BILL ANALYSIS �
AJR 40
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CONCURRENCE IN SENATE AMENDMENTS
AJR 40 (Mullin)
As Amended August 11, 2014
Majority vote
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|ASSEMBLY: |55-20|(May 5, 2014) |SENATE: |26-10|(August 18, |
| | | | | |2014) |
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Original Committee Reference: HUM. S.
SUMMARY : Memorializes the California Legislature's request to
the President of the United States and Congress to use the
Supplemental Poverty Measure (SPM) to guide the reform and
updating of the Official Poverty Measure (OPM). 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
Program, Housing Assistance, and others;
b) The method we use today was developed in the 1964 by
Mollie Orshanksy of the Social Security Administration;
c) Orshansky's method used before-tax cash income to
determine a family's resources, which was then compared to
a poverty threshold;
d) 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 1990s, and the
general stagnation of wages;
e) The OPM is a one-size-fits-all policy that leads to a
distorted perception of poverty and an inefficient
allocation of resources to fight poverty;
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f) The OPM does not take into account that families no
longer spend one-third of their income on food; they
currently spend between 5% and 10%;
g) The OPM does not account for the increase in child care
expenses due to the rise in the workforce participation of
both parents;
h) The 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;
i) 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;
j) 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;
aa) 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
bb) 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 urges 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.
The Senate amendments :
1)Make a conforming change to one of the declarations in the
resolution to specify that, given the numerous inadequacies of
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the OPM, as described, the Supplemental Poverty Measure should
be used to guide the reform and updating of the Official
Poverty Measure for administrative purposes, as specified,
rather than supplant the Official Poverty Measure.
2)Add coauthors and make other technical, non-substantive
changes.
EXISTING LAW :
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 and update the OPM.
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
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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 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 (or $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
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.
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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. The list of programs
for which eligibility relies on the federal poverty level
includes, but is not limited to, 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.
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
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
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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
as housing.
Analysis Prepared by : Myesha Jackson / HUM. S. / (916)
319-2089
FN: 0004962
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