Below are the first 10 and last 10 pages of uncorrected machine-read text (when available) of this chapter, followed by the top 30 algorithmically extracted key phrases from the chapter as a whole.
Intended to provide our own search engines and external engines with highly rich, chapter-representative searchable text on the opening pages of each chapter.
Because it is UNCORRECTED material, please consider the following text as a useful but insufficient proxy for the authoritative book pages.
Do not use for reproduction, copying, pasting, or reading; exclusively for search engines.
OCR for page 19
2
The Government Statistics
Program in Context
P
roviding information on government activity—revenues, spending,
functions, employment, and other aspects—is a critical task of a dem-
ocratic government. Such information is essential for decision makers
in all branches of government, as well as for private-sector decision making,
research and evaluation, and, ultimately, accountability to the public. For
a federal system, such as the United States, it is important to have not only
information on the national government, but also information that can be
compared for the large number of state and local governments.
For over 160 years, the primary duty of enumeration of state and lo-
cal government activity in the United States has been the responsibility of
the federal government’s experts in conducting censuses and surveys. The
U.S. government tapped the Census Bureau to identify and catalogue state
and local governmental bodies and collect data on them to measure their
activities.
Enumerating governments and measuring their activities involve a com-
plex set of data collection, processing, and estimation tasks. The current
Census Bureau programs, located in the Governments Division, cover three
major subjects—government organization, public employment, and public
finances. The information is collected in the quinquennial Census of Gov-
ernments and several annual and quarterly surveys, each using separate
collection forms and procedures, depending on the subject matter and level
of government addressed.
These censuses and surveys form the base or core programs of the
Governments Division portfolio. The designation of programs as base pro-
19
OCR for page 20
20 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
grams stems from two related ideas: (1) these undertakings have the longest
history as Census Bureau programs and (2) in general, they have been the
genesis of major reimbursable programs, whereby the Census Bureau re-
ceives financial support from external sponsors to develop more detailed
surveys pertaining to specific pieces of its base programs.
The Governments Division and the Census Bureau generally are of
the view that core or base programs must be supported and continued,
although not necessarily at their current frequency or level of detail. In
fact, the inclusion of programs as base programs is subject to change over
time as priorities and sources of funding change. Some useful pieces of the
base portfolio have been eliminated following congressional budget cuts
(see discussion below).
This chapter provides context in which to examine the current Gov-
ernments Division portfolio. It first briefly lays out the history of federal
data collection on state and local governments and then describes the base
and reimbursable programs as they are currently implemented. It discusses
issues in the classification of governments, which is a critical function of
the Governments Division in light of the dynamic nature of American gov-
ernmental entities, the activities they perform, and the flows of financing
among them.
The chapter concludes by describing cutbacks in the Governments
Division programs in response to constrained budgets and the risk that
these cutbacks pose to the division’s dual missions. As noted in Chapter
1, these missions are (1) to provide aggregate information for the state
and local governments component of the national accounts and other key
financial series and (2) to provide individual government-level information
to support analyses of the operations and finances of and the relationships
among various levels and types of governments in the U.S. federal system.
Both missions are critical to informed decisions in such areas as fiscal and
monetary policy, retirement security, income support, transportation policy,
among many others, as well as to informed debate about the proper role of
each level and type of government and to public accountability.
HISTORICAL DATA COLLECTION
Census Data Beginning in 1840
The first collection by the federal government of information about
state and local governments occurred in a limited fashion as part of the
1840 population census, which included questions on numbers and types
of schools and numbers of pupils by state. (U.S. Census Bureau, 1982,
1992). A few queries on state and local government taxable wealth, prop-
erty taxes collected, and indebtedness were included as part of the 1850
OCR for page 21
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 21
population census, and questions on these topics grew in number in suc-
ceeding censuses through 1890. Collection of information on governments
was separated from the population census in 1902 in the newly created
permanent Census Office. The information sought on governments at that
time included types and number of local governments in each state; federal,
state, and local revenues and expenditures; assessed valuations; tax levies;
and public debt. States were to report data that included all local units of
government, although separate figures were presented only for counties. In
addition, the Census Office published estimates of national wealth by state
and class of property, reflecting the heavy dependence on property taxes to
support state and local government expenditures.
