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Testimony: 

Before the Subcommittee on Information Policy, Census, and National 
Archives, Committee on Oversight and Government Reform, House of 
Representatives: 

United States Government Accountability Office: 

GAO: 

For Release on Delivery Expected at 10:00 a.m. EDT: 

Monday, October 29, 2007: 

2010 Census: 

Population Measures Are Important for Federal Funding Allocations: 

Statement of Mathew Scire: 

Director, Strategic Issues: 

GAO-08-230T: 

GAO Highlights: 

Highlights of GAO-08-230T, a testimony before the Subcommittee on 
Information Policy, Census, and National Archives, Committee on 
Oversight and Government Reform, House of Representatives. 

Why GAO Did This Study: 

The decennial census is a constitutionally-mandated activity that 
produces critical data used to apportion congressional seats, redraw 
congressional districts, and allocate billions of dollars in federal 
assistance. This testimony discusses (1) the various measures of 
population used to allocate federal grant funds (2) how the accuracy of 
the population count and measurement of accuracy have evolved and the 
U.S. Census Bureau’s (Bureau) plan for coverage measurement in 2010; 
and (3) the potential impact that differences in population estimates 
can have on the allocation of grant funds. This testimony is based 
primarily on GAO’s issued work in which it evaluated the sensitivity of 
grant formulas to population estimates. 

What GAO Found: 

In fiscal year 2000, GAO found that 85 percent of federal government 
obligations in grants to state and local governments were distributed 
on the basis of formulas that use data such as state population and 
personal income. The decennial census is the foundation for measuring 
the nation’s population. It provides a count of the population every 10 
years, and is the starting point for estimates of population made in 
years between the censuses. 

Obtaining an accurate population count through the decennial census has 
been a concern since the first census in 1790. Concern that the 
decennial census undercounted the population has continued since then. 
To measure accuracy, the Bureau since 1940 has used demographic 
analysis, in which it compares census counts with information on 
births, deaths, and other information. With the exception of 1990, the 
Bureau’s demographic analysis shows that the extent to which the census 
undercounted the population has declined. More recently, the Bureau has 
used statistical techniques in which it compares the census count with 
the results of an independent sample survey of the population. For 
2010, the Bureau plans to use similar statistical techniques to measure 
the accuracy and coverage of the census. Evaluating the accuracy of the 
census is essential given the importance of the data, the need to know 
the nature of any errors, and the cost of the census overall. 

GAO’s prior work has illustrated that the accuracy of state and local 
population estimates may have some effect on the allocation of grant 
funds. Specifically, to show the sensitivity of grant programs to 
alternative population estimates, GAO simulated how two grant program 
formulas would allocate federal funds to states if population estimates 
were substituted for census counts. This simulation was done for 
illustrative purposes only. While only actual census numbers should be 
used for official purposes, this simulation showed some shifting of 
grant funds among the states when estimates were used. For example, 
recalculating allocations of Social Services Block Grant funds using 
estimates of population for 2000, rather than the census count, would 
result in shifting $4.2 million—or 0.25 percent—of $1.7 billion in 
fiscal year 2004 funds. Specifically, 27 states and the District of 
Columbia would have gained $4.2 million and 23 states would have lost a 
total of $4.2 million. 

What GAO Recommends: 

At this time, GAO is not making any new recommendations. 

To view the full product, including the scope and methodology, click on 
GAO-08-230T. For more information, contact Mathew Scire at (202) 512-
6806 or sciremj@gao.gov. 

[End of section] 

Mr. Chairman, Mr. Turner, and Members of the Subcommittee: 

Thank you for the opportunity to be here today to discuss the role that 
the nation's population count plays in the allocation of federal funds 
to states and localities. My remarks today describe (1) the various 
measures of population used to allocate federal grant funds (2) how the 
accuracy of the census count and measurement of accuracy have evolved, 
and (3) the potential impact that differences in the census count and 
population estimates can have on the allocation of grant funds. 

