Commonwealth Foundation
Contact: John Bouder | 717-671-1901

Welfare, not Education, is Wolf’s
Biggest Budget Buster

Study: Slowing Welfare Spending Growth Will Ease Budget Pressure

May 27, 2015, HARRISBURG, Pa.—Gov. Wolf’s plans to raise taxes to boost education spending are well known, but his increases in welfare spending are less apparent and even more burdensome for taxpayers. The Department of Human Services already spends twice as much as the Department of Education and accounts for a stunning 39 percent of General Fund spending. Wolf plans to send DHS an additional $691 million next year, putting further strain on an already bursting state budget.

But there is an alternative: According to a study released today by the Commonwealth Foundation, responsible steps can be taken to slow the dramatic growth of welfare spending and avoid annual budget crises.

“Paying for Gov. Wolf’s new welfare spending plans, which follow years of increases, will force lawmakers to make the hard choice between diverting resources from other programs or raising taxes even higher,” commented Elizabeth Stelle, director of policy analysis for the Commonwealth Foundation. “The DHS budget has grown nearly twice as fast as state GDP and state personal income since fiscal year 2000-01. This trend has held true regardless of the party in power.”

Since 2000, state GDP has risen 52 percent, while state personal income has increased 56 percent. In contrast, DHS spending is up 85 percent, from $16 billion to $28 billion. (Note DHS spending and state personal income include 2013-14 figures. State GDP figures are available through 2012-13.)

Stelle continued:

“Simply spending more has not been effective at lifting Pennsylvanians out of poverty. There are money-saving alternatives that must be considered: Establishing clear guidelines to prioritize the most needy, ensuring benefits are appropriate and flexible, and promoting rules that facilitate work and independence will help define a pathway out of poverty that won’t break the bank.”

Practical reforms to an unsustainable system

• More Options for Medical Assistance: No other government program will squeeze future budgets more than Medical Assistance. It makes sense for the General Assembly to challenge Governor Wolf’s legal authority to undertake expansion. Second, the General Assembly may consider legislation directing DHS to pursue further Medicaid reforms with the federal government.
• Improve Work Options for Individuals with Intellectual Disabilities: Consider additional ways to promote employment, utilize cost sharing and tighten rules on provider reimbursements.
• Encourage Private Long-Term Care: Mitigate the expected surge in taxpayer-financed long-term care via tax credits to encourage purchase of private long-term care insurance and tightening income and asset eligibility limits, such as Medicaid’s exclusion of more than $500,000 in home equity.
• Recover Support for Child Care: Require single parents that utilize the Child Care Works Subsidy Program to seek child support.
• Improve Program Eligibility Tools: Use effective eligibility tools, such as asset tests and work requirements, to prioritize benefits for the needy while encouraging independence.

Read the full report for more details.

Elizabeth Stelle and other Commonwealth Foundation experts are available for comment today. Please contact John Bouder at 717-671-1901 or jrb@commonwealthfoundation.org to schedule an interview.

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