Censuses of governments, with varying scope, detail, and coverage,
were subsequently conducted in 1913, 1922, 1932, and 1942. In 1950
Congress enacted legislation (Title 13, Section 161 of the U.S. Code) pro-
viding for a Census of Governments every five years in the years ending in
2 and 7, although funds to complete a 1952 census were never appropriated
(see Box 2-1). The first full-scale Census of Governments under the 1950
BOX 2-1
Legal Justification for State and Local
Government Statistics Programs
U.S. CODE TITLE 13—CENSUS
CHAPTER 5—CENSUSES
SUBCHAPTER III—GOVERNMENTS
Sec. 161. Quinquennial censuses; inclusion of certain data
The Secretary shall take, compile, and publish for the year 1957 and for every
fifth year thereafter a census of governments. Each such census shall include, but
shall not be limited to, data on taxes and tax valuations, governmental receipts,
expenditures, indebtedness, and employees of States, counties, cities, and other
governmental units.
TITLE 13—CENSUS
CHAPTER 5—CENSUSES
SUBCHAPTER IV—INTERIM CURRENT DATA
Sec. 182. Surveys
The Secretary may make surveys deemed necessary to furnish annual and other
interim current data on the subjects covered by the censuses provided for in this
title.
OCR for page 22
22 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
legislation was conducted in 1957, and a census has been conducted every
five years since that time in conjunction with the Economic Census, which
covers private-sector businesses.
Intercensal Data Beginning in 1898
As early as 1898, the need for up-to-date information on state and lo-
cal government finances led to the collection of data in noncensus years.
Annual statistics on state government finances date back to 1915 in an
unbroken time series to the present, except for a few years (1920, 1921,
1933–1936) when budget constraints precluded data collection. Annual
statistics on city government finances date back even earlier—to 1902—and
were skipped only in 1914 and 1920, although coverage has been selective
and varied. Until 1931, statistics were provided only for cities with at least
30,000 people, rising to 100,000 people from 1932 to 1941, and dropping
back to 25,000 people from 1942 through 1955. Since 1956, nationwide
statistics include all municipalities (sample-based estimates are used for
smaller units), but figures are published separately only for cities that meet
a minimum population size (50,000 people since 1960). Data on county
finances were provided from the results of mail sample-based surveys from
1943 through 1946; beginning in 1972, annual data have been published
on counties with at least 100,000 people.
Other annual series on state and local government finances are part of
the Governments Division portfolio, including a survey of state and local
public employee retirement systems and extensive reporting, since 1978, of
public school system finances in a program funded by the U.S. Department
of Education. Beginning in 1962, state and local tax revenues have been
reported on a quarterly basis, as have the finances of about 100 major
public employee retirement systems since 1968.
Annual data on state and local government payroll and employment
date back to 1940 for employment other than school-based employment
and back to 1946 for employment including educational institutions, except
that no data were collected for 1996. Since 1951, data have been collected
separately on full-time and part-time employees, and, since 1952, employ-
ment has been classified by function for all levels of government.
Over the decades, the Governments Division has conducted special
surveys and analyses in addition to those briefly sketched above. Topics
covered have included labor-management relations, environmental quality
control finances, and property tax assessment, among others. The spe-
cial surveys have generally been funded by other agencies of the federal
government.
OCR for page 23
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 23
GOVERNMENTS DIVISION PORTFOLIO TODAY
Basic Programs
The Census of Governments is the flagship operation of the Govern-
ments Division of the Census Bureau. It is the major source of informa-
tion about state and local governments in the United States. The Census
of Governments is conducted in three distinct but interrelated phases—a
precensus directory survey to produce an updated list of local governments
and other selected data necessary to identify the kind of governmental body
and to produce the Governments Integrated Directory (GID); a census of
finances of all state and local governments to extend the annual finance
survey of 13,000 governmental units to the universe of more than 87,000
governments; and a census of public employment that extends the annual
survey of public employment, which surveys about 10,000 state and local
governments, to the universe of 87,000 governments.
The two annual surveys of governments are the Annual Finance Survey
(AFS) and the Annual Employment Survey (AES). Each of these surveys
has multiple components. The AFS collects data on state and local govern-
ment finances, public elementary and secondary education expenditures,
and public employee retirement systems. The AES collects data for federal
civilian agencies and state and local governments for March of each year
on full-time and part-time employment, part-time employee hours worked,
full-time-equivalent employment, and payroll statistics by type of govern-
ment and governmental function, such as elementary and secondary edu-
cation, police protection, financial administration, and public welfare. The
annual Survey of Governmental Organizations is one of the base programs.
It establishes the government universe and is indispensable for conducting
the base employment and finance surveys.
On a quarterly basis, the Governments Division updates some of its
annual collections. The Quarterly Survey of State and Local Government
Taxes provides current information on tax revenues of state and local gov-
ernments, which are an important indicator of fluctuations in their financial
condition. The Quarterly Survey of Public Employee Retirement System
Finances provides detailed information on the composition of financial as-
sets of the 100 largest systems, which amount to one of the most significant
groups of institutional investors in the economy.
