Order Code 94-953 EPW Updated November 4, 2002 CRS Report for Congress Received through the CRS Web Social Services Block Grant (Title XX of the Social Security Act) Melinda Gish Domestic Social Policy Division Summary The Social Services Block Grant (SSBG) is a flexible source of funds that states may use to support a wide variety of social services activities. States have broad discretion over the use of these funds. In FY2000, the largest expenditures for services under the SSBG were for child protective services, children’s foster care, and prevention and intervention services. Funding for the SSBG has been reduced considerably from its FY1995 peak of $2.8 billion. The FY2002 bill making appropriations for the Departments of Labor, Health and Human Services, and Education (H.R. 3061/P.L. 107116) included $1.7 billion for the SSBG in FY2002, and maintained states’ ability to transfer up to 10% of their annual Temporary Assistance for Needy Families (TANF) allotments to the SSBG in FY2002. This superseded prior law (P.L. 105-178) that would have reduced the allowable transfer amount to 4.25%. The $1.7 billion appropriation level for FY2002 reflects the same level requested by the President in both his FY2002 and FY2003 budgets, and a $25 million decrease from FY2001. An appropriations bill for FY2003 has not been passed; funding is currently provided through November 22, 2002, at the FY2002 level, under a continuing resolution (H.J.Res. 123; P.L. 107-244). This short report provides background information on the SSBG and tracks relevant legislation and appropriations measures. Recent Developments On October 18, 2002, a fourth continuing resolution was signed into law, providing appropriations through November 22, 2002 at the rate made available under FY2002 appropriations law. With respect to the SSBG, the funding level ($1.7 billion) mirrors the amount proposed in the FY2003 appropriations bill for the Departments of HHS, Education, and Labor (H.R. 5320), introduced by Representative Young (without committee action) on September 4, 2002. Recently introduced legislation that would increase the SSBG includes S. 3018, the Beneficiary Access to Care and Medicare Equity Act, introduced by Senator Baucus on October 1. This bill includes a provision for an additional $1 billion in SSBG allotments for the purpose of providing state fiscal relief. Congressional Research Service ˜ The Library of Congress CRS-2 Introduction Title XX of the Social Security Act permanently authorizes the SSBG as a “capped” entitlement to states. In other words, states are entitled to their share, according to a formula, of a nationwide funding ceiling or “cap,” which is specified in the statute. Although social services for certain welfare recipients have been authorized under various titles of the Social Security Act since 1956, the SSBG in its current form was created in 1981 (P.L. 97-35). A special SSBG program for enterprise communities and empowerment zones was authorized in 1993 (P.L. 103-66). At the federal level, the SSBG is administered by the Department of Health and Human Services (HHS), and legislation amending Title XX is reported by the House Ways and Means Committee and the Senate Finance Committee. Recent Funding History Funding for FY2003 is currently being provided at last year’s level through November 22, 2002 under a continuing resolution (H.J.Res. 123; P.L. 107-244). The FY2002 bill making appropriations for the Departments of Labor, Health and Human Services, and Education (H.R. 3061/P.L. 107-116) included $1.7 billion for SSBG funding in FY2002, as had been requested by the President in his FY2002 budget, and the House and Senate in their versions of H.R. 3061. This amount marked a $25 million decrease from the prior year’s funding, which was included in the Consolidated Appropriations Act of 2001 (H.R. 4577/P.L. 106-554). The law maintained states’ authority to transfer up to 10% of their TANF allotments to the SSBG. In his budget for FY2003, the President again requested $1.7 billion for the SSBG (as do H.R. 5320, introduced in the House on September 4, 2002, without committee action, and S. 2766, passed by the Senate Appropriations Committee on July 22, 2002 ). The Senate Finance Committee’s welfare reform reauthorization measure (H.R. 4737- approved June 26, 2002) proposes to authorize SSBG funding at $1.952 billion for FY2005, and to permanently restore states’ authority to transfer up to 10% of their annual TANF allotments to the SSBG. The same committee passed the Charity Aid Recovery and Empowerment Act (a substitute for H.R. 7) which would increase SSBG funding by a total of $1.3 billion above the FY2002 level over the 2-year period of FY2003-FY2004. The Consolidated Appropriations Act of 2001 (P.L. 106-554) provided appropriations for programs administered by the Department of Health and Human Services, among others. Included in the law was $1.725 billion in FY2001 funding for the SSBG, a decrease of $50 million from the FY2000 level ($1.775 billion, which was also President Clinton’s requested level for FY2001). In addition, the law maintained states’ ability to transfer up to 10% of their TANF allotments to the SSBG in FY2001. The law does not maintain the 10% transfer authority for years following FY2001. Prior to filing the conference report on H.R. 4577 (H.Rept. 106-1033), the House and Senate had proposed