Do short-term changes in funding improve Vocational Rehabilitation outcomes? Evidence from the ARRA

Abstract

BACKGROUND:

In response to the Great Recession, the American Recovery and Reinvestment Act was signed into law in 2009. The Vocational Rehabilitation program rather unexpectedly received $540 million in ARRA funding, which was primarily intended to serve more applicants and increase services to customers.

OBJECTIVES:

We consider the impact of ARRA-influenced changes in VR funding levels on several outcomes, including VR service receipt status, employment status at program exit, and Supplemental Security Income and Social Security Disability Insurance receipt at program exit.

METHODS:

We use ARRA VR funding as an instrument to capture the exogenous variation in state VR funding levels.

RESULTS:

Our findings show that unexpected positive funding shocks may not be effective at improving short-term outcomes for VR. We find no evidence that a change in funding levels affected key VR outcomes such as employment at program exit. We also observe that some states used ARRA funds as a substitute for decreased state VR funding (usually maintaining VR funding around pre-recession levels) instead of to increase state VR funding above pre-recession levels.