Paul Ryan's Opportunity Grant Plan Would Give States More Flexibility, but at What Cost?

House Budget Committee Chairman Paul Ryan released a 73 page booklet last week detailing preliminary proposals for reducing poverty rates. If Chairman Ryan – who calls the proposals a “discussion draft” – is earnest about his intent to spark conversation he has so far been successful, drawing some predictably positive and negative reviews as well as – most interestingly – pragmatic responses to the policy nuances of his plan. Receiving the most fanfare is Ryan’s plan to delegate safety net planning to the states by combining 11 programs – including SNAP and TANF – into the Opportunity Grant and allowing states to use the money to best serve their constituents.

Chairman Ryan highlights the differences among states and localities as well as the various forms poverty assumes as rationale for local and state control of funding. Specifically, Ryan delineates generational poverty from situational poverty and asserts that states should be able to draw from the Opportunity Grant to combat both, relying heavily on a system of case managers who can pool resources which are presently designated to programs like SNAP, TANF and housing assistance. This case manager would work with clients to design a pathway out of poverty based around their unique circumstances.

Ryan posits that in a system of Opportunity Grants, states will have the flexibility to deal with poverty by working more directly with people in every facet of their lives - “more flexibility in exchange for more accountability,” as Ryan said in a speech at the American Enterprise Institute.  Pooled resources and case managers would certainly be closer to the ground, so to speak, than federal programs, and different situations call for different solutions. If successful, deficit-neutral Opportunity Grants would provide a wonderful chance to eliminate waste in overlapping federal programs while allowing states tremendous freedom.

Thoughtful critics of the Opportunity Grant proposal caution that any increase in flexibility through a larger state role would be far outweighed by losses from shifting SNAP funds into a block grant. Relying heavily on data from the recent recession, critics point to the relative inability of TANF – a block grant – to respond to growing need to the adaptability of SNAP, which continuously responds to changes in need.

For example, in 2011 state cuts to TANF programs affected 700,000 low-income families. Because TANF funds are allotted in block grants, when revenues are down states can divert those funds to cover welfare programs usually funded at the state level, shrinking the pot for federal cash assistance.

Conversely, people apply for SNAP benefits directly, and the program maintains the ability to shrink or expand monthly. From 2007 to 2011, average monthly participation skyrocketed – from 26.3 million to 44.7 million. This dramatic increase was an appropriate reflection of unemployment rates, and mandated a budgetary increase of $41 billion over the four years.

The dynamic structure of SNAP opposed to the static nature of TANF will continue to be cited as discussion around Ryan’s Opportunity Grants persists. While giving states the freedom to streamline safety net programs, some argue the grants could prove deadly to much-needed food assistance. SNAP is the most widely used of the 11 programs combined, and would be robbed of its ability to adapt quickly to economic fluctuations, a feature that was eliminated when the Aid to Families with Dependent Children program was replaced by TANF block grants.

 As Ryan notes, TANF was largely successful when passed in 1996. This, in part, was due to a prosperous economy in the decade, when the program’s work requirement was compatible with a robust job market. Playing on the work requirement of TANF and the theory that aid should be temporary, Opportunity Grant programs would involve a contract dictating short- and long-term goals for recipients. Differing from TANF –  and responding to critics who say the work requirement ushers recipients into short-term, low-paying jobs instead of stable careers – Opportunity Grant programs could include classes towards a GED or college degree as goals that would fulfill contract requirements.

Not intended as a formal proposal, the document could lead to serious discussions about the states’ roles in administering safety net programs. Opportunity Grants could provide for coordination of similar programs at the state or local level, eliminating or minimalizing bureaucratic roadblocks. However critics correctly illuminate the flaws of such a system. Nevertheless, the so-called “discussion draft” has sparked the conversation it intended, and may lead to real reform efforts placing a new emphasis on state roles.      

 

The 11 programs Ryan proposes be combined are

  • Supplemental Nutrition Assistance Program (SNAP)
  • Temporary Assistance for Needy Families (TANF)
  • Section 8 Housing Choice Voucher Program (HCV)
  • Section 521 Rural Rental Assistance Payments
  • Section 8 Project-Based Rental Assistance
  • Public Housing Capital and Operating Funds
  • Child Care and Development Fund
  • The Weatherization Assistance Program
  • The Low Income Home Energy Assistance Program (LIHEAP)
  • Community Development Block Grant (CDBG)
  • WIA Dislocated Workers

 

For information on all of the provisions of Congressman Ryan's plan, a CSG summary can be found here 

 

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