Why Does the Census Matter for State and Local Governments? (UPDATED)

The Issue:

The 2020 census has faced a series of challenges, controversies and the unprecedented conditions brought about by the coronavirus pandemic. The accuracy of the census is very important for governance. Not only does the decennial census determine how many representatives each state can elect to the House of Representatives, but it also determines how federal funds are distributed to state and local governments each year —  to the sum of over $500 billion every year over the past few years — and even plays a role in the targeting of funds from stimulus bills, such as the CARES Act.

The census determines how over $500 billion are distributed to state and local governments each year — and plays a role in the targeting of funds from stimulus bills, such as the CARES Act.

The Facts:

• The 2020 census has faced multiple and different types of challenges. Leading up to the census, much attention was  focused on whether including a citizenship question would impact the accuracy of the count. Such a question was ultimately barred from inclusion by a Supreme Court ruling in June 2019. But other factors  – ranging from technical issues, to funding, to the ability to hire the number of census workers required  –  also presented challenges. This placed the 2020 decennial census on the U.S. GAO's list of high-risk programs. Perhaps the biggest challenge, though, has been properly carrying out the census during the COVID-19 pandemic. To stop the spread of the disease the census temporarily suspended field operations, where the census gathers responses from people who do not or cannot self-respond. In April, the Census Bureau pushed back the deadline to complete the count to October 31st, in order to makeup for the suspension of operations. But this postponement was reversed in early August with the completion date pushed forward by four weeks to September 30. This move raised some concerns that the Census Bureau may lack the requisite time to accurately count population groups who are difficult to reach. (On September 24, 2020, Federal Judge Lucy H. Koh issued a preliminary injunction preventing the administration from winding down the count by Sept. 30, reinstating the October 31st deadline.)
• The U.S. decennial census is unique because it is an actual enumeration of the total population living in the United States, rather than a sample. The United States does not maintain a registry of all residents, unlike some European countries (see here for example). Administrative data sources, while increasingly valuable for research, fail to capture the full population. For example, IRS data only includes those who file taxes. Other frequently used government data sources, like the American Community Survey or Current Population Survey, are structured to sample from the full population (instead of conducting a comprehensive enumeration); moreover, these sources rely on the decennial census as a basis for determining the frame and selection of their samples (see here). The comprehensiveness of the decennial census makes it an important data source for social scientists conducting research and for businesses making investment and expansion plans, among others. 
• Census data are used to apportion multiple federal funding streams. In fiscal year 2015, census data were used to determine the allocation of $675 billion for 132 programs, including Medicaid, SNAP, the Section 8 Housing Choice Voucher program, Head Start, and Highway Planning and Construction. The top five programs by amount of funds that used census-based population numbers and population characteristics to determine fund distribution in fiscal year 2015 were: Medicaid ($311 billion); the Supplemental Nutrition Assistance Program (SNAP $71 billion); Medicare Part B ($70 billion); Highway Planning and Construction ($38 billion); and the Federal Pell Grant program ($29.9 billion), according to a report from the U.S. Census Bureau (for a full listing of programs see page 3 here.) 
• The decennial census forms the backbone of annual population estimates which are used to allocate funding for a wide variety of government programs. Because the complete count of the full population is only every ten years, the Census Bureau uses data on births, deaths, and migration to update population estimates in between decennial census years. How the census data is used to determine funding varies from one program to another, as the examples below illustrate.
• Stimulus bills such as the recent Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Recovery and Reinvestment Act (ARRA) of 2009 rely on census estimates for the distribution of funds as well. Census figures such as population and poverty estimates are crucial for determining appropriate funds and for targeting counties in need. For instance, the CARES Act allocated funds from the $150 billion Coronavirus Relief Fund to state and local governments according to population counts derived from census data (see here). The allocation of education funds in the CARES Act also relied on data derived from the census, using existing Title I allocations — which themselves depend on census population data — to distribute $13.2 billion in Elementary and Secondary School Emergency Relief (ESSER)  and poverty and population figures to distribute an additional $3 billion in Governor’s Emergency Education Relief (see here). During the Great Recession, census-derived data were also relied on: for example, the ARRA relied on census data for population counts in distributing State Fiscal Stabilization Funds, which were the largest component of the relief targeted to education and amounted to $53 billion (see page 165).
• Census data are used to calculate the rate at which federal funds match state spending on programs including Medicaid, Temporary Assistance for Needy Families (TANF), and the Children’s Health Insurance Program (CHIP). This rate, known as the Federal Medical Assistance Percentage, depends on a state’s per capita income relative to the national average (CHIP uses an "enhanced FMAP"). For example, the federal share of Medicaid spending ranges from 50 percent in wealthier states to a maximum of 83 percent in poorer states. Annual population estimates derived from decennial census counts are used as the denominator in calculating these per capita amounts, while total personal income data come from a different source, the Bureau of Economic Analysis. If the population estimates are artificially low, the per capita income estimates will be too high – which means some states would not receive the full federal reimbursement to which they are entitled.
• Census data feed into the U.S. Department of Education’s two biggest elementary and secondary programs, through Title I (compensatory education) and the Individuals with Disabilities Education Act (special education). These programs rely on the census for counts of school-aged children and children in poverty at the state and school district levels. Even though multiple data sources are used to allocate these funds, including the American Community Survey and administrative data, funding relies on annually updated census population estimates. 
• The Highway Planning and Construction Program also relies on annually updated census population estimates to distribute funding for the National Highway System, a major transportation initiative. Funds support the planning, construction, and maintenance of highways and bridges. Funding depends on annual census population estimates, as well as the classification of urban and rural areas, which also depend on decennial census population counts.
• Many states have established their own, multi-million dollar census media and outreach campaigns to ensure that all of their residents are counted. These states are devoting their own funds to promote participation in the 2020 census among their residents – especially residents who are hard to contact or skeptical of filling out census forms – so that they can receive the appropriate distribution of federal funds and number of seats in the House of Representatives. For example, California – which is at risk of losing one Congressional seat – has approved $100 million since 2017 to hire workers and pay for media campaigns with the aim of reaching people who are hard to count, according to the Christian Science Monitor.
• As a result of the COVID-19 pandemic, the Census Bureau extended its self-response deadline from July 31 to September 30. While self-response rates are not necessarily indicative of the accuracy of the final count, they can shed light on the efficacy of national and statewide marketing campaigns. In addition, higher self-response rates mean less in-person follow-up work for the Census Bureau, which is especially important given the unprecedented constraints facing the Census Bureau in 2020. The likelihood that some households will be missed or counted inaccurately also increases as self-response rates fall. As of August 18, the national self-response rate was 63.8%, which was behind the final self-response rate in 2010. However, given difficulties reaching households and individuals during the pandemic and the move towards online census forms, comparisons between 2010 and 2020 are difficult.