By Caitlin Johnston, Carl Straumsheim and Kate McGonigle
From Capital News Service
The number of Maryland families who need government help to make ends meet has reached record levels.
More than 700,000 people receive food assistance, the most in state history. A record 70,000 people depend on emergency cash assistance. And the demand for the state’s child care subsidy program has caused officials to impose an indefinite freeze on new applicants.
Yet state and federal officials are budgeting less money for the safety net in the coming fiscal year. The move reflects the government’s confidence in the economic recovery, based in part on the fact that demand has plateaued for most state-administered assistance programs.
Others question whether it is overly optimistic to cut back at a time when state assistance programs are still swollen with unprecedented numbers.
“It took from January 2008 to February 2012 to double the number of people enrolled in the Food Supplement Program,” said Neil Bergsman, director of the Maryland Budget & Tax Policy Institute. “It’s not going to go down all that way in one year.”
Bergsman questioned whether the department is projecting positive estimates to balance the state budget. The state faced a $1.1 billion deficit that legislators plan to eliminate over the next two years.
Pat Hines, the director of communication for the Department of Human Resources, would not say if the state has an emergency plan should demand stay at historically high levels.
“I think that it is premature to speculate on what might happen under unforeseeable circumstances,” Hines said.
However, a report by the Department of Legislative Services suggested that services to families could be affected, since funding meant for struggling families would have to be spent on paying down the shortfall. If not, “the negative balance will just move from year to year,” the report said (p. 15).
High demand caused requested for more funds
Demand has been so high that the Department of Human Resources, which helps Maryland families with child care, cash and food assistance and medical services, was forced to request an additional $30 million in state funding in fiscal 2012. The shortfall occurred even though federal funding for the department has doubled to nearly $2 billion since the recession began. An emergency fund created by the American Recovery and Reinvestment Act of 2009 to help states with rising demand ran out by December 2010.
While they are higher than at any other point in history, the figures do not include the thousands of families who depend on food banks and charities because their income is too high for public assistance. To qualify, a family usually has to make no more than twice the Federal Poverty Level, or $40,000 for a family of three.
Charities report doubling of demand
People who run food banks and other charities report serving up to twice as many people — many of them middle class-families that have never before needed help.
“A lot of our agencies are telling us that people who a couple of years ago were writing checks and supported the local food pantry are now coming to get food,” said Deborah Flateman, CEO of the Maryland Food Bank.
Nor do the figures include the families who simply aren’t aware they qualify for assistance. Cathy Demeroto, director of Maryland Hunger Solutions, said her organization is working to educate this group on the programs available to them.
Demeroto estimates about 90,000 people in Montgomery County alone are eligible for food assistance but do not claim benefits — suggesting the already bloated official figures may not reflect the true state of need in Maryland, and that thousands of families could be struggling needlessly.
“I certainly think the need still exists,” Demeroto said, “and it’s too early to predict what’s going to happen with the economy.”
The federal food assistance system is an entitlement program, which means the Department of Human Resources accepts any qualifying applicant and bills the federal government. Programs funded by state funds or block grants, however, have seen their surpluses evaporate as enrollment skyrocketed.
Surge in demand for food aid
The surge in demand for food assistance between January 2007 and 2012 is the fifth highest percentage increase in the country–although the number of new applications has stalled in recent months, according to the Food Research and Action Center, a nonprofit advocacy group.
Maryland’s assistance programs have seen an influx of applicants like Ryan and Amanda Velivlis of Parkville, who have an 18-month-old daughter and a son due in July.
They thought they had planned wisely by paying off debts and cutting up credit cards before starting their family.
“I didn’t want to drown in debt,” Amanda Velivlis said. “I just didn’t want to get into a trap, fall into a hole. I think with a lot of other families, that is where a lot of people get in trouble.”
Struggling on $34,000 a year
Yet they’ve found that they still can’t stretch Ryan Velivlis’s $34,000 paycheck as a restaurant manager to cover their basic monthly costs.
So, the family has had to apply for a number of assistance programs to get by.
Ryan Velivlis receives health insurance for himself through his employer but can’t afford the cost of covering his family. Amanda Velivlis and their daughter, Evelyn, are enrolled in the state medical assistance program. Amanda attends the Community College of Baltimore County, where she hopes to get a degree in radiology or respiratory care, with the help of a $3,000 Pell Grant. The family also receives about $130 each month through a special food assistance program for women caring for infants.
Even though they benefit from these programs, the Velivlis family doesn’t qualify for the state’s Temporary Cash Assistance program, which provides cash to struggling families with children. To qualify, the Velivlises would have to make about $10,000 less than they do today.
Cash assistance threatened
Cash assistance is one of the largest programs threatened by increases in demand. While programs such as food assistance receive necessary funding no matter what, the state has to cover the remaining costs in the cash assistance program when demand exceeds the funding.
Between fiscal 1997 and 2001, the state saved unspent federal dollars and built up a $130 million emergency fund in the cash assistance program. In the next decade, the department spent more than it took in, and the reserves evaporated.
But demand kept rising, triggering a shift in funds. The state dipped into money from the next year’s budget to cover the increase. But that forced officials the following year to operate on depleted resources, leaving them in the same lurch. Each time, part of the federal grant was diverted from needy families to balance the budget, according to the Department of Legislative Services, which predicts the cycle will continue until demand drops.
Because they’ve had to request supplemental funding, the office projects a $30 million budget shortfall at the end of the fiscal year next month. A drop in demand will let the state both close the shortfall and stop the borrowing of money from future budgets.
70,000 now get cash aid, a 40% increase in four years
“Our expectation is that the numbers will return to pre-recession levels as Maryland’s economy continues to recover and grow,” Hines said.
As the name implies, cash assistance is meant to be a temporary solution. Families that qualify are limited to a total of five years — 60 payments — and also are required to participate in work programs. Today, about 70,000 Marylanders are enrolled in the program — a 40% increase from 2008 and an all-time high for the state.
“We really did see a pretty significant pop in enrollment,” said Vince Kilduff, deputy executive director in the Department of Human Resources Office of Programs.
Yet those enrolled in the program represent just a third of those who applied for help. Most of those denied either didn’t qualify or didn’t follow-through after applying, Hines said.
One statistic working in the department’s favor is that nearly twice as many people are leaving the program as are signing up for it. At the current rate, officials are predicting the federal grant alone will cover next year’s demand and this year’s deficit.
Bergsman, who worked in the Department of Budget and Management from 1988 to 2004, said the numbers may still be too optimistic.
“When I was in the budget office, there was a great temptation to use favorable assumptions for spending estimates so that we would not have to cut other stuff as much, and I don’t imagine that it’s any different today,” Bergsman said. “So you can have an estimate that is in the reasonable range, but you can pick the lower end of that range.”