Postcards from the Shutdown Edge
Ten days into the shutdown, it’s easy to wonder just how much the federal government helps people day-to-day. We’ve heard about delays in highways maintenance and about federal workers who have to wait until the government opens to get paid. What about those programs conservatives are always complaining about? You might have expected stories about people suffering without help from various federal services—from food stamps to welfare checks. Instead, there’s been little to indicate needy people are going without.
That’s because the worst potential effects of the shutdown have been delayed—for now. States, even deep red states, are currently covering for the feds. Some programs waiting for re-authorization—like food stamps—are still largely intact because the federal government sends out reimbursements at the end of the month, so there’s still money and state employees to administer the benefits. Others programs have state money to thank. Through moving funds around, draining reserves, and employing a few other accounting tricks, state governments have been able to keep almost all key safety-net programs going despite the shutdown. Because many of these programs, like cash assistance, are funded through block grants, their financial situation and short-term viability vary tremendously from state to state. Regardless of ideological bent, interviews with experts at several national and state groups that monitor federal grants all confirm that most states have been uniformly working to keep such programs going for as long as possible.
In Texas, all major welfare programs have continued despite the shutdown. The state has used leftover money from last year to keep the nutrition program Women Infants, and Children—known as WIC—running. That means that needy families haven’t had to go without essential food checks for milk, infant formula, and other necessities. Other programs are funded by a combination of federal and state dollars, allowing states to spend their earmarked funds all at once. Texas, which had previously been cutting cash assistance to both reduce the amount people receive and make it harder to qualify, has moved its money around in order to keep making payments during the current crisis.
The shutdown has not been without its state-level casualties. Head Start, which provides early childhood education to low-income kids, has struggled to keep centers open. Domestic-violence shelters around the country are limping along with drastically reduced staff and minimal funding. For poor Americans, the prospect of losing childcare, cash assistance, and formula for their infants all in a short time is terrifying.
Most states use a combination of state and federal funding for welfare programs, from cash assistance to domestic violence prevention to childcare, says LaDonna Pavetti, vice president for family-income-support policy at the Center on Budget and Policy Priorities, a left-leaning economic think tank in Washington, D.C. Because it’s early in the fiscal year, states can spend the money they’ve already designated upfront and wait for the federal agencies to put in their share later. For a limited time, that can keep things chugging along.
Even when there hasn’t been that state and federal funding mix, states have looked for ways to avoid suspending programs. As of last week, Arizona appeared to be the only state that would cease issuing welfare checks. The state is one of 11 relying on federal funding alone to keep its cash-assistance program running. When the federal dollars ceased, the state had no other money designated for the same purpose it could to fall back on. Much like Texas, Arizona’s conservative state government had already slashed the amount of the checks and raised eligibility requirements, so the program could gently go to the good night. Instead, this week Governor Jan Brewer commanded state agencies find the money to keep the program chugging through the month.
Through the fiscal equivalent of searching under couch cushions for lost change, states have been able to blunt the impact of the shutdown, but they can’t keep this up much longer. No one knows when the government will reopen.
“It depends state to state but the funds will run out in every state the longer the shutdown goes on,” says Kathryn White, a fiscal policy analyst for the National Association of State Budget Officers. The Obama administration has guaranteed to reimburse states for spending on mandatory programs like cash assistance. But on other programs, it’s not as clear just how much states will get back. And there’s still no answer to when that money will appear.
“If states had a clear end in sight, and they could see they had the cash available to cover costs that are normally funded by [congressional] appropriations, they might be more willing to continue carrying [those costs],” says White. As it is, however, states have to worry about making sure they have enough cash to last them for their many other financial responsibilities.
We’re already seeing cracks in the façade. On Tuesday, North Carolina announced it would cease some benefits. (Monica Potts wrote last week about the difficulties states face just keeping cash assistance going much longer.) 80 percent of eligible people received benefits, but the rest are out of luck for now.
If the shutdown continues past the deadline for expanding the debt limit—October 17—Social Security, Medicaid, and other major programs will cease to provide benefits. That will only compound what’s bound to be a disastrous economic situation as a result of the U.S. not paying off its debts.
The situation for poor families will get even worse if the shutdown marches on into November. Several key programs, like food stamps and free and reduced school lunches, get funded at the end of each month. That means states can keep them going through October, since cash to pay for the programs for the current month already went out. After that, there are no guarantees.
Or, as Karen McLaughlin, the director of budget and research at Arizona’s Children's Action Alliance told me, “If we come to November, there’s a whole lot of everything else that starts to fall apart.”
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