As you know, the decennial census is a critical national effort 
mandated by the Constitution. Census data are used to apportion 
congressional seats, redraw congressional districts, and allocate 
billions of dollars in federal assistance to state and local 
governments. The census count also serves as a foundation for annual 
estimates of the nation's population. Along with the decennial census 
count, these annual estimates directly and indirectly affect the 
distribution of federal assistance to state and local governments. The 
U.S. Census Bureau (Bureau) puts forth tremendous effort to conduct an 
accurate count of the nation's population. However, some degree of 
error in the form of persons missed or counted more than once is 
inevitable. Further, because of limitations in methods for annually 
estimating the population during the years between censuses, the 
difference between an annual estimate of the population on census day 
and the census count itself can emerge. Because many federal grant 
programs rely directly or indirectly on population measures, 
inaccuracies in census counts and methodological problems with 
population estimates can affect the allocation of funds. 

My remarks are based primarily on reports we have previously issued. To 
describe the various measures of population used to allocate federal 
grant funds, we examined the logistics and data from postcensal 
population estimates, the American Community Survey (ACS) and the 
Current Population Survey. To obtain insight on how the accuracy of the 
population count and the measurement of accuracy have evolved, we 
reviewed information from the Census Bureau's Decennial Statistical 
Studies Division, as well as previous GAO reports.[Footnote 1] To 
describe the potential impact that differences in population estimates 
can have on the allocation of grant funds, we relied on work we 
reported to this subcommittee last year, as well as prior 
work.[Footnote 2] We conducted our work in accordance with generally 
accepted government auditing standards. 

Population Measures Are Used in Grant Formulas: 

Decennial census data play a key role in the allocation of many grant 
programs. In fiscal year 2004, the federal government administered 
1,172 grant programs, with $460.2 billion in combined 
obligations.[Footnote 3] Most of these obligations were concentrated in 
a small number of grants. For example, Medicaid was the largest formula 
grant program, with federal obligations of $183.2 billion, or nearly 40 
percent of all grant obligations, in fiscal year 2004. Many of the 
formulas used to allocate grant funds rely upon measures of population, 
often in combination with other factors. In addition to the census 
count, the Bureau has programs that estimate more current data on 
population and population characteristics that are derived from the 
decennial census of population. Grant formula allocations also use the 
estimated data from the Bureau's postcensal population estimates, the 
Current Population Survey, and the American Community Survey. 

Because the decennial census provides population counts once every ten 
years, the Bureau also estimates the population for the years between 
censuses. These estimates are referred to as postcensal population 
estimates. They start with the most recently available decennial census 
data and for each year adjust population counts for births, deaths, and 
migration. Because these population estimates are more current than the 
decennial population counts, the distribution formulas for federal 
grants often use these data. For example, the allocation formula for 
the Social Services Block Grants uses the most recent postcensal 
population estimates to distribute funds. 

While the decennial census and postcensal estimates provide annual 
data, the Current Population Survey provides monthly data. This 
survey's sampling design relies on information developed for the 
decennial census and its data are revised annually to be consistent 
with the postcensal estimates. The survey is primarily designed to 
generate detailed information about the American labor force, such as 
the number of people unemployed. Data from this survey are also used to 
allocate funds for programs, for instance programs under the Workforce 
Investment Act. 

Another survey, the American Community Survey (ACS), provides detailed 
socioeconomic characteristics for the nation's communities. The ACS 
relies on information developed for the decennial census and its annual 
data are controlled to be identical to postcensal population estimates. 
Currently, the ACS provides information on communities with populations 
over 65,000. Data from the ACS are also used to allocate federal funds, 
such as determining fair market rent levels used in the Section 8 
housing voucher program. Because the ACS is to replace 2010 census long 
form socioeconomic data, it is expected that ACS data will be used more 
extensively in other federal assistance programs in the future. 
Beginning in 2010, 5-year estimates will be available for areas to the 
smallest block groups, census tracts, small towns, and rural areas. 
Beyond their use by the federal government, the population counts and 
estimates are also used extensively by state and local governments, 
businesses, nonprofits, and research institutions. 