significantly different funding levels for the SSBG in FY2001. On June 14, 2000, the House passed its version of a L-HHS-Ed appropriations bill (H.R. 4577), which included $1.7 billion for the SSBG. Earlier, the Senate Appropriations Committee reported its L-HHS-Ed bill (S. 2553/S.Rept. 106-293), which would have funded the SSBG at $600 million – a $1.1 billion cut from its FY2000 funding level. On CRS-3 June 30, the full Senate took up the House-passed version of a L-HHS-Ed bill (H.R. 4577), substituted the text of S. 2553, and amended and passed H.R. 4577. Table 1 shows cuts in SSBG funding over the last 4 years, from its most recent high of $2.8 billion, which was provided annually from FY1989 through FY1995. Although $2.8 billion was the originally authorized entitlement ceiling for FY1996, Congress reduced funding to $2.38 billion in that year. Welfare reform legislation (P.L. 104-193) subsequently set the annual SSBG entitlement ceiling at $2.38 billion in each of fiscal years 1997 through 2002. Under the welfare reform law, the ceiling was scheduled to return to a permanent level of $2.8 billion in FY2003. After welfare reform was enacted, Congress passed an appropriations measure for FY1997 (P.L. 104-208) that contained $2.5 billion for the SSBG, which actually exceeded the ceiling established in the welfare reform law. For FY1998, President Clinton requested that the amount authorized by welfare reform – $2.38 billion – be appropriated. However, Congress approved an FY1998 appropriations bill (P.L. 105-78) containing $2.299 billion for the SSBG. The Senate Appropriations Committee explained the reduction by stating that funding is provided for social services through other federal programs (S.Rept. 105-58). The House Appropriations Committee expressed concern that HHS lacks information on the effectiveness of SSBG-funded activities (H.Rept. 105-205). On June 9, 1998, President Clinton signed the Transportation Equity Act (TEA) into law (P.L. 105-178), which permanently reduced the SSBG entitlement ceiling to $1.7 billion, beginning in FY2001. However, the entitlement ceiling has not always reflected the actual appropriation. For example, the $1.725 billion appropriation level for FY2001 (H.R. 4577) exceeded the $1.7 billion ceiling by $25 million. In addition, the TEA contained a provision that would have limited the ability of states to transfer TANF funds into SSBG beginning in FY2001. However, this was superseded by the FY2001 Consolidated Appropriations Act (H.R. 4577) as described below (see Welfare Reform Amendments: Transfer of TANF Funds to SSBG). Table 1 shows SSBG entitlement ceilings and appropriations in FY1990-FY2002. Also shown for FY1997-FY2000 are the amounts transferred from TANF to SSBG. Table 1. SSBG Funding, FY1990-FY2002 ($ in billions) Fiscal year Ceiling Appropriation Fiscal year Ceiling Appropriation Transfer from TANF 1990 2.8 2.8 1996 2.381 2.381 not applicable 1991 2.8 2.8 1997 2.380 2.5 0.6 1992 2.8 2.8 1998 2.380 2.299 1.2 1993 2.8 2.8 1999 2.380 1.909 1.0 1994 2.8 2.8 2000 2.380 1.775 1.1 1995 2.8 2.8 2001 1.700 1.725 not available 2002 1.700 1.700 not available CRS-4 Welfare Reform Amendments: Transfer of TANF Funds to SSBG The 1996 welfare reform law replaced Aid to Families with Dependent Children (AFDC) with a block grant to states, called Temporary Assistance for Needy Families (TANF), under Title IV-A of the Social Security Act. The law allowed states to transfer up to 10% of their annual TANF allotments into the SSBG. Under provisions of the Transportation Equity Act of 1998 (P.L. 105-178), the amount that states could transfer into SSBG was to be reduced to 4.25% of their annual TANF allotments, beginning in FY2001. However, this provision was superceded in FY2001 by the FY2001 Consolidated Appropriations Act, which maintained the 10% transfer authority level. Likewise, the FY2002 appropriations bill ultimately presented to the President maintained the 10% transfer authority for FY2002. Earlier, the House had passed its version of a Labor/HHS/Ed appropriations bill (H.R. 3061) proposing to maintain the 10% transfer authority, while the Senate’s amended version proposed a 5.7% transfer level. (The Senate Appropriations Committee had recommended a 5.9% transfer authority level in S. 1536, however the full Senate, in passing an amended H.R. 3061, would have reduced it to 5.7% as a partial offset to funding proposed in S.Amdt. 2084, which provides increased funding for Hispanic education programs.) Over the course of FY1997-FY2000, states transferred a cumulative 6% of TANF funds to the SSBG ($3.9 billion). Funds transferred from TANF to SSBG can be used only for children and families whose income is less than 200% of the federal poverty guidelines. Under the welfare reform law, states also may use SSBG funds for vouchers for families who are not eligible for cash assistance because of time limits under the welfare reform program, or for children who are denied cash assistance because they were born into families already receiving benefits for another child. Allocation of SSBG Funds SSBG funds are allocated to states according to each state’s relative population size. Grants to Puerto Rico, Guam, the Virgin Islands, and Northern Marianas are based on their share of Title XX funds in FY1981. No match is required for federal SSBG funds, and federal law does not specify a sub-state allocation