Introduction
This year the federal government will allocate over $27 billion to state
and local governments based in part on a calculation of their number of
residents living below the poverty level. These funds are distributed to
state and local governments through nineteen federal formula programs which
use poverty counts as the basis for distributing federal assistance (see
Table 1). Included among the list of programs are such big ticket items
as the School Lunch Program, Head Start and Chapter 1 Education Programs.
Given the scope and size of programs which use poverty data, an examination
of the methods utilized in determining the number of individuals in poverty
is an important policy inquiry. That assumption is particularly true from
a California perspective. Perhaps more than any other state, California
is negatively impacted by current approaches to poverty statistics. From
a funding standpoint, California is disadvantaged due to its status as
a state with a high cost of living. Also, because California's poverty
growth is outpacing the national average, the state is underfunded in programs
using dated statistics.
Table 1 Grant Programs Using Poverty Data
Fiscal Year 1996 (Estimated)
(in thousands)
CODA Program U.S. Total CA Share CA %
10.553 School Breakfast Program 1,160,454 157,710 13.6
10.555 National School Lunch Program 4,643,655 600,736 12.9
10.556 Special Milk Program for Children 18,652 *
10.558 Child and Adult Care Food Program 1,657,493 201,774 12.2
10.568 Emergency Food Assistance Program (Admin. Costs) 40,000 5,115 12.8
14.218 Community Development Block Grants/Entitlement Grants 3,208,500 512,589 16.0
14.228 Community Development Block Grants/State's Program 1,345,500 43,254 3.2
14.219 Community Development Block Grants/Small Cities Program 54,360 #
14.231 Emergency Shelter Grants Program 1,106,560 153,946 13.9
17.235 Senior Community Service Employment Program 410,500 *
17.247 Migrant and Seasonal Farmworkers 78,303 *
81.042 Weatherization Assistance for Low-Income Persons 229,456 6,427 2.9
83.523 Federal Emergency Management Food and Shelter Program 128,700 21,807 16.9
84.010 Chapter 1 Programs/ Local Educational Agencies 7,000,000 778,448 11.1
84.218 State Program Improvement Grants 35,146 *
93.568 Low-Income Home Energy Assistance 1,319,204 59,352 4.6
93.600 Head Start 3,934,728 444,084 11.7
93.630 Developmental Disabilities Basic Support and Advocacy Grants 70,438 6,426 9.1
93.994 Maternal and Child Health Services Block Grant to the States 680,866 41,377 7.3
Total 27,122,515
* Information on California share is unavailable for this program. # This program is only operated in New York and Hawaii.
Source: Budget Information for States, Fiscal Year 1996
Calculation of the Poverty Statistics
The compilation of relevant poverty statistics occurs at two levels: (1) the determination of an income level appropriate for a poverty threshold (2) a count of the number of persons below poverty in a given region (ie. nation, state, county). Using the prices of a national market basket of goods and services, such as food and housing, the federal government determines the poverty income level. Estimates of the number of persons below the poverty level is derived from the dicennial censuses. Although the Census Bureau does produce intercensal poverty estimates, they are not sufficiently specific or reliable to use in the distribution of federal formula funds.
Implications of State Variations in the Cost of Living
While the current approach to calculating poverty statistics offers some success in determining an aggregate number of poor Americans, it fails to recognize regional variations in the cost of living. In circumstances where a state's cost of living is significantly higher than the national average, the federal government underestimates the numbers of persons living in poverty. This is particularly true in states with high housing and transportation costs. (Rationale)
With a cost of living at 112% of the national average, California qualifies as a high cost state. An examination of the costs of living for selected metropolitan areas demonstrates an even sharper contrast between California and the rest of the country. The cost of living in Los Angeles-Long Beach, San Diego or Bakersfield exceed the nation average by 125.2%, 127.5% and 110.3% respectively (see Table 2).
Table 2 Regional Variations in the Cost of Living
States Selected Metropolitan Areas
National Average 100.0 National Average 100.0
California 112.3 Los Angeles - Long Beach, CA 125.2
Arizona 100.2 San Diego, CA 127.5
New York 109.2 Bakersfield, CA 110.3
New Hampshire 109.3 Anchorage, AK 127.4
Massachusetts 115.7 Philadelphia, PA 129.7
Florida 92.4 Denver, CO 107.8
Louisiana 87.7 Atlanta, GA 100.6
Georgia 90.4 St. Louis, MO 97.0
Kansas 94.1 Salt Lake City - Ogden, UT 95.7
Idaho 91.4 Tulsa, OK 90.0
Missouri 95.8 Little Rock, AR 89.8
Source: American Federation of Teachers, 1993 Source: Statistical Abstract of the U.S.,1995
Implications of Outdated Data Usage
Historically, detailed income and poverty statistics have only been collected during the dicennial censuses. Unfortunately, this data quickly becomes out of date. For instance, data collected during the 1990 census (based on 1989 economic conditions) was not available until 1992 resulting in the distribution of federal funds based on data that was at least three years old. Any significant recession or rise in unemployment rendered the data useless. The disparity between available data and current conditions become even more pronounced as the later half of a decade.
In 1993, Congress directed the Census Bureau to redirect $60,000 of its FY94 budget to fund a project aimed at producing poverty data at least every two years beginning in 1996. According to the Census Bureau
In the circumstances where recent poverty data is not available, it is likely that California is not receiving its fair share of federal formula program funding. This is primarily due to the fact that California's poverty growth exceeds that of the national average and is continuing to climb. In 1980, 8.9% percent of those living poverty resided in California, by 1990 that figure rose to 12.4%, by 1993 it reached 14.8% (see Table 3).
Education Funds
Table 3 Recent Trends in Poverty Data: California and United States
1980 1990 1991 1992 1993
Percentage of California Population Below Poverty 11.9 13.9 15.7 15.8 18.2
Percentage of U.S. Population Below Poverty 13.0 13.5 14.2 14.5 15.1
California Share of U.S. Population Below Poverty 8.9 12.4 13.5 13.4 14.8
Source: Statistical Abstract of the United States, Bureau of the Census, 1995
Conclusion
Questions:
1) Is the census bureau now required to produce biennial data on poverty?
2) Are any programs other than education required to use "most recent data available"?
3) Which programs use sub-state poverty data?
4) When is the first new data going to be available?
5) What intercensal poverty data does the bureau now produce?