State benefits
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State Benefits: An Overview of Key Research Findings
Intergovernmental Fiscal Transfers and State Benefits
Cash and Health Insurance Benefits
US states provide both cash and health insurance benefits to the poor, with significant funding from federal fiscal transfers. The 1996 welfare reform reduced federal support for cash transfers, making Medicaid a more attractive option for states. This shift has led to a decrease in state expenditures on cash benefits and an increase in Medicaid spending, regardless of whether beneficiaries move between states1.
State Employee Compensation and Benefits
Determinants of Compensation
State employee benefits, including health insurance, pensions, paid leave, and care services, are becoming increasingly important. The primary factors influencing these benefits are state employee union density and the cost of living. These elements significantly impact the overall compensation package for state employees2.
Health Benefits
State governments predominantly offer preferred provider organization (PPO) plans to their employees. Health benefits are crucial for improving employee satisfaction and state government performance. However, the cost of these benefits is a major consideration, and there is no consensus on strategies to reduce these costs, although premium increases are anticipated4.
Pension Sustainability
State pension systems face significant sustainability challenges. Without improved funding for accrued liabilities, many state pension systems could deplete their funds within 10-20 years. This situation may force the federal government to consider bailouts for insolvent states5. Additionally, the underfunding of pensions and other postemployment benefits (OPEB) is influenced by state management capacity, per capita income, and public employee density. Effective management and legislative professionalism are crucial for maintaining pension funding8.
Energy Efficiency Programs
Economic and Environmental Benefits
State-level energy efficiency programs have demonstrated substantial benefits, including energy savings of 20-30% in residential and industrial sectors. These programs are cost-effective, with benefit-cost ratios exceeding 3:1. They also contribute to job creation and increased state tax revenues. States incorporating energy efficiency into their economic development programs can expect significant long-term benefits3.
Welfare Dependency
State Dependence in Welfare Benefits
In developing countries, welfare dependency is a significant issue. Longitudinal data from Turkey shows that receiving benefits in one year increases the likelihood of receiving benefits in the following year by 17-22 percentage points. This indicates that state dependence in social assistance is a relevant phenomenon even outside Western societies7.
Unemployment Insurance Reserves
Preparedness for Economic Downturns
State unemployment insurance (UI) reserves are crucial for economic stability. However, many states have not replenished their UI reserves since the Great Recession. Simulations suggest that even a moderate recession could exhaust these reserves, forcing states to borrow to pay UI benefits. The current financing system is inadequate, making it difficult for states to recover from economic downturns10.
Conclusion
State benefits encompass a wide range of programs and financial supports, from health insurance and pensions to energy efficiency and unemployment insurance. The sustainability and effectiveness of these benefits depend on various factors, including federal support, state management, and economic conditions. Addressing the challenges in funding and managing these benefits is crucial for ensuring their long-term viability and effectiveness.
Sources and full results
Most relevant research papers on this topic
State government cash and in-kind benefits: Intergovernmental fiscal transfers and cross-program substitution
The 1996 welfare reform reduced federal support for cash benefits, leading to reduced state expenditures on cash benefits and increased expenditures on Medicaid, regardless of beneficiary mobility.
The Determinants of State Employee Compensation
State employee union density is the most consistent and important determinant of compensation, with cost of living also playing a role.
State-Level Benefits of Energy Efficiency
State-level energy efficiency programs can reduce total state energy use by as much as 20%, create new jobs, and enhance state tax revenues.
Highly CitedState Government Employee Health Benefits in the United States
State governments in the US offer preferred provider organization (PPO) health benefits, which improve employee satisfaction and government performance, with cost being the most important factor in plan choice.
ARE STATE PUBLIC PENSIONS SUSTAINABLE? WHY THE FEDERAL GOVERNMENT SHOULD WORRY ABOUT STATE PENSION LIABILITIES
Many state pension systems will run out of money in 10-20 years, potentially requiring federal government intervention to bail out insolvent states.
The Welfare Trait: How State Benefits Affect Personality.
The Welfare Trait: How State Benefits Affect Personality By Adam Perkins. Palgrave Macmillan. 2016. £20.00 (pb). 201 pp. ISBN 9781137555281 In this book, Adam Perkins, neurobiologist of personality, makes a powerful claim: namely, that social policy structure can influence personality function:
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