RALEIGH – What could your family do with an extra $22,000 per year? Spend it on health insurance? Groceries? Day care?
As you daydream about how you’d spend an additional $1,800 per month, think about all the rhetoric this political season from those who have bought into the notion that North Carolina needs to expand its "social safety net" via higher taxation and bigger government.
In May, the Pew Research Center in Washington, D.C., revealed the results of a recent survey that notes a "surge in support for (the) social safety net." But just how large is the safety net here in North Carolina? How much money is being spent on social welfare programs?
A review of annual appropriations by North Carolina’s Department of Health and Human Services (DHHS) will at least partially answer this question. The department administers the lion’s share of the state’s social welfare programs including (but not limited to): Medicaid, N.C. Health Choice, food stamps, Work First, mental health care and subsidized child care.
According to the state’s 2007 Comprehensive Annual Financial Report, total DHHS spending –including federal dollars — for FY2006-07 came to $14.2 billion (the split is about 60/40 federal/state). Further, based on the financial report and my estimate of those people enrolled in more than one program (e.g. Medicaid and food stamps), the total number of people receiving some sort of DHHS assistance or service in 2007 was roughly 2.4 million.
A dollar equivalence can thus be assigned to the services and aid DHHS enrollees receive. In other words, imagine that the department was converted to a check processing unit rather than a service provider. State government would simply cut a check to those who qualify for DHHS programs and let them spend the money themselves on such services — health insurance, food, day care, whatever they value most.
Of course, someone needs to oversee this process. An administrative budget of 8 percent to process applications, enroll participants, and process and send out the checks seems fair. This brings DHHS dollars available to flow directly to recipients to $13.1 billion.
Thus, the current "social safety net" would be large enough for DHHS spending alone to provide the average recipient family of four with a check of nearly $22,000 every year. By comparison, the federal poverty guideline is $21,200 for a family of four.
This total excludes other social programs such as Medicare and Social Security (administered through the federal government), federal and state Earned Income Tax Credits, unemployment benefits, More at Four and Section EIght housing subsidies.
All this is not intended as a policy recommendation. Rather, it’s a mental exercise to provide some idea of just how much money is already invested in North Carolina’s social safety net.
If those 2.4 million recipients were surveyed and asked if their government-provided "safety net" is worth $22,000 each year, what would they say? Perhaps their answer would be more informed if they knew that the DHHS employs enough people to fill Raleigh’s RBC Center (more than 19,000).
Further, they might want to know just what kind of results we are seeing. From 2000 to 2005, DHHS spending totaled more than $50 billion, while at the same time the poverty rate in North Carolina increased from 11.7 percent to 14.9 percent.
Perhaps it’s time for North Carolinians to begin asking some difficult questions, starting with, "Does the government really need more money for social programs, or is there a better way to help those in need?"
Twenty-two thousand dollars for a family of four, every year. Think about it.