Fair Shares and Formula Fights: A Study of Federal Social Welfare Distribution

Author: Karen J. Baehler

Dissertation School: University of Maryland at College Park

Pages: 277

Publication Date: January 1999

Availability:
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Access Number: 10706

Abstract:

The 104TH Congress transformed a 60-year-old welfare entitlement program into a capped block grant. One of the most contentious issues involved allotting the new welfare block grant funds among the states. This dissertation addresses the question of how federal social welfare, drawing upon philosophy, public finance theory, and the record of congressional rhetoric on grants. The following three chapters subject actual distribution patterns generated by fourteen selected federal programs to quantitative tests to measure their compliance with the equity standards developed earlier.

The normative inquiry reveals a need to disaggregate federal social welfare goods into core and peripheral categories. Core goods ought to be distributed via the central government, in-kind, according to the principle of horizontal equity. Normative imperatives do not attach to the distribution of peripheral goods, but efficiency qualifies as a strong value. The empirical tests reveal significant disparities across programs in their performance against these standards when state allotments are correlated with state poverty counts and measures of state fiscal capacity. Lump sum grants consistently perform better than open-ended state matching grants on these tests. However, the limited ability of the central government to control how states use this federal aid means that even lump sum grants cannot guarantee fair allotment of core goods to persons.

The dissertation concludes that core goods should not be distributed by grants of any design, but only by direct payments to individuals. Because cash welfare and work-based relief for families count as core goods, they ought to be centrally provided. Several reforms are suggested for improving efficiency and equity in federal social welfare grants for peripheral goods.

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