CHAPTER 8
FEDERALLY ADMINISTERED MEANS-TESTED PROGRAMS

"Means-tested" programs provide benefits to those whose income and financial resources meet certain requirements. More than eighty benefit programs provide cash and/or noncash aid to individuals who meet certain low-income qualifications in the United States. Cash assistance programs include Temporary Assistance for Needy Families (TANF), the Earned Income Tax Credit (EITC), and Supplemental Security Income (SSI).

SUPPLEMENTAL SECURITY INCOME (SSI)

Supplemental Security Income is a means-tested income assistance program authorized by Title XVI of the Social Security Act. The SSI program replaced the combined federal-state programs of Old Age Assistance, Aid to the Blind, and Aid to the Permanently and Totally Disabled in fifty states and the District of Columbia. However, these programs still exist in the U.S. territories of Guam, Puerto Rico, and the Virgin Islands. Since the first payments in 1974, SSI has provided monthly cash payments to needy aged, blind, and disabled individuals who meet the eligibility requirements. States may supplement the basic federal SSI payment.

Eligibility Requirements for SSI Recipients

A number of requirements must be met in order to get financial benefits from Supplemental Security Income. First, a person must meet the program criteria for age, blindness, or disability. The aged, or elderly, are persons sixty-five years and older. To be considered legally blind, a person must have vision of 20/200 or less in the better eye with the use of corrective lenses, have tunnel vision of 20 degrees or less (can only see a small area straight ahead), or have met state qualifications for the earlier Aid to the Blind program.

A person is disabled if he or she cannot earn money at a job because of a physical or mental illness or injury that may cause his or her death, or if the condition lasts for twelve months or longer. Those who met earlier state Aid to the Permanently Disabled requirements may also qualify for assistance.

Children under age eighteen (or twenty-two if a full-time student) and unmarried may qualify for SSI if they have a medically determinable physical or mental impairment that substantially reduces their ability to function independently as well as effectively engage in "age-appropriate" activities. This impairment must be expected to last for a continuous period of more than twelve months or to result in death.

The Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA; PL 104-193) abolished Aid to Families with Dependent Children (AFDC), but it did not eliminate SSI. However, the welfare reform law prohibited all noncitizens from receiving SSI, with the exception of veterans and those who have worked for ten years and paid Social Security. It also made it harder for disabled children under eighteen to get SSI. To be eligible, a disabled child must have "marked and severe functional limitations."

Because SSI is a means-tested benefit, a person's income and property must be counted before he or she can receive benefits. Table 8.1 shows the maximum income that an individual and couple can have, with some income exclusions, and still be eligible for SSI benefits in 2003. For example, the monetary limits placed on individuals and couples receiving Social Security benefits are $572 and $849 per month respectively. In addition, in 2003 a person could have no more than $2,000 worth of property, and a couple could have no more than $3,000 worth of property (mainly in savings accounts or stocks and bonds). Not included in countable resources are the person's home, as well as household goods and personal effects worth less than $2,000. The first $4,500 of the fair market value of a car is not counted. A car is not counted

at all if a member of the household uses it to go to and from work or to medical treatments or if it has been adapted for a disabled person. Someone applying for SSI may have life insurance with a cash value of $1,500 or less and/or a burial policy up to the same value.

Recipients of SSI Benefits

Nearly 6.8 million persons received SSI payments in 2002, practically the same as the number of recipients in 1998. Of these, about 80 percent were disabled, 19 percent were elderly, and 1 percent were blind. (See Figure 8.1.) The majority of those receiving SSI were between the ages of eighteen and sixty-four (57 percent). Between 1974 and 2002 the number of elderly recipients declined from 61 percent to 29 percent of all recipients, while the number of disabled recipients increased. Table 8.2 shows the annual amount of payments by source of payment and category from 1974 through 2001. In 2000 the leading causes of disability among adults and children were mental disorders (not including mental retardation) and musculoskeletal system and connective tissue diseases.

About 50.2 percent of SSI recipients in 2001 were women, and 49.8 percent were men. (See Table 8.3.) According to the Social Security Administration, in 2002 58 percent of the 6.8 million recipients of SSI were women.

