Lets begin with federal funding made available to Vermont in fiscal year 2016 for welfare programs.
Each year, Vermont files the Single Audit Report with the federal government that itemizes all the federal grants that are included in the state’s Comprehensive Annual Financial Report. This report is independently prepared and audited by KPMG.
Most, but not all, federal grants are included in this report. In the tables below, all the welfare grants included in the Single Audit Report will be outlined.
Grants and tax credits that don’t flow through the state’s direct financial statements will be outlined in a second table.
Single Audit Report Welfare Grants: Fiscal-Year 2016
|Federal Government Department||Grant Program||Amount ($ millions)|
|USDA||Supplemental Nutrition for Women, Infants & Children||14.8|
|USDA||Child and Adult Care Food Program||6.8|
|USDA||Supplemental Nutrition Assistance Program (Food Stamps)||118.5|
|USDA||SNAP Administrative Matching Grant||10.6|
|USDA||School Lunch Program||23.4|
|USDA||Summer Food Program||1.3|
|USDA||Emergency Food Programs||2.2|
|Labor||Work Investment Act Programs||4.5|
|Energy||Heating & Weatherization Programs||2.1|
|Health & Human Services (HHS)||Child Support Enforcement Programs||9.4|
|HHS||Low-Income Home Energy Assistance||17.8|
|HHS||Foster Care Title IV-E||13.2|
|HHS||Social Services Block Grant||7.8|
|HHS||Children’s Health Insurance Program (CHIP)||8.6|
|HHS||Community Services Block Grant||3.4|
|HHS||Temporary Assistance for Needy Families (TANF)||33.4|
|HHS||Child Care & Development||19.3|
Source: Fiscal Year 2016 Single Audit Report
Other Federal Grants
|Federal Government Department||Grant Program||Amount ($ millions)||Information Source|
|HUD||Section 8 Housing Assistance||58.5||Vermont State Housing Authority Annual Report|
|HUD||Housing Assistance Programs||2.5||Vermont State Housing Authority Annual Report|
|IRS||Earned Income Tax Credit||86.0||National Association of State Legislatures 2016 EITC Report|
|Education||Student Assistance Programs||5.3||Vermont Student Assistance Corp. Annual Report|
|Sub-Total Single Audit Report Grants||1,384.7|
|Total Federal Welfare Grants||1,537.0|
With respect to state funding of welfare, The Informed Vermonter’s estimate is outlined below, along with the source of information.
State of Vermont Welfare Spending: Fiscal-Year 2016
|Description||Fiscal Year 2016 Amount ($ millions)||Source|
|Vermont’s Matching Medicaid Contribution||665.9||2018 State of Vermont Executive Budget Recommendation|
|Additional State Funding to Vermont Health Access||59.1||2018 State of Vermont Executive Budget Recommendation|
|Additional State Funding to Mental Health||2.0||2018 State of Vermont Executive Budget Recommendation|
|Additional State Funding to Children and Family Services||156.2||2018 State of Vermont Executive Budget Recommendation|
|Housing Assistance||13.8||Vermont State Housing Authority 2016 Annual Report|
|Homeowners Rebates||15.2||2018 State of Vermont Executive Budget Recommendation|
|Rent Rebates||9.3||2018 State of Vermont Executive Budget Recommendation|
|State Earned Income Tax Credit||27.2||2017 Biennial Tax Expenditure Report (this if for the 2015 tax year)|
|Student Assistance||20.2||Vermont Student Assistance Corp 2016 Annual Report|
Total Fiscal-Year 2016 Welfare Spending Estimate ($ millions)
|Federal Welfare Grants||1,537.0|
|State Welfare Spending||968.9|
|Total Vermont Welfare Spending||2,505.9|
With a population of about 624,000 people, total estimated welfare spending of just over $2.5 billion represents $4,000 for every man, women and child in the state.
Health care accounts for almost 73% of the total, or approximately $1.8 billion. Health care accounted for 75% of the state’s direct welfare spending.
The balance of approximately $700 million is basically addressing poverty, of which the state of Vermont provided only $241.9 million, or about 6% of total 2016 state tax and recurring service revenues.
The federal government provided about 61% of total welfare funding in 2016. Any reduction in these programs would be very challenging for the state.
Some Key Drivers of Welfare Spending
Welfare is a big and complex topic with many forces at work. There are social issues ( single parent families, substance abuse…), health issues (mental health, disabilities, chronic illnesses…) and program execution issues (improper payments, Medicare & Medicaid fraud, food stamp fraud…) that all impact heavily on the need for and level of welfare spending.
There are also some fundamental economic forces at work, which The Informed Vermonter would like to discuss briefly.
Poverty: According to the most recent US Census Bureau data, Vermont has a Persons in Poverty Rate of 11.9%, or just in excess of 74,000 people. The income thresholds used to classify a person in poverty are currently as follows:
Family Size Income Threshold
So, Vermont has 74,000 people living at or below the income levels specified above, many of whom are children. Now think about the cost of housing, utilities, food, medicine, transportation, clothing and all of life’s other necessities. There is clearly a gap to be filled somehow.
Low Wages: As reported earlier by The Informed Vermonter, Vermont is a low wage state. 10% of Vermonters earn less than $21,740 per year and 25% less than $27,150. Any cost of living math applied to these wage levels will show the challenges faced by many Vermonters today.
High Health Costs: Health care is the elephant in the room when it comes to welfare spending in the USA. Unfortunately, the USA has the highest health care costs when compared to all other major western democracies. According to OECD data for 2015, the USA spent 16.9% of GDP on health care. For the UK, Japan, Germany, France and Canada, the range of health care spending was a low of 9.9% to a high of 11.2% of GDP, with an average of 10.7%. All of these countries have universal health care coverage. So, health care costs in the USA are 37% higher than the average of these other countries, all of which have better health care outcomes as measured by mortality.
With $1.8 billion in health care costs by the state government, one could argue that 37%, or $666 million, is a result of the country’s higher cost of health care relative to comparable countries. That is a lot of money!