Opportunity For Whom and To Do What?

Several months ago, when I was reading about Paul Ryan’s poverty plan and the GOP’s 2017 proposed budget, I kept encountering references to block grants, or as they are called by some today, opportunity grants.  At the time, the GOP’s 2017 budget plan proposed shifting funding for the Supplemental Nutrition Assistance Program (SNAP, formerly called food stamps) to a block grant.  Many of the hunger fighting organizations, like the Food Research and Action Center (FRAC) were very much against this proposal.  Wanting to better understand the implications of changing SNAP’s funding structure, I decided to do some reading on block grants, especially with regard to the SNAP program.  What I discovered made me understand why many organizations engaged in fighting poverty are deeply troubled by this proposal.

First, understanding what a block grant is and how it works is an important step.  Block grants arestack-of-money large sums of money allocated by the Federal government to a regional government, usual states, for a specific program or project.  Unlike other types of funding block grant funds come with few guidelines about how the funds are to be spent.  Block grants are often touted as a way to run government more efficiently and save tax payer dollars.  The belief being that these grants allow local governments, who know best how to use the grant money to help their citizens, have the flexibility to provide services or benefits in a more cost effective way.  In theory, block grants sound like they might be just the way to help solve our budget deficit; however, theory and practice are often two different things.

In practice block grants have a host of negatives, that for many programs, have proven to be detrimental if not disastrous.  When the Federal government changes a program’s funding formula to a block grant the money the Federal government allocates for that program is usually set at a fixed amount, and will not fluctuate from year to year.  Unless that fixed amount periodically is amended, block grants have the to potential to lose their value over time.  A prime example is Temporary Aid for Needy Families (TANF, formerly AFDC or welfare).  This program was flat funded through a block grant in 1996 with the enactment of welfare reform and yearly funding for TANF has remained at that same level for the down-arrow-w-moneypast 20 years, including during the Great Recession, reflecting a 28% loss in value.  Another limitation of block grants, also tied to fixed funding, is their inability to respond to economic downturns, when more people may need assistance.  Due to fixed funding, programs that are block granted are forced to try and help more people with the same amount of money, resulting in either a reduction of benefits or decline in the number of people able to be assisted.  Finally, block grants are usually administered with very few guidelines and very little accountability as to how the funds are spent, allowing the potential for funds to be diverted to other purposes and the certainty that assistance provided under block granted programs will vary greatly from state to state.

The possibility exists that block grants may be the panacea they are promised to be for some programs, but to fund the SNAP program through a block grant would be disastrous for a program that under its current funding and administration is a very successful program.  There are two main reasons this change in funding would be ill advised.  First, SNAP functions so successfully because it is able to respond to the current economic situation.  When the economy takes a down turn, like it did in 2008, funding for SNAP increased and it was able to provide assistance to the extra Americans who were in need.  Were the funding for SNAP to be a fixed block grant, millions of Americans who would have needed help would have been out of luck.  The second reason SNAP is so successful is that 90-95% of the funding goes to providing food aid.  Due to the uniform manner in which the program is administered at the federal level, little funding is needed for administrative costs.  If funding the SNAP program is shifted to a block grant, with little oversight or guidelines on how the funds are to be administered, there is the possibility that a larger percentage of the funds could be diverted away from providing food aid to covering other costs, thus reducing the effectiveness of the program.

The SNAP program has been called the cornerstone of our safety net and nutrition assistance programs.  In its current state the SNAP program is extremely successful, reaching 75% of all eligible individuals.  The program is able to expand when economic times are difficult and shrink, as it is now, as the economy recovers.  The Congressional capitolBudget Office projects SNAP caseloads will decrease from 45.8 million people in fiscal year 2015 to 33.1 million in 2026.  Currently the program is run with little administrative costs and almost no fraud (<3% and most of that is on the part of the retailers, not the consumers).  Not only does SNAP help the individuals that receive the benefit, but economist, Mark Zandi, states that a well funded SNAP program produces a positive ripple effect in the economy as SNAP benefits are put back into the economy, helping to pay the salary of the grocery store clerk, delivery truck driver and farmer.  Changing the funding structure of the SNAP program, however, would alter much of what make this program a success.  Why legislators would want to make such a change, that will in essence cripple the program, is difficult to understand.  Unless maybe that is actually the plan.  One hopes not.