Programs are part of the base because of the value of the statistics
they produce to the user community. Major aggregate statistics (e.g., total
revenue, total expenditure, total employment, total payroll) define the base
by virtue of their importance in supplying adequate information for key
The programs in this section are described in greater detail in Appendix A.
OCR for page 24
24 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
economic measures, such as those produced by the Bureau of Economic
Analysis (BEA). This definition extends to subtotals as well (e.g., total tax
revenue, total expenditures for current operations) which are needed by
BEA in producing the national accounts.
It is important to understand that the national accounts serve as the in-
tegrator of economic statistics in the federal statistical system. The national
accounts influence the content not only of statistical programs conducted
by such agencies as the Census Bureau, the Bureau of Labor Statistics, the
National Agricultural Statistics Service, and others, but also of administra-
tive records programs, such as the Internal Revenue Service Statistics of
Income reports. The role of national accounts in shaping economic statistics
programs is recognized internationally and laid out in the Handbook of
Statistical Organization, Third Edition (United Nations Statistical Divi-
sion, 2003).
Reimbursable Programs
In addition to the programs funded in the annual and periodic budgets
of the Census Bureau, the Governments Division obtains funding from
other government agencies through so-called reimbursable programs. The
reimbursable programs are projects for which the Governments Division
acts as a contractor to conduct survey work. The sponsors, usually other
federal government agencies, seek Census Bureau assistance to capitalize on
the agency’s expertise in government organization and experience in dealing
with and measuring the universe of public agencies.
There are three major sponsors of reimbursable surveys—the National
Center for Education Statistics, the Bureau of Justice Statistics, and the Of-
fice of Management and Budget; Appendix B lists all current reimbursable
programs. The reimbursable work changes from year to year and evolves as
sponsor needs change. While several of the reimbursable survey programs
have lasted more than two decades, others have come and gone as inter-
est in the topics and the availability of resources have waxed and waned.
Reimbursable programs that the Governments Division no longer conducts
include collection of environmental expenditures for the U.S. Environmen-
tal Protection Agency, election administration costs for the U.S. General
Accounting Office (now the U.S. Government Accountability Office), and
taxation and other data for the U.S. Department of the Treasury. The data
for the Treasury Department were collected to support federal fund al-
locations to state and local governments under the State and Local Fiscal
Assistance Act of 1972. This legislation was the basis for general revenue
sharing, a program that transferred more than $7 billion annually to states
and localities before being terminated in 1986.
The base programs may serve as a springboard for new reimbursable
OCR for page 25
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 25
programs. A good example is a recently begun survey of state government
research and development (R&D) expenditures sponsored by the National
Science Foundation (NSF) Division of Science Resources Statistics. A key
reason why NSF wanted the Governments Division to do the survey was
its knowledge of state government structure and its ability to collect ex-
penditure information that is similar to that collected by another division
of the Census Bureau on private-sector R&D expenditures for the NSF-
sponsored Survey of Industrial Research and Development (National Re-
search Council, 2005).
The Governments Division reports many benefits—tangible and in-
tangible—accruing as a result of the reimbursable programs. First and
foremost, they provide about half of the Governments Division’s current
funding. The reimbursable activities bear some program overhead costs,
allowing the base programs to extend their own resources and provide
services that they would otherwise not be able to do.
The reimbursable programs also support the base programs in the fol-
lowing ways:
• Testing. The reimbursable programs serve as a test bed for the
base program operations. The reimbursable programs are smaller
and easier to change. The base programs take advantage of work
done in different reimbursable programs. A recent example is the
introduction of automated editing techniques that were first used in
reimbursable programs and later adopted by the base programs.
• Data currency. The reimbursable programs shine light on aspects
of state and local government economic activity that the Govern-
ments Division may consider adopting in the base programs. If
users show interest through reimbursable surveys, the division may
decide to incorporate certain aspects of a reimbursable program
into the base program to maintain the currency and relevance of
the base program data.
• Data accuracy. The reimbursable programs serve as an indepen-
dent check on the accuracy of the base program information.
• Strengthening analyst capabilities. The reimbursable programs
afford opportunities for staff analysts to work on different surveys
and thereby enhance their skills and knowledge.
• Learning through partnerships with other agencies. The Govern-
ments Division has learned a considerable amount about different
data collection, processing, and analysis techniques that may be
useful for its base programs. The division has become aware of
Communication with Henry Wulf, U.S. Census Bureau, Governments Division, October
18, 2006.
OCR for page 26
26 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
ways to make its base programs more useful because of relation-
ships it has developed with other federal statistical and program
agencies through reimbursable work.
