beginning in FY2014 (or potentially sooner, at state option), Medicaid will cover low-income childless adults in addition to the program’s traditional target populations of low-income parents and children, and elderly and disabled individuals. The original Social Security Act’s grants to states for cash aid to needy blind and aged individuals were expanded over time to include people with disabilities. However, in contrast to cash aid and related programs for needy families with children, which remain state-administered, Congress “federalized” programs for low-income aged, blind, and disabled people in 1972. These earlier programs were replaced by Supplemental Security Income (SSI), which has uniform federal minimum eligibility and benefit rules (rather than state-determined policies) and serves blind and disabled children as well as adults. Also in the early 1970s, Congress considered but did not enact welfare reform legislation that would have replaced AFDC with a federal minimum cash guarantee for poor families, including working families with two parents. Instead, in 1975 Congress enacted a temporary “work bonus” or wage supplement intended to return a portion of Social Security taxes to low-income working households. 10 This program was made permanent in 1978 and became the current 7 A key component of the War on Poverty was the Community Action Program, which required local antipoverty agencies to include low-income residents on their governing boards. These boards were charged with identifying and advocating for government services to meet local community needs. Many of the original Community Action Agencies are current eligible entities under the Community Services Block Grant, administered by the Department of Health and Human Services. See CRS Report RL32872, Community Services Block Grants (CSBG): Background and Funding, by (name redacted). 8 While School Breakfast traces its origins to the War on Poverty, the National School Lunch Program began earlier, under the Richard B. Russell National School Lunch Act of 1946. 9 See CRS Report RL33202, Medicaid: A Primer, by (name redacted). 10 See CRS Report 95-542, The Earned Income Tax Credit: A Growing Form of Aid to Low-Income Workers, by James Storey (out-of-print; available upon request). Congressional Research Service 6 Federal Benefits and Services for People with Low Income Earned Income Tax Credit (EITC). The credit has been expanded several times over the past 30 years and is currently one of the largest cash assistance programs for low-income households, reflecting the prevailing policy goal of “make work pay.” Consistent with the emphasis on promoting work for low-income families, the welfare reform law of 1996 created TANF, which, as noted above, conditions cash aid on participation in work activities, and also expanded funding for child care. In the year following enactment of welfare reform, low-income families not sufficiently poor for Medicaid gained access to health insurance for their children through enactment of the State Children’s Health Insurance Program (CHIP) in 1997. The Child Tax Credit and refundable Additional Child Tax Credit (ACTC) also were created in 1997, although the impact of the ACTC originally was limited. In 2001 and subsequent years, the ACTC was expanded so that it now targets assistance toward low-income families. Most recently, Congress enacted the American Recovery and Reinvestment Act (ARRA, P.L. 1115) in 2009, in an effort to stimulate the economy during recession. While ARRA did not create significant new initiatives for people with limited income, it revised and expanded certain existing policies, at least temporarily, to make them more responsive to the needs of people and communities affected by the downturn. As the following discussion shows, ARRA resulted in a substantial increase in spending on benefits and services for low-income populations between FY2008 and FY2009. The bulk of funding provided by ARRA was intended to be spent during FY2009 and FY2010. Overview of Federal Spending on Benefits and Services for People with Low Income Federal spending on benefits and services for low-income people totaled $708 billion in FY2009 and $578 billion in FY2008. These programs generally seek to mitigate the effects of low income by helping people meet basic needs such as health care, food, or shelter, or to address the root causes of economic disadvantage through services, education, or job training. Notably, few programs have poverty reduction as an explicit goal or purpose. Key target populations for many of these programs, including some of the largest, include low-income elderly and disabled individuals, and dependent children and their families. Other target groups for selected programs include veterans, students, people who are homeless, Indians, and refugees, among others. Figure 1 illustrates the composition of spending, by category, in FY2008 and FY2009. Figure 2 displays FY2008 and FY2009 spending by category, and also highlights the portion of spending in FY2009 attributable to ARRA. Table 1 shows this information, both overall and by category, and the percent change in spending from FY2008 to FY2009. See Appendix Table B-1 for a listing of specific programs in each category. Congressional Research Service 7 Federal Benefits and Services for People with Low Income Figure 1. Federal Spending on Benefits and Services for Low-Income People, FY2008 and FY2009, by Category Source: Prepared by the Congressional Research Service (CRS) from obligations data contained in the U.S. Budget Appendix for FY2010 and for FY2011. Note: FY2009 amounts include federal obligations under the American Recovery and Reinvestment Act. FY2008 amount for cash aid includes an unspecified amount for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 (P.L. 110-185), which was not targeted on low-income families. Figure 2. Federal Spending on Benefits and Services for Low-Income People, FY2008 and FY2009, with and without ARRA Spending, by Category Source: Prepared by the Congressional Research Service (CRS) from obligations data contained in the U.S. Budget Appendix for FY2010 and for FY2011. Notes: ARRA = American Recovery and Reinvestment Act. FY2008 amount for cash aid includes an unspecified amount for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 (P.L. 110-185), which was not targeted on low-income families. Congressional Research Service 8 Federal Benefits and Services for People with Low Income Table 1. Federal Spending by Major Category on Benefits and Services for People with Low Income, FY2008, FY2009, and ARRA (dollars in billions) FY2008 FY2009 ARRA (included in FY2009) % Change, FY2008 to FY2009 Health 258.5 319.3 34.4 24% Cash aid 133.7 129.6 0.4 -3% Food assistance 58.9 77.5 5.0 32% Housing and development 39.6 59.9 14.4 51% Education 41.9 58.2 18.7 39% Social services 36.2 44.3 3.9 22% Energy assistance 2.9 10.3 4.7 259% Employment and training 6.2 8.6 1.8 38% $577.8 $707.6 $83.4 22% Category Total Source: Prepared by the Congressional Research Service (CRS) from obligations data contained in the U.S. Budget Appendix for FY2010 and for FY2011. Notes: ARRA = American Recovery and Reinvestment Act, P.L. 111-5. The FY2009 column includes amounts also shown separately in the ARRA column. The FY2008 amount for cash aid includes an unspecified amount for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 (P.L. 110-185), which was not targeted on low-income families. As Figure 1 shows, spending for health care dominates all other categories, accounting for close to half (45%) of total spending for limited-income populations in FY2009. Cash aid is the second largest category but trails health care by a wide margin, with 18% of spending in FY2009. Food assistance is third (11% of FY2009 spending), followed by housing and development (almost 9%), education (8%), social services (6%), energy assistance (almost 2%), and employment and training (1%). Change in Spending from FY2008 to FY2009 Overall spending on federal benefits and services for low-income populations grew by 22% between FY2008 and FY2009, largely due to policy responses to the recession. Almost two-thirds (64%) of the additional spending was provided under ARRA, the economic stimulus enacted in February 2009.11 Some large entitlement programs (e.g., Medicaid, the Supplemental Nutrition Assistance Program (SNAP)) saw additional growth in spending beyond that provided under ARRA, likely due to an increase in eligible and enrolled individuals as a result of the economic downturn. Spending growth from FY2008 to FY2009 was uneven among categories. The largest percentage increase was for energy assistance, which represented less than 1% of all spending in FY2008 and 11 For an overview, see CRS Report R40537, American Recovery and Reinvestment Act of 2009 (P.L. 111-5): Summary and Legislative History, by (name redacted) et al. Congressional Research Service 9 Federal Benefits and Services for People with Low Income more than tripled in FY2009. Spending for housing and development programs rose by 51%, education by 39%, and employment and training by 38%. Spending on food assistance increased between the two years (32%), as did spending for health care (24%) and social services (22%). Spending for cash aid appeared to drop by 3% between FY2008 and FY2009; however, this was the result of a one-time $300-per-child tax rebate, which was included as spending under the Additional Child Tax Credit (ACTC) in FY2008 but was not targeted toward low-income families. In terms of dollar increases between the two years, health care saw the largest growth, with $61 billion of additional obligations in FY2009. More than half of this increase (54%) resulted from provisions in ARRA that temporarily raised the federal share of Medicaid costs. However, growth in Medicaid spending—regardless of ARRA—accounted for another 30% of the dollar increase in low-income health spending from FY2008 to FY2009. The next largest dollar increase was for housing and development programs, which grew by $20 billion between FY2008 and FY2009. Most of this growth (71%) resulted from additional appropriations provided under ARRA for such programs as Public Housing, Homeless Assistance Grants (specifically for a new Homelessness Prevention and Rapid Re-Housing Program), and Section 8 Project-Based Rental Assistance. ARRA also funded two temporary grants related to the Low-Income Housing Tax Credit. Spending for food assistance rose by almost $19 billion between FY2008 and FY2009. More than a quarter of this growth resulted from ARRA provisions that increased the dollar value of SNAP benefits. As noted above, however, SNAP grew significantly regardless of the ARRA provisions, as more households became eligible and enrolled in the program during the recession and its aftermath. Additional SNAP