The voices of Urban Institute's researchers and staff
April 24, 2017

Do state spending differences create an unequal playing field for children?

April 6, 2017

Some states spend less on their children than others, including public education, health, and social services costs. Arizona, for example, spent less than $4,900 per child in 2013, whereas New York spent slightly more than $12,200 per child (after adjusting for cost of living).

These wide disparities in public investment raise concerns about whether children nationwide are on equal footing when pursuing the American Dream. Though children’s outcomes are affected by many factors, health and education outcomes tend to be better in states that spend more on children.

Differences in K–12 education funding cause most of these differences. New York also spends more per capita than Arizona on Medicaid services for children, cash assistance, child welfare services, the Children’s Health Insurance Program, child care assistance, and child support enforcement. In addition, New York has a state earned income tax credit, but Arizona does not.

How will population shifts affect spending disparities?

Population shifts may widen the spending gap. Child populations are projected to grow in southern and western states that spend less per child, such as Arizona, Florida, and Texas, and decline in states that spend more, such as New York and Vermont. 

Using Arizona and New York as examples, I sketch out two ways states might react to population growth and their effects on state budgets and per child spending:

  • Child populations in Arizona are projected to increase 16 percent between 2013 and 2030. The state would need to spend more each year (an additional $1.3 billion annually by 2030) to keep pace with population growth. Alternatively, if Arizona does not appropriate any additional spending on children, but keeps a constant budget in inflation-adjusted terms, per child spending would drop to about $4,200—lower than any current spending levels (see figure below).
  • In contrast, New York, like other northeastern states, faces a population decline. With a projected 6 percent drop in its child population, the state could save $3.5 billion annually by 2030 by keeping per child spending constant. Per child spending would increase to more than $13,000 if New York kept total spending constant and spread it across fewer children.
 

Many southern and western states have spending and projection patterns similar to Arizona. It is uncertain whether these states will boost spending to keep up with population growth. If they do not, per child spending will fall in many states, widening the spending gap and heightening concerns about child outcomes.

How can we level the playing field for children nationwide?

The findings laid out here and in the brief Unequal Playing Field? State Differences in Spending on Children in 2013 provide a caution against block grants, which, in their most basic form, lock in current spending patterns to the detriment of children in states experiencing population growth.

The findings also raise broader policy questions about state and federal spending choices and whether more federal resources should be targeted to states with high population growth and low spending on children. Doing so might help children in states that have low capacity for raising revenue or are strained by population growth. But voters in states that spend more may balk at sending dollars to states that spend less solely because of their own tax and spending priorities. 

Before determining whether state and federal policymakers should equalize spending on children across states, we must reassess the status quo. We take for granted that senior citizens in Arizona receive the same minimum retirement benefit and access to Medicare as those in New York. If we expect equity for seniors living in different states, why are we so accepting of large differences in spending on children? 

Photo via Shutterstock.

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