North Carolina Blames Government Shutdown For Closing Welfare Program

Now that a deal has been reached to reopen the federal government, it remains to be seen how quickly the programs will resume operating normally.
By @katierucke |
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    (Photo/Brittney Rankin via U.S. Army/Flickr)

    (Photo/Brittney Rankin via U.S. Army/Flickr)

    Citing rippling financial effects of the U.S. government shutdown, North Carolina announced it was cutting its welfare program this week.

    The decision to shut down the program came on Monday when North Carolina state officials ordered the state’s Department of Health and Human Services (HHS) to stop processing all welfare applications until a deal is reached to reopen the federal government.

    Though the welfare checks are administered by the state, the Work First program is fully funded by the federal government. The state says it has run out of federal funds to keep the programs running.

    But now that a deal has been reached to reopen the federal government, it remains to be seen how quickly the programs will resume operating normally.

    More than 20,000 people — most of them children — rely on their monthly stipend from the state’s welfare program known as Work First, in order to buy food and other basic necessities. Each month all welfare recipients in the state must reapply to the program in order to receive financial assistance, so the state’s decision to not process any welfare applications until the federal government is back up and running affects all persons who rely on the program — not just new applicants.

    All welfare recipients in the state who have already had their welfare applications processed for October will receive their check for the month, but November benefits were not guaranteed.

    “We are heavily dependent on federal dollars,” said Julie Henry, spokeswoman for the state’s HHS department. “When these kinds of things happen at the federal level, it has an immediate impact.”

    Other programs that are affected include those that are funded through the federal Temporary Assistance for Needy Families (TANF) grant, which includes child care subsidies that go to more than 70,000 children in the state.

    According to a report from Reuters, the federal agency that oversees TANF, the Office of the Administration for Children and Families, sent a letter urging states to continue funding programs such as welfare and child care subsidy programs.

    The letter says that the states would be reimbursed by the federal government for any money they spend to keep the programs operating as normal, unless Congress says otherwise.

    In response to the state’s decision to cut welfare, many have pointed out that the state has a “rainy day fund” with about $650 million that was set aside for an emergency use. In September, the Work First program cost about $4.8 million to operate.

    Alexandra Sirota is the director of the North Carolina Budget and Tax Center, which advocates for low-income citizens. She said the current circumstances constituted an emergency and that the state should do everything it can — including taking money from the emergency fund — to help low-income citizens.

    “They’re cutting off a lifeline for thousands of North Carolina families who have experienced significant hardships,” Sirota said.

    “North Carolina is the only state that’s doing this,” she added. “This isn’t a necessary course of action.”

    Three Democratic congressmen from North Carolina also sent a letter to the state’s Gov. Pat McCrory (R) asking him to consider reinstating the state’s welfare programs by continuing to fund the programs with state funds. According to a local news report, the letter noted that the reimbursement guarantee was “good enough for 49 other states.”

    But others argue that taking money from the state to fund federal programs may be more of a political statement than a financial decision.

    The existence of taxpayer-funded social programs has been a highly contentious political issue for some time, especially in recent years as the number of beneficiaries and costs to fund the programs have both dramatically increased.

    Despite the high costs, supporters of the social or safety net programs such as food stamps, unemployment insurance, Social Security and tax credits say these programs are responsible for keeping tens of millions of Americans out of poverty each year.

    In its September 2013 report, the Census Bureau reported that 40 million people were helped out of poverty by federal benefits programs in 2011.

     

    Will it get worse?

    This isn’t the first time North Carolina has announced the closure of government programs as a result of the 2013 shutdown. Earlier this month state officials announced they would be cutting off benefits to the some 50,000 low-income mothers and children in the state who receive help from the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC) program.

    However, the state budget director intervened about a day later and provided funds for the program so that low-income mothers could afford baby formula for their children.

    A similar thing happened in Arizona. Initially, the state was not using state funds to keep social programs operating, but that decision was later reversed, and Gov. Jan Brewer (R) ordered all programs be funded through Oct. 31.

    Since federal funding ran out on Oct. 1, all 50 states have agreed to cover the costs of social programs themselves, but most didn’t make plans to fund the programs past the end of the month.

    The federal government shutdown ended on Wednesday, but it was not clear how quickly the government would reopen or how quickly states would be reimbursed for money they had already spent covering the cost of federally funded programs.

    Many experts warned that if the shutdown were to continue into November and beyond, other states may follow in North Carolina’s footsteps and begin to cut off benefits.

    Elizabeth Lower-Basch is the policy coordinator for CLASP, an advocacy group that works to create policy solutions that work for low-income people. She said “in every state, for at least a month or so you could run with just the state funds,” but “after a month states would start to get nervous.”

    Lower-Basch explained that most of the states thought at the beginning of the shutdown that use of their own funds wasn’t risky because they assumed the shutdown would only last a few weeks. “A state could not do everything it does with the block grant all year without it,” she said.

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