obligations unrelated to ARRA accounted for 60% of the FY2009 spending increase in the food assistance category. Education spending grew by $16 billion from FY2008 to FY2009, although without additional appropriations provided under ARRA, this category would have decreased by $2 billion. However, ARRA was enacted before final decisions were made on total FY2009 appropriations, so appropriators were able to take into consideration the additional amounts already provided through ARRA. Pell Grants for postsecondary students and grants to disadvantaged school districts under Title I-A of the Elementary and Secondary Education Act were the largest beneficiaries of ARRA funding among education programs specifically targeted on low-income populations. Spending for social services rose by $8 billion between FY2008 and FY2009, with almost half of the increase coming from appropriations made by ARRA, specifically for Head Start, the Child Care and Development Fund, and the Community Services Block Grant. Energy spending grew by $7 billion, of which nearly two-thirds (64%) was ARRA funding for the Weatherization Assistance Program. Finally, employment and training saw a $2 billion increase in spending in FY2009, with more than three-quarters (77%) coming from appropriations under ARRA for the Workforce Investment Act and Job Corps. As noted above, cash assistance spending appeared to go down in FY2009, by about $4 billion. However, FY2008 obligations in this category included an unspecified amount of spending for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 (P.L. 110-185). This one-time rebate was counted as spending under the ACTC, but was not targeted toward low-income families. Thus, FY2008 spending for low-income people under the ACTC Congressional Research Service 10 Federal Benefits and Services for People with Low Income appears higher than it actually was. While ARRA made changes in both the Earned Income Tax Credit and the ACTC, these changes did not take effect until tax year 2009, and therefore associated spending would generally not be seen until FY2010. Budgetary Classification of Federal Spending on Benefits and Services Of total spending on programs for low-income people, about 75% is classified in budget terms as “mandatory” (also called “direct” spending) and the remainder as “discretionary.”12 In mandatory programs, many of which are entitlements to individuals or units of government, Congress defines eligibility and payment rules in authorizing laws.13 These rules determine the amount of spending that will occur, so Congress generally must amend the authorizing law in order to control federal spending. The amount of federal spending for discretionary programs, on the other hand, is determined by Congress through the annual appropriations process.14 Mandatory spending may be structured as open-ended or capped. In an open-ended entitlement program, no predetermined ceiling is imposed on federal expenditures; instead, federal payments are made to all eligible beneficiaries for eligible expenditures as defined in law. (Medicaid is an example of an open-ended entitlement program.) In a capped program, the authorizing law limits the total amount of federal spending that can occur. (Temporary Assistance for Needy Families is an example of a capped entitlement program.) Of mandatory spending discussed in this report, more than 90% is through open-ended programs. The pattern of mandatory versus discretionary spending differs by major category of benefits and services. All cash aid spending, and most spending for health care and food assistance, is mandatory. In all three of these categories, spending occurs largely through open-ended entitlement programs. In contrast, all spending for energy assistance and employment and training, and most spending for housing and development and education, is discretionary. Social services spending is a mixture; about two-thirds is mandatory and the rest is discretionary. Of the mandatory social services spending, a little more than half is capped and the balance is open-ended. 12 For more information on these budget classifications and trends in both areas of spending, see CRS Report RL33074, Mandatory Spending Since 1962, by (name redacted) and (name redacted) and CRS Report RL34424, Trends in Discretionary Spending, by (name redacted) and (name redacted). 13 Most mandatory programs in this report are entitlements; however, not all mandatory spending is for entitlement programs. See U.S. Government Accountability Office, A Glossary of Terms Used in the Federal Budget Process, GAO-05-734SP, September 2005. 14 Congress also funds certain mandatory programs through annual appropriations laws; however, the amounts to be provided are established in authorizing laws, and appropriators generally lack the “discretion” to adjust these amounts. These programs are sometimes referred to as appropriated entitlements. Congressional Research Service 11 Federal Benefits and Services for People with Low Income A Look at the 10 Largest Programs This report generally looks at spending and policy by major category, such as health care, cash aid, or food assistance. It illustrates the enormous diversity among and within categories in terms of target population and various design elements. However, it is important to note that a few individual programs account for the vast majority of spending for low-income populations, and these programs merit special attention. The four largest programs contributed almost 60% of total spending in each of FY2008 and FY2009, and the top 10 accounted for more than three-fourths. The following provides an overview of these programs; they are discussed in the context of all low-income programs in the balance of the report. Table 2 shows spending for these programs in FY2008 and FY2009, and separately under ARRA. Table 3 highlights key features of these programs. Table 2. Spending for 10 Largest Programs for People with Low Income, FY2008, FY2009, and ARRA (dollars in billions) FY2008 FY2009 ARRA (included in FY2009) Medicaid 214.015 265.058 32.632 Supplemental Nutrition Assistance Program 37.530 53.763 4.478 Supplemental Security Income 48.926 52.446 0 Earned Income Tax Credit (refundable portion only) 40.600 42.418 0 Pell Grants 18.000 26.019 8.497 Additional (refundable) Child Tax Credit 34.019 24.284 0 Title I-A—Education for the Disadvantaged 13.352 21.495 9.936 Medicare Part D, LowIncome Subsidy 17.400 20.300 0 Temporary Assistance for Needy Families 17.469 18.761 0.616 Section 8 Housing Choice Vouchers 15.552 16.289 0 $456.863 $540.833 $56.159 Program Total Source: Prepared by the Congressional Research Service (CRS) from obligations data contained in the U.S. Budget Appendix for FY2010 and for FY2011. Notes: ARRA = American Recovery and Reinvestment Act, P.L. 111-5. The FY2009 column includes amounts also shown separately in the ARRA column. Amounts shown for TANF include obligations in the following categories: cash aid, social services, and employment and training. Amounts shown for SNAP include obligations primarily in the food assistance category, but also include obligations in the employment and training category. The FY2008 amount for cash aid includes an unspecified amount for a one-time $300-per-child tax rebate, authorized under the Economic Stimulus Act of 2008 (P.L. 110-185), which was not targeted on low-income families. Congressional Research Service 12 Federal Benefits and Services for People with Low Income As Table 2 shows, Medicaid is the single largest program and alone accounts for nearly 40% of low-income spending. Next in size are the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps), Supplemental Security Income (SSI), and the refundable portion of the Earned Income Tax Credit (EITC).15 Notably, SNAP became the second largest program in FY2009 but was number four in spending in FY2008, behind SSI and EITC. Rounding out the top 10 are Pell Grants, the Additional Child Tax Credit (ACTC),16 Title I-A of the Elementary and Secondary Education Act (ESEA), the low-income drug subsidy under Part D of Medicare, Temporary Assistance for Needy Families (TANF),17 and Section 8 Housing Choice Vouchers. Because of the effect of Medicaid, more than half (53% in FY2009) of spending under the top 10 programs fell into the health category. Spending for programs in the cash assistance category equaled 23% of spending under the 10 largest programs in FY2009, followed by programs categorized as food assistance (10%) and education (9%). Small percentages of total spending for the top 10 programs went to those categorized as housing (3%), social services (2%), and employment and training (less than 1%).18 Low-income elderly, disabled, and families with dependent children are the focus of much of the spending under the top 10 programs. Medicaid provides health care for low-income people within certain categorical groups, which are primarily the elderly, individuals with disabilities, and dependent children and their families. 19 Low-income elderly and disabled Medicare recipients receive subsidized prescription drug insurance under Part D. Cash aid goes to low-income elderly and disabled beneficiaries under SSI, and to low-income working households through the EITC20 and ACTC. TANF serves families with dependent children; states define specific eligibility rules but federal law emphasizes participation in work activities for recipients of cash aid. SNAP provides assistance specifically for the purchase of food to households below a certain income threshold. While the program does not target benefits to certain demographic groups, nearly half of SNAP recipients in FY2009 were children and another 8% were age 60 or older. 21 The law also requires able-bodied non-elderly adults without dependent children to participate in work or training to receive benefits for more than a brief period of time. 22 15 This report captures direct spending for the refundable portion of the EITC, which accounted for nearly 90% of the credit in FY2009. The program also results in tax expenditures, which are not included in this analysis. 16 The ACTC is a refundable credit, available to certain families who also qualify for the regular nonrefundable Child Tax Credit but whose tax liability is too low for them to fully benefit from the regular credit. 17 For purposes of identifying the 10 largest programs, TANF is treated as a single program, although in the analysis of spending by category, TANF dollars are disaggregated among cash aid, social services, and employment and training. Although TANF is frequently thought of as cash welfare, it would not qualify as one of the 10 largest programs if only its cash aid component were considered. 18 These calculations are based on disaggregated TANF and SNAP spending by category; see notes for Table 2. 