BILL ANALYSIS Ó
AJR 22
Page 1
ASSEMBLY THIRD READING
AJR
22 (Mullin)
As Introduced June 9, 2015
Majotity vote
------------------------------------------------------------------
|Committee |Votes|Ayes |Noes |
| | | | |
| | | | |
| | | | |
|----------------+-----+----------------------+--------------------|
|Human Services |6-1 |Chu, Mayes, Calderon, |Maienschein |
| | |Lopez, Mark Stone, | |
| | |Thurmond | |
| | | | |
| | | | |
------------------------------------------------------------------
SUMMARY: Memorializes the California Legislature's request to
the United States (U.S.) President and Congress to reform the
Official Poverty Measure to better reflect poverty.
Specifically, this bill:
1)Makes a number of declarations, including:
a) The Official Poverty Measure is determined by the
United States Census Bureau and is instrumental in
determining an individual's eligibility for a number of
government programs, including the Supplemental Nutrition
Assistance Program; Medicaid; School Lunch Program; Women,
AJR 22
Page 2
Infants, and Children Program; Housing Assistance; and
others;
b) The method we use today was developed in 1964 by
Mollie Orshansky of the Social Security Administration,
and that method used before-tax cash income to determine a
family's resources, which was then compared to a poverty
threshold;
c) Other than minor changes, the method has remained the
same over time, despite significant economic and
governmental changes, including the introduction of
Medicare and Medicaid, the shift from a manufacturing to a
service economy, welfare reform of the 1990's, and the
general stagnation of wages;
d) The Official Poverty Measure is a one-size-fits-all
policy that leads to a distorted perception of poverty and
an inefficient allocation of resources to fight poverty;
e) The Official Poverty Measure does not account for the
increase in child care expenses due to the rise in the
workforce participation of both parents;
f) The Supplemental Poverty Measure was designed to take
into account changes in the United States economy over
time, cost-of-living variations in different parts of the
country, and the changing role of government;
g) The Supplemental Poverty Measure more accurately
measures poverty by using a basic set of goods that
includes food, clothing, shelter, and utilities, adjusted
to reflect the needs of different family types and to
account for geographic differences in living costs to
establish what is known as a poverty threshold;
AJR 22
Page 3
h) The Supplemental Poverty Measure defines family
resources as the value of cash income from all sources,
plus the value of noncash benefits, including nutrition
assistance, subsidized housing, home energy assistance,
tax credits, and other benefits that are available to buy
the basic bundle of goods, minus the necessary expenses
for critical goods and services not included in the
thresholds;
i) The use of the Official Poverty Measure can have a
detrimental effect on policies to combat poverty because
it results in less efficient and less accurately targeted
policies and expenditures; and
j) It is vital that we implement a fair poverty measure
that allows us to efficiently allocate resources and focus
on regions and populations that need help the most.
2)Resolves that the Legislature of California urges the
President and the Congress of the United States to take steps
to reform the outdated and inadequate Official Poverty Measure
to better reflect poverty and the unmet needs demonstrated by
the Supplemental Poverty Measure.
EXISTING LAW: Annually establishes the federal poverty line
based on data available from the Census Bureau and provides that
the poverty line shall be used as a criterion of eligibility for
anti-poverty programs that fall under the community services
block grant authorized in 42 United States Code (U.S.C.) Section
9904. (42 U.S.C. Section 9902)
FISCAL EFFECT: Unknown. This resolution is keyed non-fiscal by
the Legislative Counsel.
AJR 22
Page 4
COMMENTS:
The effects of poverty: Researchers have established that
children who grow up in poverty often show poorer academic
performance, have poorer physical health, poorer mental health,
and lower intelligence quotient (IQ) than children from families
with higher socioeconomic status. Poor children are at greater
risk than higher income children for a range of problems,
including poor socio-emotional functioning, developmental
delays, behavioral problems, asthma, poor nutrition, low birth
weight, and pneumonia. Socioeconomic status is one of the most
powerful risk factors for poor adult health, as well. People
living in poverty suffer disproportionately from nearly all
diseases and have higher rates of mortality.
Families in poverty experience increased chronic stress related
to difficulties in providing for each family member's needs,
food insecurity, living in dangerous neighborhoods and other
factors. Events in daily life associated with living in an
impoverished household and neighborhood that produce a type of
chronic stress can lead over time to wear and tear on the body
and can have a negative impact on the developing brain. A
number of researchers have linked domestic household crowding,
commonly found to be a consequence of lower socioeconomic
status, with higher psychological stress and poorer health
outcomes. Other research shows that stress specifically impairs
working memory and the ability to pay attention.
History of the Official Poverty Measure (OPM): In the early
1960s, amid the early conversations that eventually led federal
anti-poverty policy changes, the U.S. Congress tasked the Social
Security Administration with determining the cost of living for
seniors and families with young children. A researcher at the
Social Security Administration named Mollie Orshansky proceeded
with a series of research projects, which quickly evolved into
AJR 22
Page 5
defining a national poverty standard. Prior to her work, the
definition of poverty, which had been set by the Council of
Economic Advisers, was annual family income of less than $3,000.
