Origins of the State-Federal Public Welfare Programs
By John E. Hansan, Ph.D.
The history of public welfare in the United States has been one of continuing change and growth. Prior to the 1900’s local governments shared with private charitable organizations major responsibility for public assistance or as it was often termed, “public relief.” As the nation’s economy became more industrial and the population more concentrated in urban areas, the need for public relief often grew beyond the means, and sometimes the willingness, of local public and private authorities to provide needed assistance. During the Progressive Era, some state governments began to assume more responsibility for helping the worthy poor. By 1926, forty states had established some type of public relief program for mothers with dependent children. A few states also provided cash assistance to needy elderly residents through old-age pensions. The programs and the size of the benefits varied widely among the states.
State financed public assistance programs were often inadequate to meet the challenges of large-scale unemployment and urban poverty that often afflicted states and urban areas. But it was the Great Depression of the 1930’s that led to the collapse of state financed public relief programs. State systems of public relief were simply unprepared to cope with the volume of requests for help from individuals and families without work or income. On top of that, the economic depression reduced state and local revenues. Conditions were so grave it became necessary for the federal government to step in and help with the costs of public relief.
The Federal Government Begins To Help States With the Burden of Public Relief
The national government’s first significant initiative to help bail out state governments was the enactment of the Emergency Relief and Construction Act of 1932. On signing this legislation, President Herbert Hoover said:
- “Its three major features are–
- “First–through provision of $300 million of temporary loans by the Reconstruction Corporation to such States as are absolutely unable to finance the relief of distress, we have a solid backlog of assurance that there need be no hunger and cold in the United States. These loans are to be based upon absolute need and evidence of financial exhaustion. I do not expect any State to resort to it except as a last extremity.
- “Second–through the provision for $1,500 million of loans by the Reconstruction Corporation for reproductive construction work of public character on terms which will be repaid, we should ultimately be able to find employment for hundreds of thousands of people without drain on the taxpayer.
- “Third–through the broadening of the powers of the Corporation in the character of loans it can make to assist agriculture, we should materially improve the position of the farmer…”
Immediately after assuming office in 1933, President Franklin D. Roosevelt proposed and then signed the Federal Emergency Relief Act (FERA), which, in its first year enabled the national government to distribute more than $1 billion to the states to shore up their existing public relief programs. The language of the enabling legislation included these sections:
- Sec. 4. (a) Out of the funds of the Reconstruction Finance Corporation made available by this Act, the Administrator is authorized to make grants to the several States to aid in meeting the costs of furnishing relief and work relief and in relieving the hardship and suffering caused by unemployment in the form of money, service, materials, and/or commodities to provide the necessities of life to persons in need as a result of the present emergency, and/or to their dependents, whether resident, transient, or homeless.
- (b) Of the amounts made available by this Act not to exceed $250,000,000 shall be granted to the several States applying therefore, in the following manner: Each State shall be entitled to receive grants equal to one third of the amount expended by such State, including the civil subdivisions thereof, out of public moneys from all sources for the purposes set forth in subsection (a) of this section; and such grants shall be made quarterly, beginning with the second quarter in the calendar year 1933, and shall be made during any quarter upon the basis of such expenditures certified by the States to have been made during the preceding quarter.
- Sec. 5. Any State desiring to obtain funds under this Act shall through its Governor make application therefore from time to time to the Administrator. Each application so made shall present in the manner requested by the Administrator information showing (1) the amounts necessary to meet relief needs in the State during the period covered by such application and the amounts available from public or private sources within the State, its political subdivisions, and private agencies, to meet the relief needs of the State, (2) the provision made to assure adequate administrative supervision, (3) the provision made for suitable standards of relief, and (4) the purposes for which the funds requested will be used.
- Sec. 7. As used in the foregoing provisions of this Act, the term State shall include the District of Columbia, Alaska, Hawaii, the Virgin Islands, and Puerto Rico; and the term Governor shall include the Commissioners of the District of Columbia.
The Social Security Act of 1935
FERA was only a temporary measure. The Roosevelt administration understood more fundamental reforms were needed to prevent a recurrence of what had happened when the nation’s economy failed to provide the jobs and public relief necessary to meet the financial needs of unemployed workers and their families. President Roosevelt sent a message to Congress on June 8, 1934 in which he outlined what he believed was necessary.