Governments Division as Honest Broker
The Governments Division faces difficult issues concerning the clas-
sification of what is and what is not a government, as discussed in the next
section. It also—as discussed in Chapters 3 and 4—faces difficult issues of
accounting for revenues, expenditures, and employment of each recognized
governmental unit. In the process of identifying governmental organizations
and collecting information about them, the division does more than simply
collect and release the data. It serves as the official enumerator of these
governments and their impact on the American people, and it plays the role
of honest broker by providing consistency of definitions and accounting
treatment across governments according to a set of published rules.
As an honest broker, the Governments Division sets the boundary
between government and private entities; aggregates the various funds
(general fund, bond funds, enterprise funds, federal funds, etc.) into consoli-
dated accounts for each government; ensures consistent treatment of sub-
ordinate units and special districts and classifies like transactions together,
even if they have different names in different governments; provides con-
sistent annual time series across governments by combining data reported
for fiscal years ending in different months; and serves as the authoritative
source of information on the geography of state and local entities. These
tasks are both valuable and complex, given the proclivity of general- and
special-purpose local governments to change their geographic profiles and
organizational structures as they consolidate, separate, annex, and other-
wise evolve into different bodies over time.
CLASSIFICATION OF GOVERNMENTS
The task of classifying governments, largely a responsibility of the
Governments Division, is a bedrock function of the division. The classifica-
tion function is necessary to define governmental units, and thus to build
the lists of governmental units that would be in scope for the census and
surveys. This task is an ongoing operation and is fraught with challenges
for the staff of the Governments Division who decide on the classifications.
As discussed below, the task has become more difficult over time as new,
alternative forms of government have emerged and grown and others have
faded.
OCR for page 27
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 27
Historical Trends
Government organization in the United States has been described as
inherently messy, an apt descriptor over the course of the nation’s history.
Beginning as a federal system with 13 states in 1790 under the newly rati-
fied Constitution, the national government annexed lands, organized ter-
ritories, and admitted states in a dynamic process that added 35 more states
between 1791 and 1912 and then 2 more states—Alaska and Hawaii—in
1959. Each state, in turn, has sovereign authority to establish local gov-
ernments within its boundaries and to delimit their functions. The states
in different parts of the country have organized themselves, their subunits
of government, and their division of responsibilities in a wide variety of
ways for historical, geographic, political, and economic reasons. In New
England, cities and towns are the dominant governing bodies; in southern
states, counties provide most key functions; in other states, counties, cities,
and towns all have important functions, some of which (such as providing
police protection) overlap.
Moreover, the governmental arrangements established by the states
and the relationships among the federal government, the states, and local
governments have continued to evolve. In the nearly five decades since the
last state was admitted to the Union and the first modern Census of Gov-
ernments was conducted, striking changes have occurred in the numbers,
functions, and relationships of governments.
Consider just the numbers of functioning governmental units by type
(U.S. Census Bureau, 2005):
• Total. The total number of units decreased from 116,807 in 1952
to 87,576 in 2002, in which year Illinois had the largest number
of units (6,903) and Hawaii the smallest (19). The overall decline
masks different trends by type of government.
• Counties. The number of counties remained relatively stable: there
were 3,052 counties in 1952 and 3,034 counties in 2002, in which
year Texas had 254 counties, Delaware had 3, and Connecticut and
Rhode Island had none.
• Towns and townships. The number of towns and townships (ad-
ministrative subdivisions of counties) also remained about the
same: there were 17,202 townships and towns in 1952 compared
with 16,504 in 2002. The distribution by state varied markedly:
only 20 states had this type of functioning government in 2002,
with the largest number in Minnesota (1,793) and the smallest
number in Rhode Island (31).
• Municipalities. The number of municipalities (political units in-
corporated for local self-government) increased by about 20 per-
OCR for page 28
28 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
cent—from 16,807 in 1952 to 19,429 in 2002. Illinois had the
largest number of municipalities in 2002 (1,291) and Rhode Island
had the smallest number (8).
• School districts. The number of independent school districts de-
creased dramatically from 67,355 in 1952 to 13,506 in 2002.
Most of the decline occurred between 1952 and 1972 as districts
were combined to achieve efficiencies and economies of scale to
cope with the baby boom generation of elementary and second-
ary school students. In 2002, Texas and California each had over
1,000 school districts. In Hawaii, Maryland, North Carolina, and
Virginia, the counties and independent cities and even some towns
operate school districts.
• Special districts. In contrast to school districts, special districts,
such as water boards, transit authorities, housing authorities, and
development commissions, grew steadily from 12,340 in 1952 to
35,052 in 2002. Increasingly, general-purpose governments have
spun off responsibility for provision of public services to single-
function or multiple-function districts, authorities, commissions,
boards, and other entities. Governments have also increasingly
sought to privatize functions and to develop collaborative schemes
for discharging functional responsibilities with other public and
nonpublic organizations. Special districts have also arisen as a
result of essentially new activities, such as those associated with
transportation and economic or community development.
