California Legislature—2013–14 Regular Session

Assembly Joint Resolution No. 40

Introduced by Assembly Member Mullin

February 21, 2014

Assembly Joint Resolution No. 40—Relative to the federal poverty level measurement.

LEGISLATIVE COUNSEL’S DIGEST

AJR 40, as introduced, Mullin. Federal poverty level measurement.

This measure would urge the federal government to take steps to transition from the outdated and inadequate Official Poverty Measure and instead begin implementing the Supplemental Poverty Measure to determine the allocation of federal benefits.

Fiscal committee: no.

WHEREAS, 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 Infants and Children,
Housing Assistance, and others; and

WHEREAS, The method we use today was developed in the
1964 by Mollie Orshanksy 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; and

WHEREAS, In determining this poverty threshold, Orshanksy
used a food plan developed by the federal Department of
Agriculture that was designed for “temporary or emergency use
when funds are low,” and then multiplied the cost of the plan by
three because at the time a family typically used about a third of
their income on food; and

WHEREAS, 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; and

WHEREAS, 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; and

WHEREAS, The Official Poverty Measure has failed to
accurately measure poverty because it has not kept up with the
changes to our economy and social science research; and

WHEREAS, The Official Poverty Measure does not take into
account that families no longer spend one-third of their income on
food; they currently spend between 5 to 10 percent; and

WHEREAS, The Official Poverty Measure does not account
for noncash transfers, such as the Supplemental Nutrition
Assistance Program or Medicaid, as income; and

WHEREAS, The Official Poverty Measure does not account
for variations in cost-of-living in different regions of our country;
and

WHEREAS, 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; and

WHEREAS, The Official Poverty Measure does not account
for variations in health care coverage and out-of-pocket medical
costs; and

WHEREAS, Historically, there has been widespread agreement
among analysts, advocates, and policymakers that the Official
Poverty Measure is inadequate, leading to a 1990 Congressional
appropriation that was made for an independent scientific study
on a new calculation method; and

WHEREAS, This study was performed by The National
Academy of Sciences, which established the Panel on Poverty and
Family Assistance. The panel released a report in 1995 entitled
“Measuring Poverty: A New Approach,” which established
guidelines for creating a new method; and

WHEREAS, Fifteen years later, in 2010, the Interagency
Technical Working Group on Developing a Supplemental Poverty
Measure and the Census Bureau and the Bureau of Labor developed
an alternative poverty measure known as the Supplemental Poverty
Measure; and

WHEREAS, 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; and

WHEREAS, 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; and

WHEREAS, 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; and

WHEREAS, Necessary expenses include income taxes, Social
Security payroll taxes, childcare and other work related expenses,
child support payments, and contributions toward the cost of
medical care and health insurance premiums or out-of-pocket
medical costs; and

WHEREAS, The Supplemental Poverty Measure offers a more
accurate measure of poverty than the general Official Poverty
Measure; and

WHEREAS, 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

WHEREAS, 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; and

WHEREAS, Given the numerous inadequacies of the Official
Poverty Measure as a tool to accurately target and efficiently
allocate antipoverty resources, the Supplemental Poverty Measure
should supplant the Official Poverty Measure for administrative
purposes in determining financial eligibility for programs intended
to reduce poverty; now, therefore, be it

Resolved by the Assembly and the Senate of the State of
California, jointly, That the Legislature of California urges the
President and the Congress of the United States take steps to
transition from the outdated and inadequate Official Poverty
Measure and instead begin implementing the Supplemental Poverty
Measure to determine the allocation of federal benefits; and be it
further

Resolved, That the Chief Clerk of the Assembly transmit copies
of this resolution to the President and the Vice President of the
United States, to the Speaker of the House of Representatives, to
the Majority Leader of the Senate, and to each Senator and
Representative from California in the Congress of the United
States, to the Governor of California, and to the author of this
resolution.