An Executive Order was issued June 29, 1934 that delegated to five Cabinet officers the responsibility to study methods of providing “security against the hazards and vicissitudes of life” with the primary purpose of developing a workable social insurance system. Named the Committee on Economic Security it was headed by Secretary of Labor Frances Perkins. She selected as key staff Arthur J. Altmeyer, the Assistant Secretary of Labor, and Edwin E. Witte, a professor of economics at the University of Wisconsin. A final 50-page committee report was filed on January 15, 1935 and sent to the Congress for hearings two days later, accompanied by draft legislative language. Following seven months of Congressional hearings and negotiations, on August 14, 1935 President Roosevelt signed the Social Security Act into law. The law was a landmark piece of legislation that created, among other things, the basic framework that guided the nation’s public welfare system for sixty years.
The Social Security Act consisted of 11 separate “titles” and it established three distinct types of programs designed to provide economic protections to different populations in different ways: 1) a system of state administered Unemployment Insurance programs designed to provide temporary financial assistance to able-bodied workers who lose their jobs through no fault of their own; 2) the Old Age and Survivors Insurance Program?, a universal and contributory social insurance program for eligible wage-earners who retired or died, leaving a spouse or family; and, 3) a system of state-federal public assistance programs for aged, blind, and dependent children deemed unable to earn wages and therefore participate in the social insurance programs.
The Public Welfare Titles
The Social Security Act of 1935 initially authorized federal financial participation in three state administered cash assistance programs: Title I: Grants to States for Old-Age Assistance; Title IV: Grants to States for Aid to Dependent Children; and Title X: Grants to States for Aid for the Blind. The framers of the Act also recognized that certain groups of people had needs for particular services which cash assistance alone could not or should not provide. To meet these needs small formula grants for the states were authorized in relation to: Maternal and Child Health, Crippled Children, Child Welfare, and medical assistance for the aged. A fourth program of public assistance — Aid to the Disabled — was added in 1950.
The basic shape of the state-federal public welfare system formed by the Social Security Act of 1935 remained largely intact until 1973 when Congress combined the cash assistance programs serving needy adults (Aid for the Aged, Blind, and Disabled) into the Supplementary Income (SSI) program, making it a federally administered program under the U.S. Social Security Administration. In 1975, Title XX of the Act was enacted, consolidating most of the social services provisions of the various cash assistance titles into a single program of social services for needy citizens. In 1996, the Temporary Assistance for Needy Families (TANF) program, a federally funded block grant program, was enacted to replace AFDC.
Under the terms of the Social Security Act of 1935, each state had to first choose whether or not to participate in one of the new public welfare programs. After a state chose to participate in the new federal-state public assistance programs, it was required to submit a “state plan” that demonstrated to the federal government that its proposed program adhered to the minimal standards set out in the law, e.g., state-wideness, no residency requirements for recipients, etc.. States retained major control over setting the requirements governing client eligibility and the level of cash benefits paid to recipients. Initially, federal financial participation in the cost of benefits paid to recipients was determined according to a formula which fixed federal reimbursement to the level of cash benefits established by a state. In addition, the federal government agreed to pay fifty percent of the administrative costs incurred by a state.
These new state-federal welfare programs were “means tested” and “categorical” in nature. Means testing required the applicant to prove/demonstrate that their income and assets were below the level to be deemed eligible for assistance in a particular state. It was also a condition of eligibility that the individual fit one of the established categories, that is: to be aged, blind or a child living in a household without a father. For this reason, the federal-state public welfare programs were often referred to as “means-tested categorical programs.” The categorical nature of the nation’s public assistance programs effectively denied any federal financial help to poor men or women under 65 years of age or poor couples with minor children. For many years, this limitation of the federal-state public assistance programs contributed to the phenomenon of fathers voluntarily leaving a family so their children could receive public assistance.
The framers of the Act also recognized that certain groups of people had needs for particular services which cash assistance alone could not or should not provide. To meet these needs, small formula grants were authorized to the states for Maternal and Child Health, Crippled Children, Child Welfare, and Medical Assistance for the Aged. Further expansion of medical assistance for the aged occurred in 1965 with the enactment of Medicaid (Title XIX) for eligible public welfare recipients.
The basic shape of the state-federal public welfare system formed by the Social Security Act remained largely intact until 1973 when the Congress federalized the cash assistance programs serving adults (Aid to the Aged, Blind, and Disabled) into the Supplemental Security Income (SSI) program. In 1975, Title XX of the Act was enacted, consolidating most of the social service provisions of the various cash assistance titles into a single program of social services for needy citizens, with a cap on the amount of money the states could claim as federal financial participation for the provision of social services.
For more information: Visit the U.S. Social Security Administration History: www.ssa.gov/history/