Cost of the SSI Program

According to the Social Security Administration, as of 2002 an individual SSI recipient could receive up to $545 per month in benefits from the federal government. If both people in a couple were eligible, the pair could receive up to $817. Most states supplement the amount provided by the Federal government.

The cost of the program rose from $11 billion in 1985 to $16.6 billion in 1990 and to $31 billion in 1999. Expenditures for the disabled, which rose from $7.8 million in 1985 to $15.7 million in 1999, accounted for most of the increase. Table 8.4 provides a breakdown of the number of persons receiving payments by source of payment and category from 1974 through 2001.

NONCASH MEANS-TESTED BENEFITS

Noncash benefits are those given in a form other than cash, such as vouchers, coupons, or commodities of some kind. The remainder of this chapter discusses some of the major noncash means-tested programs, including food stamps; the National School Lunch and School Breakfast Programs; the Women, Infants, and Children (WIC) program; Medicaid; Head Start; home energy assistance; and housing assistance.

Under Public Law 104-193, the welfare-reform law enacted in August 1996, many of these programs are being funded as block grants (lump sums of money) from the federal government to the states. (For more information about this welfare law, see Chapter 2.)

FOOD STAMPS

The Food Stamp Program, administered by the U.S. Department of Agriculture, is America's largest food assistance program. Food stamps are designed to help low-income families purchase a nutritionally adequate, low-cost diet. Generally, food stamps may only be used to buy food to be prepared at home. They may not be used for alcohol, tobacco, or hot foods intended to be consumed immediately, such as restaurant or delicatessen food.

Title VIII of the 1996 Personal Responsibility and Work Opportunity Reconciliation Act continues to fund the Food Stamp Program, but the maximum benefits have been reduced. The welfare-reform law lowered the program's expenditures by more than $23 billion from 1997 to 2002. In addition to reduced benefits for many families, it created time limits for benefits to able-bodied adults without dependents and eliminated benefits to most legal immigrants.

In June 1997 the Supplemental Appropriations Act (PL 105-18) gave states the authority to purchase federal food stamps with which to provide state-funded food assistance to those who had been eliminated from the program under the new welfare-reform law. The Agricultural Research, Extension, and Education Reform Act of 1998 (PL 105-185) restored food stamp benefits to 250,000 of the 900,000 immigrants who had earlier lost eligibility.

Participation in the Food Stamp Program

The typical American household spends 30 percent of its monthly income on food purchases. The program calculates 30 percent of the family's earnings and then issues enough food stamps to make up the difference between that amount and the amount needed to buy an adequate diet. These monthly allotments of coupons are then redeemed for food at retail food stores. Some food stamp programs provide benefits electronically through an electronic benefit transfer (EBT), a debit card similar to a bank card. In an effort to reduce fraud and to save money, the 1996 welfare-reform law required all states to convert to EBT issuance by fiscal year 2002.

The cash value of these benefits is based on the size of the household and how much the family earns. Households without an elderly or disabled member generally must have a monthly total (gross) cash income at or below 130 percent of the poverty level and may not have liquid assets (cash, savings, or other assets that can be easily sold) of more than $2,000. (If the household has a member aged sixty or older, the asset limit is $3,000.) The net monthly income limit (gross income minus any approved deductions for child care, some housing costs, and other expenses) must be 100 percent or less of the poverty level, $1,534 per month for a family of four between October 2003 and September 2004. (See Table 8.5.)

With some exceptions, food stamps are automatically available to SSI and TANF recipients. Food stamp benefits are higher in states with lower TANF benefits because those benefits are considered a part of a family's countable income. To receive food stamps, certain household members must register for work, accept suitable job

offers, or fulfill work or training requirements (such as looking or training for a job).

While the federal government sets guidelines and provides funding, the Food Stamp Program is actually carried out by the states. They certify eligibility as well as calculate and issue benefit allotments. Most often, the welfare agency and staff that administer the TANF and Medicaid programs also run the food stamp program. The regular food stamp program operates in all fifty states, the District of Columbia, Guam, and the Virgin Islands. (Puerto Rico is covered under a separate nutrition-assistance program.)