19 This report discusses programs as they existed in FY2009. However, the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) significantly amended Medicaid to expand eligibility, beginning in FY2014 (or sooner at state option), to low-income childless adults. See CRS Report R41210, Medicaid and the State Children’s Health Insurance Program (CHIP) Provisions in PPACA: Summary and Timeline, coordinated by (name redacted). 20 Childless adults with income below a certain threshold are eligible for the EITC; however, the overwhelming majority of EITC spending is for benefits to working families with children. See Table 4 in CRS Report RL31768, The Earned Income Tax Credit (EITC): An Overview, by (name redacted). 21 See Characteristics of Supplemental Nutrition Assistance Program Households: FY2009, Summary, Food and Nutrition Service, U.S. Department of Agriculture, October 2010: http://www.fns.usda.gov/ora/MENU/Published/snap/ FILES/Participation/2009CharacteristicsSummary.pdf. 22 ARRA (P.L. 111-5) temporarily suspended this provision, from April 2009 through September 2010. Congressional Research Service 13 Federal Benefits and Services for People with Low Income The 10 largest programs also include housing vouchers for low-income families (“families” are defined by local public housing authorities and may include single individuals). Two education programs are among the top 10, including Pell Grants, which assist students whose family resources are not adequate to meet their college costs. The system used to determine benefit amounts under Pell sometimes gives aid to students with relatively high family income; however, the benefits given to these students are likely to be low. Finally, low-income school districts receive grants through Title I-A of ESEA, but individual students do not necessarily have to be low-income to be served by the program. As noted earlier, about 75% of all spending for limited-income populations is classified as mandatory. This percentage is higher for the top 10 programs; close to 90% of spending under these programs is mandatory, which means the amount spent is a function of program rules set forth in law rather than annual decisions made by congressional appropriators. Moreover, of mandatory programs in the top 10, only TANF is capped; the rest are open-ended. Three of the top 10 programs are classified as discretionary. These are Pell Grants (which also includes a mandatory component), Title I-A of ESEA, and housing vouchers. With one exception, the 10 largest programs all require that beneficiaries must be determined individually eligible to receive aid. In other words, except for Title I-A of ESEA, individuals or households must meet an income (or equivalent) test to benefit from these programs. The particular income test used, however, varies with the program. For example, Medicaid, SNAP, and the Part D subsidy all use different multiples of the federal poverty guidelines to determine eligibility, in addition to criteria that allow beneficiaries of certain other programs to qualify automatically. Specific dollar amounts are used to define eligibility for SSI and also to determine when EITC benefits begin to phase out.23 Section 8 housing vouchers use income limits that are based on area median income to define eligibility, and TANF income eligibility thresholds, as noted earlier, are set by states. No absolute income threshold determines eligibility for Pell Grants; however, the lowest-income students receive the largest grants. As stated above, children are not required to meet an income eligibility test to receive benefits funded by Title I-A of ESEA. Rather, the program uses allocation formulas to direct federal resources toward local educational agencies with relatively high concentrations of low-income students. Once these funds are received by an individual school, students may be served regardless of their family income. Title I-A is an example of a formula grant program. (Other mechanisms for distributing funds include competitive or discretionary awards, and direct benefits to individuals.) Medicaid, TANF, and Section 8 housing vouchers also use formulas to distribute funds, but the specifics vary. Because Medicaid is an open-ended entitlement, the federal government reimburses states for all eligible expenditures with no cap on federal spending; however, the federal “matching rate” is calculated for each state by a formula inversely related to its per capita income (poorer states get a larger federal match, and wealthier states get a smaller federal match).24 TANF allocates block grants to states according to a formula that considers their spending patterns under the 23 Unlike the EITC, the Additional Child Tax Credit (ACTC) does not phase out at specified income levels. However, as a family’s income goes up, it may begin to incur tax liability and at a certain point (depending on individual circumstances), it could become eligible for the nonrefundable Child Tax Credit, rather than the refundable ACTC. 24 Services are generally matched at this variable rate (referred to as the federal medical assistance percentage, or FMAP); however, administrative costs are matched at a uniform 50% federal rate. See CRS Report RL32950, Medicaid: The Federal Medical Assistance Percentage (FMAP), by (name redacted). Congressional Research Service 14 Federal Benefits and Services for People with Low Income predecessor Aid to Families with Dependent Children (AFDC) program. Funding to renew existing housing vouchers is distributed to local public housing authorities (not states) according to a formula established by Congress each year in appropriations law, which typically is related to the use and cost of vouchers in the local area. As noted above, formula grants are one of three major ways that federal programs for low-income populations distribute funds; the other two are competitive or discretionary awards, and direct benefits to individuals. None of the 10 largest programs award funds on a competitive or discretionary basis, other than a relatively small component of TANF. 25 Instead, these large programs either allocate funds to states or another unit of government by formula, as just described, or give benefits to eligible individuals directly (or through a nongovernment intermediary). Federal benefits are provided directly under SNAP (although states administer the program), SSI (although states may supplement the federal benefit), EITC, ACTC, Pell Grants, and the Medicare Part D subsidy. Benefits provided by the federal government directly to eligible individuals typically are 100% federally funded, although, as noted above, states incur administrative costs under SNAP (which are reimbursed at a 50% federal rate) and may supplement federal payments under SSI. Some states also operate their own earned income tax credit programs, which supplement the federal EITC. Medicaid and TANF, however, are federal-state programs, and states must spend a significant amount of their own money to receive federal funds. As noted above, state Medicaid expenditures are reimbursed by the federal government at prescribed matching rates. Unlike Medicaid, TANF is not a matching grant; however, to receive TANF block grant funds, states must maintain a certain level of their own spending from prior years. Local educational agencies that receive Title I-A grants also are required to maintain a certain amount of prior-year spending and must use federal funds to “supplement and not supplant” nonfederal funds that would otherwise be used for the same purpose. Table 3. Key Features of the 10 Largest Programs Medicaid • Mandatory spending, open-ended. • Serves elderly, disabled, and families with children. • Uses federal poverty guidelines to determine eligibility, automatic eligibility for certain groups. • Formula grant to states; cost-sharing formula determines federal share. Supplemental Nutrition Assistance Program • Mandatory spending, open-ended. • Limits participation of able-bodied adults without dependents. • Uses federal poverty guidelines to determine eligibility, automatic eligibility for certain groups. • Direct benefits to individuals; matching grants to states for administrative costs. Supplemental Security Income • Mandatory spending, open-ended. • Serves elderly and disabled. • Sets specific dollar thresholds for eligibility. • Direct benefits to individuals; states may supplement federal payment. 25 TANF grants to promote healthy marriage and responsible fatherhood are awarded competitively; these are discussed later in the report. Congressional Research Service 15 Federal Benefits and Services for People with Low Income Earned Income Tax Credit • Mandatory spending, open-ended. • Serves workers with earnings; largest benefits for families with children. • Phases out benefits at specific dollar thresholds. • Direct benefits to individuals. Pell Grants • Discretionary spending, small mandatory component. • Serves postsecondary students. • No individual income eligibility threshold; benefits based on available resources and cost of education. • Direct benefits to individuals. Additional Child Tax Credit • Mandatory spending, open-ended. • Serves families with children. • Phases out benefits at specific dollar thresholds. • Direct benefits to individuals. Title I-A Education for the Disadvantaged • Discretionary spending. • Serves students in schools with high concentrations of low-income students. • No individual income eligibility determination; students need not be low-income. • Formula grants to local educational agencies; uses population-based and other allocation factors. Medicare Part D, Low-Income Subsidy • Mandatory spending, open-ended. • Serves elderly and disabled Medicare beneficiaries. • Uses federal poverty guidelines to determine eligibility, automatic eligibility for certain groups. • Direct benefits to individuals. Temporary Assistance for Needy Families • Mandatory spending, capped. • Serves families with children. • States set their own eligibility criteria. • Formula grants to states; allocations based on historical expenditures under predecessor program. Section 8 Housing Choice Vouchers • Discretionary spending. • Serves families, with priorities defined by local public housing authorities. • Uses income limits based on area median income to determine eligibility. • Formula grants to local public housing authorities; allocations based on use and cost of vouchers. Source: Prepared by the Congressional Research Service (CRS). Congressional Research Service 16 Federal Benefits and Services for People with Low Income Overview of Benefits and Services by Category The following sections provide brief overviews of the programs included in each major category of benefits and services, organized by size of spending in FY2009. Tables included in Appendix B individually list and identify key