How does the federal shutdown affect NYC children and families?

When Congress shut down the federal government nine days ago (and counting), billions of dollars stopped flowing from D.C. to state and local governments. With notable exceptions, most social safety net programs have kept running, using a patchwork of funds left over from the last fiscal year, contingency dollars from federal agencies, and money from state and local governments. What does the shutdown mean for programs that serve children and families in New York City?

In most cases, the answer is not much...yet. The majority of social service programs are safely funded through the month of October—either because they have carryover money from before the shutdown, or because the programs don’t follow the yearly federal budget cycle.

If the shutdown lasts into November, then city programs—and the families they serve—will face much bigger problems. Contingency funding plans, created by many federal agencies to help programs ride out the shutdown, only last through October 31. Few state or city agencies have the kind of rainy-day money that would keep programs running for long, without federal dollars coming in. The standard public statement offered by city agencies is that they won’t speculate on November.

The uncertainty is particularly damaging for organizations like food banks and soup kitchens, which anticipate increased demand due to major cuts in the federal food stamp program, set to take effect in November regardless of what happens with the shutdown.

Read on for a rundown of the shutdown’s consequences for New York City programs. Of course, these assume that Congress doesn’t default on its debts on October 17. In that case, all bets are off.

FOOD AND CASH ASSISTANCE PROGRAMS

Food Stamps: Federal money for the Supplemental Nutrition Assistance Program (SNAP, also known as food stamps) is safe until the end of the month. That’s because Congress authorized funding for the program as part of the Recovery Act, back in 2009. Since the authorization was already set to last until October 31 of this year, SNAP wasn’t subject to new budget appropriations on October 1.

If the shutdown lasts into November, the US Department of Agriculture has said that it will disburse about $2 billion in contingency funds, which states can use to keep their SNAP programs going.

However, come next month, SNAP will face cutbacks that have nothing to do with the shutdown. Not only will the program almost certainly be cut when Congress passes the Farm Bill (before the shutdown, the Senate’s version of the bill included a SNAP cut of $4.1 billion; the House of Representatives’ bill slashed the program by $40 billion over 10 years), but it will also be subject to a cut that’s been pending since 2010. As part of the “Healthy, Hunger-Free Kids Act” nearly three years ago, Congress funded an increase in school lunch reimbursements by planning a major cut to SNAP, scheduled to take effect November 1 of this year. If the cut goes into effect, New York City residents will lose $19 million per month in food stamp benefits, according to an analysis by the Food Bank for New York City.

Women, Infants and Children (WIC): At the beginning of the week, WIC, the federal program that helps pay for food for pregnant women, new parents and kids up to age 5, looked to be at serious risk of shutting down. Yesterday, however, the USDA released new guidance allowing states to tap into a pot of contingency money, which should keep the program running through October 31. If the shutdown lasts into November, New York State would likely need to come up with its own money to cover the lack of federal funds.

Emergency Food: Last-resort food programs like food banks and soup kitchens rely heavily on federal support. The Food Bank for New York City, which funnels most of the emergency food that goes to hungry New Yorkers, gets about half of its food supplies through the USDA’s The Emergency Food Assistance Program (TEFAP).

The TEFAP supply is safe for this month, because the program had purchased October food before the shutdown. But since no new orders can be placed, TEFAP food will disappear if the shutdown drags into November.

School Lunches: School lunch money comes through the federal Office of Child Nutrition Programs, which has said there are enough carryover funds from last year’s budget to cover meals through the end of October. If the shutdown continues and federal funds dry up in November, advocates speculate that City Hall will likely cover the costs. But with nearly 80 percent of the city’s public school students eligible for free or reduced-cost school lunches, that would be a major, unforeseen hit to the city’s budget.