With the exception of some small differences in Alaska, Hawaii, and the territories, the program is run the same way throughout the United States. While the states pay 50 percent of the administrative costs, the federal government pays 100 percent of food stamp benefits and the other 50 percent of the operating costs. In 2001 the federal government paid only $15.5 billion in food stamp benefits, but by 2003 the federal government paid $21.4 billion in food stamp benefits, or an estimated average monthly benefit of $83.92 per recipient (based on preliminary data). (See Table 8.6.)

How Many People Receive Food Stamps?

Food stamp participation increased significantly in the early and mid-1970s, remained relatively stable at between eighteen and twenty-two million recipients per year throughout the 1980s, and then rose again in the 1990s. Participation generally peaks in periods of high unemployment, inflation, and recession. In 1994, 27.5 million persons (about 10 percent of the population) participated in the food stamp program, a 36.9 percent increase from the number of recipients in 1990. In 2003 the Food Stamp Program served an average of 21.3 million people each month. (See Table 8.6.)

The food stamp program is the nation's largest source of food assistance, helping about 6 percent of all Americans. According to the U.S. Department of Agriculture, half of participants are children, 10 percent are elderly, and 13 percent are disabled.

Table 6.2 (in Chapter 6) shows the numbers and percentages of poor households that received food stamps in 2001. One-third (33.6 percent) of all persons below poverty level lived in households that received food stamps. Almost half (46 percent) of those under age eighteen living below the poverty level lived in households that received food stamps. Recipiency rates (rates of those receiving aid) were highest in households headed by women with children under six years old—59.5 percent.

The percentage of poor white households receiving food stamps was 25.3 percent in 2002, compared to 47.3 of poor African-American households and 33.7 percent of poor Hispanics.

Participation in the food stamp program has fallen markedly since the enactment of the PRWORA welfare reform in 1996. One reason for the decline is that many able-bodied adults age eighteen to fifty who do not have children are no longer eligible for benefits. In addition, studies indicate that former TANF recipients who make the transition from welfare to work tend to give up their food stamp benefits even though they may still qualify on the basis of low income. The U.S. Department of Health and Human Services reported that the proportion of households eligible for food stamps that actually participated in the program fell from 63 percent in 1996 to 54 percent in 1998.

Increase in Average Monthly Benefits

Average monthly benefits per person rose from $34.47 in 1980 to a preliminary estimate of $83.92 in 2003, not accounting for inflation. (See Table 8.6.) Table 8.7 shows the maximum monthly food stamp allotments for October 2003 to September 2004 for households of varying sizes within the continental United States. During this period the maximum monthly benefit for a four-person household was $471.

In the early 1980s, Congress passed many laws designed to hold down the cost of the food stamp program by tightening administrative controls and setting tougher eligibility standards. The Omnibus Budget Reconciliation

Act of 1981 (PL 97-35), the Agriculture and Food Act of 1981 (PL 97-98), and the Omnibus Budget Reconciliation Act of 1982 (PL 97-253) each contained provisions that held down costs. These measures included delaying inflation adjustments, establishing eligibility at 130 percent of poverty levels, ending eligibility for college students and strikers, and reducing benefits.

In 1985 the Food Security Act (PL 99-198) reversed the earlier trend, making food stamp rules easier to obtain and raising some benefits. However, the law required states to introduce employment and training programs for food stamp recipients. Several other pieces of legislation gave the homeless access to food stamps and increased benefits and accessibility for those receiving student aid, energy assistance, and income from employment programs for the elderly and charitable organizations. The Hunger Prevention Act of 1988 (PL 100-435) increased food stamp benefits and made it easier for people to get food stamps, as did the Mickey Leland Childhood Hunger Relief Act of 1991 (PL 103-66).

Characteristics of Food Stamp Recipients

In 2002 most (89 percent) food stamp households earned less than the poverty guideline (that year, $17,050 for a family of four). In fact, one-third earned less than half of the poverty level. A report, Characteristics of Food Stamp Households: Fiscal Year 2002, prepared for the Food and Nutrition Service of the U.S. Department of Agriculture by Randy Rosso and Melissa Faux of Mathematica Policy Research (December 2003), presented detailed information on food stamp participants and households for 2002:

• Over half (51 percent) of participants were children.
• Nine percent of participants were elderly.
• Fewer than a quarter of food stamp households also received TANF (21 percent).
• Almost 30 percent received SSI, and 24 percent received Social Security benefits.
• Forty-four percent of food stamp households with children had earned income.
• Almost all participants (97 percent) were U.S. citizens.
• 45.3 percent of the heads of food stamp households were white, 31.9 percent were African-American, and 12.2 percent were Hispanic.

