Projected $4.1 Billion Federal Funding Loss in 31 States.

The 2000 census undercount could result in a federal funding loss of more than $4 billion in 31 states and the District of Columbia, with a majority of the funds lost ($3.6 billion) in 58 of the nation’s largest counties over the next ten years, according to a report by PricewaterhouseCoopers. The funding loss translates into nearly $3,000 per uncounted person in these counties over the 2002-2012 period.

“Inaccuracies in the census can cause federal funds to be distributed in a way that is not fully consistent with congressional intent,” said Dr. Peter Merrill, head of ricewaterhouseCoopers’ National Economic Consulting group. “The census undercount not only misallocates funds among jurisdictions, it also causes a net loss to the states of funds from federal entitlement programs. Compounding the problem, many state-funded grant programs to localities also rely on census counts.”

The PricewaterhouseCoopers report, which was conducted at the request of the Presidential members of the U.S. Census Monitoring Board, examined eight programs most affected by the census: Medicaid, Foster Care, Rehabilitation Services Basic Support, Social Services Block Grants, Substance Abuse Prevention and Treatment Block Grants, Adoption Assistance, Child Care and Development Block Grants, and Vocational Education Basic Grants.

“These findings present the most compelling evidence of the potential harm caused by the 2000 census undercount,” said Gilbert F. Casellas, Presidential Co-Chair of the Monitoring Board. “The undercount will cost state and local governments millions of dollars in funds that are earmarked for programs that largely serve our nation’s most disadvantaged.”

The report found states and counties with large metropolitan areas were the most adversely affected. California and Texas, two of the worst counted states, risk losing the most, $1.5 billion and $1 billion respectively over the fiscal 2002 to 2012 period. Counties topping the list included Los Angeles County, CA ($636 million), Bronx County, NY ($362 million), Kings County, NY ($269 million), Harris County, TX ($234 million), New York County, NY ($212 million) and Cook County, IL ($193 million). The report also found that large counties would not only share in state losses, but would also lose funds to other areas within the state because of the high relative undercount of urban centers.

The estimates of the Census 2000 undercount for states and counties with populations larger than 500,000 are derived from undercount rates estimated by the Census Bureau and extended by Dr. Eugene P. Ericksen, a decennial census expert and professor of statistics at Temple University. After determining the program’s allocation formulae, PricewaterhouseCoopers projected national funding levels for these federal programs through 2012. These formula allocations were calculated with unadjusted and then adjusted population figures to estimate the change in federal funds flowing to each state and then translated into changes at the county level.

The eight programs selected represent 87 percent of the funding of major programs identified by the General Accounting Office (GAO) as being affected by the undercount. Medicaid, which provides assistance to low-income individuals, represents the largest share of these federal grant obligations at $130 billion.

Merrill noted that actual funding losses could be higher than projected because data were not available to analyze all of the affected federal programs or any of the state programs distributed based on census data. “Our projected funding distortions should be treated as conservative,” he said.

The report is the first post-Census 2000 analysis of how the allocation of federal funds among the states and large counties for fiscal years 2002-2012 will be affected by the net census 2000 undercount.

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