Kids’ Share 2011: Report on Federal Expenditures on Children through 2010

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The Brookings Institution and The Urban Institute

The fifth annual Kids’ Share report represents a milestone in the analysis and reporting of federal expenditures on children because the available data now spans 50 years, from 1960 to 2010.

In 1960, the largest federal contributions to families with children came from the dependent tax exemption, Social Security benefits and education. However in 2010 the dependant exemption has far less of a relative value, and Medicaid, the child tax credit and the earned income tax credit have become the three largest federal expenditures on families and children.

Federal expenditures in 2010, which is the most recent year of data available, seemed to be affected by the recession of the latter half of the decade as well as by long-term trends. In response to the recession and the increased unemployment rate, the federal government increased its expenditures on children.

The children’s share of the federal budget was 11 percent in 2010, which is slightly higher than it was in 2009, and significantly higher than it was in 1960. However, this increase might only be temporary as the children’s share of the federal budget is expected to decline to less than 8 percent of the total federal budget by the end of the next decade.

Between 2010 and 2015, outlays on children are expected to fall from $374 billion to $339 billion, which is a decrease of 9 percent.

Together, Medicaid and the three child-related tax provisions accounted for 47 percent of the total expenditures on children. Among the other largest federal spending programs on children are Social Security, Supplemental Nutrition Assistance Program (SNAP), several education-related programs, and the Child Nutrition Program.

There was also a temporary increase in spending on some programs because of the American Recovery and Reinvestment Act (ARRA), which was enacted in 2009. The act had a large impact on education outlays, with both Title I schools and special education programs showing substantial outlays from ARRA funding. In addition, it is estimated that about two-thirds of the new $53.6 billion State Fiscal Stabilization Fund (SFSF), which was established by ARRA, was spent on K-12 education, $17 billion of which was spent in fiscal year 2010.

A large majority of the state and local spending on children in 2008, the last year for which data is available, was on education, with a significantly lesser amount of spending on health and other costs. State and local spending on education averaged about $6,853 per child in 2008 (spread across all children under 19 years old, and including those not in school). Expenditures for health were more evenly split among state and local governments and federal spending with the federal government providing 59 percent and state governments providing the remaining 41 percent. In addition, health spending accounted for 11 percent of total public investments in 2008.

Researchers note that without complete state and local data on spending on children for 2009 and 2010, it cannot be determined whether the increases in federal spending during the recession offset state and local cuts.

Future projections on spending show the sharpest decline over the next 20 years to be between 2011 and 2012, when the lingering effects of ARRA dissipate. Total outlays on children will continue to fall through 2014, and then slowly rise again between 2015 and 2020. However, despite that increase, federal spending on children, as it is projected, will be lower in 2020 than it was in 2010.

For the full, free 44-page report click here.