Maine ranks second in percent of households getting cash benefits
“Fix the System,” The Maine Heritage Policy Center’s 2012 report on Maine’s welfare system, show that Maine is the only state in the country to rank in the top 10 of three major areas of welfare: Maine ranks sixth in percent of households receiving food stamps; second in the nation in percent of households receiving cash assistance; and third in the country in percent of population enrolled in Medicaid.
Only California and Vermont have a higher percentage of their populations enrolled in Medicaid. Download the report here.
“This updated report makes it very clear once again that welfare reform should be a major issue for our leaders,” said MHPC CEO Scott Moody, co-author of the report. “While recent reforms have improved the system, more must be done to fix the system and free Maine families from welfare dependency.”
The report highlights reforms that were a priority of the LePage administration and approved by the current Legislature. Many of the reforms had been suggested in MHPC’s 2010 “Fix the System” report. Reforms that were successfully implemented include: a five-year limit on cash assistance; stricter sanctions for violation of program requirements; drug testing for welfare recipients accused of drug crimes; tightened Medicaid eligibility requirements; improvement of fraud detection; and a waiting period for legal non-citizens to get welfare benefits.
The report also highlights many policies that continue to push Maine to the top of welfare dependency nationally, including welfare eligibility levels that are among the highest in the country. To fix Maine’s welfare system, the report advocates for: increased tightening of eligibility levels; more effective use of diversion programs; further strengthening of job search and work requirements; and increasing agency accountability and program management.
“Maine has made some great strides in reforming our broken welfare system, but there is more work to be done to give Mainers the kind of system that is built to move our families from welfare to independence,” said Moody. “We must continue reform efforts to ensure that our welfare system focuses aid to the truly needy, encourages independence, rewards hard work and self-sufficiency and ultimately helps get Mainers back on their feet and free from dependence.”
Since the release of the first “Fix the System” study, the 2008 recession has continued to cause welfare systems throughout the country to explode. However, even with the increase of need throughout the country, Maine, which ranked top in participation in 2010, still holds top spots in three key programs.
The U.S. Census Bureau reports that Maine ranks sixth in the percent of households receiving food stamps in 2010, with an increase of household participation to from 13.8 percent in 2008 to 16.2 percent in 2010.
The U.S. Census Bureau also reports that the percent of households receiving Cash Public Assistance has grown to from 4.8 percent in 2008 to 5.2 percent in 2010. Maine still has the second highest participation of households in the nation—which is almost double the participation rate of the national average.
In 2009, Maine’s Medicaid program remained one of the largest in the nation with more than 27 percent of the state’s population—or 322,000 people—participating in the program, only lagging behind Vermont and California.
Another major portion of Maine’s welfare system is the federal and state Earned Income Tax Credit. In 2010, a little more than 100,000 Mainers received the federal EITC, or benefits equal to $188 million dollars. That’s about $1,871 in benefits per person.
Maine is also one of 24 states that also have a state-level EITC. This non-refundable tax credit reduces the tax burden of low-income Mainers by 5 percent of the value of the federal EITC. More than 50,000 Mainers participated in the program in 2009, representing a tax expenditure of $4.1 million.
Maine’s welfare system remains out of the mainstream, fostering the most dependence of all the states. Even after the recession, no state other than Maine ranks in the top 10 in all three categories of welfare participation—and Maine continues to surpass the national average in all three categories.
This dependence still takes a huge fiscal toll. The percent of the budget devoted to public welfare has grown from 30 percent in 2008 to 36.7 percent in 2010, almost 10 percentage points higher than the national average and only lower than one other state. This is a higher proportion of money than the State of Maine spends on education, roads, hospitals and police protection combined.
As of June 2012, 402,722 people are enrolled on Medicaid, TANF or food stamps (EBT) in the state of Maine, representing an increase in the participation rate from 29 percent to 30.5 percent. Medicaid participation has increased from just fewer than 300,000 to 330,474.
Food stamp participation also continues to climb, even as the economy slowly recovers from the recession. This means nearly one in three people in the state are still on some sort of public assistance.
The continuous growth of the welfare system is not due to increasing levels of poverty: it has been the conscious design of policymakers. This trend has been heading towards an alarming situation in which there will be more Mainers enrolled in welfare than are working jobs in the state’s private sector by 2016.
It is reasonable to assume, from other states’ experiences, this trend will not actually come to fruition as Governor LePage’s reforms are phased in. Data from the Maine Department of Health and Human Services suggest that in more than a dozen Maine towns, more than half the population is already dependent on TANF, food stamps or Medicaid.
The level of dependence in Maine comes at an astonishing cost. Data from the U.S. Census Bureau shows that Maine spends more than $2.9 billion a year on its welfare system—up from $1.5 billion a decade earlier. Even in constant, inflation-adjusted dollars, welfare spending in Maine rose almost 50% percent from 2000 to 2010.
Although Maine spends billions on welfare, it is not because the population is needier than in other states. Maine, even after the recession, is not even close to being the poorest state. Data from the U.S. Census Bureau shows that Maine’s poverty rate is only 12.9 percent, a rate that is well below the national average of 14.7 percent.
In fact, it doesn’t seem as though spending by the state’s welfare system has an association whatsoever with poverty rates. Real, inflation-adjusted spending by Maine’s welfare system has significantly increased, but Maine’s poverty rate has remained constant for the last 19 years.
“Clearly, poverty is not the driving force behind the exploding growth of Maine’s welfare system,” Moody states. “As this study demonstrates, Maine people are among the nation’s most dependent not because of economic misfortunes unique to the state, but because state policymakers have consciously enacted policies that make it too easy to become trapped by the welfare system—and too difficult to escape it.”
See the study at www.mainepolicy.org. It is listed under “Most Recent.”