BILL ANALYSIS �
AJR 40
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ASSEMBLY THIRD READING
AJR 40 (Mullin)
As Amended April 10, 2014
Majority vote
HUMAN SERVICES 5-2
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|Ayes:|Stone, Ammiano, Ian | | |
| |Calderon, Garcia, Hall | | |
| | | | |
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|Nays:|Maienschein, Grove | | |
| | | | |
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SUMMARY : Memorializes the California Legislature's request to
the President of the United States and Congress to replace the
Official Poverty Measure (OPM) with the new Supplemental Poverty
Measurement. Specifically, this bill :
1)Makes a number of declarations, which include:
a) The OPM is determined by the United States (U.S)
Census Bureau and is instrumental in determining an
individual's eligibility for a number of government
programs including the Supplemental Nutrition Assistance
Program (SNAP), Medicaid, School Lunch Program, Women
Infants and Children, Housing Assistance, and others;
b) 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;
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 OPM is a one-size-fits-all policy that leads to a
distorted perception of poverty and an inefficient
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allocation of resources to fight poverty;
e) The OPM does not take into account that families no
longer spend one-third of their income on food; they
currently spend between 5% to 10%;
f) The OPM does not account for the increase in child
care expenses due to the rise in the workforce
participation of both parents;
g) The Supplemental Poverty Measure (SPM) 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;
h) The SPM 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;
i) The use of the OPM can have a detrimental effect on
policies to combat poverty because it results in less
efficient and less accurately targeted policies and
expenditures;
j) Low-income working families in California are
especially disadvantaged by the OPM due to our state's
high cost of living, which results in the denial of
federally funded assistance to families living above the
federal poverty line, but who are unable to meet their
basic needs; and
aa) 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 California State Assembly and Senate call on
the President and the Congress of the United States to take
steps to reform the outdated and inadequate OPM to better
reflect poverty and unmet needs demonstrated by the SPM.
EXISTING LAW :
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1)Annually establishes the federal poverty line based on data
available from the U.S. 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 : None
COMMENTS : Although the formula used to calculate the OPM 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
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
reform the OPM.
History of the 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 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 fifty 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 USDAs 1955
Household Food Consumption Survey, which found that families of
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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 SNAP,
known as CalFresh in California, the National School Lunch and
School Breakfast Programs, the Special Supplemental Nutrition
Program 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 2014 federal poverty guidelines provided by the U.S.
Department of Health and Human Services set the poverty level
for a family of three at $19,790 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
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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 an 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.
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 cannot 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
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as housing.
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 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.
Analysis Prepared by : Myesha Jackson / HUM. S. / (916)
319-2089
FN: 0003179