Minnesota among leaders in welfare expenditures

Published 8:55 am Wednesday, September 30, 2009

Welfare spending in Minnesota is among the highest in the nation, according to new census figures, and it’s been growing steadily for more than 10 years due to the rising cost of providing health care for the needy.

Nearly 23 percent of all state and local government spending in Minnesota during fiscal 2007 went toward services that fall under the Census Bureau’s broad definition of welfare, according to the 2007 Census of Government Finances. Among states, that ranked behind only Maine at 24.3 percent and Rhode Island at 23.7 percent.

The report said $9.3 billion of the $40.6 billion spent by all levels of government in the state that year was on welfare programs. It was a higher share of spending than Wisconsin, 18.2 percent; Iowa, 16.6 percent; North Dakota, 15.7 percent and South Dakota, 15.5 percent.

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Minnesota’s figure crept toward the share state and local governments spent on education, which was 34.2 percent, according to the figures released late Tuesday. Spending on highways was next at nearly 8 percent. Third was spending on police protection at 3.5 percent.

The bureau’s definition of public welfare includes direct payments to people and payments to groups that serve the poor, but it also includes expensive health care programs, including Medicaid and medical assistance.

The bureau counts as welfare state payments for the Medicaid program, prescription drugs under the Medicare Part D program and many other health care programs for the poor. Public nursing homes, veterans homes and other institutions for the needy also are included.

State Demographer Tom Gillaspy said it’s hard to point to any single reason welfare is such a big slice of government spending in Minnesota, but he noted the state has a higher percentage of residents in nursing homes receiving aid than most others.

“That’s been true for a long time,” he said. “That’s something we’ve been working on to get down more in line with the rest of the country.”

Minnesota also has more generous health care programs than many other states, he said.

Taken together, the costs have been steadily taking up a larger share of government spending in Minnesota since at least 1992.

The census data show that in 1992, public welfare spending accounted for 15.2 percent of what Minnesota governments spent. It climbed to 16.7 percent in 1997 and just 18.4 percent in 2002.

Kristin Dybdal, fiscal expert on health and human service programs for the Minnesota Management and Budget agency, wasn’t surprised by the climb.

Despite moves in the Legislature in the past few years to slow the programs’ growth, Dybdal said she’s concerned about the rising costs.

“The growth rate for these programs far outstrips what we could hope to gain through natural increases on the revenue side,” she said.

Government spending on health care is consistent with spending by private businesses and people, said Debra Schwick, executive director of the Affirmative Options Coalition in St. Paul, which advocates for policies that fight poverty.

“The state is spending more on health care because everyone is,” she said.

Her group’s analysis of state government spending has found health care typically takes up a much larger share of what’s usually called welfare than most people realize, she said.

“It certainly is true that what in a political context is called welfare spending is health care spending,” she said. “In fact, we spend a very tiny bit of state money, proportionally, on what people consider welfare.”

University of Minnesota professor Maria Hanratty, who studies welfare policy, agreed that during the past decade, the government has been shifting away from direct payments to people toward providing services, like child care, to the working poor.

At the same time, the rising cost of health care and the graying population have put more demands on government health programs. Direct payments are a small part of welfare spending, she said. “We’re talking about long-term care, and that’s really expensive,” she said.

For Annette Meeks, chief executive officer of the Freedom Foundation of Minnesota, a conservative think tank, the soaring costs and Minnesota’s generous programs mean one thing.

“We can still cut some programs and not necessarily hurt people,” she said. “No one wants to hurt people.”