State and Local Government Statistics at a Crossroads (2007)

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State and Local Government Statistics at a Crossroads Panel on Research and Development Priorities for the U.S. Census Bureau’s State and Local Government Statistics Program Committee on National Statistics Division of Behavioral and Social Sciences and Education 

THE NATIONAL ACADEMIES PRESS 500 Fifth Street, N.W. Washington, DC 20001 NOTICE: The project that is the subject of this report was approved by the Govern- ing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineer- ing, and the Institute of Medicine. The members of the panel responsible for the report were chosen for their special competences and with regard for appropriate balance. This study was supported by Contract No. YA132305CN0031 between the Na- tional Academy of Sciences and the United States Census Bureau. Support of the work of the Committee on National Statistics is provided by a consortium of federal agencies through a grant from the National Science Foundation (award number SBR-0453930). Any opinions, findings, conclusions, or recommendations expressed in this publication are those of the author(s) and do not necessarily reflect the views of the organizations or agencies that provided support for the project. Library of Congress Cataloging-in-Publication Data State and local government statistics at a crossroads : panel on research and development priorities for the U.S. Census Bureau’s state and local government statistics program / Committee on National Statistics. — 1st ed. p. cm. Includes bibliographical references. ISBN 978-0-309-11136-2 (paperback) — ISBN 978-0-309-11137-9 (pdf) 1. State governments—United States—Statistics. 2. Local government—United States—Statistics. I. National Research Council (U.S.). Committee on National Statistics. JK2408.S788 2007 352.7'52130973--dc22 2007037284 Additional copies of this report are available from the National Academies Press, 500 Fifth Street, N.W., Lockbox 285, Washington, DC 20055; (800) 624-6242 or (202) 334-3313 (in the Washington metropolitan area); Internet, http://www.nap. edu Printed in the United States of America. Copyright 2007 by the National Academy of Sciences. All rights reserved. Suggested citation: National Research Council. (2007). State and Local Government Statistics at a Crossroads. Panel on Research and Development Priorities for the U.S. Census Bureau’s State and Local Government Statistics Program. Committee on National Statistics, Division of Behavioral and Social Sciences and Education. Washington, DC: The National Academies Press. 

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Panel on Research and Development Priorities for the U.S. Census Bureau’s State and Local Government Statistics Program RICHARD P. NATHAN (Chair), Nelson A. Rockefeller Institute of Government, Albany, New York JOHN L. CZAJKA, Mathematica Policy Research, Inc., Washington, DC JOHN L. KNAPP, Business and Economics Section, Weldon Cooper Center for Public Service, University of Virginia YOLANDA K. KODRZYCKI, Federal Reserve Bank of Boston DAVID A. MARKER, Westat, Rockville, Maryland DAVID YOUNG MILLER, Graduate School of Public and International Affairs, University of Pittsburgh ROBERT P. PARKER, Consultant and Bureau of Economic Analysis and Government Accountability Office (Retired), Washington, DC ROBERT P. STRAUSS, H. John Heinz III School of Public Policy and Management, Carnegie Mellon University THOMAS J. PLEWES, Study Director CARYN E. KUEBLER, Associate Program Officer DONALD J. BOYD, Consultant LANCE HUNTER,* Program Assistant MICHAEL SIRI, Senior Program Assistant * Until July 2006.  

Committee on National Statistics 2007 WILLIAM F. EDDY (Chair), Department of Statistics, Carnegie Mellon University KATHARINE ABRAHAM, Joint Program in Survey Methodology, University of Maryland ROBERT BELL, AT&T Research Laboratories, Florham Park, New Jersey WILLIAM DuMOUCHEL, Lincoln Technologies, Inc., Waltham, Massachusetts JOHN HALTIWANGER, Department of Economics, University of Maryland V. JOSEPH HOTZ, Department of Economics, University of California at Los Angeles KAREN KAFADAR, Department of Mathematical Sciences, University of Colorado at Denver and Health Sciences Center DOUGLAS MASSEY, Department of Sociology, Princeton University VIJAY NAIR, Department of Statistics and Department of Industrial and Operations Engineering, University of Michigan–Ann Arbor JOSEPH NEWHOUSE, Division of Health Policy Research and Education, Harvard University SAMUEL H. PRESTON, Population Studies Center, University of Pennsylvania KENNETH PREWITT, School of International and Public Affairs, Columbia University LOUISE RYAN, Department of Biostatistics, Harvard University NORA CATE SCHAEFFER, Department of Sociology, University of Wisconsin–Madison ALAN ZASLAVSKY, Department of Health Care Policy, Harvard University Medical School CONSTANCE F. CITRO, Director vi 

