Determinants of AFDC Caseload Growth. 2. Florida

07/01/1997

Basic Caseload

The Basic caseload in Florida grew at an average annual rate of 6.9 percent over the entire period, more than three times as fast as the national Basic caseload. The model predicts average annual growth of just 2.8 percent (top panel of Exhibit 6.5). The main contributors to growth that are accounted for by the model were population growth and aging (2.8 percentage points per year). Changes in the vital statistics and "other" variables -- primarily IRCA legalizations -- contribute about half a percentage point each to annual growth, while the labor market variables and AFDC benefit variables are estimated to have reduced growth by about a half a percentage point each.

The most notable feature of the Florida simulations is the extraordinarily high average annual growth rate of the actual caseload from 1989.4 to 1993.3, 17.5 percent. The model predicts only 5.7 percent annual growth during that period. As in California and the nation as a whole, the labor market variables and the IRCA immigration variable are the main factors accounting for growth during this period. This finding suggests that we have missed a very important factor for Florida during this period which, if we could identify and model it, might substantially improve the model's ability to predict caseload growth in both Florida and other states.

Exhibit 6.5
Decomposition of Florida Caseload and Average Monthly Benefit Series
                 
  Average Annual Growth Rate Annual Growth Rate Accounted for by:
Program, Period, and Model Actual Accounted for by Model Not Accounted for by Model Population Growth and Aging Vital Statistics Variables Labor Market Variables AFDC Benefits Other Variables
Basic                
1979.4 - 1983.3 5.4% 4.2% 1.2% 6.0% 0.5% 1.7% -4.2% 0.1%
1983.4 - 1989.3 2.7% 0.3% 2.4% 2.4% 0.4% -3.2% 0.5% 0.2%
1989.4 - 1993.3 17.5% 5.7% 11.8% 0.9% 0.4% 2.3% 0.3% 1.8%
1993.4 - 1994.3 -4.6% 0.1% -4.7% 0.4% 0.0% -1.6% 1.1% 0.2%
1979.4 - 1994.3 6.9% 2.8% 4.1% 2.8% 0.4% -0.4% -0.7% 0.6%
Unemployed Parent 1                
1979.4 - 1983.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1983.4 - 1989.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1989.4 - 1993.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1993.4 - 1994.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
1979.4 - 1994.3 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
Average Monthly Benefit                
1980.4 - 1983.3 -2.3% 3.5% -5.8% n.a. 0.6% 0.2% 3.2% -0.6%
1983.4 - 1989.3 0.5% -0.8% -0.3% n.a. 0.5% 0.2% 0.1% 0.0%
1989.4 - 1993.3 -0.9% -1.1% 0.3% n.a. 0.3% -0.5% -1.3% 0.3%
1980.4 - 1993.3 -0.6% 0.8% -1.4% n.a. 0.5% 0.0% 0.4% -0.1%
                 
1. Florida did not have an UP program for the entire sample period and therefore was not included in the sample for the UP model. The AMB model does not include a variable for population growth and aging.

Donald Winstead commented on several aspects of the Florida experience that are not captured in the model:

  • Most of the growth from 1989 on was in one county, Dade. Growth in the rest of the state was roughly in-line with the model's predictions.
  • Insufficient program capacity, which is not captured in the model, may contribute to the impact of a recession. He writes, "the 1989 recession so overpowered our ability to process work that the resulting impact became virtually exponential. Perhaps an analogy would be the impact of a traffic accident on the beltway at 3:00 a.m. vs. 5:00 p.m."(7) Difficulties with a new computer system exacerbated the administrative problems that were created by the flood of applications.
  • The AFDC caseload may be a leading indicator of a recession, increasing before the unemployment rate does because "people at the economic margin are often the first affected by a downturn."

Florida's Medicaid expansion and outreach efforts, starting in 1988 may have had a substantial impact. These included outposting of over 400 eligibility workers in major public hospitals. This effort in combination with Florida's integrated eligibility process for AFDC, Food Stamps, and Medicaid resulted in the identification of many AFDC eligible families.

Two other features of the Florida simulation are especially noteworthy:

  • The contribution of population growth and aging is estimated to be 6.0 percentage points per year during the first four years of the sample period. As in the nation as a whole, it diminishes over time, but remains positive in the last year (0.4 percentage points);

Actual growth from 1993.4 to 1994.3 is -4.6 percent, while the model predicts essentially zero growth. This large positive prediction error may be the reverse side of the large negative prediction errors in the previous four years; i.e., the same factor may explain both. Based on the plotted actual and simulated series (Exhibit 6.6), the reversal in the sign of the prediction error for caseload growth actually occurs in the first half of 1993.

UP Caseload

Florida was one of many states that did not have an UP program for the full sample period, and we have not used the findings from the UP models to simulate its caseload experience over the period of its existence.

Exhibit 6.6

Actual and Predicted Caseload for Florida, 1979.4 - 1994.3

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Average Monthly Benefits

The average annual decline in AMB in Florida over the period (exhibit 6.5, bottom section) was less than for the nation (0.6 percent per year vs. 2.0 percent). The model predicts an increase of 0.8 percent per year, implying an unaccounted for decline of 1.4 percentage points per year -- close to the value for the nation. As in California, the pattern of changes predicted by the model is similar to that for the nation. The most substantial difference is that the AFDC benefit variables predict a much larger increase in AMB during the first three-year subperiod (3.2 percentage points per year vs. 1.1 percentage points for the nation).