features of the programs, and brief fact sheets on each program are provided in Appendix C. Health Care As health care dominates federal spending on benefits and services for people with limited income, Medicaid dominates spending within the health care category. Medicaid accounted for 83% of health care spending in FY2009 and, as noted above, was nearly 40% of all spending in this report. Medicaid is intended to provide medical assistance to specified categories of lowincome people who lack the income and resources to afford necessary medical care. Low-income parents, dependent children, the elderly, and individuals with disabilities have been the primary target populations served by Medicaid.26 The program finances the delivery of a wide range of primary and acute medical services as well as long-term care. The State Children’s Health Insurance Program (CHIP) provides health coverage for low-income children who lack health insurance but whose family income exceeds Medicaid eligibility levels. The next largest health programs are the low-income subsidy under Medicare Part D, which helps low-income seniors and individuals with disabilities pay for prescription drugs, and medical care for low-income veterans without service-connected disabilities. The latter program pays for an array of primary care, specialized care, and related social and support services provided by the Department of Veterans Affairs (VA). The Indian Health Service also offers a wide variety of health services to its target population, who are American Indians or Alaskan Natives living on reservations or within a specified service delivery area. Consolidated Health Centers offer primary and other health services to low-income populations in medically underserved areas, and the Maternal and Child Health block grant supports preventive and primary health care services for low-income women, infants, and children. The Ryan White HIV/AIDS Program is intended to address the unmet care and treatment needs of individuals living with HIV or AIDS who lack insurance or resources to pay for core medical services, including prescription drugs, and related support services. Additional programs focus on specific health services, such as family planning and early breast and cervical cancer detection, or specific populations, such as refugees. 26 About half of Medicaid beneficiaries are children (see program fact sheet in Appendix C); however, slightly less than 19% of Medicaid payments in FY2008 were on behalf of children. Of total FY2008 Medicaid payments, almost 41% were on behalf of disabled beneficiaries; almost 22% on behalf of elderly beneficiaries; and 12% on behalf of other adults (i.e., low-income parents). (Source: 2010 CMS Statistics, Centers for Medicare and Medicaid Services.) As noted earlier, the Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) significantly amended Medicaid to expand eligibility, beginning in FY2014 or sooner at state option, to low-income childless adults. However, this report discusses programs as they existed in FY2009. Congressional Research Service 17 Federal Benefits and Services for People with Low Income Cash Aid Three programs account for the bulk of cash aid spending, and each is among the 10 largest of all programs for low-income people. SSI, which aims to provide a minimum income for aged, blind, or disabled individuals with very low income and resources, is the largest and accounted for slightly more than 40% of cash aid spending in FY2009. The refundable portion of the EITC accounted for another 33% of cash aid spending, and almost 19% resulted from the refundable ACTC. The EITC subsidizes the wages of low-income workers, with most benefits going to those with children. The ACTC is a refundable credit for families whose tax liability is too low for them to fully benefit from the regular nonrefundable Child Tax Credit. The cash aid category also includes TANF, the welfare reform program that replaced Aid to Families with Dependent Children (AFDC) in 1996. As AFDC’s successor, TANF is still sometimes viewed as traditional “welfare” for poor families; however, the majority of TANF expenditures are for activities other than cash aid. TANF aims to increase the flexibility of states in meeting several statutory goals, including assisting needy families so that children can remain in their homes; ending dependence of needy parents through job preparation, work, and marriage; preventing and reducing incidence of out-of-wedlock pregnancies; and encouraging the formation and maintenance of two-parent families. In this report, TANF spending has been allocated among cash aid, social services, and employment and training, based on states’ reporting of their actual expenditures. Finally, cash aid programs include pensions for needy elderly or disabled veterans and their dependents or survivors. Food Assistance SNAP (formerly food stamps) dominates spending for food assistance, accounting for about twothirds of obligations in this category and registering as the second largest of all low-income programs in FY2009. SNAP attempts to alleviate hunger and malnutrition and to help lowincome households purchase food to support a healthy diet. The next largest area of food assistance spending is for programs that subsidize the costs of breakfast and lunch served to lowincome schoolchildren; these programs aim to support learning readiness, promote healthy eating, and protect the health and well-being of low-income children. Related programs subsidize the costs of meals and snacks for children in child care and other out-of-school settings (and some low-income elderly and disabled adults in adult care settings) and for children during the summer when they lack access to school-based meal programs. Food assistance programs also include the Special Supplemental Food Program for Women, Infants and Children (WIC), which provides supplemental food and nutrition education to lowincome pregnant, postpartum, or breastfeeding women and their infants and young children who are at nutritional risk. The program seeks to protect children’s health during critical developmental stages, to prevent health problems, and to improve health status. Food assistance programs also include congregate and home-delivered meals for the elderly to reduce hunger and promote socialization and well-being for older individuals, and emergency food assistance in the form of commodities for individuals defined by their states as needy. Housing and Development The federal government supports the housing needs of low-income people primarily by subsidizing the cost of rental units in the private market. Section 8 housing vouchers and Congressional Research Service 18 Federal Benefits and Services for People with Low Income project-based rental assistance together accounted for 43% of all housing and development spending in FY2009. (The voucher component of Section 8 is one of the 10 largest low-income programs.) The overarching goal of Section 8 is to provide low-income people with decent, safe, and sanitary housing. Public Housing, which represented 18% of spending in this category in FY2009, achieves a similar goal by making publicly owned rental units available to low-income tenants at affordable prices. Federal spending for Public Housing supports the capital needs and operating costs of publicly owned housing developments, as well as the HOPE VI program, which demolishes, rehabilitates, and replaces distressed public housing units. Additional housing programs are intended to expand the supply of supportive housing for low-income elderly and disabled households, as well as individuals living with AIDS. Homeless Assistance Grants attempt to meet the needs of homeless individuals and families, including individuals with disabilities, for basic shelter, short-term and long-term housing, and related support services. Two block grants—HOME and the Community Development Block Grant (CDBG)—target federal assistance toward communities with high rates of poverty and aging housing stock (among other factors) to help meet the housing needs of low-income homeowners, homebuyers, and renters (HOME) and to expand the community’s supply of decent housing and economic development activities (CDBG). An additional block grant provides housing assistance and helps develop private housing finance mechanisms on Indian lands. To address housing needs in rural areas, loans are available to help low-income households purchase, build, or renovate homes, and rental subsidies are available for low-income tenants. Low-interest loans and grants also are available to support new and improved water and waste disposal facilities in low-income rural communities. Finally, the housing and development category includes the Public Works and Economic Development program, which provides grants to distressed communities to help them revitalize, expand, and upgrade their physical infrastructure to attract new industries, expand businesses, diversify their economies, and generate job and investment growth. Certain temporary programs are included in the housing and development category. The Neighborhood Stabilization Program-1 was established by the Housing and Economic Recovery Act of 2008 (P.L. 110-289) to assist in rehabilitating abandoned and foreclosed homes for occupancy by low-income tenants. Obligations under this program occurred in FY2009.27 Likewise, FY2009 spending includes obligations under two temporary programs created by ARRA as adjuncts to the Low-Income Housing Tax Credit (LIHTC) program. 28 These temporary programs offered grants to states in lieu of tax credits and provided capital investments for owners of certain LIHTC-financed properties. They were enacted in response to the financial crisis, which, along with the departure of several large tax credit investors, made it difficult for developers to sell their tax credits to raise capital. Finally, ARRA added funds to HUD’s Homeless Assistance Grants, specifically for a new Homelessness Prevention and Rapid Re-Housing Program. 27 Congress provided funding for a Neighborhood Stabilization Program-2 under the American Recovery and Reinvestment Act (P.L. 111-5), with somewhat different rules from NSP-1. No obligations for NSP-2 occurred in FY2009. See CRS Report RS22919, Community Development Block Grants: Neighborhood Stabilization Program; Assistance to Communities Affected by Foreclosures, by (name redacted) and (name redacted). 