NATIONAL SCHOOL LUNCH AND SCHOOL BREAKFAST PROGRAMS

The National School Lunch Program (NSLP) and the School Breakfast Program (SBP) provide federal cash and commodity support to participating public and private schools and to nonprofit residential institutions that serve meals to children. Both programs have a three-level reimbursement system. Children from households with incomes at or below 130 percent of the poverty line receive free meals. Children from households with incomes between 130 percent and 185 percent of the poverty level receive meals at a reduced price (no more than 40 cents). Table 8.8 shows the income eligibility guidelines, based on the poverty line, effective from July 1, 2003, to June 30, 2004. The levels are higher for Alaska and Hawaii than in the forty-eight contiguous states, Washington, D.C., Guam, and other U.S. territories. Children in TANF families are automatically eligible to receive free breakfasts and lunches. Almost 90 percent of federal funding for the NSLP is used to subsidize free and reduced-price lunches for low-income children.

Meals for children from households that do not qualify for free or reduced-price meals are also subsidized. There was a reimbursement of about 21 cents for each full-price school lunch during the 1999–2000 school year. Local school food authorities set their own prices for full-price meals. In 2003–2004 the reimbursement for each free school lunch was $2.19.

School Lunch Program

The National School Lunch Program (NSLP), created in 1946 under the National School Lunch Act (60 Stat 230), supplies subsidized lunches to children in almost all schools and in 6,000 residential and child-care institutions. About 16.4 million children (58.5 percent) received free or reduced-price lunches in 2003. (See Table 8.9.) According to the U.S. Department of Agriculture, by 2004, about 99,800 public and non-profit private elementary and secondary schools and residential child-care institutions participated in the program.

In the school year 1996–97, the U.S. Department of Agriculture changed certain policies so that school meals would meet the recommendations of the Dietary Guidelines for America, the federal standards for what constitutes a healthy diet.

School Breakfast Program

The School Breakfast Program (SBP), created under the Child Nutrition Act of 1966 (PL 89-642), serves far fewer students than does the NSLP. The SBP also differs from the NSLP in that most schools offering the program are in low-income areas, and the children who participate in the program are mainly from low- and moderate-income families. In 2003 about 8.4 million students participated, with 82.8 percent receiving free or reduced-price (up to 30 cents) breakfasts. (See Table 8.10.) In 2003 the total federal cost of school food programs was estimated at $8.8 billion.

SPECIAL SUPPLEMENTAL FOOD PROGRAM FOR WOMEN, INFANTS, AND CHILDREN (WIC)

The WIC program provides food assistance as well as nutrition counseling and health services to low-income pregnant women, to women who have just given birth and their babies, and to low-income children up to five years old. Participants in the program must have incomes at or below 185 percent of poverty (all but five states use this cutoff level) and must be nutritionally at risk.

Under the Child Nutrition Act of 1966, nutritional risk includes abnormal nutritional conditions, medical conditions related to nutrition, health-impairing dietary deficiencies, or conditions that might predispose a person to these conditions. Pregnant women may receive benefits

throughout their pregnancies and for up to six months after childbirth (up to one year for nursing mothers).

Those receiving WIC benefits get supplemental food each month in the form of actual food items or, more commonly, vouchers (coupons) for the purchase of specific items at the store. Permitted foods contain high amounts of protein, iron, calcium, vitamin A, and vitamin C. Items that may be purchased include milk, cheese, eggs, infant formula, cereals, and fruit or vegetable juices. Mothers participating in WIC are encouraged to breast-feed their infants if possible, but state WIC agencies will provide formula for mothers who choose to use it.

The U.S. Department of Agriculture estimated that the national average monthly cost of a WIC food package in 2003 was $35.23 per participant, including food and administrative costs. In fiscal year 2003 estimated federal costs for the WIC program were $4.5 billion, and the program served approximately 7.6 million women, infants, and children. (See Table 8.11.) WIC works in conjunction with the Farmers' Market Nutrition Program, established in 1992, to provide WIC recipients with increased access, in the form of vouchers, to fresh fruits and vegetables.

