By Angela Butel and James Parrott
The federal government provides significant funding to localities, which is targeted primarily to support children, families, and low-income communities. This support happens through a combination of direct benefits for individuals and families – social safety net programs such as Medicare, Social Security, Medicaid, and the Supplemental Nutrition Assistance Program (SNAP) – and social services categorical funding, which flows through the City budget to help provide services to individuals and families. Some federal funding streams, such as Temporary Assistance to Needy Families (TANF), provide both kinds of funding – direct benefits to families as well as programmatic funding to states and localities.
In this report, we examine the federal funding provided to New York City and its importance to the budgets of five City agencies serving children, families, and low-income communities: the Administration for Children’s Services (ACS) and the Departments of Social Services (DSS, also called the Human Resources Administration), Homeless Services (DHS), Youth and Community Development (DYCD), and Health and Mental Health (DOHMH). These agencies contract with nearly 4,000 local service providers to deliver child welfare services, child care, job training, emergency shelter, transitional housing, youth programming, health care, and a variety of other services. We reflect on the possible impact that cuts to federal social services spending, of the magnitude that have been proposed in recent years, could have on the City budget and on these contracted providers.
Our deep dive into the adopted City budget for FY 2018 has led to five key findings:
Taken together, the five City agencies examined for this report received $3.2 billion in federal funding in FY 2018, which accounted for nearly 30 percent of their budgets. Because these agencies contracted out more than $5.5 billion (including funds from federal grants as well as State and City funds) in FY 2018, much of it to community-based organizations (CBOs) that provide direct services to the community, the possibility of cuts to federal social services spending has significant implications for both the City and CBOs in terms of their ability to continue providing the current level of services.
Federal social services categorical funding that flows through the City budget primarily funds services for children, in program areas like family homeless shelter operations ($665.8 million in federal funding) and child care services through both the Child Care and Development Block Grant ($500.8 million) and Head Start ($128.6 million).
Though some of the City’s program areas with the largest budgets receive significant amounts of federal funding, there are several smaller program areas that rely almost entirely on federal funding. These include the Home Energy Assistance Program, which helps low-income households pay their heating bills (99.3 percent federally funded) and two DYCD programs for youth (both more than 95 percent federally funded), as well as Head Start (72 percent federally funded). Notably, the four programs just mentioned rely predominately on discretionary funds, which unlike mandatory funds must be appropriated by Congress each year and are thus easier to cut.
President Donald Trump and Congressional Republicans have proposed deep cuts to many social safety net and social service programs, including SNAP, TANF, and the Social Services Block Grant (SSBG). President Trump has recently proposed a public charge rule change which would consider immigrants’ use of public assistance in their eligibility for permanent status, and have the effect of discouraging many immigrants from accessing human services. Congressional Republicans have also recently used the growing deficit caused by the 2017 tax cut bill as rhetorical justification for cuts to social services spending. Regardless of whether or not these particular recent moves result in cuts now, the tactics that underlie them are likely to continue resurfacing in budget battles to come.
The midterm elections for the State Legislature also offer an opportunity to revisit the role of State social services funding to the City, which has declined by nearly 26 percent since 2010 (while federal aid has risen slightly more than five percent during that time).
The results of the recent midterm elections will shape the outcome of the ongoing negotiations over safety net and social services spending. Funding decisions not resolved this year will stretch into the next, with a new House to push back against the deep cuts sought by the Trump administration and its supporters. As the newly elected Congress begins its work in January, negotiations over how, and how much, to fund social services will continue to be a top priority.