Report

Has Spending Per Poor Person Grown Since 1990?

by Ed Lazere
PDF of this analysis

A recent report by the DC Fiscal Policy Institute, The Untold Story of the DC Budget (http://dcfpi.org/?p=51), found that while the District’s local funds budget grew only modestly since 1990, spending in a number of program areas declined substantially.  The report noted some programs that serve low-income and other vulnerable populations ‘ including affordable housing, human service, and employment services ‘ have faced particularly large cuts.  It also found that spending rose in four areas: Medicaid, special education, child welfare, and basic government operations.

In response, a representative from the Office of the Chief Financial Officer stated that spending on all health and human service programs has grown when measured relative to DC’s poverty population.  According to the CFO’s office, spending on the "human support services" cluster of agencies ‘ including both local and federal funds ‘ increased from roughly $17,000 per poor resident in 1990 to $22,000 in 2004.  This finding appears to be intended to challenge the basic premise of the DCFPI analysis.

By treating all health and human service programs together, however, the CFO’s figures can lead to a misleading conclusion.  The figures fail to reflect the highly divergent trends between spending on Medicaid ‘ which rose substantially ‘ and support for other human services ‘ which declined sharply.

  • Medicaid: Medicaid spending per poor resident climbed from $6,400 in 1990 to $11,000 in 2004, after adjusting for inflation; Medicaid accounts for half of the $22,000 figure cited by the CFO.  This substantial figure stems from the fact that Medicaid serves DC’s neediest residents, including people with disabilities and people needing nursing home care.  The increase in DC’s Medicaid program largely reflects rising health care costs throughout the country, that stem from higher prescription drug costs, new technologies, and other changes in medical practices.  All states have experienced higher Medicaid costs, but DC’s Medicaid program actually grew more slowly in the 1990s than in all but four states.
  • Other Programs: By contrast, total support for all other agencies in the "human support services" cluster ‘ including both federal and local funds ‘ fell from $13,100 per poor resident in 1990 to $11,000 in 2004, a decline of 16 percent.[1]  (This figure does not reflect actual benefits received by the typical poor resident.  The "human support services" cluster includes agencies that serve all residents such as the Department of Parks and Recreation, as well as a number of agencies that provide benefits to targeted populations rather than to all low-income residents, such as the Department of Mental Health.)

The fact that Medicaid spending has increased substantially does not negate the fact that investment in a number of services critical to low-income residents has declined.  The CFO’s claim is equivalent to an employer who cuts wages in response to rising health insurance costs and then declares that workers have received a pay increase because their total compensation has grown.  While the statement may be true technically, the loss of cash income would have an adverse effect on the ability of workers to meet their needs.


End Note:

[1] DCFPI estimates that total spending per poor person in 1990 was $19,500.  This is somewhat different from the $17,000 figure cited by the CFO.

Related Report:

The Untold Story of the DC Budget (http://dcfpi.org/?p=51)