WIC is not an entitlement program. That is, the number of participants is limited by the amount of funds available rather than by eligibility. In 1999 the federal government estimated that WIC reached about 97 percent of eligible women, infants, and children. Of the 7.6 million participants, 3.7 million were children, 1.9 million were infants, and 1.7 million were women.

A study conducted in 1998 for the Food and Nutrition Service of the U.S. Department of Agriculture National Survey of WIC Participants, 2001 Final Report (Nancy Cole and Julie Kresge, Alexandria, VA, 2001), found that almost two-thirds of WIC recipients reside in families whose income is below the poverty guidelines. Nonetheless, three-fourths of WIC families receive income from wages.

Nearly 8 million participants were enrolled in WIC in April 1998, but the number of participants who cashed in or picked up vouchers was lower, at 7.4 million. Almost half of the women enrolled (45.2 percent) were never married, 44.1 percent were married, and the remaining 10.7 percent were widowed, separated, or divorced. Of the women enrolled in WIC in 1998, 11.1 percent were pregnant, 4.8 percent were breastfeeding, and 7.3 were classified

as post-partum. The study found significant changes in caseloads and the racial composition of participants between 1988 and 1998. Caseloads in the western states grew from 13 percent to 24 percent of total WIC participants, primarily due to growth in the Hispanic population in the West. Hispanic participants increased from 21 percent of the caseload in 1988 to 32 percent in 1998.

MEDICAID

Medicaid, authorized under Title XIX of the Social Security Act, is a federal-state program that provides medical assistance for low-income people who are aged, blind, disabled, or members of families with dependent children and for certain other pregnant women and children. Within federal guidelines, each state designs and administers its own program. For this reason, there may be considerable differences from state to state as to who is covered, what type of coverage is provided, and how much is paid for medical services. States receive federal matching payments based on their Medicaid expenditures and the state's per capita income. The federal match ranges from 50 to 80 percent of Medicaid expenditures. Table 8.12 shows the number of recipients, the amount of payments, and the average payment per recipient for each state or territory.

Who Gets Medicaid?

Although Medicaid eligibility had been linked to receipt of, or eligibility to receive, benefits under Aid to Families with Dependent Children (AFDC) or SSI, legislation gradually extended coverage in the 1980s and 1990s. Beginning in 1986, benefits were extended to low-income children and pregnant women not on welfare. States must

cover children less than six years of age and pregnant women with family incomes below 133 percent of the federal poverty level. Pregnant women are only covered for medical services related to their pregnancies, while children receive full Medicaid coverage. The states may cover infants under one year old and pregnant women with incomes more than 133 percent, but not more than 185 percent, of the poverty level. As of January 1, 1991, Medicaid also began to cover aged and disabled persons receiving Medicare whose income was below 100 percent of the poverty level.

Medicaid coverage is not guaranteed for recipients of TANF as it was for recipients of AFDC. However, the welfare-reform law of 1996 requires states to continue benefits to those who would have been eligible under the AFDC requirements each state had in place on July 16, 1996. As with pre-reform law, Medicaid coverage must be continued for one year for those families that have increased their earnings to the point where they are no longer eligible for cash aid and for four months to those who lose eligibility because of child or spousal support.

States may deny Medicaid benefits to adults who lose TANF benefits because they refuse to work. However, the law exempts poor pregnant women and children from this provision, requiring their continued Medicaid eligibility. In addition, the welfare law requires state plans to ensure Medicaid for children receiving foster care or adoption assistance.

The process to determine eligibility can take months. The Balanced Budget Act of 1997 (PL 105-33) gave states the option to grant interim coverage to children who appear to be eligible for Medicaid, based on age and family income. This "presumptive eligibility" option allows children and pregnant women to receive care immediately while waiting for Medicaid approval.

