Determinants of AFDC Caseload Growth. G. PARTICIPATION MEASURES

07/01/1997

In this section we describe the measures of AFDC participation that have been used in previous studies of caseload growth and discuss issues relevant to the choice of a dependent variable for our analysis.

The most common measure of AFDC participation used in previous studies of caseload growth is the number of AFDC Basic or UP cases, typically measured as the number of families receiving benefits in a given month, or the average number of families for a given quarter or year (Exhibit 2.1). Quarterly data are used in the national studies of caseload growth, while the use of monthly data is more common among the individual state forecasting models. The pooled studies of state date use either quarterly or annual data.

Models that use case openings and closings for the dependent variables are rare. The state of Washington uses entries and exits to forecast its AFDC-Basic and UP caseloads in separate models. CBO includes an analysis of case openings and closing (Basic and UP cases combined) in the appendix to their main caseload analysis (CBO, 1993). The CBO study cites inconsistencies in administrative reporting of openings and closings as a major problem in using these data to analyze caseload growth. By comparing the estimated caseload, computed using changes in openings and closings, to the actual caseload, they illustrate how the estimated and actual series diverge due to the reporting problems associated with case openings and closings.

According to the CBO report, the problem arises because only families who enter the caseload through the formal application process are counted as case openings. Families who were on AFDC and return after a short period off the program are often not required to file a formal application. For these families, a closing would have been initially reported, but the subsequent opening would not be counted. It is also frequently the case that, for families who go on and off the rolls during a short period, neither the subsequent openings nor closings are documented.(18) This poses a major problem in using openings and closings to analyze the dynamics of caseload growth, as a portion of the caseload that is in transition will be lost to the analysis. This is especially unfortunate because those moving on and off the rolls during shorter periods are likely to be most affected by changes in the economic factors that determine AFDC participation.

Another important measure used as the dependent variable in a few models is AFDC expenditures or average payments. A primary reason for analyzing caseload growth is to determine the implications of changing factors on federal and state AFDC expenditures. Using expenditures or average payments as the dependent variable allows the effects of economic, demographic, and programmatic factors on AFDC expenditures to be estimated directly, rather than inferred from analyses that model caseloads. It is possible that expenditures are more sensitive to changes in the economy than are caseloads. They may be more sensitive if economic downturns not only induce additional individuals to apply for benefits, but also cause those already on the rolls to experience a fall in earned income and a corresponding increase in AFDC benefits. This effect may be negated, however, if those coming on the rolls receive lower than average benefits.

Exhibit 2.1

Measures of AFDC Participation used as Dependent Variables in Previous Studies

Variable Type Description Model(s)
AFDC-Basic

Caseload

Quarterly, national   Grossman (1985);

CBO (1993)

  Quarterly, state   Barnow (1988)
  Quarterly, state Seasonally adjusted Florida
  Quarterly, state Average number of cases receiving benefits in that quarter Garasky (1990)
  Monthly, state   Texas; Oregon; Minnesota; Maryland
AFDC-UP Caseload Quarterly, national   Grossman (1985);

CBO (1993)

  Quarterly, state   Barnow (1988)
  Monthly, state   Minnesota; Maryland
AFDC Entries (Openings) Quarterly, national AFDC-Basic and UP openings combined CBO (1993)
  Monthly, state Separate data series for Basic and UP entries Washington
AFDC Exits

(Closings)

Quarterly, national AFDC-Basic and UP closings combined CBO (1993)
  Monthly, state Separate data series for Basic and UP exits Washington
AFDC Cash Medicaid Enrollees per Capita Quarterly, state   Cromwell et al. (1986)
AFDC-Basic Expenditures Quarterly, state   Florida
Recipiency Ratio Annual, state Log of ratio of AFDC recipient population to non-AFDC recipient population Shroder (1995), recipiency model
AFDC Participation Rate of Female Household Heads Annual, state AFDC participation rates of female household heads derived from the CPS. Moffitt (1986)
Average Benefit per Household, AFDC-Basic Quarterly, national   Grossman (1985)
  Quarterly, state   Grossman (1985)
Average Benefit per Household, AFDC-UP Quarterly, national   Grossman (1985)
  Quarterly, state