Strategies for Using ACS Data in State Fund Allocations

States should consider the use of ACS estimates in place of the data sources they currently use for allocating state funds to localities. The same considerations apply as discussed for federal fund allocation, such as the value placed on having the most up-to-date estimates in contrast to the stability of funding streams and the types and population sizes of eligible geographic areas. It is most likely that states would need to use ACS 5-year period estimates to allocate funds to local areas given that 1-year and even 3-year period estimates are not available or not sufficiently precise for many jurisdictions.

There may be instances in which a state believes it is important that fund allocations (or another application) reflect data that are as current as possible and when reasonably precise 1-year (or 3-year) period estimates are available for many but not all eligible jurisdictions. Should a state find itself in this situation, it could consider using a simple procedure to update the 5-year period estimates for jurisdictions for which they are the only reasonably precise estimates available (see Section B.3 below). The intent would be to put the 5-year period estimates on a comparable basis with 1-year (or 3-year) period estimates and not have to discard the more up-to-date estimates for those jurisdictions for which they are available and sufficiently precise for their intended use. Federal agencies may also be able to use this procedure for some applications.

For other applications, the goal may be currency of estimates, but there may be reason to believe that a simple updating procedure will not give good results because its underlying assumptions about change over time among areas are unrealistic. In such instances, a more advanced form of small-area estimation is called for. Such estimation requires additional data from administrative records or other sources, similarly to the way that the Census Bureau’s SAIPE program uses food stamp and federal income tax data to generate updated county estimates of poor school-age children.

Before deciding to use any type of updating procedure, simple or complex, it is essential to carefully examine the procedure’s underlying assumptions. It may be that less current estimates are preferable to more current estimates produced with an unrealistic updating procedure.

Example of a Simple Updating Procedure

Table 3-2 provides an example of a simple procedure to produce current county-level estimates of poor school-age children for possible use in allocating state funds to counties. The state in this example plans to use ACS 1-year period estimates for as many counties as practicable and to adjust ACS 3-year or 5-year period estimates for the remaining counties to

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