Small-Area Income and Poverty Estimates Priorities for 2000 and Beyond (2000) / Chapter Skim
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2 Needs for Small-Area Income and Poverty Estimates
2 Needs for Small-Area Income and Poverty Estimates
Pages 18-43
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From page 18... ...
Users, including government agencies that administer programs by using estimates and policy makers that legislate program uses of estimates, need to be aware of the strengths and weaknesses of estimates for their purposes. In this chapter we describe the growing demand for small-area income and poverty estimates, identify key requirements for estimates from the perspective of program uses, and assess in general terms the ability of alternative data sources to satisfy these requirements.
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From page 19... ...
Estimates were obtained from such sources as the decennial census long-form sample income information; administrative record counts of participants in particular social programs; the per capita income estimates developed from administrative records, censuses, and surveys by the Bureau of Economic Analysis (BEA) ; and, more recently, the estimates from the Census Bureau's Small Area Income and Poverty Estimates (SAIPE)
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From page 20... ...
Department of Commerce Empowerment Zones Program, rural and urban areas that are designated for the program must demonstrate a poverty rate of not less than 20 percent in each census tract in the area and, for at least 90 percent of the census tracts in the area, the poverty rate must not be less than 25 percent.1 Looking to the future, it seems likely that an increasing number of federal programs will provide funding on the basis of allocation formulas that include small-area poverty or income estimates because of the trend in social welfare policy of replacing individual entitlement programs with block grants to states and localities. For example, the new block grant Welfare to Work Program, funded beginning in fiscal year 1998 at $1.5 billion, requires that 75 percent of the funds be allocated to states according to the state share of the national number of poor persons and the state share of the national number of adult recipients of Temporary Assistance to Needy Families (TANF)
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From page 21... ...
First is a trend-evident in other programs as well-toward requiring estimates of child poverty more frequently than can be provided by the decennial census. Second is a trend toward requiring estimates for very small areas, namely, school districts, to permit direct allocation of federal funds to those areas.
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From page 22... ...
. Table 2-1 summarizes key features of selected federal and state allocation formulas that use small-area income or poverty estimates as a factor, chosen to illustrate the variety of program areas, funding levels, and provisions of current allocation formulas.
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From page 23... ...
.6 Hence, some school districts that received Title I concentration grant funds because they had sufficient proportions (or numbers) of children approved for free or free and reduced-price school lunches would not have received funds on the basis of an estimate of children in families 4Lower living standard income levels are published by the Employment and Training Administration for 25 metropolitan areas and for metropolitan and nonmetropolitan components of the four census regions, Alaska, and Hawaii.
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From page 24... ...
($200 billion, federal and state, in 1999) School districts (prior to 1999, the Department of Education allocated to counties; states suballocated to school districts)
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From page 25... ...
total rural families with income below poverty Model-based estimates using March CPS, decennial census, and administrative records (prior to fiscal 1995, used decennial census) Decennial census to 1999, Basic grants allocated to school districts Model-based SAIPE Cation with at least 10 formula-eligible children estimates (prior to 1997 ,tates and more than 2% formula-eligible children; 1998 school year, used districts)
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From page 26... ...
than higl lower liv Job Training Partnership Act Title II-B Service delivery areas Formula (summer youth) and Title II-C (as defined above)
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From page 27... ...
net per capita income. (one or Formula includes number of persons aged Decennial census , of 22-72 in families with income not more (special tabulation)
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From page 28... ...
Program New Mexico State education foundation formula School districts Formula ($1.3 billion in 1999) allocation Departm~ New York State Education Aid School districts Formula ($11.9 billion in 1999)
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From page 29... ...
Department of Education, for Title I formula) Formula includes number of children approved for free or reduced-price lunch; per capita income in district School lunch data Decennial census Decennial census School lunch data State administrative records See U.S.
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From page 30... ...
Moreover, administrative records that are used for model-based estimates for states and counties, such as income tax returns, cannot currently be used in models for school districts or other subcounty areas because a significant proportion of the addresses in the records cannot readily be assigned (geocoded) to these areas.
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From page 31... ...
Beginning in fiscal 2000, states are required to allocate Perkins III funds for secondary school vocational and technical education programs to school districts on the basis of (1) estimates of people aged 15-19 in the district (30% of funds)
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From page 32... ...