Contents Preface ix Acronyms and Abbreviations xiii Executive Summary 1 1 Introduction 11 Importance of the State and Local Government Sector, 12 Role of the Governments Division, 14 Issues for the Panel, 16 Outline of the Report, 18 2 The Government Statistics Program in Context 19 Historical Data Collection, 20 Governments Division Portfolio Today, 23 Classification of Governments, 26 Effects of Program Cutbacks, 32 3 Data Users and Uses 38 Federal Government Users, 39 Public Interest Groups, 51 Research Institutions and Academic Researchers, 53 Data Users as Data Disseminators, 58 Conclusions and Recommendations, 61 vii 

viii CONTENTS 4 Data Quality and Statistical Methods 69 Dimensions of Quality, 70 Sample Frame Development and Design, 71 Data Collection Methods, 74 Nonresponse, 78 Estimation, 84 Data Processing, 86 Revision Policies, 87 Cognitive Testing of Questionnaires, 89 Redesign of the Quarterly Tax Survey, 90 Planning for Improvements in Statistical Methodology, 92 5 Dissemination and Analysis 94 Timeliness, 94 Governments Division Website, 100 In-House Analyses, 104 6 Challenges for the Future 107 Strategic Planning, 108 Building the User Community and Obtaining User Input, 113 Role of Standards, 116 Conclusion, 123 References 125 Appendixes A Governments Division Census and Surveys 129 B Reimbursable Programs 137 C Letters on the Taxable Property Value Survey 146 D Summary of Presentations of Public Interest and Other User Groups 151 E Meeting and Workshop Agendas 157 F Biographical Sketches of Panel Members and Staff 162 

Preface S tate and local governments play crucial roles in the daily lives of citizens and in the national economy. Knowledge about the finances, employment, and programs of state and local governments is vital for many purposes and many groups. Statistics about state and local govern- ments have been collected by the national government since before the Civil War. An in-depth Census of Governments was established by law in 1950 to be conducted every five years; the first such census was conducted 50 years ago in 1957. The panel on Research and Development Priorities for the U.S. Census Bureau’s State and Local Government Statistics Program was created on this 50th anniversary to carry out the first impartial outside review of the role and work of the Governments Division. The division conducts the quinquennial Census of Governments and publishes annual reports on state and local finances. Its work in defining the 80,000-plus governmental units for which data are provided constitutes the gold stan- dard for understanding the character and operations of American federal- ism and the activities of states and localities, which account for 12 percent of the gross domestic product and directly employ 1 in 7 workers in the national labor force. Our panel of eight members, established by the Committee on National Statistics of the National Research Council, began its work late in 2005 to assess and report on research and development priorities for the state and local government statistics program. We were tasked with the job of identifying issues for the Census of Governments and the annual and quarterly surveys of governments with regard to goals, content, statistical ix 