Many states, in an effort to reach the large number of uninsured children (by Census Bureau estimates, over one-third of Medicaid-eligible children), are simplifying the Medicaid application process. In addition, the 1996 welfare law gives states the option to use Medicaid to provide health-care coverage to low-income working parents. About half (46 percent) of poor (below 100 percent poverty level) adults without children, 43 percent of all parents, and 25 percent of poor children were uninsured in 2002. (See Figure 8.2.) Although the income of these households is below the federal poverty line, working poor parents have been ineligible for publicly funded health insurance. In addition, low-wage jobs often do not offer affordable employer-sponsored coverage. The number of uninsured working poor parents is likely to grow as welfare recipients move into the work force, as required under the welfare-reform law, unless states expand Medicaid to cover this group.

Medicaid may also cover "medically needy" persons, those with income levels higher than the regular Medicaid levels. Each state may establish a higher income or resource level for the medically needy than the standards the states set for those who qualify for other social welfare benefits. They may also limit the categories of the medically needy who will receive Medicaid. As of January 2004, all fifty states and the District of Columbia provided Medicaid to medically needy recipients.

MEDICAID RECIPIENTS. In 2004 approximately 42.9 million people were enrolled in Medicaid. Most were dependent children under twenty-one years of age (19.7 million) and adults in families with dependent children (10.8 million). The remainder of Medicaid recipients were blind or disabled persons (eight million) and the elderly (4.4 million). The number receiving Medicaid coverage had doubled since the mid-1970s when approximately twenty million people were enrolled.

Medicaid accounted for about 11.6 percent of all health coverage in 2002. (See Figure 8.3.) Poor households were most likely to be covered by Medicaid. Some 27.8 percent of poor persons were covered in 2002. States are required to provide Medicaid coverage for pregnant women and children under age six. One of every five children in the United States is covered under Medicaid. It is the single largest source of health insurance coverage for all children from families earning below 200 percent of the poverty line. African-American and Hispanic children were far more likely to have Medicaid coverage than were white or Asian and Pacific Islander children. In 2002, 41.3 percent of African-American children and 37.3 percent of Hispanic children were covered by Medicaid, compared to 15.5 percent of non-Hispanic white and 18.1 percent of Asian children. (See Figure 8.4.)

Medicaid provides health-care services, such as long-term care, for many elderly people not covered by Medicare. Medicaid pays for about half of all nursing home expenditures, which accounts for a large percentage of Medicaid expenditures. This proportion of spending on the elderly is expected to increase as more people live longer and those from the baby boom generation age.

Growth in Medicaid Costs

The rapid growth in spending for Medicaid has contributed to the concern over the rising cost of health care. Not accounting for inflation, spending skyrocketed from $6.3 billion in 1972 to $37.5 billion in 1985 to $142.3 billion in 1998. Of the $142.3 billion spent on Medicaid payments in 1998, most went for the disabled (42.4 percent) and the elderly (28.5 percent). In addition, considerable amounts were spent on dependent children under age twenty-one (16 percent) and adults in families with dependent children (10.4 percent). On average, the Medicaid program spent $10,242 on every elderly recipient, $1,203 on each dependent child under twenty-one, and $9,095 on each disabled person in the program. (See Table 8.13.)

Transitional Medical Assistance

Families who leave welfare for work are at risk of losing the health-care benefits that they received under Medicaid. Families with children who had previously been covered by Medicaid but are no longer eligible because of earnings from employment may be eligible for Transitional Medical Assistance (TMA) for up to an additional twelve months, as long as periodic legislative extensions continue to preserve funding for the TMA program, which originally expired in July 2002.

STATE CHILD HEALTH INSURANCE PROGRAM

The Balanced Budget Act of 1997 (PL 105-33) set aside $24 billion over five years to fund the State Children's Health Insurance Program (SCHIP) in an effort to reach children who are uninsured. This was the nation's largest children's health-care investment since the creation of Medicaid in 1965. SCHIP requires states to use the funding to cover uninsured children whose families earn too much for Medicaid but too little to afford private coverage. States may use this money to expand their Medicaid programs, design new child health insurance programs, or create a combination of both.

States must enroll all children who meet Medicaid eligibility rules in the Medicaid program rather than in the new SCHIP plan. They are not allowed to use SCHIP to replace existing health coverage. In addition, states

must decide on what kind of cost-sharing, if any, to require of low-income families without keeping them from access to the program. The only federal requirement is that cost-sharing cannot exceed 5 percent of family income. In 2004, 5.8 million children were enrolled in the SCHIP plan.

