National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Overview

« Previous: RECOMMENDATION
Suggested Citation:"Overview." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 320
Suggested Citation:"Overview." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 321
Suggested Citation:"Overview." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 322
Suggested Citation:"Overview." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
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Page 323

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USE OF THE POVERTY MEASURE IN GOVERNMENT ASSISTANCE PROGRAMS 320 and a regular, automatic adjustment for real growth seems preferable to an adjustment that occurs spasmodically. However, the design of government assistance programs must take into account many factors, only one of which is a statistical standard of need. Other considerations, such as funding constraints and competing uses for scarce tax dollars, may dictate that assistance program benefits be set at a level below the statistical poverty thresholds. RECOMMENDATION 7.1. Agencies responsible for federal assistance programs that use the poverty guidelines derived from the official poverty thresholds (or a multiple) to determine eligibility for benefits and services should consider the use of the panel's proposed measure. In their assessment, agencies should determine whether it may be necessary to modify the measure—for example, through a simpler definition of family resources or by linking eligibility less closely to the poverty thresholds because of possible budgetary constraints—to better serve program objectives. GOVERNMENT ASSISTANCE PROGRAMS Overview In 1994, 70 federal and federal-state programs were providing cash, in- kind benefits, or other types of services to families or individuals who were deemed needy on the basis of an explicit income test.3 Table 7-1 summarizes the number and expenditures of these programs in fiscal 1992 (see Burke, 1993, and Appendix D for details). Of the 70 programs, 27 (39%) have as one of their income eligibility criteria that income be compared with the poverty guidelines or some multiple of them; see Table 7-2. They run the gamut from small programs that spend only a few million dollars a year (e.g., Follow Through and Senior Companions) to two of the largest assistance programs, food stamps and Medicaid. Of these programs, 14 use the poverty guidelines (or a multiple) as the sole criterion of income eligibility; they account for 2 percent of expenditures by all assistance programs. Examples are the Maternal and Child Health Services Block Grant, Legal Services, and Foster Grandparents. The other 13 programs, which account for 56 percent of expenditures by all assistance programs, have several ways of determining income eligibility. For example, School Lunch and School Breakfast accord eligibility to children whose families already participate in AFDC or food stamps, and they also permit other 3 Assistance programs typically have other requirements for eligibility besides a comparison of income with a need standard: for example, they may provide benefits only to people in certain age categories or have a limit on assets in addition to income or have other restrictions or requirements. Our discussion focuses on programs' definitions of and limits on income.

USE OF THE POVERTY MEASURE IN GOVERNMENT ASSISTANCE PROGRAMS 321 TABLE 7-1 Government Assistance Programs That Link Eligibility to Income, Fiscal 1992 Programs Expenditures Program Type Number Percent Million $ Percent Programs that link eligibility solely to 14 20.0 6,510 2.3 the federal poverty guidelines Programs that link eligibility to the 13 18.6 156,580 56.1 federal poverty guidelines and also to participation in other programs (e.g., AFDC, SSI, or food stamps) Programs that link eligibility to a 12 17.1 21,302 7.6 percentage of the local area (or state) median income Programs that have their own income 31 44.3 94,583 33.9 eligibility standards (or that link eligibility to participation in another program) Total 70 100.0 278,975 100.0 SOURCE: Derived from Burke (1993). NOTES: Not included in the table are two assistance programs that are wholly supported by state and local funds: General Assistance (fiscal 1992 expenditures of $3,340 million) and General Assistance—medical care component (fiscal 1992 expenditures of $4,850 million). Also not included are eight programs that allocate benefits on some other basis (e.g., area of residence): Indian Health Services, Nutrition Program for the Elderly, State Legalization Impact Assistance Grants, Chapter 1 Migrant Education Program, Emergency Food and Shelter Program, Food Distribution Program on Indian Reservations, Migrant High School Equivalency Program, and College Assistance Migrant Program, which had total fiscal 1992 expenditures of $2,626 million. For details of the programs in each category, see Appendix D. SSI, supplemental Security Income. children to qualify on the basis of comparing their family income to a multiple of the poverty guidelines. Programs authorized by the Job Training Partnership Act (e.g., Job Corps and Summer Youth Employment) accord eligibility to people already participating in AFDC or food stamps and permit other people to qualify on the basis of comparing their family income to 100 percent of the poverty guidelines or 70 percent of the lower living standard income level determined by the Department of Labor, whichever amount is higher. The remaining 43 programs (61%) use some other income eligibility

