Economy

Arizona Will Boot Thousands From Welfare To Address $1 Billion Budget Hole

CREDIT: AP/Toby Talbot

Arizona’s legislature has decided to try to plug a $1 billion budget deficit in part by kicking people off of welfare after just 12 months, the strictest time limit in the country.

The change will mean that at least 1,600 families, including more than 2,700 children, will lose the benefit on July 1, 2016 and save the state at least $4 million.

All states cap benefits at some point, but the majority cut recipients off after five years. Some states have shorter limits than that: four impose a cap at four years; one at three years and nine months; four a three years; and 13 at two years or less. Only one state, Texas, imposes a 12 month limit for some parents, but their children can keep getting benefits for up to five years. Arizona’s won’t have the same exemptions. In a given year, about 51,000 cases across the country, or 3 percent of the total, are closed because of time limits. While not all states have always had them, the trend recently has been to add them and to tighten the restrictions.

This is an outgrowth of the way Temporary Assistance for Needy Families (TANF), or welfare, is designed. In 1996, it was turned into a block grant, meaning that states get a fixed amount of money from the government no matter what need and demand might look like. That amount also hasn’t been increased in the intervening time, losing 28 percent of its value since then. States are largely responsible for designing their programs, but the incentives are to reduce how many people participate, rather than increase assistance to low-income people, to free up funds that often get used for other purposes like plugging budget holes, as in Arizona.

But while there may be savings for states, time limits can impose severe hardship on families already at the brink. One examination of Maine’s a five-year limit found that the families that lost assistance weren’t likely to find work thanks to disabilities, low education levels, child care responsibilities, and/or few job opportunities and experienced “severe hardships.” Forty percent had no income afterward and median income for those who lost assistance was just $3,120 a year. People who lost benefits after Washington enacted a five-year limit in 2011 had lower rates of employment and higher rates of homelessness. Studies of time limits in a handful of other states have similarly found that they lead to lower incomes and increased hardship for the families who lose benefits and these families have few job prospects.

States have found other ways to impose harsh restrictions on those who need welfare assistance. Kansas recently limited recipients to withdrawing just $25 of their benefits a day as well as accessing them from places like movie theaters, pools and spas, and cruise ships. Even though states are given quite a lot of leeway in designing their programs, this might violate federal law, which would mean it could lose the $102 million it gets in block grant funding from the federal government. The state had previously instituted other reforms that kicked more than 23,000 people off the rolls. Many others have instituted drug testing, barring those who test positive from getting benefits, even though positive rates are lower than drug use rates for the general population and the testing programs cost thousands of dollars.