Population-based data drawn from the decennial census, postcensal 
population estimates, and the ACS play critical roles in the conduct of 
community development programs undertaken by the federal, state, and 
local governments. Such data are central to the conduct of the federal 
government's Community Development Block Grant program (CDBG), the 
federal government's 13th largest formula grant program with $3 billion 
in obligations in fiscal year 2004. Since 1974, this program has 
provided $120 billion to help communities address a host of urban 
problems ranging from poverty and deteriorating housing to population 
loss and social isolation. Given the breadth of the program's 
objectives and the diversity of the nation's communities, CDBG employs 
four formulas to allocate funds among 50 states, the District of 
Columbia, and 1,080 local governments. These formulas depend on census 
data, including total population, individuals in poverty, lagging 
population growth, households in overcrowded homes, as well as the 
number of pre-1940 homes. 

Accuracy of Population Count Is Important: 

An accurate census relies on finding and counting people--only once--in 
the right place and getting complete, correct information on them. 
Seeking to obtain an accurate count has been a concern since the first 
census in 1790. Concern about undercounting the population continued 
through the decades. In the 1940s, demographers began to obtain a more 
thorough understanding of the scope and nature of the undercount. For 
example, the selective service registration of October 1940 showed 2.8 
percent more men than the census count. According to the Bureau, 
operations and programs designed to improve coverage have resulted in 
the total undercount declining in all but one decade since the 1940s. 
These measures of coverage are based on demographic analysis, which 
compares the census count to birth and death certificates and other 
administrative data (see fig. 1). 

Figure 1: Decennial Census Population Net Undercount Rates from 
Demographic Analysis in Percentages: 1940 to 2000: 

This figure is a bar chart showing the decennial census population net 
undercount rates from demographic analysis in percentages between 1940 
and 2000. 

[See PDF for image] 

Source: U.S. Census Bureau-2006 Census Test-Evaluation #2: Coverage 
Improvement, Decennial Statistical Studies Division, Sept. 24, 2007. 

[End of figure] 

Modern coverage measurement began with the 1980 Census, when the Bureau 
compared decennial figures to the results of an independent sample 
survey of the population. In using statistical methods such as these, 
the Bureau began to generate detailed measures of the differences among 
undercounts of particular ethnic, racial and other groups. In 1990, the 
Bureau relied on a Post-Enumeration Survey to verify the data it 
collected through the 1990 Census. For this effort, the Bureau 
interviewed a sample of households several months after the 1990 
Census, and compared the results to census questionnaires to determine 
if each sampled person was correctly counted, missed, or double counted 
in the Census. The Bureau estimated that the net undercount, which it 
defined as those missed minus those double counted, came to about 4 
million people.[Footnote 4] To estimate the accuracy of the 2000 
Census, the Bureau conducted the Accuracy and Coverage Evaluation 
(A.C.E.), which was an independent sample survey designed to estimate 
the number of people that were over-and undercounted in the census, a 
problem the Bureau refers to as coverage error. This evaluation found 
that in the 2000 Census there was a net overcount. For 2010 the Bureau 
plans a census coverage measurement program that will, among other 
things, produce estimates of components of census net and gross 
coverage error (the latter includes misses and erroneous enumerations) 
in order to assess accuracy. 

Population Estimates May Affect Allocation of Federal Funds: 

The accuracy of state and local population estimates may have an 
effect, though modest, on the allocation of grant funds among the 
states. In our June 2006 report, we analyzed how sensitive two federal 
formula grants are to alternative population estimates, such as those 
derived by statistical methods.[Footnote 5] In the June 2006 report, we 
recalculated certain federal assistance to the states using the A.C.E. 
population estimates from the 2000 Census, as well as the population 
estimates derived from the Post-Enumeration Survey, which was 
administered to evaluate the accuracy of the 1990 Census. This 
simulation was done for illustrative purposes only--to demonstrate the 
sensitivity of government programs to alternative population estimates. 
While only the actual census numbers should be used for official 
purposes, our simulation shows the extent to which alternative 
population counts would affect the distribution of selected federal 
grant funds and can help inform congressional decision making on the 
design of future censuses. 

