Budget Series #2: Understanding How Entitlement & Discretionary Funding Can Impact Your Community

Blog 2 of our federal budget series describes two key categories of the budget. Understanding the differences between these two types of funds can empower you and your communities to advocate for additional money or fully access existing resources.

1. Entitlement

Entitlement programs provide resources according to need-based eligibility, rather than providing a set amount of funds. Federal spending on entitlements is required by law and an eligible person can never be turned away because the program has “run out.” While the annual federal budget can change the laws that govern spending on these programs (e.g. alter eligibility requirements or allocation size), the federal budget does not establish an amount to be spent on entitlement programs.

Examples: Social Security, Supplemental Nutrition Assistance Program (SNAP; also known as “Food Stamps”), Medicaid, Medicare, Children’s Health Insurance Program (CHIP)

Relevant advocacy: Community-based organizations can engage in three advocacy activities relevant to entitlements:

1. Promote entitlement enrollment among eligible populations by:

• Organizing creative public announcements to increase awareness of the programs; For example: billboards and bus advertisements

• Placing trained volunteers in accessible locations, including community centers, schools, libraries and the waiting rooms of free clinics, to assist clients through complicated application processes.

2. Advocate for easier application procedures and work with government officials to identify and reduce inefficient and burdensome paperwork

3. Campaign for changes to the laws that govern entitlements. For example, advocates may call upon policy makers to increase the monthly amount of SNAP benefits by demonstrating that current allocations cannot enable recipients to purchase a healthful diet. Community organizations that argued for expanded Medicaid eligibility that would insure a greater percentage of the Federal Poverty Line won a major victory with passage of the Affordable Care Act.

2. Discretionary

Discretionary spending is optional, changes from year to year and demonstrates federal priorities. While these priorities are initially described in the President’s annual budget request, Congress’ budget resolution outlines the final amounts allocated to each federal Department (e.g. The Department of Education). Federal agencies award their funds to states, programs, community organizations or another grantee based on need, merit, population size, or some combination of factors. Resources may not be available to everyone who qualifies for the program; eligible applicants can be turned away because the program has “run out.”

Discretionary grantees have a responsibility to use their resources wisely, both for the purpose of efficiency within their own programming and to ensure continued financial support for such efforts the following year. President Obama’s administration has emphasized Neighborhood Reinvestment Initiative programs, which are funded by competitively awarded, discretionary grants and include place-based programs like Promise Neighborhoods. The Center for the Study of Social Policy’s recently published Handbook offers useful tips on how to organize and manage place-based initiatives such that results are maximized.

Examples: Temporary Assistance for Needy Families (TANF; commonly thought of as “welfare”), most spending on education, the environment, housing/ homelessness services, infrastructure, etc.

Relevant advocacy: Community organizations should use the methodology explained above to ensure that all available resources are allocated to eligible applicants and that program design targets the appropriate populations. However, if the set amount of funds that defines discretionary programs proves insufficient, grassroots organizations can mobilize communities to advocate for more resources to support the programs they need most. Researchers can contribute scientific evidence to these grassroots campaigns.

• A campaign of working families could make a powerful appeal to state and local governments to use TANF funds differently or to Congress for increased funds to the program. Economists could supplement their advocacy by explaining that providing adequate resources to the poor has a large multiplier effect on the local economy, thereby helping everyone. Human development experts could point out the benefits of a stable home environment on early childhood development.

• Since most Department of Education dollars are discretionary, school children could be mobilized to advocate generally for more dollars for education, an argument that can also be supported by a diverse array of researchers.

Note: In a recession, discretionary programs and services tend to lose resources and provide less of a buffer against further economic despair than entitlements. For example, while SNAP enrollment increased substantially during the recent recession, providing invaluable assistance to families suffering from unemployment or decreased wages, TANF lost money and provided less assistance to fewer families even though need was far greater.

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We understand that the federal budget can be extremely confusing. Please post your questions in the comments section!