28 The Low-Income Housing Tax Credit itself, which is a nonrefundable credit for the development of affordable housing, is not included in this report. See CRS Report RS22389, An Introduction to the Design of the Low-Income Housing Tax Credit, by (name redacted). Congressional Research Service 19 Federal Benefits and Services for People with Low Income Education The Federal Pell Grant Program is the single largest education program for people with limited incomes, accounting for 43% of targeted federal education spending in FY2009. The program is among the 10 largest in this report. Pell Grants are one of several ways the federal government helps subsidize the costs of higher education for needy students. Other grant programs with similar goals include Federal Supplemental Education Opportunity Grants, Federal Work-Study, and the Academic Competitiveness and Smart Grant programs.29 In addition to direct assistance to students, the federal government provides institutional aid to help expand the capacity of colleges and universities that serve high proportions of low-income and minority students. Federal TRIO Programs offer grants to institutions of higher education and other organizations to motivate and support disadvantaged students as they move from high school through college. The GEAR-UP program provides services to low-income children in elementary and secondary schools who are at risk of dropping out and aims to increase the number of such students who enter and succeed in higher education. The second largest education program included in the report (also one of the 10 largest lowincome programs) is Title I-A of the Elementary and Secondary Education Act, which accounted for more than one-third of targeted federal education spending in FY2009. Title I-A provides grants to local educational agencies with high concentrations of disadvantaged children and aims to ensure that all children have an opportunity to obtain a high-quality education and reach at least minimum proficiency on challenging academic achievement standards. A separate program has similar goals for children of migrant workers, and the Rural Education Achievement Program helps rural school districts meet academic achievement standards. The Bureau of Indian Education operates several programs to meet the educational needs of Indian children living on or near reservations. Other elementary and secondary education grant programs aim to increase student achievement through improvements in teacher and principal quality and to improve teacher knowledge and student performance in mathematics and science. Literacy is the focus of the Adult Basic Education program, which helps adults to become literate and obtain the skills necessary for employment and self-sufficiency, and to become partners in their own children’s educational development. Reading First and Early Reading First also promoted literacy, focusing specifically on young children, from preschool through grade 3.30 Finally, 21st Century Community Learning Centers are intended to provide a wide range of remedial education and academic enrichment opportunities during non-school hours for children in high-poverty and low-performing schools. Social Services The social services category is diverse and includes a wide variety of activities to support lowincome or otherwise vulnerable populations. 31 Of spending categorized as social services in this 29 Low-cost loans to help students finance higher education also are provided through the Federal Family Education Loan and William D. Ford Federal Direct Loan programs. However, these programs are not strongly targeted toward low-income students and are not included in this report’s analysis. See explanation in Appendix A. 30 These programs had obligations in FY2008 and FY2009; however, no appropriations were made for Early Reading First in either FY2010 or FY2011, and Reading First received its last appropriation in FY2008. 31 Social services is a loosely defined category. Some of the programs included here could be classified in other categories; e.g., Head Start could be viewed as education rather than social services. See discussion in Appendix A. Congressional Research Service 20 Federal Benefits and Services for People with Low Income report, the vast majority—93% in FY2009—is focused directly on children and youth or their families. Services funded by TANF are the largest single activity in this category, accounting for almost a quarter of social services spending in this report. As noted in the earlier discussion of cash aid, TANF is often thought of as traditional welfare for poor families. However, states have flexibility in spending their TANF grants, and the majority of funds are used for noncash aid, including a wide variety of social services for families with children. TANF spending in the social services category also includes obligations under competitive grants for promotion of healthy marriage and responsible fatherhood. Head Start is the second largest program in this category, accounting for more than 20% of social services spending for low-income populations. Head Start aims to promote school readiness for young children through a full array of educational, health, nutritional, social and other services to children and their families. The Child Care and Development Fund (CCDF), with 16% of social services spending in FY2009, subsidizes the cost of child care for low-income parents while they work or attend school. Additional programs targeted toward children and families include Child Support Enforcement, which provides services on behalf of custodial parents who are seeking support for their children from the children’s noncustodial parent. Foster Care grants are used by states to provide temporary homes for children who cannot remain safely with their families; Adoption Assistance helps facilitate the adoption of children with special needs as defined by their state; and the Chafee Foster Care Independence Program helps current and former foster children transition to a self-sufficient adulthood. Of social services programs not specifically targeted toward children and families, the Social Services Block Grant (SSBG) is the largest and most flexible. The program supports a continuum of services to promote self-sufficiency but decisions about target populations and services are left to the states. Other social services programs focus on specific target populations. For example, social services for the elderly are provided under the Older Americans Act; support and advocacy grants help people with developmental disabilities; and various human services are provided for American Indians. Programs that focus services at the community level include the Community Services Block Grant (CSBG), which aims to reduce poverty and empower low-income individuals and families to become self-sufficient, and Emergency Food and Shelter Grants, which provide services for homeless and hungry individuals in high-need communities. Finally, the Legal Services Corporation attempts to ensure equal access to the justice system for people who are otherwise unable to afford legal counsel. Energy Assistance Two programs make up the energy assistance category. The Low-Income Home Energy Assistance Program (LIHEAP) helps low-income households pay their heating and cooling expenses, and the Weatherization Assistance Program helps increase the energy efficiency of homes occupied by low-income people to reduce energy costs and improve health and safety. Employment and Training Two programs serving disadvantaged youth comprised almost half of FY2009 employment and training spending included in this report. Specifically, youth activities under the Workforce Investment Act (WIA) provide a variety of services to improve the educational and skill competencies of eligible youth and to develop connections with employers and mentoring opportunities with adults. Job Corps focuses on those disadvantaged youth who can benefit from Congressional Research Service 21 Federal Benefits and Services for People with Low Income an intensive residential program to become employable and productive. The employment and training category also includes work-related services for needy families with children under TANF, a small employment and training program for recipients of SNAP benefits, and a program that provides employability and related services to help refugees and other humanitarian entrants find jobs quickly. Remaining programs include WIA’s adult activities program; Community Service Employment for Older Americans, which helps older individuals (age 55 or older) become self-sufficient through community service jobs and training; and Foster Grandparents, which provides stipends for low-income older individuals to provide services to children with special needs. Defining Individual Eligibility for Benefits and Services As described above, federal programs for low-income people can be grouped into several major categories of benefits and services. Key target groups for these benefits and services include the elderly, individuals with disabilities, and children and families, among others. Within these broad target populations, there is not necessarily a coherent policy regarding who should receive assistance, although some themes emerge within categories. Programs use different concepts to define who is eligible. Many programs use explicit income eligibility criteria that individuals, families, or households must meet, but the specific levels and measures of income vary. Some measures are uniform throughout the country; others vary by geography. Some are adjusted annually for inflation; others are not. In some cases, income criteria are used to set priorities for who is served but are not necessarily applied to every participant. Some programs use asset tests in addition to income tests. Many programs have categorical requirements, such as age or disability, in addition to income criteria; and some use alternative criteria that allow specified groups or categories of people to qualify automatically without having to meet an individual income test. Automatic “exclusions” exist under some programs, so that people who would otherwise qualify based on their income are excluded if they fall into specified categories. Finally, some programs establish federal parameters for eligibility but allow states or other entities to set their own income eligibility criteria within these parameters. This section of the report discusses the various ways in which individual eligibility is determined. The section looks at use of the federal poverty guidelines, as well as other measures of economic need used to define eligibility such as specific dollar amounts, percentages of area or state median income, and the “need analysis” system used for postsecondary student aid. The section briefly discusses asset limits, and then turns to nonfinancial or categorical rules. Table 4 summarizes the various concepts used in determining individual eligibility and Table B-2 in Appendix B shows the concepts used by specific programs. It is important to note that being eligible for a program does not necessarily mean that an individual will receive benefits from that program. While some of the programs included