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Federal Spending on Kids Slips for First Time in 3 Decades

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Document date: July 19, 2012
Released online: July 19, 2012

Abstract

Federal spending on children declined in 2011 for the first time since the early 1980s, the sixth annual “Kids’ Share” study estimates. The children’s slice of the federal budget and gross domestic product also shrank. Assuming no changes in federal policies or law, the children’s share of federal program outlays and of GDP will drop through at least 2022.


Contact: Stuart Kantor, (202) 261-5283, skantor@urban.org

WASHINGTON, D.C., July 19, 2012 -- Federal spending on children declined in 2011 for the first time since the early 1980s, the Urban Institute’s sixth annual “Kids’ Share” study estimates. The children’s slice of the federal budget and gross domestic product also shrank.

The decline in spending on kids will continue in the fiscal year that ends September 30, as the economic stimulus funds from the American Recovery and Reinvestment Act of 2009 (ARRA) are nearly exhausted. Assuming no changes in federal policies or law, the children’s share of federal program outlays and of GDP will drop through at least 2022, the Urban Institute researchers forecast.

“In 2012, federal funding on children is projected to decline significantly. State funding is uncertain, but with states still recovering from the recession, it will be challenging for them to fill the gap caused by the drop in federal funding. As a result, there may be cutbacks in services and benefits for children in 2012,” the Kids’ Share research team concludes.

The researchers analyzed dozens of programs and tax expenditures (which reduce tax liabilities) affecting children. Their analysis of fiscal 2011 data, the most recent year for which complete federal data are available, reveals the following:

  • Program outlays fell from $378 billion in 2010 to $376 billion in 2011 (figures are in inflation-adjusted 2011 dollars). Tax expenditures, such as the child tax credit, declined from $72 to $69 billion. Combined, total expenditures fell from $450 to $445 billion.
  • While the federal government spent less on children in 2011, its total spending increased from $3.52 to $3.60 trillion. As a result, the share of the budget allocated to children fell from 10.7 to 10.4 percent. Programmatic spending on children slipped as a share of GDP from 2.6 to 2.5 percent, and total expenditures on children, including tax expenditures, dropped from 3.1 to 3.0 percent of GDP.
  • Children’s 10 percent share in 2011 compares to the 41 percent spent on the elderly and disabled via Social Security, Medicare, and Medicaid; 20 percent on defense; 6 percent on interest payments on the debt; and 23 percent on everything else.
  • Ten programs and tax provisions accounted for 75 percent of the $445 billion in expenditures on children, led by Medicaid at $74 billion.
  • Federal spending on education was $5 billion lower in 2011 than in 2010. Expenditures also fell in the areas of health, social services, training, and tax provisions, but they rose in nutrition and income security.
  • Overall federal-state-local spending per child was generally flat between 2008 and 2011. Education spending declined somewhat, while child health spending increased modestly.

What’s Ahead in 2012, 2017, and 2022?
ARRA spending on children is expected to fall from $42 billion in 2011 to $12 billion this year. As a result, total federal expenditures on children are projected to fall 4 percent, from $445 to $428 billion. The ARRA funding drop will have a dramatic effect on K-12 education spending.

Under current policies, beginning in 2017 the federal government will spend more on interest payments than on children.

The researchers say resources for children will be under considerable pressure through at least 2022:

  • Federal program spending on children as a percentage of the budget will be down to 8 percent in 2022. By then, total federal spending will be nearly $1 trillion above 2012, but the amount spent on children will be nearly the same as it is today.
  • The non-child portions of Social Security, Medicare, and Medicaid will be up to 51 percent of all federal outlays in 2022.
  • Children’s spending will drop to 1.9 percent of GDP by 2022, the lowest level since 2002.
  • The largest drop in spending will affect education, while health, in large part because of the Affordable Care Act, will be the one area of growth.

Kids’ Share 2012: Report on Federal Expenditures on Children through 2011,” funded by the Annie E. Casey Foundation and First Focus, was written by Julia Isaacs, Katherine Toran, Heather Hahn, Karina Fortuny, and Eugene Steuerle. The report covers only programs directly benefiting children or benefiting households because of the presence of children.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation. It provides information, analyses, and perspectives to public and private decisionmakers to help them address these problems and strives to deepen citizens’ understanding of the issues and trade-offs that policymakers face.



Topics/Tags: | Children and Youth | Economy/Taxes | Families and Parenting | Poverty, Assets and Safety Net


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