In sum, state and local governmental units in the United States are
not as simple and stable as they may appear. Even at the familiar and rec-
ognizable level of states, counties, municipalities, and townships, units of
government are diverse, fragmented, layered, and changing. From area to
area, they perform different functions in different ways. The Governments
Division of the Census Bureau must create statistical coherence and order
out of this messy situation.
Defining Governmental Units
The Governments Division, in its role as the official arbiter of the
definition of governments and the source of identification of governmental
entities for statistical purposes, has developed and publishes a set of defi-
nitions and standards for sorting out, classifying, and counting entities as
governments. In addition, the international guidelines underlying the gov-
The growth in privatization and collaboration has been termed “new governance” by Lester
M. Salamon (Salamon, 2005).
OCR for page 29
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 29
ernment finance statistics of the International Monetary Fund (IMF) and
the national income and product accounts (NIPAs) of the BEA also provide
definitions of governments that the Census Bureau must consider.
The Governments Division defines governmental entities by using a
set of detailed guidelines. One basic definition of a governmental unit is
recognized for Census Bureau reporting:
A government is an organized entity which, in addition to having govern-
mental character, has sufficient discretion in the management of its own
affairs to distinguish it as separate from the administrative structure of any
other government. (U.S. Census Bureau, 1992, p. 3–2)
In other words, to be recognized as a government for Census Bureau pur-
poses, an entity must possess all three of these critical attributes: existence
as an organized entity, governmental character, and substantial autonomy
(U.S. Census Bureau, 1992, p. 3-3). The power to tax automatically classi-
fies an entity as a government, although entities that do not have this power
may still be classified as a government.
The task of defining a government has ramifications beyond the mainly
statistical purposes for which the definition was promulgated. For example,
the U.S. Department of Labor defines “public agencies” for regulatory
purposes under the Family and Medical Leave Act as units of government
defined by the Census of Governments.
The way in which the Census Bureau defines governmental organiza-
tions “puts everything in its place and provides a place for everything”
(Wulf, 2005, p. 2). When it comes to general-purpose forms of govern-
ment—counties, municipalities, towns, and townships—the task is fairly
straightforward. They are relatively easy to identify and count because
they are fairly stable; only 72 more local governments of these types were
reported in 2002 than had been identified in 1997. These relatively stable
forms of government account for a large share of local government expendi-
tures—57 percent of direct expenditures by local governments in 2002—but
they are a much smaller share of the number of governments, accounting
for only about 39,000 of the 87,500 units of government as defined and
measured by the Governments Division.
The majority of governments are those that historically have changed
the most and are continuing to change in numbers and scope; they are a
hodgepodge of special-purpose governments, including school districts—
13,506 in 2002 and continuing to decline in number—together with a wide
variety of other kinds of special districts—35,052 in 2002 and continuing
to grow in number.
It is at the boundaries of the definition of special-purpose local govern-
ments that the issue of distinguishing public- and private-sector activities
OCR for page 30
30 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
increasingly strains traditional definitions. Three examples of governmental
look-alikes—charter schools, residential community associations, and busi-
ness improvement districts (BIDS)—help make the point about the complex-
ity of the government classification problem and the need for the continued
efforts of the Governments Division to address classification issues in order
to ensure that government-like organizations are included when warranted
in the tallies of governmental units. The strict interpretation of classification
standards often leaves these special governing bodies uncounted.
Charter Schools
Charter schools are a fast-growing part of the American educational
landscape. In the 16 years since 1991, when Minnesota became the first
state to pass a charter school law, the charter school movement has ex-
panded rapidly. Today, over 1 million students are enrolled in more than
3,600 charter schools in 40 states plus the District of Columbia and Puerto
Rico (Center for Education Reform, 2006). Charter schools exhibit a rich
variety of organizational forms, which vary from state to state, not only
because the individual charters set out unique mission and goal statements,
but also because state charter laws, which significantly influence the devel-
opment of charter schools, vary (U.S. Charter Schools, 2007).