HEAD START

Head Start began operating in 1965 under the general authority of the Economic Opportunity Act of 1964 (PL 88-452). Head Start is designed to help low-income children from birth to age five improve their social competence, learning skills, health, and nutrition so that they

can begin school on a footing level with more advantaged children.

Education is the service most directly provided by Head Start to enrolled children. Head Start services include language development; medical (including immunizations), dental, and mental health services; and nutritional and social services. Head Start often facilitates access to other social services, such as Medicaid, for siblings and families, as well as for enrolled children. The program tries to involve parents in their children's education, either through volunteer participation or through employment of parents as Head Start staff.

Head Start's guidelines require that at least 90 percent of the children enrolled come from families with incomes at or below the poverty income level. At least 10 percent of the enrollment slots must be available for disabled children.

In 2002, 912,345 children were served in Head Start programs at a total federal cost of about $6.5 billion. (See Table 8.14.) In 2002 African-American children made up 33 percent of the enrollment; white children, 28 percent; Hispanic children, 30 percent; Native Americans, 3 percent; and Asians, 3 percent. Most of the children participating in the program were four-year-olds (52 percent) and three-year-olds (36 percent). (See Table 8.15.) A significant proportion (13 percent) were disabled children.

HELP IN PAYING THE HEATING BILL

What is now the Low-Income Home Energy Assistance Program (LIHEAP) began as Title III of the Crude Oil Windfall Profit Tax Act of 1980 (PL 96-223). The act provided funding for the states to create programs for three types of energy assistance:

• Helping poor households pay their heating and cooling bills.
• Using low-cost insulation to make homes more energy efficient.
• Providing financial aid to households during energy-related emergencies (unusually long cold or hot spells).

In 1981 Title XXVI of the Omnibus Budget Reconciliation Act (OBRA; PL 97-35) gave form and substance to the program. Funding peaked at an estimated $2.1 billion in 1985 and declined throughout the 1990s. In 2001 the U.S. Department of Health and Human Services increased funding by 27 percent over 2000, appropriating $1.4 billion in LIHEAP block grants.

Home heating assistance benefits, by far the major service of LIHEAP, served about 4.6 million families during 2004 and totaled about $1.7 billion. According to Kristin Thomson in The LIHEAP Databook: A State-by-State Analysis of Home Energy Assistance, (Washington, DC: Campaign for Energy Assistance, 2004), of the 29.9 million families eligible in fiscal year 2001, only about 15.5 percent received energy assistance, with almost 4.4 million receiving assistance with heating costs and about 250,000 receiving assistance for cooling. Benefit amounts vary widely throughout the states, ranging from larger grants in colder states with high costs of heating, such as Alaska, Montana, and New Jersey, to much lower grants in generally warmer states, such as Alabama, Florida, and South Carolina. Benefits apply to both heating and cooling in some states such as Texas.

States make payments directly to eligible households or to home energy suppliers to be used for eligible households. The highest level of assistance is given to households with the lowest income and highest energy costs in relation to income, taking into account family size and whether infants, children, or elderly are a part of the household.

FEDERAL HOUSING ASSISTANCE

The primary purpose of federal housing assistance is to improve housing quality and to reduce housing costs for low-income Americans. However, affordability rather than housing quality has become the predominant problem facing low-income renters and homeowners. The number of substandard housing units continues to decline. Affordability problems occur nationwide, affecting poor households in every region and in urban, suburban, and rural areas of the country alike. They are spread among all racial and ethnic groups and affect both working and non-working poor renters. For example, in 1999 two-thirds of poor working families with children spent more than 30 percent of their income on shelter, the percentage the government considers affordable.

Financial Commitments for Housing Assistance

Housing assistance for low-income households comes through a number of programs and can be very confusing. Authorizations for housing assistance, especially for building low-cost public housing, may be committed for a dozen or two dozen years in the future. As a result, a financial authorization made in 1977 may well have affected spending by the U.S. Department of Housing and Urban Development (HUD) as late as 2001. Spending patterns changed dramatically in the 1980s and 1990s. HUD has increasingly turned to using housing vouchers to help low-income families pay the rent in existing housing and has turned away from building low-income housing, which requires larger financial commitments over a longer time. Figure 8.5 shows the types of housing assistance provided by the federal government in 1999.