 PREFACE methodology, data quality, and data products. We were also tasked with considering data uses and users and the relevance and adequacy of the census and survey content and products for meeting current and emerging data needs. It was a bigger job than we expected and took us longer than we planned. To a person, we consider our work vitally important and are proud to share the results of our deliberations, in the course of which we reached out to a wide range of experts on and users of census data on state and local governments. The principal fact-finding activity of the panel was a workshop held June 22–23, 2006. To plan our work and the content of the workshop, the panel met in January 2006 to hear from senior Census Bureau representa- tives on the status of state and local government statistics programs. The panel is grateful for the participation of Thomas L. Mesenbourg, associate director for economic programs; Stephanie H. Brown, chief of the Govern- ments Division; Henry S. Wulf, assistant division chief for recurring pro- grams; and Carma R. Hogue, chief of the statistical support and consulting staff, Economic Statistical Methods and Programming Division. They pro- vided informative and frank discussion of the status of the programs both in the planning meeting and at the workshop. Their willing cooperation with our many requests for information to assist in framing the issues and arriv- ing at recommendations is commendable. Special thanks go to Henry Wulf, who was the primary liaison between the panel and the Census Bureau. He went out of his way on many occasions to respond to questions posed by the panel and to provide helpful materials as our review progressed. In preparing for the workshop, the panel solicited the comments of a number of user organizations to ensure that the workshop presenta- tions were representative of the majority of public uses. We express our appreciation to the following individuals, who represented their organiza- tions in person and by phone in an informal meeting with several of the panel members to discuss how they use the state and local government statistics: Ron Alt and Harley Duncan, Federation of Tax Administrators; Keith Brainerd, National Association of State Retirement Administrators; Christiana Brennan, National League of Cities; Jackie Byers, National As- sociation of Counties; Eric Lupher, Citizens Research Council of Michigan and a member of the Governmental Research Association; Stacey Mazer, National Association of State Budget Officers; Evelina Moulder, Inter- national City/County Management Association; Richard Raphael, Fitch Ratings; and Ron Snell, National Council of State Legislatures; and Audrey Curry Wall, Council of State Governments. The workshop was the panel’s primary data-gathering activity. Its ob- jective was identifying issues for the Census of Governments and the an- nual and quarterly surveys of governments with regard to goals, content, statistical methodology, data quality, and data dissemination. The two-day 

PREFACE xi workshop also considered data uses, the needs of users, and the relevance and adequacy of the census and survey content and products for meeting current and emerging data needs. The agendas of the planning meeting and the workshop appear in Appendix E. In addition to hearing presentations from senior Census Bureau offi- cials, the panel organized several topical sessions and heard from experts in the relevant fields. Recognizing the growing influence of standardized finan- cial reporting among state and local governments, the panel benefited from a summary of recent Government Accounting Standards Board issuances from Ken Schermann of the board. During lunch, Anne Jordon, managing editor of Governing Magazine, outlined the important and extensive use of state and local statistics in the preparation of this publication. Dennis Fixler, Bureau of Economic Analysis, and Paul Smith, Board of Governors, Federal Reserve System, addressed the important federal government uses of the data. In two sessions, Evelina Moulder, Michael Pagano, George Palumbo, Andrew Reschovsky, Phyllis Resnick, and Kim Rueben gave sub- stance and depth to the panel’s understanding of the importance of state and local government statistics for public interest groups and the academic research community. Tracey Gordon of the Public Policy Institute of Cali- fornia, Kim Rueben of the Urban Institute, and Bill Shobe of the University of Virginia addressed dissemination issues. The panel is deeply appreciative of the work that went into preparing for these presentations and the will- ingness of all who shared their views. Following the workshop, members of the panel met with staff of the Census Bureau’s Governments Division to clarify several issues of statistical methodology, before deliberating and preparing this report with its recom- mendations for priority areas for R&D to improve the government statistics program. In summary, this report is the product of a series of focused open sessions and a good deal of discussion with data users and Census Bureau staff, which enabled the panel members to refine understanding of key is- sues in state and local government statistics. The panel is grateful for the excellent work of the staff of the Commit- tee on National Statistics and the National Research Council for support in developing and organizing the workshop and this report. Tom Plewes, study director for the panel, was ably assisted by Caryn Kuebler of the Commit- tee on National Statistics staff in supporting the work of the panel. Caryn drafted the workshop summary, on which much of this report is based, and also provided research support. Donald J. Boyd, deputy director of the Center for Policy Research at the Nelson A. Rockefeller College of Public Affairs and Policy, University at Albany, provided key advice and critical assistance in the fine-tuning of the panel’s ideas, and his contribution is gratefully acknowledged. Lance Hunter and Michael Siri provided admin- istrative support to the panel. We are especially thankful for the personal 