For purposes of historical context, the average U.S. family
income in 1962 was $6,000 ($2,800 per person), according to U.S.
Census Bureau data. The $3,000 standard for determining poverty
was questioned by researchers and policymakers, as it failed to
take into consideration a number of variables that could
increase or decrease per-person resources, including family
size.
Mollie Orshansky's formula, which has contributed to the OPM
formula for over 50 years, attempted to be less arbitrary than
the $3,000 standard. She developed a measure of poverty by
calculating the cost of a low-cost family food plan, as
determined by the U.S. Department of Agriculture (USDA) in 1962,
and multiplying that value by three to reflect the USDA's 1955
Household Food Consumption Survey, which found that families of
three or more people persons spent an average of one third of
their total income, after taxes, on food. The USDA's food
plans, the Social Security Administration noted, had been used
for decades to represent a translation of the criteria of
nutritional adequacy, and anything below that level would
represent deprivation. Since its development, the formula has
been modified to account for variations in household size, but
it still does not factor in certain variables that might worsen
or improve a family's financial situation.
The poverty level used today is adjusted annually by the
Consumer Price Index to reflect changes in the cost of living
throughout the nation, and is itself used, or some multiplier of
the level is used, as the foundation for setting eligibility
thresholds for numerous federal programs. Programs for which
eligibility relies on the federal poverty level include the
Supplemental Nutrition Assistance Program (SNAP), known as
CalFresh in California, the National School Lunch and School
Breakfast Programs, the Special Supplemental Nutrition Program
AJR 22
Page 6
for Women, Infants, and Children (WIC), the Low-Income Home
Energy Assistance Program (LIHEAP), and the Children's Health
Insurance Program, to name a few.
The 2015 federal poverty guidelines provided by the U.S.
Department of Health and Human Services set the poverty level
for a family of three at $20,090 annually. Researchers continue
to contest the accuracy of the measure, as the same level is
applied across the nation (with the exception of Hawaii and
Alaska) despite geographical differences, distinctions in labor
and housing markets, and other factors like child care and work
expenses.
Redefining poverty: After decades of controversy around the
appropriateness and accuracy of the OPM, Congress authorized an
appropriation for an independent scientific study of the measure
to be conducted. The result was a lengthy report published by
the National Academy of Sciences (NAS) in 1995, which
highlighted the inadequacy of the current measure and
recommended that a new measure be created to more accurately
reflect the pressures of current family costs. The NAS report
identified a number of factors that are essential in calculating
poverty, including child care costs, differences in medical care
expenses across population groups, and significant price
variations in housing and other costs between geographic
regions.
In 2011, and again in 2012, the U.S. Census Bureau, in
conjunction with the Bureau of Labor Statistics and other
federal agencies, which were together called the Interagency
Technical Working Group on Developing a Supplemental Poverty
Measure (ITWG), published a Supplemental Poverty Measure (SPM)
intended to provide a more refined look at poverty in the
nation. This measure, for the first time, attempts to balance a
family's receipt of tax credits, food and other aid, and child
support with costs that otherwise are not considered, such as
housing expenses, work-related transportation costs, child care,
health care, and others.
AJR 22
Page 7
Under the SPM, California became the state with the highest
poverty rate in the country. Whereas a three year average
calculated between 2010 and 2012 under the official measure put
California's poverty rate at 16.5%, applying the SPM for the
same three year period increased California's poverty rate to
23.8%. According to the U.S. Census Bureau, a primary reason
for this change is California's high housing costs.
The current poverty measure is a simple formula that identifies
resources as gross income before taxes and compares that amount
to set of presumed expenses, adjusted for family size. The SPM,
on the other hand, also includes factors such as tax benefits
and public social services benefits on the resource side of the
formula, which can potentially put a household above the poverty
level that would have otherwise been considered to be below the
poverty level under the current measure. By way of example,
most conversations about public social services exclude things
like federal nutritional benefits received through SNAP from any
income calculations because they are not flexible cash benefits
and can only be used for food purchases (a person can't use SNAP
to pay rent or buy medication). However, the SPM includes money
from all sources (liquid or not) on the resource side of its
poverty level calculation and assumes that use of a benefit,
like the nutrition supplement under SNAP, frees up other dollars
within the household income to be used for other expenses, such
as housing.
Need for this bill: This joint resolution expresses the
author's continued effort to ensure that poverty is eventually
measured in a way that is more accurate, and therefore more
beneficial to poor Californians. Although the formula used to
calculate the Official Poverty Measure relies on a formula
developed in the early 1960s, it is still used as a means of
measuring the number of people living in poverty and as a
baseline for determining eligibility for federally funded
AJR 22
Page 8
anti-poverty programs. This joint resolution seeks to apply a
more appropriate standard for assessing and addressing poverty
by calling on the President of the United States and Congress to
transition from use of the OPM to the widely researched and more
accurate Supplemental Poverty Measure.
Analysis Prepared by:
Myesha Jackson / HUM. S. / (916) 319-2089 FN:
0001250