These new and growing types of educational establishments pose chal-
lenges when the Census Bureau attempts to classify them as public or
private, and to ensure that they are counted by the Governments Division
or , if not, as private businesses. The standard Census Bureau rules are not
always definitive in making the classifications. The criteria are “problematic
in the case of charter schools” (Wulf, 2005). As organized entities, charter
schools are most often creatures of other governmental units rather than
independent purveyors of governmental functions. Their autonomy in terms
of fiscal and administrative independence varies widely. A recent study
in California classified 318 charters by their degree of autonomy, finding
that some were “low-autonomy” charters in that they received “several
important services” from their district or county office of education, had
collective bargaining arrangements that were the same or almost the same
as that of their district, and were “locally funded” (receiving funds through
the local school district); others were “high-autonomy” schools, receiving
from their parent school districts “oversight only, no direct services or sup-
port”; and the majority were in a “mid-autonomy” category, in that they
had indicators of both low and high autonomy, such as having a collective
bargaining agreement that was somewhat different from one their district
had with its teachers (U.S. Charter Schools, 2007). The classification of
these schools on the basis of autonomy is a subjective exercise, varying by
state and circumstance.
OCR for page 31
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 31
A federal district court case in Ohio involving a suit against a charter
school indicates not only the limits of an “independence” test for auton-
omy, but also the kinds of nuance that must be considered in the context
of the local situation for an appropriate classification of these new and
growing forms of educational entities. The court applied four legal tests to
determine when private conduct may be considered “state action”: (1) the
public function test, (2) the state compulsion test, (3) the symbiotic relation-
ship/nexus test, and (4) the “entwinement” test. The court concluded that
“free, public education, whether provided by public or private actors, is an
historical, exclusive, and traditional state function” and that the education
was funded by taxpayers, as is currently the practice under Ohio’s com-
munity school law. It interpreted the “entwinement” test as when private
conduct is “so entwined with governmental policies or so impregnated with
a governmental character as to become subject to the constitutional limi-
tations on state actors.” The judge concluded that the charter school had
been granted the authority to provide free public education to all students
in a nondiscriminatory manner. Since only local school districts and charter
schools had been granted this authority in Ohio, the charter school was so
“entwined with governmental policies” that the court was forced to con-
sider it and other such schools as “public actors subject to the constitutional
limitations on state actors.”
Residential Community Associations
Residential community associations, which are nonprofit organizations
that provide municipal-like services for groups of private residences, are
ubiquitous. These civic associations, homeowner associations, citizens as-
sociations, cooperatives, and planned communities provide services closely
associated with services traditionally provided by the public sector, such as
sanitation, streets, parks, maintenance, and security (Wulf, 2005, p. 3). The
Community Associations Institute estimated that, in 2006, some 286,000
associations represented 23.1 million homes with over 57 million people
belonging to them (Community Associations Institute, 2007). Clearly, it is
important to classify these entities appropriately.
The residential community associations illustrate the subjectivity of
government classification. They are organized entities; they have a govern-
mental character because they were created by governments and have pub-
A charter school, the Riverside Community School in Cincinnati, fired one of its teachers
in 2001. The teacher sued for violation of her civil rights, and the school attempted to dismiss
the suit by arguing that it was a private school and not a unit of government. The U.S. Dis-
trict Court judge ruled that an Ohio “community school” is a “state actor,” and therefore is
bound by the same rules that apply to the government (U.S. District Court for the Southern
District of Ohio, 2002).
OCR for page 32
32 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
lic responsibility; and they enjoy some autonomy. Nonetheless, the Census
Bureau holds that residential community associations are not governments,
since they cannot be legislated out of existence and they are protected by
the right of citizens to freely associate (Wulf, 2005, p. 4). This example
indicates the challenges posed by new and growing entities with govern-
ment-like powers and the need to continually update the decision rules for
identification of governmental organizations.
Business Improvement Districts
Since the early 1970s, downtowns and other commercial areas across
the United States have been using business improvement districts as a
mechanism for revitalization. The districts experienced a substantial expan-
sion in the 1990s. Business Improvement Districts are a type of governance
tool, in that they allow for an assessment on property within a defined area.
Revenues from this assessment are then directed back to the area to finance
a wide range of services, including such things as security, maintenance,
marketing, economic development, parking, and special events. They are
usually created by specific enabling legislation, but sometimes they are
formed by voluntary coalitions of businesses in an area. They have elected
governance of one form or another. They represent significant levels of
public expenditures and sometimes create public debt. These public-private
hybrids fundamentally contain the same combination of public and private
elements as other structures of local governance and are ultimately subject
to public control (Briffault, 1999).
Little is systematically known about these bodies, as a whole. They
generally do not qualify as special districts because, like the residential
community associations, they do not meet the current standard defining a
government. Whatever their classification and categorization, they are an
important feature of governance that needs to be understood, and under-
standing starts with information.
EFFECTS OF PROGRAM CUTBACKS
The need for Governments Division data increased under the provisions
of the State and Local Fiscal Assistance Act of 1972 (General Revenue Shar-
ing). This program required the Governments Division data on state and
local taxes to determine allocations of federal funds to 39,000 eligible local
governments. Following the program’s demise in 1988, constrained budgets
led to significant cutbacks in the base programs of the division.
