Federal funding for social services

In 2025, federal funding for social services is projected to grow by 3.6%, reaching $20.8 billion. This increase is supported by the Continuing Resolution (CR) passed in March 2025, which prevents funding cuts from the previous year but maintains levels until Congress decides on further revisions. There is no significant past legislation contributing to growth for this segment, which aligns with the cessation of programs like the Homeowner Assistance Fund in September 2025, diverting resources as states have a deadline to utilize remaining funds. Despite these limitations, inflation adjustments for provisions such as the earned income tax credit will slightly bolster funding for social services.

The onset of the COVID-19 pandemic in 2020 significantly influenced federal funding for social services, requiring swift government action to mitigate economic and health impacts. That year, funding increased by 4.0%, reflecting the federal government's effort to stimulate the economy and safeguard individuals from the pandemic's adverse effects. This surge was pivotal in fortifying safety nets and offering necessary relief to counteract economic disturbances. In 2021, however, as the economy gradually reopened, the dynamics of government aid shifted; individuals reentering the workforce and declining unemployment affected the need for extensive federal support, resulting in funding stabilization.

Despite this plateau, legislative measures continued to provide some aid extensions from 2020. Nonetheless, as pandemic-specific relief measures expired, adjustments in funding allocation were necessary. Also, inflation posed challenges by diminishing the funds' purchasing power. Although appropriation bills sought to counter these effects, the inherent limitations of programs like the Social Services Block Grant, capped at $1.7 billion, restricted broader funding growth. Amid these challenges, the American Rescue Plan Act (ARPA) in 2021 temporarily enhanced the Child Tax Credit (CTC), increasing deductions based on family size, which supported federal assistance expansion. Although the enhanced CTC provisions ended in December 2021, the inflation-adjusted Additional Child Tax Credit (ACTC) continued to bolster growth through its refundable component. Collectively, these legislative interventions and economic considerations resulted in a CAGR of 0.9% for federal social services funding from 2020 to 2025, illustrating the balancing act between temporary legislative measures and sustained economic pressures.