How much is a child in South Carolina worth? Not nearly as much as a child in Connecticut according to the federal program designed to alleviate poverty. The federal government provides the state of Connecticut with $1,052 a year for each child in poverty. The same federal fund values poor children in South Carolina at $179 per child. And it’s not just in South Carolina; it seems children throughout the South are worth less than their counterparts in other parts of the nation. Apart from our underfunded school systems or our high unemployment rates, federal welfare reform legislation hinders the many southern states like South Carolina from achieving its desired results. South Carolina gets less federal money to lift families out of poverty than almost any other state.
Before welfare was reformed in 1996, funds were allocated based on a formula which required states to provide matching dollars to draw down federal funds. Thus, states with higher per capita incomes, and therefore a higher tax base, could draw down more federal funding. States with small tax bases, like South Carolina, had few dollars to invest and, therefore, got few dollars back.
When welfare reform was passed, a new program called Temporary Assistance for Needy Families (TANF) was established. The goal of TANF is to move families from welfare to work. To achieve this, these families receive assistance in job training and job skills and assistance to reduce the barriers they face in obtaining and maintaining employment, like transportation and childcare. Most of South Carolina’s families receiving TANF assistance are single parents with one or two children. Currently our state has only enough funds to serve 25% of the families eligible for childcare assistance. And it has even fewer dollars to address a family’s need for transportation and training.
The most difficult part of this new welfare reform bill was figuring out how to distribute the block grant to states. Naturally, high-income states sought to continue getting the big federal dollars they received under the old program, while low-income states desired a new formula based on the number of families in poverty living in each state. This time, like many times before, the high-income states, often with larger delegations, won the fight and received the lion’s share of the money. Federal funds were allocated to states based on the average amount of funds received for the prior three-year period, which was under the old program. Low-income states were left with the task of implementing new programs and new federal requirements with very little money.
Some poor states were thrown a bone, “a supplemental payment,” in exchange for their votes to pass the welfare reform legislation. Seventeen states qualified for this bone, because their level of spending per poor person was less than 35% of the national average or they had more than a 10% increase in population from 1990 through 1994. With spending per poor person at 37.66% of the national average and only a 5% increase in population during the given time period, South Carolina just missed the mark to receive supplemental funding.
What’s more, when the supplemental funding was formed, it was frozen so that no other states could be added and the original seventeen would not lose the funding. Thus, even though a state like South Carolina qualified for supplemental funding the second year, it could not receive the additional funding. In fact, South Carolina was the only state in deep poverty that did not get any extra help. States like Kentucky, South Carolina and Virginia were held to the same federal requirements, which cost a lot more, as every other state, and were given less money with which to meet those requirements.
The law that created welfare reform, the TANF Act, is up for reauthorization next year. States are planning to ask Congress to take a look at the funding for the program and add some new dollars to make up for the buying power lost to inflation over the past 13 years. Based on the consumer-priced index, this would be approximately an additional $5 billion nationally. The new money needs to be distributed using a new formula - one based on poverty. A formula that equalizes the payments to states based on the percentage of each state’s population living in poverty would benefit 33 of the 50 states, the majority of states. It would target federal dollars where they are most needed - to states with high poverty. And South Carolina would receive a fair and equal share of the new money.
Over the last 13 years, it is estimated that South Carolina has lost approximately $150 million in TANF funding. This is money that did not go to South Carolina families moving from poverty to self sufficiency. If the amount of funding is increased using the consumer-priced index South Carolina would receive $32 million under the current formula. The amount would increase to $93 million if funds were distributed using the suggested new formula based on need. A formula based on poverty leads to an additional $61 million. This would make a significant impact on our state, and it’s now time to get our fair share of funding.
The Sisters of Charity Foundation of South Carolina envisions families in South Carolina with the resources to live out of poverty. The current funding is based on the amount a state received 13 years ago under a different program. It is an injustice to continue to use this formula, as states with the largest number of citizens in poverty will receive the smallest amount of funding. As a Foundation we feel that we must bring this to light and fight for those who cannot fight for themselves. Our state has been short-changed in TANF funding and we feel that it is time for South Carolina to receive its fair share.
The old money ($16 billion) would still use the old formula that allots for more funding for high-income states that can draw down more federal funding. Everyone wins. Everyone gets more money. TANF is designed for people out of work, and with the current economy, now is the time for Congress to reauthorize TANF.
A formula based on poverty best matches the original intent of the TANF legislation, and is the most unbiased way to allocate new federal funds. The Sisters of Charity Foundation of South Carolina is planning to do all that we can to make sure South Carolina and other southern states get an equitable share of any new TANF funding. We want to make sure Congress gets it right this time, so that South Carolina no longer has to work under a handicap. Just think of what an additional $93 million for South Carolina’s low-income families would mean.
Tom Keith is the president for the Sisters of Charity Foundation of South Carolina