We selected the Social Services Block Grant (SSBG) as part of this 
simulation because the formula for this block grant program, which is 
based solely on population, and the resulting funding allocations are 
particularly sensitive to alternative population estimates. At a given 
level of appropriation, any changes in the state's population relative 
to other states' changes would have a proportional impact on the 
allocation of funds to the state. In fiscal year 2004, the federal 
government allocated $1.7 billion to states in block grant funds under 
the program. Recalculating these allocations using statistical 
population estimates from the 2000 A.C.E., only $4.2 million--or 0.25 
percent--of $1.7 billion in block grant funds would have shifted. The 
total $1.7 billion SSBG allocation would not have changed because SSBG 
receives a fixed annual appropriation. In other words, those states 
receiving additional funds would have reduced the funds of other 
states. 

In short, 27 states and the District of Columbia would have gained $4.2 
million and 23 states would have lost a total of $4.2 million. Based on 
our simulation of the funding formula for this block grant program, the 
largest percentage changes were for Washington, D.C., which would have 
gained 2.05 percent (or $67,000) in grant funding and Minnesota which 
would have lost 1.17 percent (or $344,000). For the programs we 
examined, less than half of a percent of total funding would be 
redistributed by using the revised population counts. Figure 2 shows 
how much (as a percentage) and where SSBG funding in 2004 would have 
shifted as a result of using statistical population estimates for 
recalculating formula grant funding by state. We previously reported 
that using 1990 adjusted data as the basis for allocations had little 
relative effect on the distribution of annual funding to 
states.[Footnote 6] More recently, we reported that statistical 
population estimates from the 2000 Census would have shifted a smaller 
percentage of funding compared to those from the 1990 Census because 
the difference between the actual and estimated population counts was 
smaller in 2000. For example, using statistical estimates of the 
population following the 1990 Census, a total of 0.37 percent of SSBG 
funds would have shifted among the states in fiscal year 1998. 

Figure 2: Estimated Social Services Block Grant Percentage Change in 
Grant Funding Using Statistical Population Estimates for States: 

This figure is a bar chart showing the estimated social services block 
grant percentage chance in grant funding using statistical population 
estimates for states. 

[See PDF for image] 

Source: GAO analysis of data from the Department of Commerce and the 
Department of Health and Human Services. 

[End of figure] 

In addition to any impact that inaccuracies in the census count may 
have on allocation of federal funds, between decennials differences 
between the actual population and population estimates could affect 
fund allocation. To calculate grant amounts, formula grants generally 
rely on annual population estimates for each state developed by the 
Bureau. State populations are estimated by adding to the prior year's 
population estimate the number of births and immigrants and subtracting 
the number of deaths and emigrants. These estimates are subject to 
error, mainly because migration between states and between the United 
States and other countries is difficult to measure. By the end of the 
decade, when the census count is taken, a significant gap may have 
arisen between the population estimate and the census count. We found 
that by the time of the 2000 census count, the annual estimates of 
population differed from the 2000 count by about 2.5 percent. This 
"error of closure" was substantially larger than that for the 1990 
census--0.6 percent. We found that correcting population estimates to 
reflect the 2000 census count redistributes among states about $380 
million in federal grant funding for Medicaid, Foster Care, Adoption 
Assistance, and SSBG. Most of the shift in funding occurred in fiscal 
year 2003 when federal matching rates for three of the programs were 
based on population estimates derived from the 2000 census. For the 
SSBG program, the shift occurred in 2002 when it began using the 2000 
census count. 

Complete and accurate data from the decennial census are central to our 
democratic system of government. These same data serve as a foundation 
for the allocation of billions of dollars in federal funds to states 
and local governments. Because of the importance of the once-a-decade 
count, it is essential to ensure that it is accurate. Though the 
overall undercount has generally declined since it has been measured, 
evaluating the accuracy of the census continues to be essential given 
the importance of the data, the need to know the nature of any errors, 
and the cost of the census overall. We continue to monitor the Bureau's 
progress in this important effort. 