xii PREFACE participation of Constance F. Citro, director of the Committee on National Statistics, in the conduct of the workshop and in the preparation of this report. Her sage advice benefited the report in numerous ways. This report has been reviewed in draft form by individuals chosen for their diverse perspectives and technical expertise, in accordance with pro- cedures approved by the NRC’s Report Review Committee. The purpose of this independent review is to provide candid and critical comments that assist the institution in making its report as sound as possible, and to en- sure that the report meets institutional standards for objectivity, evidence, and responsiveness to the study charge. The review comments and draft manuscript remain confidential to protect the integrity of the deliberative process. The panel wishes to thank the following individuals for their review of this report: Christopher Briem, University Center for Social and Urban Research, University of Pittsburgh; William F. Eddy, Department of Statis- tics, Carnegie Mellon University; Ronald Fisher, Honors College, Michigan State University; Daniel Kasprzyk, Mathematica Policy Research, Washing- ton, D.C.; John L. Mikesell, School of Public and Environmental Affairs, Indiana University; Kim Rueben, the Urban Institute, Washington, D.C.; and David L. Sjoquist, Fiscal Research Center, Georgia State University. Although the reviewers listed above have provided many constructive com- ments and suggestions, they were not asked to endorse the conclusions or recommendations, nor did they see the final draft of the report before its release. The review of this report was overseen by Barbara A. Bailar, Con- sultant, Washington, D.C. Appointed by the National Research Council, she was responsible for making certain that the independent examination of this report was carried out in accordance with institutional procedures and that all review comments were carefully considered. Responsibility for the final content of the report rests entirely with the authoring panel and the institution. Richard P. Nathan, Chair Panel on Research and Development Priorities for the U.S. Census Bureau’s State and Local Government Statistics Program 

Acronyms and Abbreviations ACIR Advisory Commission on Intergovernmental Relations ACS American Community Survey AEA American Economics Association AES Annual Public Employment Survey AFS Annual Survey of State and Local Government Finances AMA American Marketing Association ASA American Statistical Association BEA Bureau of Economic Analysis CAFR Comprehensive Annual Financial Report CDP Census designated place CMS Centers for Medicare and Medicaid Services CNSTAT Committee on National Statistics COFOG United Nations Classification of Functions of Government COG Census of Governments COPAFS Council of Professional Associations on Federal Statistics CPAN Community Policy Analysis Network DHS Department of Homeland Security EPA Environmental Protection Agency ESMPD Economic Statistical Methods and Programming Division xiii 

xiv ACRONYMS AND ABBREVIATIONS FIPS Federal Information Processing Standards FRB Board of Governors, Federal Reserve System FTA Federation of Tax Administrators GAAP Generally accepted accounting principles GASB Government Accounting Standards Board GDP Gross domestic product GID Governments Integrated Directory GRA Governmental Research Association GSP Gross state product HUD Department of Housing and Urban Development ICMA International City/County Management Association IT Information technology NACO National Association of Counties NAICS North American Industry Classification System NASBO National Association of State Budget Officers NASRA National Association of State Retirement Administrators NCES National Center for Education Statistics NCSL National Conference of State Legislatures NHEA National health expenditure accounts NIPA National income and product accounts NLC National League of Cities NRC National Research Council NSF National Science Foundation OMB Office of Management and Budget PAA Population Association of America PI Personal income R&D Research and development RSS Really simple syndication SHA System of Health Accounts SIAM Section on Intergovernmental Administration and Management, Society of Public Administration SIC Standard Industrial Classification System SIPP Survey of Income and Program Participation SNA System of National Accounts StEPS Standard Economic Processing System 

ACRONYMS AND ABBREVIATIONS xv TPV Taxable Property Values Survey VIUS Vehicle Inventory and Use Survey