formula. In other words, states have complete discretion for the distribution of SSBG funds within their borders. Use of Funds There are no federal eligibility criteria for SSBG participants. Thus, states have total discretion to set their own eligibility criteria (except, as described above, the welfare reform law established an income limit of 200% of poverty for recipients of services funded by TANF allotments that are transferred to SSBG.) States also have wide discretion in the use of SSBG funds. Federal law establishes the following broad goals toward which social services must be directed: ! achieving or maintaining economic self-support to prevent, reduce, or eliminate dependency; ! achieving or maintaining self-sufficiency, including reduction or prevention of dependency; CRS-5 ! preventing or remedying neglect, abuse, or exploitation of children and adults unable to protect their own interests, or preserving, rehabilitating or reuniting families; ! preventing or reducing inappropriate institutional care by providing for community-based care, home-based care, or other forms of less intensive care; and ! securing referral or admission for institutional care when other forms of care are not appropriate, or providing services to individuals in institutions. The law also provides the following examples of social services that may relate to these broad goals: child care, protective services for children and adults, services for children and adults in foster care, home management, adult day care, transportation, family planning, training and related services, employment services, information, referral and counseling, meal preparation and delivery, health support services, and services to meet special needs of children, aged, mentally retarded, blind, emotionally disturbed, physically handicapped, alcoholics and drug addicts. SSBG funds also may be used for administration, planning, evaluation, and training. States may transfer up to 10% of SSBG funds to block grants for health activities and low-income home energy assistance. However, the law also contains certain prohibitions on the use of SSBG funds. Specifically, SSBG funds cannot be used for capital purchases or improvements; cash payments to individuals (except that welfare reform allows vouchers for certain families, as described above); payment of wages as a social service; medical care; social services for residents of institutions; public education; child care that does not meet applicable state or local standards; or services provided by anyone excluded from participation in Medicare or other Social Security Act programs. In addition, SSBG funds may not be used for items or services related to assisted suicide (this provision was added in 1997, under P.L. 105-12.) States are required to report their annual SSBG expenditures in each of 29 service categories using a standard post-expenditure reporting form. HHS published regulations to implement this requirement and to provide states with a uniform set of service category definitions on November 15, 1993. The most recent compilation of national data (50 states and the District of Columbia) on the use of SSBG funds is found in a report of 2000 SSBG Expenditures, released by HHS in the summer of 2002. Table 2 shows the percentage of total SSBG expenditures made for providing services in each category, on a national basis, in FY2000. States used 6% of SSBG funds in FY2000 for child day care (down from 13% in FY1999), almost 11% for foster care services for children, over 7% for prevention and intervention (from abuse and neglect) services, almost 11% for protective services for children, and over 7% for special services for the disabled. Expenditures made from TANF transferred funds, but not broken out by service category, have decreased from over 12% in FY1998 to 4.5% in FY2000. An extra $1 billion was authorized and appropriated in FY1994 for SSBG grants to enterprise communities and empowerment zones, in addition to the amount shown in Table 1 as the FY1994 appropriation for the SSBG. The program is administered by the Departments of Housing and Urban Development (HUD) and Agriculture (USDA). These funds remain available for expenditure for 10 years. CRS-6 Table 2. Use of Title XX Funds, by Expenditure Category, FY2000 Service category Percent of funds Adoption services 1.4 Case management 6.4 Congregate meals 0.3 Counseling services 1.6 Day care — adults 0.5 Day care — children 5.9 Education/training services 0.6 Employment services 2.0 Family planning services 1.5 Foster care services — adults 0.3 Foster care services — children 10.7 Health-related services 0.6 Home-based services 7.2 Home-delivered meals 0.7 Housing services 0.6 Independent/transitional living services 0.6 Information and referral services 1.3 Legal services 0.5 Pregnancy and parenting 0.2 Prevention/intervention 7.4 Protective services — adults 4.9 Protective services — children 10.8 Recreation services 0.1 Residential treatment 2.7 Special services — youth at risk 3.1 Special services — disabled 7.8 Substance abuse services 0.5 Transportation 1.0 Other services 5.6 Administrative costs 8.6 Uncategorized TANF transfer expenditures 4.5 Total 100.0 Source: Table prepared by the Congressional Research Service (CRS) based on data in Social Services Block Grant Program: Annual Report on Expenditures and Recipients 2000 (released Summer 2002).