OCR for page 33
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 33
Programmatic Cutbacks, 1988–1997
During the first decade after the demise of General Revenue Sharing,
cutbacks accrued in the Census of Governments, special surveys, and ana-
lytical reports:
• Taxable property values. This survey provided important informa-
tion relating to the property tax, which was the largest state and
local government property tax at the time that data collection was
discontinued. The data from the survey were the only nationwide,
state-by-state, and county-by-county information on the ratios of
property assessments to sales prices, and it did so every five years
from 1957 to 1992. The Census Bureau discontinued the Taxable
Property Values survey while conducting the 1992 Census of Gov-
ernments because of budget constraints and the survey’s declining
response rates.
• Labor-management relations. This survey provided data on state
and local employees who belong to employee organizations, labor
relations policies, contractual agreements between governments
and employee bargaining units, employees covered by contractual
agreements, and employee bargaining units. Although the survey
extended citizens’ understanding of the public sector, it did not fill
a clear federal need and so it was not considered by the Census
Bureau to be crucial to its mission.
• Popularly elected officials. This survey produced data on the num-
ber and demographic characteristics of elected officials in the na-
tion. The report produced from the survey was popular, but the
Governments Division considered the survey to be peripheral to the
task of providing economic data. This survey and the report from
it were discontinued after 1992.
• State payments to local governments. The practice of discontinuing
research reports actually began in 1982 when this report, which
described in detail the flow of intergovernmental funds between
states and their local governments, was dropped. The surveys still
collect the information, but as is the case now with most Govern-
ments Division data, no detailed analyses are produced and no
user-friendly data are provided except for highly aggregated totals.
Users who wish to see details or understand changes over time
must access detailed data files and conduct their own analyses, an
approach used for other Bureau programs.
• Analytic reports. After 1992, the Governments Division stopped
producing most of its descriptive and analytic reports, such as the
separate report series entitled Government Finances, City Finances,
OCR for page 34
34 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
and County Finances, as well as similar series. As an alternative,
the Governments Division began placing its data on the Internet,
but with little or no explanatory text and with relatively little abil-
ity to compare data across governments or over time.
Budget Adequacy, 1997–Present
In more recent years, appropriations for core Governments Division
programs have tended to grow somewhat, according to data provided to
the panel by the Office of Management and Budget. Table 2-1 shows budget
streams for the period, 1997–2007, separately for the Census of Govern-
ments and the annual and quarterly surveys (excluding the reimbursable
programs), in constant 2007 dollars. As is the case for the other components
of the Economic Census, funding for the Census of Governments is cycli-
cal, increasing in the years when the census is conducted and when most of
the processing takes place, and then subsiding in years when activity is less
intense. The trend is toward somewhat larger budgets over time.
The funding for the annual and quarterly surveys in the core or base
program has increased modestly in the past decade. The growth has come in
spurts with funding remaining essentially flat during 1997–2000 and then
increasing by 15 percent from 2000 to 2001; it again remained essentially
flat during 2001–2006 and then increased by 7 percent from 2006 to 2007.
These increases amount to about 2 percent per year on average over the
entire period.
TABLE 2-1 Governments Division Appropriations, Census of
Governments and Annual and Quarterly Surveys (Base Program), Fiscal
Years 1997–2007 in Constant 2007 Dollars (Dollars in Thousands)
Fiscal Year Census of Governments Base Program Surveys
1997 $2,492 $7,227
1998 3,483 7,551
1999 4,482 7,598
2000 4,340 7,316
2001 3,475 8,396
2002 6,388 8,188
2003 7,086 8,519
2004 6,642 8,425
2005 5,334 8,575
2006 4,686 8,524
2007 7,755 9,156
NOTE: Appropriations data deflated using the consumer price index.
SOURCE: U.S. Office of Management and Budget.
OCR for page 35
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 35
Despite these trend increases in allocations, the Census Bureau has
continued to make programmatic cuts (see below). The panel takes these
cuts as a strong indication that resources are inadequate in light of the
complexity of the data collection, processing, and analytical tasks of the
Governments Division and the increasing difficulties of obtaining responses
from governmental units, as discussed in Chapter 4.
The panel is aware that other statistical agencies, including other divi-
sions in the Census Bureau, have experienced flat or only modestly increas-
ing budgets in recent years. The panel’s charge, however, is to assess the
adequacy of the budget for the Governments Division when viewed against
the needs for the division’s data.
