State governments spent a collective $581.9 billion on public welfare, or 26% of total government expenditure in 2016. Public welfare spending varies considerably from state to state and is determined by demographic needs, available assistance programs, eligibility policies, tax collections, and other factors.
Approximately 89% of state welfare spending goes toward medical care vendor payments — those made to hospitals, doctors, and other healthcare providers — for programs such as Medicaid. Just 2% goes toward programs that provide cash assistance to low-income families such as Temporary Assistance for Needy Families (TANF), housing assistance, and the Supplemental Nutrition Assistance Program (SNAP, formerly food stamps). The remaining 9% goes toward other public welfare programs.
Using data from the Annual Survey of State and Local Government Finances, 24/7 Wall St. reviewed how each state funds welfare and where the funds go. States were ranked based on total welfare spending per capita.
Money from the federal government, such as categorical and block grants, funds 72% of total state welfare spending. Although block grant programs often come with federal guidelines regarding eligibility for different welfare programs, states can make their own eligibility determinations, which can affect how many of those in need receive public financial assistance. While in some states more than half of all poor families receive TANF benefits, for example, fewer than 10% of poor families do in the states where welfare supports the fewest poor families.
Welfare spending is also determined by demographic needs. Medicaid constitutes a large share of welfare expenditure, and states with older populations tend to spend more on welfare. In eight of the 10 states with the highest welfare spending per capita, the share of the population 65 and over is greater than the 16% national figure.
One major source of public welfare funds is state taxes. Although the spending mix varies by state, many of the states with the highest welfare spending are on the list of the states where Americans are paying the most in taxes.
24/7 Wall St. reviewed state government welfare expenditure figures from the U.S. Census Bureau’s 2016 Annual Survey of State and Local Government Finances. Data on the share of state welfare spending from federal sources also came from the Annual Survey of State and Local Government Finances. Total spending figures were adjusted for population using resident population estimates for 2016 from the Census Bureau. Data on state tax collections are from the Tax Foundation’s Facts and Figures 2018 report, which includes data for the 2016 fiscal year. Data on the share of residents 65 and over came from the Census Bureau’s 2018 Population Estimates.