Cash Assistance: New York State’s Family Assistance (FA) program provides temporary benefits to needy families with children. Technically, FA shouldn’t be touched by the shutdown, since it operates under the federal government’s basic welfare program (Temporary Assistance for Needy Families, or TANF), which is a mandatory program and therefore not reliant on yearly appropriations. However, TANF does have to be renewed by Congress. The program’s current authorization expired on September 30th, but states are are allowed to use their own money and carryover funds from last fiscal year to keep the program going.

The New York State Office of Temporary and Disability Assistance (OTDA) says that the Family Assistance program will operate as usual through October 31. A spokesperson declined to speculate on what might happen if the shutdown continues into November.

EDUCATION, CHILDCARE AND AFTER SCHOOL

Head Start: None of the city’s Head Start programs are at risk of closing this month. Most of the programs, which serve low-income kids aged 3-5, are administered by the city’s Administration for Children’s Services (ACS). While ACS uses federal dollars to fund the programs, its contracts started earlier this year and are not immediately dependent on a new federal budget.

Fortunately for city kids, none of the Head Start programs located in the city had federal contracts up for renewal in October.Nationally, 23 Head Start programs (serving a total of 19,000 kids) were up for contract renewal on October 1, according to the National Head Start Association. Until they were rescued yesterday by a billionaire couple from Texas, seven programs had shut down and six were on the brink—including one in upstate New York.

Schools: Public schools are "forward funded," which means they obtained this year’s federal funding–which covers about 10 percent of the school system’s operating expenses—in last year’s budget and will not be affected by the shutdown.

Childcare and After School: Most of the city’s subsidized childcare programs operate under contract with ACS. Since their contracts started earlier this year, they are not immediately affected by the federal budget or the shutdown.

After school programs administered by the city’s Department of Youth and Community Development (DYCD) and the state’s Office of Children and Family Services (OCFS) are similarly immune to the federal budget cycle, since their contracts began earlier this year.

CHILD SUPPORT AND FOSTER CARE

Like public schools, child support and foster care services received advanced appropriations in last year’s federal budget, leaving them untouched by the shutdown.

HOUSING

Public Housing: There is enough carryover and contingency money to fund public housing through the end of October, according to a plan released by the U.S. Department of Housing and Urban Development (HUD) on October 2.

Section 8: Housing Choice (also known as Section 8) vouchers covering October rents were disbursed before the shutdown. HUD predicts that carryover money will fund November vouchers if the shutdown continues.

Homeless Shelters: The city’s homeless shelter operators, which contract directly with the NYC Department of Homeless Services, are not affected by the shutdown.

 

The Reinvestment Myth: Beyond the IBO Report

The idea of reinvesting savings from one part of the child welfare system into another sounded perfectly logical when it was first proposed in a city strategy paper in 2001, especially to anyone unfamiliar with the vagaries of government social services funding. More than a decade ago, before Michael Bloomberg became mayor, New York City policymakers saw a huge trend in the making: the number of children in foster care was tumbling downward, alongside crime rates and the once epidemic use of crack cocaine. Of course, there were other factors: families were helped by great improvements in the city's economy, for example, and there was also a growing realization in the child welfare field that placing 10,000 or more children in foster care each year was no panacea for what ails troubled families living in severe poverty.

So in 2001, the Administration for Children's Services (ACS) established a reform goal of reinvesting savings from the shrinking foster care system into social services, including case management, drug treatment, counseling, benefits advocacy, homemaking and more, all designed to help families, keep children safe and prevent placements in foster care.

Did it happen? Not so much. The charts below show there was very little reinvestment despite a huge, 40 percent decline in overall government spending on New York City foster care between 2000 and 2010. Remarkably, the number of foster children continues to fall. As of July 2011 there were 14,308 foster children, down 58 percent since 2000.

And yet, this year, New York City taxpayers' contribution to preventive family support services is almost exactly the same as it was 12 years ago.

With the help of the NYC Independent Budget Office (IBO), Child Welfare Watch mapped the impact of the last dozen years in budget and spending trends on ACS-funded services. The charts below show what we've found. Some of this analysis is found in a report published by the IBO last week. But with that agency's assistance, we chose a very different, and we think very useful, way to report and understand the numbers. And we've included some data here that are not in the IBO report.

