	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. 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. Because the decennial census provides population counts once every ten  years, the Bureau also estimates the population for the years between  censuses. 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. 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. 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. To estimate the accuracy of the 2000 Census, the Bureau  conducted the Accuracy and Coverage Evaluation (A.C.E. 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. 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. 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. 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. 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. These same data serve as a foundation  for the allocation of billions of dollars in federal funds to states and local  governments. 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. This is a work of the U.S. government and is not subject to copyright protection in the  United States.
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.