Vouchers give recipients more flexibility as to where they may live and are particularly helpful to those making the transition from welfare to work. Families can use vouchers to move closer to areas with more job opportunities or better transportation to work.

Housing assistance is not an entitlement to which a person has a legal right if he or she meets certain requirements. The number of people receiving help depends on the amount of money authorized by Congress. Therefore, not all households or families that qualify receive assistance. Approximately one-third (32.8 percent) of the low-income families that qualify actually receive assistance. In 1999 some 4.3 million families received federal housing assistance even though about 13.1 million households qualified for it. (See Figure 8.6.)

In the 1980s and 1990s the number of new commitments to assist low-income families dropped dramatically. Between 1977 and 1981 the federal government committed to increasing rental assistance by an average of about 260,000 new households per year. From 1982 through 1999 the new assistance commitments fell to an average of 55,000 per year. The limited level of housing assistance means most poor renters desiring housing assistance are placed on waiting lists and sometimes wait several years before receiving aid. In some areas, waiting lists are so long that they have been closed, and new families are not allowed to apply.

Availability of Low-Cost Housing

Barbara Sard and Margy Waller reported in Housing Strategies to Strengthen Welfare Policy and Support Working Families (Washington, DC: Brookings Institution, 2002) that the supply of low-cost housing has declined from eighty-five units per one hundred poor families in 1987 to seventy-five units in 1999. The number of housing units that are both affordable and available for rent is even less: thirty-nine units for each one hundred renters.

The U.S. Conference of Mayors conducts an annual survey of hunger and homelessness in major U.S. cities. Its 2002 survey of twenty-five cities found an 88 percent increase in requests for housing assistance from low-income families and individuals. Only 31 percent of those eligible were currently receiving housing assistance. The wait for public housing in the cities surveyed averaged nineteen months, and the wait for housing vouchers was twenty-three months. Twelve of the twenty-five cities in the survey had stopped taking applications for at least one housing program due to "the excessive length of waiting list."

Observers attribute the decline in low-cost housing to a number of factors, including the conversion of rental units to condominiums, rapidly increasing costs of maintaining apartments, and urban-renewal programs that have destroyed low-cost housing. The decline in federal spending for public housing, both in funding the construction of new facilities and in refurbishing older, substandard units, has also contributed to the drop in low-cost housing.

Expenditures on Housing

Most federal housing aid goes to "very-low-income renters" through rental-assistance programs that either provide low-cost public housing or pay rent subsidies so that the low-income families may live in existing private apartments. Under the latter program, the low-income tenant pays 30 percent of his or her household income for rent, and the government pays the rest. The federal government also assists some lower moderate-income households in becoming homeowners by making long-term commitments to reduce their interest rates significantly.

In 1995 about 82 percent of all poor-renter households and 78 percent of working-poor renters with children spent at least 30 percent of their income on rent and utilities, the level set by HUD as "affordable housing." By 1999 the percentage of working poor paying more than 30 percent of their income for housing had increased to 88 percent. Around 4.9 million of these households spent more than 50 percent of their income on housing. HUD

considers these families as "worst-case" and gives them priority for housing assistance.

Federal Funding for Housing

Budget authorizations for these programs dropped dramatically between the late 1970s and the late 1980s, but have risen since then. While the authorizations declined, the actual yearly outlays, many fueled by earlier commitments, increased from $7.2 billion (in 2002 dollars) in 1977 to an estimated $31.9 billion in 2002, an increase of 443 percent. (See Table 8.16.) Average annual federal outlays per unit for all programs have generally risen, but rents in subsidized housing have probably risen faster than the income of assisted households, causing the subsidies to rise faster than inflation. In addition, housing aid is being targeted toward a poorer segment of the population, requiring larger subsidies per assisted household.

Increase in the Number of People Served

In 2000, 4.7 million renter households received subsidies, representing 13.6 percent of all renter households. Half of these households had incomes below the federal poverty line. More than one-third (35.6 percent) of those receiving subsidies were African-American, 46.2 percent were non-Hispanic whites, and 13.8 percent were of Hispanic origin.