Most importantly, in our charts and in the text below, all of the dollar figures are adjusted for the impact of inflation. In buying power, a dollar in 2010 had much less value than a dollar in 2000. Year after year, inflation wears away at the dollar's value. We believe inflation-adjusted dollars are a more logical way of comparing government spending over the years, rather than simply listing the actual (or "nominal") dollars spent each year in their value at the time. Why? Because the cup of coffee I bought at the deli for $1.45 this morning cost me just 65 cents in 2000. Much the same is true for the cost of salaries, benefits, office leases and all the other expenses that go into providing city-funded services.

When we adjust for inflation, for example, the $903.5 million that New York spent on foster care in 2000 has the buying power of $1.3 billion in 2010 dollars. (The IBO mostly uses nominal, unadjusted dollar figures in its reports).

These numbers tell a somewhat more sobering story than we heard from the IBO last week.

Chart 1. The Sharp Drop Foster care spending in New York City fell 40 percent from 2000 to 2010. Over the same period, the number of children in foster care declined by more than half. Foster care dollars go mostly to foster parents and to the nonprofit agencies that work with them, the children and their parents. (In all of these charts, we use the city fiscal year, which begins on July 1 and ends on June 30.)

Foster care spending and foster care population

Chart 2. Hundreds of Millions of Dollars Saved As the overall cost of foster care plummeted, total spending on preventive family support services increased, but the change was relatively modest.

preventative and foster care spending 2000-2010

Chart 3. Child Protective Services Grows Spending on child protective services, that is, the ACS Division of Child Protection's investigation of abuse and neglect reports, increased in the years following the murder of Nixzmary Brown in January 2006.

protective services spending FY 2000-2011

Chart 4: The Loss of Federal Funds Foster care is paid for with city, state and federal government dollars. The federal contribution collapsed in the middle part of the decade, when city officials acknowledged problems with the way they had been documenting claims for foster children's eligibility for funding under Title IV-E of the Social Security Act. So, despite the stunning decline in the number of foster children, the contribution to foster care from state coffers changed only modestly. And the contribution from city taxpayers was volatile across the decade, mostly plugging the huge hole opened up by the loss of federal funds.

Foster care funding by source

Chart 5: Who Pays for Preventive Programs? As with foster care, funding for ACS preventive family support services comes from the city, state and federal governments. The portion paid for by the city was lower in 2010 than in 2000. Since an agreement reached in 2006, an increase or decrease in city tax levy funds spent on preventive services is amplified by the state, because Albany matches local dollars spent on these services with a formula of its own.

preventative services by funding source

Chart 6: Preventive Services Funding Today In June 2011, the Bloomberg administration agreed to "baseline" ACS preventive family support services into the city budget at $230 million, almost exactly where it stood in 2010. This means that for the foreseeable future, the City Council may not have to fight to restore funding for preventive services every year. Dollars from the city still cover only a modest 20 percent of the preventive budget. (The figures in charts 6 and 7 are not adjusted for inflation, because they are so recent. The 2010 amount is actual expenditures. The 2011 and 2012 figures reflect what the city budgeted for these services.)

preventative family support services

Chart 7: Foster Care and Adoption Almost Below $1 Billion This final chart shows the four major areas of child welfare funding in New York City, excluding core administrative services. The "Adoption" category is mostly made up of subsidies provided to adoptive families. (Nearly 80 percent of the city"s adoption budget comes from the state and federal governments.) One interesting note: In Fiscal Year 2012, for the first time in decades, the combined budget of New York City foster care and adoption services is close to falling below $1 billion. If current trends continue, that may indeed happen in 2013.

child welfare funding 2010-2012 An important acknowledgement: Thanks to the IBO and analyst Kate Maher for their help crunching these numbers.