Survey and model-based estimates may also require 1 or more years to prepare: SAIPE estimates currently are released about 3 years after the reference year for income data. Administrative records data are usually available on a more timely basis for the agencies (usually at the state level)
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From page 33... ...
Regularly conducted household surveys (such as the March CPS) that are designed to collect information with which to estimate the official concept of poverty can result in biased estimates due to measurement problems (see Chapter 4~.
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From page 34... ...
, and the planned American Community Survey (ACS) ; administrative data, ranging from school lunch counts to federal and state income tax records; and programs for deriving estimates from multiple sources, including the BEA program for estimating total and per capita personal income for states and counties and SAIPE.
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From page 35... ...
Generally speaking, long-form estimates for areas with fewer than about 20,000 people have relatively large sampling errors, and there are many areas smaller than this size for which estimates are needed: 47 percent of counties and 82 percent of school districts are below 20,000 population (although these areas account for small proportions of people-see Chapter 4~. If the American Community Survey is implemented as planned there may be no long-form survey in the 2010 or subsequent censuses.
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From page 36... ...
SIPP obtains even more detailed information about income and population characteristics than the March CPS, asking about 60 questions on sources of income. The survey obtains more complete reporting of many income sources than the March CPS, and two Committee on National Statistics reports have recommended that SIPP become the basis of official income and poverty statistics (National Research Council, 1993, 1995a)
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From page 37... ...
Thus, the questionnaire will ask about income in the past 12 months and not the more natural reference period of the past calendar year (see Chapter 4~. In addition, although the ACS will have a much larger sample size than other household surveys, direct estimates of income and poverty will still not be reliable for many small areas, such as school districts, even if the data are cumulated for as many as 5 years.
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From page 38... ...
Examples include the number of children approved for free or reduced-price school lunches; participants in the TANF program; postsecondary students who receive Pelt Grants or other assistance; people who receive food stamps; children enrolled in Head Start; and people in families with low income, based on their tax returns (see Midwest Research Institute, 1999~. Administrative records vary in how much information they provide on the characteristics of people, and the information recorded may change over time in response to program administration needs.
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From page 39... ...
Reasons for such variation include: differences across areas in the income distribution-one area may have fewer near-poor children relative to poor children than another area; in program administration-some school districts may be more aggressive in encouraging families to participate than other districts; and in participation-some families may not enroll their children because of perceived stigma. For allocation programs for poor children that have significant thresholds to receive funding, such as Title I concentration grants, the use of school lunch counts as a proxy measure would likely provide funds to districts that would not be eligible if a poverty measure were available.
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From page 40... ...
BEA Income Estimates BEA produces state and county estimates of personal income and per capita personal income as part of the national income and product accounts. The data used to produce the income estimates are primarily from the decennial census and administrative records from federal and state government programs (e.g., records for unemployment insurance, Social Security, Medicare, Medicaid, other social welfare programs, and tax records)
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From page 41... ...
The SAIPE model-based estimates have several advantages for use in fund allocation formulas and other program purposes: they are updated annually or biennially; they reflect official concepts of income and poverty with the survey that is currently the source of official income statistics; and they are available for school districts as well as states and counties. Validation work conducted to date indicates that the SAIPE estimates are preferable to continuing to use outdated census estimates: the differences between SAIPE model-based estimates for income year 1989 and 1990 census estimates are substantially smaller than the differences between 1980 census and 1990 census estimates (see Chapter 3~.
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From page 42... ...
For example, while the decennial census provides estimates of poverty and income with low sampling variability for many small areas, the estimates are only available once every 10 years. In contrast, administrative records may be available on a timely basis and have other advantages, but they do not always measure the causers should also require documentation and evaluation for estimates that are not developed on the basis of an explicit model: for example, evaluation of the effects on fund allocations of using census estimates over a decade or more or of using administrative data as a proxy for poverty.
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From page 43... ...
It is particularly important for users to consider such interactions when deciding to change from one source of estimates to another-as occurred when the Title I program shifted from using decennial census estimates for allocations to using SAIPE estimates-or when developing new funding formulas and deciding which source of estimates to use for them.
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