Mr. Chairman, this concludes my remarks. I will be glad to answer any 
questions that you, Mr. Turner, or other subcommittee members may have. 

Contacts and Acknowledgments: 

For further information regarding this statement, please contact Mathew 
Scire, Director, Strategic Issues, on (202) 512-6806 or at 
sciremj@gao.gov. Contact points for our Offices of Congressional 
Relations and Public Affairs may be found on the last page of this 
testimony. Individuals making key contributions to this statement 
included Steven Lozano, Assistant Director; Betty Clark; Robert 
Dinkelmeyer; Greg Dybalski; Ron Fecso; Sonya Phillips; Michael 
Springer; and Cheri Truett. 

[End of section] 

Related GAO Products: 

Federal Assistance: Illustrative Simulations of Using Statistical 
Population Estimates for Reallocating Certain Federal Funding. GAO-06-
567. Washington, D.C.: June 22, 2006. 

Data Quality: Improvements to Count Correction Efforts Could Produce 
More Accurate Census Data. G AO-05-463. Washington, D.C.: June 20, 
2005. 

Census 2000: Design Choices Contributed to Inaccuracy of Coverage 
Evaluation Estimates. GAO-05-71. Washington, D.C.: November 12, 2004. 

2010 Census: Cost and Design Issues Need to Be Addressed Soon. GAO-04-
37. Washington, D.C.: January 15, 2004. 

Formula Grants: 2000 Census Redistributes Federal Funding Among States. 
GAO-03-178. Washington, D.C.: February 24, 2003. 

2000 Census: Coverage Measurement Programs' Results, Costs, and Lessons 
Learned. GAO-03-287. Washington, D.C.: January 29, 2003. 

2000 Census: Complete Costs of Coverage Evaluation Programs Are Not 
Available. GAO-03-41. Washington, D.C.: October 31, 2002. 

The American Community Survey: Accuracy and Timeliness Issues. GAO-02-
956R. Washington, D.C.: September 30, 2002. 

2000 Census: Refinements to Full Count Review Program Could Improve 
Future Data Quality. GAO-02-562. Washington, D.C.: July 3, 2002. 

2000 Census: Coverage Evaluation Matching Implemented as Planned, but 
Census Bureau Should Evaluate Lessons Learned. GAO-02-297. Washington, 
D.C.: March 14, 2002. 

Formula Grants: Effects of Adjusted Population Counts on Federal 
Funding to States. GAO/HEHS-99-69. Washington, D.C.: February 26, 1999. 

Formula Programs: Adjusted Census Data Would Redistribute Small 
Percentage of Funds to States. GAO/GGD-92-12. Washington, D.C.: 
November 7, 1991. 

[End of section] 

Footnotes: 

[1] GAO, Federal Assistance: Illustrative Simulations of Using 
Statistical Population Estimates for Reallocating Certain Federal 
Funding, GAO-06-567 (Washington, D.C.: June 22, 2006); GAO, 2000 
Census: Coverage Measurement Programs' Results, Costs, and Lessons 
Learned, GAO-03-287 (Washington, D.C.: January 29, 2003) and GAO, 
Formula Grants: Effects of Adjusted Population Counts on Federal 
Funding to States, GAO/HEHS-99-69 (Washington, D.C.: Feb. 26, 1999). 

[2] GAO-06-567; GAO, Formula Grants: 2000 Redistributes Federal Funding 
Among States, GAO-03-178 (Washington, D.C.: February 24, 2003) and GAO, 
Formula Programs: Adjusted Census Data Would Redistribute Small 
Percentage of Funds to States, GAO/GGD-92-12 (Washington, D.C.: 
November 7, 1991). 

[3] In fiscal year 2000, we found that 85 percent of federal government 
obligations in grants to state and local governments was distributed on 
the basis of formulas that are based on data such as state population 
and personal income. 

[4] GAO/HEHS-99-69. 

[5] GAO-06-567. 

[6] GAO, Formula Programs: Adjusted Census Data Would Redistribute 
Small Percentage of Funds to States, GAO/GGD-92-12 (Washington, D.C.: 
Nov. 7, 1991). 

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