USE OF THE POVERTY MEASURE IN GOVERNMENT ASSISTANCE PROGRAMS 322 TABLE 7-2 Government Assistance Programs That Link Eligibility or Benefits to the Current Poverty Measure, by Program Type and Poverty Cutoff for Eligibility, Fiscal 1992 Programs That Provide All-or-Nothing Poverty Cutoff for Eligibility (%) Service Commodity Supplemental Food Program 100 (for elderly people) Community Services Block Grant 100; 125 at state option Follow Through 100 Foster Grandparents 125 Head Starta 100 Job Corpsa 100 Legal Services 125 (up to 187.5 for people with excessive medical or child care expenses) Medicaid a,b 100 for some people; 133 for others (up to 185 at state discretion for others) Senior Community Service Employment 125 Programa Senior Companions 100 Special Milk Program 130 Special Programs for Students with 150 Disadvantaged Backgrounds (TRIO Programs) Special Supplemental Nutrition Program for 100 to 185 at state discretion Women, Infants, and Children (WIC) Summer Food Service Program for Children 185 (applies to service areas, not applicants) Summer Youth Employment Programa 100 Training for Disadvantaged Adults and 100 Youtha Vocational Education Opportunities, 100 Disadvantaged Activitiesa Weatherization Assistancea 125 Programs That Relate Benefits to Income or Poverty Cutoff for Eligibility (%) Charge for Services on a Sliding Scale Child and Adult Care Food Program 130 for free meals; 185 for reduced price Community Health Centers 100 for free care; sliding scale up to 200 Food Stamp Programa,b 130 (gross income); 100 (net income) Low-Income Home Energy Assistance 150 Program (LIHEAP)a Maternal and Child Health Services Block 100 for free care; sliding scale for others Grant Migrant Health Centers 100 for free care; sliding scale up to 200 School Breakfast Programa,b 130 for free meals; 185 for reduced price School Lunch Programa,b 130 for free meals; 185 for reduced price Title X Family Planning Services 100 for free care; sliding scale up to 250 SOURCE: Burke (1993). a Program also accords eligibility on bases other than the poverty guidelines (e.g., children on AFDC are automatically eligible for Head Start); see Appendix D. b Entitlement program: eligible applicants cannot be denied benefits.

USE OF THE POVERTY MEASURE IN GOVERNMENT ASSISTANCE PROGRAMS 323 criterion. Of these programs, 12 of them, which account for 8 percent of total expenditures, determine income eligibility on the basis of comparing household income to a percentage of state or local area median family income. Examples are Section 8 Low-Income Housing Assistance and Rural Housing Loans. Finally, 31 programs, which account for 34 percent of total expenditures, have their own income eligibility standards. Examples are AFDC, Supplemental Security Income (SSI), veterans' pensions, and Stafford Loans. The 27 programs that link eligibility for some or all applicants to the poverty thresholds or guidelines differ on a number of dimensions. These, in turn, have implications for using the proposed poverty measure for eligibility determination. One dimension is how the benefits are related to income. Some programs have a poverty-based income test simply to determine eligibility and do not further condition benefits for eligible people on the amount of their income. In other words, these programs provide an all-or-nothing service (examples are Head Start and Legal Services). Other programs do condition benefits on the amount of an applicant's income. For example, the Food Stamp Program reduces the dollar amount of the coupons provided to recipients in direct relationship to their ''countable" income. Such programs as Maternal and Child Health Services charge recipients for services on a sliding scale: some people pay nothing, others pay a fraction of the costs, and still others pay full costs, depending on broad income-to-poverty guideline categories. A second dimension is the complexity of the method for measuring applicants' incomes. Programs that provide an all-or-nothing benefit often have a fairly simple application form that does not ask applicants for extensive detail about income sources. Many programs that charge recipients for services on a sliding scale are also in this category. In contrast, the Food Stamp Program, which calibrates benefits quite closely to income, includes an elaborate process to determine applicants' gross income and their net income after allowable deductions. Another distinction is between entitlement and nonentitlement programs. Entitlement programs (e.g., Medicaid, food stamps, School Lunch, and School Breakfast) must provide benefits to all eligible applicants. However, many of the programs that link eligibility to the poverty guidelines (e.g., Head Start, Legal Services) are not entitlements. These programs do not guarantee to provide services to all eligible families; rather, legislatively set budget limits determine how many eligible people who apply for services will actually be assisted and how many will be put on a waiting list. Finally, programs vary in whether they use 100 percent or a multiple of the poverty guidelines as the basis for determining eligibility (see Table 7-2). For example, Head Start has an income cutoff of 100 percent of the poverty guidelines, but Legal Services has a cutoff of 125 percent, and Special Programs for Students with Disadvantaged Backgrounds has a cutoff of 150 percent.

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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of:

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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