The Governments Division has made the following cutbacks in its
programs since 1997:
• Temporary reduction in sample size for the 2001 and 2003 an-
nual finance surveys. In the period leading up to the 2001 Annual
Finance Survey, the Governments Division investigated ways to
restructure the processing and editing of the survey to improve its
timing and quality, as it was not meeting adequate standards for
either measure. Internal budget constraints required the Govern-
ments Division to finance these improvements by cutting the sur-
vey program in other ways; it did not have the ability to request
additional funds. After consulting with BEA, the Federal Reserve
Board, the Census Advisory Committee of Professional Associa-
tions, and the Council of Professional Associations on Federal
Statistics, the Governments Division developed a reduced sample
of local governments for survey fiscal years 2001 and 2003, which
would produce only national totals instead of the usually larger
sample that yielded local government totals by state. As a result,
the Governments Division did not produce state-by-state totals for
local government finances in 2001 or 2003, although they were
available for the surrounding years of 2000, 2002, and 2004 and
also for later years. Many outside users, particularly in the research
community, consider the lack of state-level data on local govern-
ments in 2001 and 2003 to be a major loss (see Chapter 3).
• Reduction in data on special districts. After 2002, the Govern-
ments Division no longer collects data on service areas of special
districts.
• Reduction in debt data detail. In the redesign of the 2005 Annual
This discussion draws heavily on Governments Division Responses to CNSTAT Panel
Questions for June 22-23, 2006 Meeting, as contained in “06-05_Responses to CNSTAT panel
questions for June 2006 meeting_Indiv pgs_V35.doc,” Answer A.6.
OCR for page 36
36 STATE AND LOCAL GOVERNMENT STATISTICS AT A CROSSROADS
Finance Survey, the Governments Division eliminated many debt
classification categories to the local government component of the
survey, and scaled back details in other areas. Prior to 2005, many
categories had been restricted to federal and state governments
only or to large local governments. As such, estimates of U.S. totals
of government finances for these classification categories did not
represent true aggregates of the financial transactions of all levels
of government. As part of the redesign, the Governments Division
enhanced internal consistency in debt categories and simplified the
classification categories across levels and types of governments,
but in doing so it reduced the number of categories used to classify
state and local government regular debt statistics from 66 to 8,
with many of the former categories combined into broader group-
ings. Perhaps the most significant element of this change is that the
redesigned debt data now track only two broad purposes of debt:
private purposes and unspecified public purposes. By contrast,
earlier surveys provided separate information on debt incurred for
elementary and secondary education, higher and other education,
water supply systems, electric power systems, natural gas supply
systems, and public mass transit systems (U.S. Census Bureau,
2006b).
• Cutbacks in published detail. A database showing which county
areas were believed to be served by each special district was posted
to the Governments Division web site for years prior to 2002, but
not for 2002. Although this information is included in the 2002
Census Bureau volume on government organization, users have
to look up the specific entity in order to find it. The database for
2002, however, remains available from the Governments Division
upon request.
• Privatization and other forms of contracting out government ser-
vices. The 1987 and 1992 Censuses collected and published data on
whether or not local governments provided certain services and, if
so, whether they were partially or totally contracted out (although
it is not possible to tell whether the services were contracted out
to a private provider or to another government.) These data were
collected but no longer published beginning with the 1997 Census
of Governments and dropped with the 2007 census.
• Delaying statistical improvements. Due the lack of resources, the
The Census Bureau does conduct an annual Boundary and Annexation Survey that captures
important shifts in physical space, but it applies only to general-purpose governments and
cannot be used to address this user issue (see http://www.census.gov/geo/www/bas/bashome.
html).
OCR for page 37
THE GOVERNMENT STASTISTICS PROGRAM IN CONTEXT 37
Governments Division has delayed making statistical improvements
in the surveys and census. The impact of these delays is discussed
in Chapter 4.
The decisions about which surveys and reports to scale back or elimi-
nate reflected the best judgment of the Governments Division and the Eco-
nomic Directorate regarding where cuts could be made without adversely
affecting the division’s main missions. In particular, it seems clear that the
division chose to favor the first of its two main missions: providing aggre-
gate information for the national accounts and other key financial series
required by BEA and the Federal Reserve Board to satisfy the information
needs of the federal government for fiscal and monetary policy. The Eco-
nomic Directorate has asserted the primacy of serving these needs, and the
panel does not dispute their importance. We argue throughout this report,
however, that the Governments Division’s second mission is also important
in determining program content. Policy makers, researchers, and the public
need detailed information about individual governments, the relationships
among them, and the detailed functions and activities of government.
Moreover, such detailed information is an important element in evaluating
and validating the quality of the key financial aggregates. We take up these
issues in more detail in Chapter 3 and Chapter 6.
