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A happy problem.

"A happy problem." That's the oxy moronic phrase my mother used to describe challenges arising from something that was generally positive, but fraught with complications. The recession that began in late 2007 is now recognized as one of the worst economic downturns in decades. Indicators posted during the past six quarters portend difficult conditions for months, even years to come. The national rate of unemployment now tops 9 percent and is expected to crest at over 10 percent. A growing number is also deemed underemployed--the number of individuals who were involuntarily working part-time instead of full-time due to the economy. This number grew by 53.7 percent from February 2008 to February 2009. Thousands of home foreclosures and declining home values have destabilized local governments and businesses. According to the Fiscal Survey of States conducted by the National Association of State Budget Officers, 42 states have reduced their enacted 2008 budgets by a total of $31.6 billion. This compares with 13 states that reduced their enacted budgets in FY 2007, and only three in the prior year. The survey also indicates that between fiscal 2009 and fiscal 2011, estimated state budget gaps will reach $230 billion. This problem is compounded by the reality that states can't legally run deficits, rainy day funds have been exhausted, and the primary tax revenue mechanisms--sales, property and income--are declining. The bottom line is that communities are in economic crisis, and policymakers are debating strategies for stimulating the economy, generating revenue and cutting spending among urgent and competing priorities. In terms of human services, demand typically increases during difficult economic times, when resources are most stretched. The good news is that public policymakers are acknowledging the countercyclical nature of human services and the stimulative potential of human service investment.


A new study by the County Welfare Directors Association of California confirms the wisdom of that decision. This report provides a bird's-eye view of California's safety-net programs and related economic benefits for communities. The report, which has implications for all states, depicts how in this challenging time, human service programs in California are caught in the convergence of three forces:

* A sudden and rapid escalation of demand;

* Profound historic cuts in state funding that have seriously eroded services; and

* A deteriorating economy that depletes county resources to cope.

The study says temporary programs to protect people who are the most vulnerable in a deep recession have the largest "job bang for the buck." Compared with the spending rate of other stimulus proposals, funds to protect the vulnerable are spent very quickly. Beacon Economics, which evaluated the economic impact of spending on human service programs in California, says human services provide a 32 percent boost to the economy. The USDA estimates that every dollar in SNAP (Food Stamps) returns $1.78 in economic growth through increased purchasing, shipping, harvesting, processing, administration, etc.

APHSA worked extremely hard during the past several months to expand human service funding in the stimulus plan with remarkable results. The good news for states in dire circumstances is that it will provide some much-needed relief. But it is a double-edged sword. There is a critical need to balance the immediate needs resulting from budget shortfalls against the reality that ARRA funds will end in two years. With additional funding also comes added accountability and transparency requirements. States are getting mixed messages from Washington. They are told to spend the money quickly, because Americans are suffering, but don't spend it on anything non-stimulative. The message is do it fast, cheap and good. The stakes are high as many politicians and reporters who are critical of the stimulus package are lying in waiting for the first misstep. Included in the ARRA legislation is $359 million for additional oversight and the hiring of new auditors--one soon coming to a desk near you.

While the funds are desperately needed, concerns fall into several categories:

* The short time to obligate and spend the funds

* The separate tracking and reporting requirements

* Identifying the number of jobs created or protected

* The need for an exit strategy when the funding expires

* The delay in the guidance from a number of federal agencies while the clock is ticking

* The policy implications are that investing in human services not only can minimize the worsening conditions of the safety net, but also offers greater potential to help the economy in general, even though it is temporary. Policymakers should factor in the economic stimulus effects of human service programs. Also, an ineffective safety net can make an already bad situation worse. Last but not least, the current crisis offers an opportunity to evaluate how well the safety net works in times of severe economic crisis. The stimulative effects should be independently researched and evaluated. As an industry, we have an unprecedented opportunity to demonstrate that human services can yield one of society's greatest returns on investments. That's why this turns out to be a "happy problem."

Jerry W. Friedman

Editor's Note: "Jerry's Blog" is now a feature on APHSA's web site, Please go there to share your thoughts with Jerry.
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Title Annotation:director's memo; United States recession's impact on social welfare
Author:Friedman, Jerry W.
Publication:Policy & Practice
Geographic Code:1USA
Date:Aug 1, 2009
Previous Article:APHSA conferences and major meetings in 2009.
Next Article:How we spend TANF money.

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