here, especially some of the larger ones, are entitlements to individuals, which means that all eligible applicants must receive benefits, most programs are either discretionary (subject to annual appropriations) or capped entitlements, and eligible individuals are served only to the extent that funds are available. Congressional Research Service 22 Federal Benefits and Services for People with Low Income Finally, not all programs require participants to be determined individually eligible. Some target federal resources toward communities or entities where low-income populations are likely to be concentrated and do not examine the income, assets, or other characteristics of a particular individual or family. Such targeting mechanisms are discussed in the next major section of this report. Table 4. Concepts Used in Determining Individual Eligibility for Federal Benefits and Services for Persons with Low Income Concept Summary Financial Conceptsa Federal poverty guidelinesb The federal poverty guidelines are a simplified version of the federal poverty thresholds. The thresholds are used to calculate official poverty statistics, such as the number of Americans in poverty, and are adjusted for inflation annually by the Census Bureau. The guidelines are used for administrative purposes, such as determining eligibility for certain programs. Updated guidelines are published yearly by the Department of Health and Human Services (HHS). The guidelines vary by family size and are the same for the 48 contiguous states and DC; separate guidelines apply to Alaska and Hawaii. Specific dollar limitsb Specific dollar amounts are used to determine eligibility for medical care and pensions for needy veterans, SSI, and to phase out benefits under the EITC. (Also see the discussion later in this report on benefit levels in selected cash programs, including SSI, EITC, veterans’ pensions, and TANF.) Median incomeb The Census Bureau publishes median family incomes for states using three-year data from the American Community Survey. The Department of Housing and Urban Development (HUD) uses these data to calculate and annually update median family incomes for states, and for metropolitan and nonmetropolitan areas within states. The definition of “area” is that used to determine fair market rents for the Section 8 Housing Choice Voucher program. HUD establishes definitions of “low-income,” “very low-income,” and “extremely low-income” as percentages of these area median incomes, and uses these income limits to determine program eligibility. “Need analysis”b The need analysis system is used to calculate a postsecondary student’s Expected Family Contribution (EFC), or the amount a family can be expected to contribute toward the student’s college costs. Students provide income and asset data used to calculate the EFC through the Free Application for Federal Student Aid (FAFSA). Lower Living Standard Income Levelb Lower Living Standard Income Levels (LLSILs) are defined in the Workforce Investment Act as the “income level (adjusted for regional, metropolitan, urban and rural differences, and family size) determined annually by the Secretary [of Labor] based on the most recent lower living family budget issued by the Secretary.” The lower living family budget is no longer issued, but alternative data are used to annually update the LLSILs. Assets/resources Assets or resources commonly counted in programs with asset/resource tests include either the equity value or the fair market value of property (usually excluding the primary residence), stocks, bonds, notes, individual retirement accounts, bank deposits, savings accounts, and cash. Nonfinancial Concepts Categorical/behavioral requirements In addition to financial eligibility rules, some programs require individuals to be members of a particular target population group (e.g., above or below a certain age, disabled, or veterans). Behavioral requirements may include participation in work or training activities. Congressional Research Service 23 Federal Benefits and Services for People with Low Income Concept Automatic eligibility Summary Some programs allow automatic eligibility (also referred to as “categorical eligibility”) for people who have already qualified for another, specified income-tested program, or if they are a member of a specified target population (e.g., members of a federally recognized Indian tribe, homeless, refugees). Source: Prepared by the Congressional Research Service (CRS). a. Additional financial concepts, not shown in this table, that are used to determine eligibility include “countable” income (i.e., the categories of income that are counted in determining whether an individual or household is below the income eligibility threshold for a particular program), and the “filing unit.” The filing unit refers to the unit (e.g., individual, family, household) for whom eligibility is determined and whose income (and resources, if applicable) are counted. b. See Appendix D for references to additional information on these concepts and their actual dollar amounts, where applicable. Federal Poverty Guidelines As already stated, programs in this report do not strictly serve the poor. Rather, target populations are more accurately characterized as people with “low” or “limited” income. Even among programs that use the federal poverty guidelines as a criterion for determining eligibility, very few limit participation to individuals or households with income at or below “poverty” as defined by the federal government. 32 Most programs that use the federal poverty guidelines (FPG) as an element in defining eligibility use a multiple of poverty, with some programs defining eligibility as high as 200% or 300% of FPG. The poverty guidelines trace their origin to a 1963 Social Security Administration study that based poverty income cutoffs on the amount families needed to spend to meet their basic food needs (the “Economy Food Plan”) and the relationship between expenditures on food and expenditures on other items. With food accounting for roughly one-third of low-income budgets in a 1950s survey of consumption, the poverty cutoffs were set at three times the Economy Food Plan for a given family size and type. These poverty cutoffs were subsequently adopted by the Census Bureau for counting the poor, and are also the basis for the HHS poverty guidelines used for administering programs. They are uniform nationwide (except for Alaska and Hawaii) and are updated annually for inflation (see Table 4). Most health care programs that serve people with limited income use FPG as a criterion in determining eligibility, typically in conjunction with categorical requirements. Mandatory coverage groups under Medicaid, for example, which has numerous pathways to eligibility, include different categories of children and families with income ranging from 100% to 185% of FPG. Optional coverage groups (which states may serve at their discretion) include additional categories, including certain elderly and disabled individuals, with income as high as 250% of FPG. The CHIP program serves children with family income above Medicaid eligibility levels, at 32 For a detailed discussion of the federal poverty guidelines, and the federal poverty thresholds on which they are based, see CRS Report R41187, Poverty Measurement in the United States: History, Current Practice, and Proposed Changes, by (name redacted). Also see Frequently Asked Questions Related to the Poverty Guidelines and Poverty: http://aspe.hhs.gov/poverty/faq.shtml#differences, and additional references in Appendix D. Congressional Research Service 24 Federal Benefits and Services for People with Low Income income thresholds established by states with federal approval. (As of January 2009, the highest reported income standard was 350% of FPG, in New Jersey. 33) Medicare beneficiaries are eligible for the low-income prescription drug subsidy under Part D if their income is no higher than 150% of FPG, although the deepest subsidy goes to those below 135% of poverty. Remaining health programs that use FPG either give priority to people below 100% of poverty (Family Planning and the Maternal and Child Health block grant), or provide services free of charge to those below 100% but allow higher-income participants on a sliding fee scale basis (up to 200% of FPG under Consolidated Health Centers and 250% for Breast and Cervical Cancer Early Detection). Cash aid, housing and development, and education programs generally do not use the poverty guidelines in determining eligibility. An exception is the TRIO programs for certain low-income postsecondary students, which cap income eligibility at 150% of FPG. TANF eligibility thresholds are established by states and are well below the federal poverty guidelines in most states.34 Food assistance programs typically use multiples of the federal poverty guidelines in determining eligibility, but they also provide automatic eligibility to categorical groups. The SNAP program generally serves those with gross income up to 130% of poverty. Child nutrition programs serve meals free to children with family income up to 130% of poverty, and at a reduced price to children with family income up to 185%. The WIC program caps eligibility at 185% of poverty. The nutrition program authorized by the Older Americans Act gives priority to certain groups, including seniors with the greatest economic need, defined as 100% of poverty. In the social services category, CSBG and Head Start use 100% of the federal poverty guidelines as their income eligibility limit, but they both provide flexibility to states (in the case of CSBG) or grantees (for Head Start) in adjusting this limit upwards.35 Likewise, the Legal Services Corporation sets eligibility at 125% of FPG, but allows it to be increased up to 200% in certain circumstances. The SSBG has no federal income eligibility limit except for services funded by TANF grants that are transferred to the SSBG, which may only be used for families with income below 200% of FPG. Like the elderly nutrition program mentioned above, the Older Americans Act grant programs for supportive services and senior centers and for family caregivers give priority to seniors with income below 100% of poverty. LIHEAP uses 150% of poverty as its income eligibility limit, or 60% of state median income, if higher. Weatherization formerly used 150% of FPG to define income eligibility, but effective in FY2009, this was increased to 200%. Both weatherization and LIHEAP allow automatic eligibility for those eligible for certain other programs. Employment and training programs for people with limited income use the federal poverty guidelines as one of several eligibility criteria, which include other measures of low income as well as categorical groups. Job Corps limits eligibility to those with income no higher than 100% 33 See Table 1 in CRS Report R40444, State Children’s Health Insurance Program (CHIP): A Brief Overview, by (name redacted) and (name redacted). 