This overview was prepared by By Suzanne Bates Policy Director at the Yankee Institute for Public Policy.

Overview

Key Facts
10.8 percent of Connecticut residents live in poverty, the third lowest percentage in the nation.
One in four Connecticut households struggle to pay for basic needs.
750,000 Connecticut residents are on Medicaid, about 20 percent or one in five.
30 percent of children in Connecticut live in poor or low-income households.
12 percent – one in eight - of Connecticut’s residents are on food stamps.
32,800 residents receive temporary assistance for needy families (TANF, welfare).
34 percent – the gap between poor/minority students and other students in Connecticut schools, the largest gap in the nation.

Connecticut is a land of contradictions – it has some of the wealthiest and some of the poorest neighborhoods in the nation. The state also has a substantial welfare system when compared to other states, but, while this system may alleviate some of the effects of poverty, it has done little to lift people out of poverty.

Connecticut has fewer people living below the poverty line compared to other states. About 11 percent of Connecticut residents live below the poverty line, compared to 14.8 percent nationally, which puts us at 48 out of 50 states. But, because our cost of living is high, the United Way estimates that one in four households in Connecticut do not earn enough to pay for basic needs.4

The United Way figures are similar to the state’s Department of Social Services numbers. Just over one million state residents, or more than one in four, receive some kind of assistance from the state.5 This includes the more than 750,000 residents on Medicaid, which is the government health insurance program for the poor. The number of people served by Medicaid in Connecticut has increased by 44 percent since 2013. This is due in large part to changes made in the Affordable Care Act, which expanded Medicaid to more adults of working age without children.

The number of people on food stamps in Connecticut is now just over 439,000, or one in eight, people. In 2004, that number was 195,980. In recent years, federal requirements for food stamps were loosened, allowing more to take advantage of the program.

Children and Families

According to the National Center for Children in Poverty, 30 percent of children in Connecticut live in a poor or low-income household. About 40 percent of poor children in Connecticut do not have an employed parent, and another 45 percent live with a parent who only has a part-time job. Education plays a large role in child poverty – 60 percent of the parents of poor children do not have a high school degree. Family formation also plays a significant role– 73 percent of poor children have unmarried parents.

While some are reluctant to speak about family formation because it seems like a value judgment, more social scientists are starting to openly make the connection between intact families and poverty. This connection is clear in Connecticut – in several of the state’s poorest neighborhoods in cities like Hartford, New Haven and Bridgeport, a majority of children are poor and live with a single parent. This problem is exacerbated by many of the social programs the state offers, since the income thresholds set by the state favor unmarried parents.

Barriers to Opportunity: Education

Many believe the answer to lifting children out of poverty is equipping them with an excellent education, but the achievement gap in Connecticut between poor students and other students on standardized tests suggests many children in this state do not receive even an adequate education. Connecticut has the largest achievement gap in the nation, and students in low income households often score poorly compared to poor students in other states.10 In recent years the state has significantly increased spending on education for poor students, but this has not raised test scores.

 

Some Solutions

Those of us committed to the free market system believe that the values at its center – the dignity of every man and woman, the importance of work, and the belief in equality of opportunity – are the values that will best lift people out of poverty and into a better life.

As Arthur Brooks, president of American Enterprise Institute, eloquently says in his book The Conservative Heart: “Conservatives have the most effective solutions for human flourishing in our intellectual DNA.”

We have seen this happen globally as free markets have spread to developing countries, where two billion people have been lifted out of poverty over the past few decades.

Ultimately, our goal at the Yankee Institute is for everyone in our state to be free to succeed. To that end, we continue to propose policy solutions that we believe will help expand the benefits of free markets to more of our state’s citizens. These solutions include:

  • Focus on pro-growth economic agenda that will increase jobs and entrepreneurship in the state. This agenda includes loosening up barriers to entry and regulations for individuals trying to start their own small businesses.
  • Communities and the state should work together to provide an excellent education for every child. This is key to increasing opportunity for low-income children. Charter and magnet schools have brought competition into the education field, which has encouraged greater creativity among all schools. Besides school choice, the state should reemphasize the value of vocational and technical education. Schools cannot be ‘one size fits all.’
  • Streamline state services by eliminating duplication. The state should stop competing with non-profit and private providers, many of whom also get state money. The non-profit community in Connecticut has shown that they are able to do a better job for a lower cost when providing services.
  • Focus Medicaid on our neediest residents, and increase reimbursement rates to expand access to more health care providers.
  • Remove state mandates on local governments. These mandates end up increasing property taxes, which are regressive.
  • Where possible, give direct monetary aid to low-income residents instead of providing services. For example, it costs the state a lot more money to build low-income housing than it would cost a private developer. Instead of building housing, the state could give direct housing assistance aid to poor residents.
  • Local communities and the state should make zoning and land use regulations more predictable to reduce the cost of new construction – both residential and commercial.  

A System That Will be Challenged

Some of the solutions outlined above are already starting to happen. The welfare system will be challenged over the next few years as state lawmakers seek to cut the budget.

This year Gov. Dannel Malloy proposed deep spending cuts on social services in his latest budget. At the same time, he called on social service providers to show that their programs are achieving the goals they set out to achieve. This is an important first step in streamlining the state government, and aligning dollars to outcomes.

In this year’s State of the State address, the governor laid out five principles that he says will guide how he budgets for the rest of his tenure:

  1. Limit spending to available resources.
  2. Address the state’s long-term unfunded obligations.
  3. Prioritize funding for core services.
  4. Hold state agencies accountable for their results.
  5. Reform the budgeting process.

Gov. Malloy said he would work to streamline state social services. He made 5.75 percent cuts across the board to ‘discretionary funds’ in all social service agencies. This move, while difficult to take, will force community providers to consolidate, and will also likely lead to a reduction in the state workforce.

However, even with these cuts, state spending is still growing. That’s because there are parts of the budget that are growing faster than others, and they end up crowding out money for spending on things like social services and education. Those areas that are growing faster than the budget as a whole include:

  • Payments on state debt,
  • State employee healthcare,
  • State employee pensions, and
  • Retired state employee health care.

Payments on state debt now eat up 14.5 percent of all General Fund spending, while pension debt payments comprise another 5 percent. This means 20 percent of our total budget is going to pay down debt. This is expected to only increase in the coming years, unless policy changes are made to address the growth in these areas.

Several bills were proposed this year to cap state debt. Other bills have proposed ways to rein in spending on state employee compensation. Unless the state deals with its long-term liabilities, we will continue to see cuts in spending in areas like education and social services.