WASHINGTON – Maryland will nearly wipe out a $100 million surplus in federal welfare funds by the end of this fiscal year and could slip into the red next year unless spending is curbed, according to an analysis of the welfare budget.
The state’s welfare surplus will plummet from as much as $103.7 million — the amount in federal coffers last September — to $11 million by June 30, according to the General Assembly’s Department of Legislative Services and federal data.
Without some adjustments, the state projects a welfare deficit of $14.5 million by the end of the next fiscal year.
Maryland and other states have accelerated their welfare spending since 1999, when Congress threatened to take back about $4 billion in unspent federal funds.
“We’re not going to leave a lot in the federal treasury,” said Rich Larson of the state Department of Human Resources. “We’re going to pretty well take that down.”
Maryland has funneled its money to an expanded child-care subsidy and to set up a contingency fund, among other uses.
The drop marks a departure from recent years, when Maryland had surpluses of about $130 million in its federal welfare account, according to David Romans, an analyst with the Department of Legislative Services.
Maryland and other states accumulated large surpluses after 1996, when a booming economy and sweeping welfare reform drove many of the nation’s poor from the welfare rolls.
States receive the same amount from the federal government each year, whether the rolls grow or shrink, as long as they maintain a certain level of state spending.
Maryland’s yearly grant totals $229.1 million. But its rolls have fallen nearly 68 percent since 1995. According to the state’s budget overview for fiscal 2002, it will pay nearly $200 million less in cash grants to welfare recipients than it did in 1996.
So the state has found other ways to spend the money, partly to keep it out of federal hands.
In September 1999, Gov. Parris Glendening added $70 million to the child care subsidy program for poor families, according to published reports. This year, the state took $30 million from its federal welfare grant to pay for nine traditionally state-funded programs, including a school drop-out prevention program. It used the savings from the state program for a “rainy day” fund.
“We want to make sure that the money is spent but also make sure that it is wisely spent” on the poor, said Larson.
“We may disagree about the amount and we may disagree about what the money is used for, but no one will disagree that it is better that the money is in Maryland’s control. . .than the United States Congress,” he said.
But some advocates and state officials are concerned that the pendulum may have swung too far. They fear that Glendening may have underestimated next year’s welfare caseload.
“We are concerned that the governor’s budget insufficiently provides for welfare, and there’s a limit as to how much you can draw down from other sources,” said Delegate Samuel Rosenberg, D-Baltimore, and chairman of a House subcommittee that oversees welfare appropriations.
And some advocates say that too much of the money has simply been parked in other accounts, unavailable to the needy families for whom it was intended.
While they agree it is prudent to hedge against an economic downturn, they say the crisis is now for many of Maryland’s poor. The money “needs to be put to more active use,” said Steve Hill, director of the Maryland Budget and Tax Policy Institute.
“On the one hand, it’s very responsible of the state to create this rainy day fund,” Hill said. But “for many families in Maryland right now, it’s raining, it’s pouring, so it could be used right now.”