Although the 2007-2008 budget controversy is fading from the limelight, the exorbitant spending it authorizes cannot be overlooked. One of the largest portions of state spending is public welfare, which accounts for 36% of the budget. Since Governor Rendell took office in 2003, General Fund spending on public welfare increased 48%—from $6.5 billion to $9.7 billion in the 2007-2008 budget. Total spending from all state and federal funds on welfare increased by more than $4 billion to the all-time high of $23 billion.
The number of recipients receiving taxpayer assistance has swelled. Medical Assistance, the largest and least restricted program in the Department of Welfare (DPW), served 1.5 million Pennsylvanians in FY 2002-2003 and is projected to grow to almost 2 million in FY 2007-2008—an increase of over 434,000 caseloads. Temporary Assistance for Needy Families (TANF), the joint federal and state program that is traditional “welfare” for the poor, experienced an increase of recipients from 210,528 to 245,071 under Governor Rendell. This represents the highest increase in TANF caseloads in the nation, while at the same time 42 states experienced declines in TANF participation from 2002 to 2006. Pennsylvania’s 16% increase in TANF caseloads contrasts sharply with the 19% decline in the rest of the United States.
In 2005, the federal government reauthorized TANF and mandated higher welfare-to-work rates—i.e., ensuring the “safety net” is no longer a “hammock.” States are allowed to establish exceptions for some cases, but 50% of the remaining families must participate in work or job training activities. In 2004, Pennsylvania ranked last in welfare-to-work rates, with only a 7.1% participation rate. To the disbelief of many, the DPW claimed a 52.3% participation rate as of May 2007. Some legislators are skeptical of such a fast recovery, and are accusing DPW of shuffling cases around.
In 2004, 4,294 families participated in work activities, while 4,430 families were exempted from work requirements. Though a full report on work participation has not been made available, DPW claims that 14,626 families were participating in work activities in April 2007. While this represents an increase in work participation since 2004, to achieve a 52.3% participation rate DPW would have to exempt an estimated 26,000 families from the TANF work requirement. In other words, while DPW increased work participation by 10,000, they increased exemptions by 22,000 to meet federal regulations.
The rapid increase of recipients of taxpayer assistance has been aided by poor enforcement of limits. Recent findings from a House Republican Policy Committee investigation uncovered numerous cases of welfare fraud that have gone unchecked, including out-of-state recipients, individuals with multiple benefit cards, and the use of false post office boxes and addresses. The investigation found that the number of fraudulency referrals to the Office of Inspector General have decreased significantly since 2003. Prior to the Rendell Administration, approximately 47,000 cases were referred annually. However, between 2003 and 2004, the Inspector General received about 29,000 referrals—as caseloads continued to increase. A “close your eyes and authorize” approach to granting taxpayer assistance is reported to be the modus operandi of the Department of Public Welfare leadership.
Pennsylvania needs welfare reform that will use taxpayers’ money efficiently and cut back wasteful spending. House Republicans have proposed the Working Families Independence Act, which would attempt to reduce welfare fraud and increase welfare-to-work rates, allowing more money to support those citizens who truly need assistance. The Act includes measures that would require proof of residency, implement fingerprint verification for applications, apply stricter database screenings, and prohibit the DPW from creating new line items.
Beyond addressing fraud and abuse, Pennsylvania needs to shed its mentality of dependence. Rising welfare spending and caseloads are matched by increases in Pennsylvania’s tax burden. In 2006, state and local taxes consumed nearly 11% of Pennsylvanian’s income—$4,400 per person—with federal taxes taking an additional 21%. This year, Pennsylvania ranks 20th in the nation for overall taxation; Pennsylvania ranked 9th lowest as recently as 1990.
With government spending and taxation rising at a rate faster than taxpayers can afford, Pennsylvanians are becoming more reliant on government programs than on private-sector jobs. While Pennsylvania leads the nation in welfare growth, it ranks 40th in job growth and 35th in personal income growth since 2002. Although Gov. Rendell boasts to have “stimulated the economy” by adding 162,000 jobs, this is less than half the increase of 434,000 recipients of taxpayer assistance.
Instead of expanding our economy and giving residents the freedom to thrive in the marketplace, Pennsylvania’s spend and tax mentality makes people increasingly dependent on government for their livelihood. Pennsylvania needs to reverse this trend and live up to its current slogan as the “State of Independence.”
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Jessica Runk is a research intern with the Commonwealth Foundation (www.CommonwealthFoundation.org), an independent, nonprofit public policy research and educational institute based in Harrisburg.
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