Counting for Dollars: The Role of the Decennial Census in the Distribution of Federal Funds

The federal government’s role in annually dispensing hundreds of billions of dollars to state and local governments, nonprofit organizations, businesses, and individuals is highly visible and political, with substantial economic impact in every corner of the nation.

It has been understood for some time that a substantial proportion of federal domestic assistance is distributed on the basis of population data gathered through the decennial census, the once-a-decade headcount mandated by the Constitution and managed by the U.S. Census Bureau.

An analysis of federal domestic assistance program expenditures distributed on the basis of census-related data indicates that:

  • The accuracy of the 2010 Census will determine the geographic distribution of a substantial proportion of federal assistance, particularly in the form of grants, over the coming decade. In FY2008, 215 federal domestic assistance programs used census-related data to guide the distribution of $446.7 billion, 31 percent of all federal assistance. Census-guided grants accounted for $419.8 billion, 75 percent of all federal grant funding.

  • The bulk of census-guided federal assistance goes to state governments through a handful of large formula grant programs to aid low-income households and support highway infrastructure. Medicaid alone accounts for 58 percent of census-guided funding. In general,census-guided funding is highly concentrated in a small number of programs,recipients states), departments, and budget functions.

  • State per capita census-guided funding is positively related to income inequality (high annual pay, high poverty), Medicaid income limits, and the percent of the population that is rural. The higher any of these measures, the higher per capita funding tends to be.

  • The decennial census facilitates federal funds distribution largely through being the basis for ten other federal datasets, most importantly the Bureau of Economic Analysis’ per capita income series and the Census Bureau’s population estimates. Decennial census data are directly used to guide a relatively small proportion of the funding.

  • To illustrate the fiscal impact of decennial census accuracy, each additional person included in the Census 2000 resulted in an annual additional Medicaid reimbursement to most states of between several hundred and several thousand dollars, depending on the state.

The findings have several implications for local efforts to promote greater 2010 Census participation. First, they show that efforts to increase 2010 Census participation by indicating the link between the census and the flow of federal funds are valid. Second, state governments stand to gain the greatest fiscal benefit from increased census participation. Third, raising the response rate of hard-to-count populations, particularly among the subset of families with children, will serve to increase the flow of federal funds. Finally, census participation will have a positive impact on federal fund flows regardless of whether a household is in a rural or urbanized area.

Full Report » (PDF)

U.S. Tables

State/Local Tables (Summary and Individual)

Reference Document » (PDF)

Tables for smaller metropolitan areas and counties may be requested by writing Rachel Blanchard Carpenter at [email protected]