34 See Table 4 in CRS Report RL32760, The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions, by (name redacted). 35 The CSBG Act allows states to increase eligibility to 125% of FPG; ARRA (P.L. 111-5) temporarily allowed states to increase eligibility to 200% of FPG during FY2009 and FY2010. Congressional Research Service 25 Federal Benefits and Services for People with Low Income of FPG; however, certain groups qualify automatically. Youth activities under WIA set eligibility at 100% of FPG, or 70% of the lower living standard income level (described below), if higher. The same criteria are used to give priority for certain adult activities under WIA. Both adult and youth activities under WIA also allow automatic eligibility for specified groups. Community Service Employment for Older Americans and Foster Grandparents (as in effect in FY2009) both limit eligibility to those with income no higher than 125% of poverty.36 Other Income Measures Three alternative measures of income are most commonly used to define eligibility for programs that have individual income eligibility criteria but do not use the federal poverty guidelines. These measures are used primarily, but not exclusively, in three categories of federal benefits and services. Specifically, most cash assistance programs set an actual dollar amount that determines who is eligible; housing and development programs typically use a percentage of area median income; and student financial assistance programs use a relative concept of need that considers both available family resources and the actual cost of education. A fourth alternative measure is the lower living standard income level, which is used in conjunction with the poverty guidelines in certain employment and training programs. Specific Dollar Amounts In the cash assistance category, specific dollar amounts are used to determine eligibility (and benefit levels) for pensions for needy veterans; the same concept is used in the health care category to determine eligibility for free medical care for needy veterans. Specific dollar amounts also are used to determine eligibility and benefit levels under SSI, and to determine when EITC benefits begin to phase out.37 Veterans’ benefits, SSI, and EITC are generally adjusted each year for price inflation. Veterans’ benefits and SSI adjustments are tied to Social Security cost-ofliving adjustments (COLAs); and EITC is adjusted for price changes through indexing to the Consumer Price Index.38 As noted previously, under TANF, states set their own dollar limits to define who is eligible to participate. (See Appendix D for references to further information about the current VA income thresholds, SSI eligibility limits, and EITC phase-out limits.) Median Income Housing and development programs typically use the concept of area median income, with various percentages of local area median income used to define “low-income,” “very lowincome” and “extremely low-income.” These income limits are then used to determine program 36 Effective in FY2010, the Serve America Act (P.L. 111-13) amended the Foster Grandparent program to increase the income eligibility limit from 125% to 200% of the federal poverty guidelines. 37 As noted earlier, unlike the EITC, the Additional Child Tax Credit (ACTC) does not begin to phase out at specified income levels. However, as a family’s income goes up, it may incur tax liability and become eligible for the regular nonrefundable Child Tax Credit instead of the refundable ACTC. 38 The income threshold above which families are eligible for the ACTC also is indexed for inflation; however, this has the effect of reducing (rather than increasing) the amount of the credit available to families with a given income level. The size of the credit itself is not indexed. Congressional Research Service 26 Federal Benefits and Services for People with Low Income eligibility. For example, Section 8 Housing Choice Vouchers serve “very low-income” families, defined as those with income no higher than 50% of the area median. However, 75% of the Section 8 vouchers that become available each year must go to “extremely low-income” people, defined as those with income no higher than 30% of area median. Under limited circumstances, vouchers may go to “low-income” households, with income up to 80% of area median. Similarly, Public Housing serves low-income families (80% of area median) but at least 40% of units that become available each year must go to extremely low-income families (30% of area median). Supportive housing programs for the elderly and disabled limit eligibility to households with income no higher than 50% of area median, while Housing Opportunities for Persons with AIDS (HOPWA) and Indian Housing Block Grants serve people with income up to 80% of area median. The single-family rural housing loan program makes guaranteed loans available to households with income as high as 115% of area median, while direct loans are limited to those with income no higher than 80% of area median. (See Appendix D for references to further information about area median family incomes published by the Department of Housing and Urban Development.) Few non-housing programs use the median income concept. Exceptions are the Child Care and Development Fund (CCDF) and LIHEAP, which both use state median income as a component of their eligibility criteria. CCDF allows states to define their own income eligibility limits within the federal maximum of 85% of state median income, and LIHEAP, as noted earlier, uses 60% of state median income as an alternative measure of low income, if higher than 150% of the federal poverty guidelines. “Need Analysis” There is no absolute income threshold for certain postsecondary student aid programs. As noted above, these programs use a relative concept to determine the amount of aid a student is eligible to receive. Applicants provide information about family income and assets through completion of the Free Application for Federal Student Assistance (FAFSA). This information is then used to determine the Expected Family Contribution (EFC), or the amount the student’s family is expected to contribute toward the student’s education. Different EFC formulas are applied to three different groups of students: those considered dependent on their parents; independent students with no dependents other than a spouse; and independent students with dependents other than a spouse. The federal need analysis methodology is used for Pell Grants and several smaller higher education programs such as Supplemental Educational Opportunity Grants, Federal WorkStudy, and Academic Competiveness and Smart Grants.39 Aid is capped under the Pell Grant program, so that higher income students are likely to receive smaller awards and the majority of students who receive Pell grants are low-income. 40 (See Appendix D for references to additional information on the need analysis system.) Lower Living Standard Income Level Employment and training programs for adults and youth under WIA, as discussed earlier, use the lower living standard income level (LLSIL) as one component in eligibility determinations. The 39 The need analysis system also is used for federal student loan programs, which are not included in this report’s analysis. Under the student loan programs, the need analysis system can result in aid going to students from relatively well-off families, especially if they attend particularly expensive schools. 40 In FY2008, an estimated 62% of dependent Pell Grant recipients had total family income at or below $30,000 and an estimated 83% of independent Pell Grant recipients had total income at or below $30,000. Congressional Research Service 27 Federal Benefits and Services for People with Low Income LLSIL has its origins in a series of family budgets developed by the Department of Labor’s Bureau of Labor Statistics (BLS). In 1967, BLS published estimates for family budgets at three standards of living—lower, intermediate, and higher—based on a list of goods and services needed to achieve those standards of living and their prices. These budgets were last fully priced in 1969. They were subsequently updated by summary components of the Consumer Price Index (CPI) through 1981, when the BLS family budget series was discontinued.41 Since 1981, the LLSIL has been updated annually based on overall changes in the CPI-U. (See Appendix D for references to further information about the current LLSILs.) Under WIA, individuals are determined eligible (or, in the case of certain adult activities, receive priority) if their income is at or below 100% of the federal poverty guidelines, or 70% of the LLSIL, whichever is higher. Unlike the federal poverty guidelines, the LLSIL vary by region and by metropolitan and non-metropolitan areas. Treatment of Income As illustrated in the discussion above, measures of income used to determine eligibility vary widely among federal programs. It is important to note that definitions of countable income also vary. Some programs have explicit rules for counting income while many do not. A full discussion of the treatment of income is beyond the scope of this report; however, readers should know there may be differences between programs, so that income counted in determining eligibility for one program might not be counted in another, even though the programs might appear to use similar eligibility criteria. Wages are typically counted as income, although some programs disregard a portion of earned income as an incentive for aid recipients to work. Programs differ as to whether they count Social Security and retirement income, public or private disability insurance, other work-related benefits such as Unemployment Compensation and Workers’ Compensation, and investment income such as interest and dividends. Benefits provided under means-tested programs often—but not always—are excluded from the definition of income when determining eligibility for another means-tested program. Programs vary as to whether they count the income of the individual applicant, or also the income of a spouse, children, or other household members; in other words, the definition of “filing unit” varies among programs. Income can be looked at before tax, or after tax; on a monthly or an annual basis. Finally, some programs specify allowable deductions from countable income. Moreover, income (and assets, as discussed below) used to determine eligibility for a particular program might be evaluated differently when determining benefit levels under that program. Individuals with the same amount of countable income or assets might qualify for different levels of benefits, because of the program’s specific calculation rules. This section of the report has focused primarily on eligibility rules; benefit determinations are discussed briefly in a later section. 