depends at least in part on whether the estimates will enter into a formula indirectly or directly. Indirect uses will require less in-depth consideration by program and policy people because the statistical agency that produces the relevant estimates will presumably tackle the matter. Thus, the Census Bureau SAIPE staff will presumably determine effective ways of including ACS data in their model-based estimates of poor school-age children that are used in the allocation of education funds to school districts under the No Child Left Behind Act.
The Bureau of Economic Analysis (BEA) is already incorporating ACS data into its county-level per capita income estimates, which could be considered for possible use in fund allocation. At present, only the BEA state-level per capita income estimates, which do not require 2000 long-form-sample (or ACS) data, are used in federal fund allocation programs, including the largest program—Medicaid ($193 billion of federal funds obligated in fiscal 2005)—and other programs that use the Medicaid formula.
BEA develops county (and state) per capita income estimates from federal and state administrative records, censuses and surveys, and census-based population estimates (as denominators). Currently, BEA is moving to use the ACS, in place of the 2000 long-form sample, as a source of data on intercounty commuting. This information is needed to convert estimates of per capita income by county of workplace to those by county of residence. The BEA estimates are produced annually for counties about 15 months after the end of a year.5
When ACS estimates are to replace long-form-sample estimates directly in a fund allocation formula, then program and policy people must be more involved. Factors in choosing which ACS period estimates to use (1-year, 3-year, or 5-year) include not only the extent of sampling error, but also the desired frequency with which funds are to be reallocated among areas and the types and population sizes of eligible geographic areas. Of course, during the ramp-up period between 2005 and 2010, agencies’ choices are constrained by whether the estimates that best serve their needs are available. For example, if 5-year period estimates must be used to obtain an acceptable level of precision, then agencies will need to rely on the long-form-sample estimates until 2010 when ACS 5-year period estimates become available for the period 2005–2009.
Currency, Precision, and Stability Considerations In determining which ACS estimates to use in an allocation formula (assuming they are available for all eligible areas), decision makers should identify key characteristics that the estimates must satisfy. If currency of the information is paramount, so that areas with the greatest present need receive the most funding, then