Legislative Determination Three states reported that need standards are set by their legislatures on the basis of budgetary considerations.

Average Payment Three states reported that they developed need standards in the early 1970s that represented average AFDC payment levels by family size. (AFDC benefits at that time were determined on a discretionary basis by caseworkers according to the particular circumstances of each recipient family.)

Unknown Methods Six states "are unable to document how their need standards were originally constructed, either because records are incomplete or lost or because their standards seem to have been set arbitrarily with no reference to living costs" (Larin and Porter, 1992:17).

Comparing Larin and Porter (1992) with USR&E (1980), one finds that many states reported using a different method in 1990 than in 1980; see Table 8-2. Only 10 states appear to have used the same method in both decades: Maine, New York, and Wisconsin consistently reported using a variation of the BLS lower level budget, and Colorado, Idaho, Massachusetts, Nebraska, Oklahoma, Oregon, and Washington consistently reported using the market basket pricing method.16 Perhaps the most important change is that 14 states now relate their need standard explicitly to the HHS poverty guidelines.

Differences Among States

Differences in Need Standards and Benefits

As noted above, AFDC need standards vary widely among the states (see Table 8-1). In January 1994, the need standards for the 50 states and the District of Columbia varied from $1,648 per month in New Hampshire to $320 in Indiana, with a median value of $574, a mean value of $655, and a coefficient of variation of 41 percent. The maximum AFDC benefit exhibited almost as much dispersion, although the addition of food stamps reduced the dispersion somewhat.

In a historical analysis of AFDC benefits, Peterson and Rom (1990: Table 1-1) found that a high degree of variation in benefit levels has always characterized the states. They determined that the coefficient of variation ranged

16  

Inferences about standard setting methods across decades cannot be made with certainty. USR&E and Larin and Porter provide conflicting accounts for some states: for example, Arizona is reported as "unknown method" in USR&E, but in Larin and Porter, Arizona is reported as having previously used a variant of the BLS lower level budget and as currently using the HHS poverty guidelines. Similarly, Missouri is reported as "unknown method" in USR&E, but in Larin and Porter, Missouri is reported as having conducted market basket pricing studies in 1969 and 1975. Also, the "average payment" method that Larin and Porter say that several states adopted in the early 1970s is not one of the methods identified in the USR&E study.



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