41 For a history of BLS family budgets, see David S. Johnson, John M. Rogers, and Lucilla Tan, “A century of family budgets in the United States,” Monthly Labor Review, May 2001, pp. 28-45. Congressional Research Service 28 Federal Benefits and Services for People with Low Income Asset/Resource Limits In addition to income eligibility rules, some programs use explicit asset or resource tests to limit eligibility. In other words, applicants may not have assets (e.g., cars, bank accounts; see Table 4) valued above a certain level to be eligible for a particular program. As with income eligibility rules, the amount of assets or resources that are subject to limits varies widely among programs. Likewise, programs define countable assets differently, although typically they are limited to liquid assets. Many exclude the value of a primary residence and personal belongings, and some overlook all or part of the value of a car. Within the health care category, asset tests apply for the VA medical care program and the lowincome subsidy under Part D of Medicare. Under CHIP, states have the option of applying an asset test, although few states currently do, and Medicaid is required to use an asset test only for certain categories of beneficiaries that are age 65 or older, have disabilities, and/or have high medical expenses. In the cash assistance category, asset rules apply to pensions for needy veterans and to the SSI program. States also may choose to apply asset tests in their TANF programs, and the majority of states currently do. SNAP is the only food assistance program with an explicit resource test, although it is not applied to households that are automatically eligible because they have already received benefits or services under another means-tested program. While housing programs do not have asset tests, several impute a certain amount of income from assets. These include singlefamily rural housing loans, supportive housing for the elderly and persons with disabilities, and Section 8 vouchers and project-based rental assistance. Higher education programs that use the “need analysis” system consider assets along with income and the cost of school attendance to determine how much financial aid a student may receive. Programs that were historically linked to the former AFDC program, including Foster Care and Adoption Assistance, still have remnants of the AFDC assets test. And, Legal Services Corporation grantees are required to establish “reasonable” asset limits for eligible individuals and households. Categorical and Behavioral Requirements and Exclusions For many programs, categorical requirements apply in addition to financial eligibility rules, so that an applicant must be both income-eligible and a member of the program’s target population. While some programs are intended to help people in general below a certain income level, most are targeted on specific segments of the low-income population. As noted previously, key target populations for low-income programs, including many of the largest included here, are the elderly and individuals with disabilities, and dependent children and their families. Other target groups for selected programs include veterans, students, people who are homeless, Indians, and refugees, among others. Some programs also impose behavioral requirements as a condition of eligibility. For example, recipients of TANF cash assistance must comply with work and training requirements and cooperate with child support enforcement efforts; student aid recipients must generally maintain good academic standing; and certain Public Housing residents must participate in a selfsufficiency program or engage in community service. Able-bodied adults without dependent children must comply with work and training requirements to receive SNAP benefits for more Congressional Research Service 29 Federal Benefits and Services for People with Low Income than a limited time, and the EITC and ACTC go only to workers with earnings and their families. To receive CCDF-funded child care, parents must be working or in training, in addition to meeting income eligibility criteria. Certain behaviors or characteristics automatically exclude individuals from participating in some programs. For example, postsecondary students, households with members on strike (unless they were eligible before the strike), or people living in institutions are automatically disqualified from SNAP, even if they otherwise meet eligibility rules. Federal law bars individuals who are fleeing arrest or have been convicted of a drug-related felony from participation in SNAP and TANF, and individuals fleeing prosecution or confinement for a felony also are disqualified from SSI. TANF further allows states to test cash aid applicants and recipients for substance abuse and to sanction those who fail. Federal housing law prohibits individuals who have been convicted of producing methamphetamine on federally-assisted housing property or who are subject to lifetime registration on a state sex offender registry from admission to Public Housing or receipt of Section 8 vouchers. Public housing authorities have the discretion to adopt additional criteria, barring admission to households on the basis of such factors as other criminal convictions, poor credit histories, poor rental histories, or other criteria set by the PHA. A Note About Noncitizens Treatment of noncitizens under federal programs serving low-income populations is a complex topic that is beyond the scope of this report.42 Federal policy in this area is found in the various programs’ authorizing statutes, but also in overarching provisions enacted in the 1996 welfare reform (P.L. 104-193) and immigration reform (P.L. 104-208) laws, as subsequently amended, as well as policy interpretations by executive branch agencies. Eligibility of noncitizens varies across and within programs and often depends on the noncitizens’ immigration status, when they arrived in the U.S., how long they have lived here legally, their work history and military connection, and policies in the state where they live. Aliens living in the U.S. without legal authorization are generally barred from access to most federal benefits. Automatic Eligibility As distinct from categorical or behavioral requirements that apply in addition to income eligibility rules, a concept of “automatic eligibility” is sometimes used as an alternative to individual income eligibility.43 If someone meets the eligibility criteria for one program, that person is automatically deemed eligible for another program, simplifying the process for both the applicant and the administering agency. In some programs, people are automatically determined eligible because they fit a particular demographic group or have a particular characteristic. 42 See CRS Report RL33809, Noncitizen Eligibility for Federal Public Assistance: Policy Overview and Trends, by (name redacted), CRS Report RS21470, Noncitizen Eligibility For Major Federal Public Assistance Programs: Legal Concepts, by (name redacted), CRS Report RL31753, Immigration: Noncitizen Eligibility for Needs-Based Housing Programs, by (name redacted) and (name redacted), and CRS Report RL34500,Unauthorized Aliens’ Access to Federal Benefits: Policy and Issues, by (name redacted). 43 Provisions that make certain categories of people automatically eligible for a program are also referred to as “categorical eligibility” criteria. However, the term “automatic eligibility” is used here, to avoid confusion between these provisions and categorical requirements described earlier that apply in addition to financial eligibility rules. Congressional Research Service 30 Federal Benefits and Services for People with Low Income Among health care programs, Medicaid, the low-income subsidy under Medicare Part D, and services for refugees allow some degree of automatic eligibility. For example, SSI recipients are one of several groups that automatically qualify for Medicaid; SSI and Medicaid recipients are automatically eligible for the Part D subsidy; and unaccompanied minor children are automatically eligible for transitional medical services for refugees. Cash assistance programs typically do not allow automatic eligibility for specified groups, while almost all food assistance programs do. TANF and SSI recipients automatically qualify for SNAP; TANF and SNAP recipients are automatically eligible for child nutrition programs; and TANF, SNAP and Medicaid recipients are automatically eligible for WIC, if they also are at nutritional risk. Head Start children, residents of emergency shelters, and runaway and homeless youth are examples of other groups that automatically qualify for some nutrition programs. Most housing and development programs that have individual income eligibility criteria do not allow automatic eligibility for particular groups as an alternative. Homeless Assistance Grants, however, base eligibility on a person’s residential status rather than their income, and Indian Housing Block Grants allow certain non-low-income households to receive assistance if they meet other criteria related to their need for housing. In the education category, the Pell Grant program allows certain postsecondary students— dependent students and independent students with dependents other than a spouse—to qualify for an automatic zero EFC (expected family contribution). This means they would receive the maximum Pell Grant award if they enroll full-time at a school where the cost of attendance equals or exceeds the maximum award. In general, to qualify for the automatic zero EFC, these students must have received means-tested benefits from other federal programs or had been eligible to file certain federal income tax returns, or had been a dislocated worker. However, parents or students also must have family income levels at or below certain annual thresholds ($30,000 in award year 2010-2011), to qualify. Children of deceased Iraq/Afghanistan service members also may qualify for an automatic zero EFC. One of the benefits of qualifying for an automatic zero EFC is that it greatly reduces the response burden associated with completing financial aid forms. With the exception of postsecondary student aid, education programs typically do not require individuals to be determined income-eligible for assistance; rather, they target assistance toward areas or entities where low-income students are likely to be served (such targeting mechanisms are discussed later in the report). However, certain education programs use alternative criteria to identify eligible participants. For ex [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/crs%3AR41625. Public record. Not legal advice.