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Measuring Poverty: A New Approach
has been the most popular basis for AFDC need standards" (Urban Systems Research & Engineering, 1980:8); 21 states reported using this approach. However, only three states had standards that were based on pricing studies conducted in the last 10 years (i.e., in 1969-1979), and only one state had updated its standard regularly on the basis of repeated pricing studies to account for cost-of-living increases. USR&E criticized (perhaps too harshly) the practice in the more recent market basket studies of using expenditure surveys to determine the shelter component of the need standard rather than developing a normative standard for shelter and then pricing it out.
Expenditure Surveys Six states reported basing their standard on expenditure surveys that were limited to AFDC recipients. USR&E properly criticized this approach as tautological, in that the population for determining the "standard" was based on current program participants.
Lower Level Budget Five states reported adapting the lower level family budget of the Bureau of Labor Statistics (BLS) as the basis for their need standards, and all of these states had done so as of 1969 or later. USR&E noted correctly that the BLS budgets represented a combination of normative standards and actual expenditure patterns. The states using the BLS lower level budget generally deleted categories they deemed "inappropriate," either on judgemental grounds (e.g., alcoholic beverages) or on grounds that other programs covered the expenditure (e.g., medical care). However, only two of the five states had regularly updated their need standard.
Other One state used a multiplier approach similar to the Orshansky method for deriving the poverty line; six states used a combination of methods; and twelve states used completely arbitrary methods or methods that could not be ascertained in the USR&E survey.
Standard Setting in the 1980s
The Congressional Research Service regularly tracks changes in the level of the states' need standards and benefit levels (see, e.g., Solomon, 1991; Solomon and Neisner, 1993), but little information was obtained about standard setting practices in the 1980s until recently. In 1992, the Center on Budget and Policy Priorities completed a study for the Administration on Children and Families of AFDC standard setting practices in the late 1980s. This report (Larin and Porter, 1992) was prepared to fulfill the requirement in the 1988 Family Support Act that the states evaluate their AFDC need standard at least once every 3 years and report the results to the Secretary of the Department of Health and Human Services (HHS).
In early 1991 HHS sent the states a questionnaire asking for information on how each state's need standard in effect as of October 1, 1990, was developed, the relationship between the state's need standard and benefit