Measuring Material Hardship of Howard County, Maryland Households

Self-Sufficiency Index – Howard County, Maryland

Background and Purpose

The Policy Analysis Center has developed an Index for use in measuring the level of economic hardship for households in Howard County, Maryland. The Index, called the “Self-Sufficiency Index,” and an accompanying set of measurement indicators referred to as the “Public Assistance Matrix” will be updated annually and used to assess the extent to which households in the county are unable to be financially independent.

The work was prompted by the Association of Community Services (ACS) that long sought the means by which residents served by its members could assess material hardship. ACS as well as public agencies and the business community will find this tool to serve this purpose and be an important resource in carrying out their work as it affects the people they serve.

The Index is a tool whose development reflects the best of research and study undertaken by the professional and academic communities with regard to assessing material hardship. It has been adapted to fit the unique needs of Howard County, Maryland and has benefited by the guidance provided by the Center’s convened “Committee on Hardship Measurement”; a committee representing the public and non-profit interests in Howard County.*

The purpose of this paper is twofold:

1. To provide the underlying and descriptive information about the Index and its accompanying indicators. The rationale and explanatory tables are presented so as to describe the “Self Sufficiency Index for Howard County,” its use, and application
2. To present program information derived from public and non-profit agencies that answer important measurement questions regarding the changing demand for an array of health and human services.

The objectives and operations are outlined and discussed for each of the two. Also, and critical to each, is how they will be sustained and the information kept current and complete.

I. The Self Sufficiency Index – Rationale and Background

The Federal Poverty Level – An Assessment

The measure most commonly used as an index of poverty is the Federal Poverty Level (FPL), and it is generally used to determine eligibility for public assistance programs. Most programs (Medicaid, Food Stamps, Energy assistance, etc.) have as their core eligibility criterion an income level expressed as a percent of the FPL (125% of FPL; 175% of FPL; etc.). To be eligible for program benefits the income of the family or individual cannot exceed the criterion. The long standing assumption generally held by the public is that the FPL serves as an accurate measure of poverty and that anyone living at or above that level is able “to make ends meet.” However, research and practice have found that not to be the case.

The FPL was developed in 1964 and first used in 1965. It is based solely on the cost of what the Department of Agriculture determines constitutes adequate nutrition, i.e., the cost of meeting basic food needs. It includes no other costs such as housing, health care, or transportation; nor does it recognize geographic variants, such as the difference between living in New York City as opposed to Des Moines, Iowa. For example, in 2008, the FPL for the 48 contiguous states was $10,400 for a one person household; $14,000 for a two person household; and $3,600 to be added for each additional

individual in the household. For a family of four living in Howard County with earnings above $21,200 per year would be above the FPL.

Objective research has found that the FPL is only useful as an indicator of the most severe poverty, with those at or below the FPL clearly in severe hardship. It does not address the question as to the level of resource required to be financially independent. As a consequence, there is often a significant gap between the FPL and the level of material hardship, or the income needed by many households to meet their daily living costs. And while federal legislation to address these issues continues to be considered by the Congress, there appears to be little likelihood of changes any time soon.

It was apparent, after studying the issue over the past several months, that a better measure was needed. Accordingly, the Center undertook the development of a more meaningful and accurate measure or set of measures.

Self Sufficiency Standard- Conducting the Research

The Center selected the Self-Sufficiency Standard, developed at the University of Washington, as the core of the Self- Sufficiency Index. Using the Self-Sufficiency Standard as its base, the Center developed an Index which provides a rationale and sound measure for estimating the number and percent of households in the county that are not financially independent; or expressed in another way, “are unable to meet the daily costs of living in Howard County.”

In selecting the Self-Sufficiency Standard and the approach to developing an Index, it did so after conducting an extensive review of poverty measures in the literature and in use throughout the country. It consulted with experts and organizations including Advocates for Children and Youth, the Annie E. Casey Foundation, Wider Opportunities for Women, the Governor’s Group on Poverty, Pathways, the Heartland Mid-America Institute on Poverty, Everywoman Opportunity Center, University of Washington, University of Maryland, and Penn State University.

The original and on-going work involving the Self-Sufficiency Standard is housed at the University of Washington. Dr. Diana Pearce in the school of Sociology is the principal investigator

Self Sufficiency Standard – Establishing the Rationale

The methodology developed by the research conducted by Dr. Pearce has demonstrated four major advantages:

1. It takes into account the market costs of living, including food, housing, health care, child care, transportation, and miscellaneous costs.
2. It recognizes family demographics. Using different costs for different family size and composition, including adults, infants, preschoolers, school age children, and teenagers, the Standard recognizes the differences family demographics make in what it costs to live in the county.
3. The Standard recognizes county-specific variations and computes a specific set of costs for Howard County.
4. It has a wide range of support from non-profit organizations and academic experts. It is being used in a number of states and localities throughout the country as a guide to what it really costs to live in an area and is providing a rich source of information on the economic status of residents and individual counties.

Important to the Center’s analysis is the fact that the Standard is a conservative measure in that it does not take into account longer-term needs (such as savings and college tuition), credit card debt, purchases of major items (such as an automobile, appliances), or other major emergency expenses.

Self Sufficiency Standard – Assuring Sustainability

Critical to undertaking the development of an Index or other set of measures was the matter of answering the question about how a system such as this would be kept current and affordable. In this regard, the Center sought out the support of the organization that has long been invested in the work of the Self Sufficiency Standard. That organization is Wider Opportunities for Women (WOW). Information about the WOW is widely known to the human service community across the country as one that lends assistance to other jurisdictions and organizations interested in more effectively assessing quality of life issues such as the ability to determine levels of material hardship. As a consequence, in January 2009, the Center entered an agreement with WOW whereby it will provide current information on an annual basis to the Center for assuring that the Index and accompanying indicators are current and complete.

Self Sufficiency Standard – Applying the Index to Howard County

In examining the application of the Self Sufficiency Standard to households in Howard County, the Center believed it was important to display the information about annual household income in terms of living costs. The following chart using 2007 data provides examples covering four different sized households.

The amount of money (income and public benefits) a family needs to be economically self-sufficient depends upon family size and composition, the age of children, and where they live. This table was extracted from the Self-Sufficiency Standard for Maryland and shows the amount of money needed by five families in Howard County found in the source material: one adult; two adults; two adults with an infant; one adult with two teens; and one adult with two preschoolers.

Self Sufficiency Index – Taking a Conservative Approach

Given the formative nature of the Index, the Center elected to take the most reasonable, yet conservative approach in this standard. It used the lowest example of what a three-person household needs to be self-sufficient ($47,437) and established the Index with the conservative assumption that an average household in Howard County must earn at least $50,000 per year to be financially independent. The further a household is from this standard (i.e. the less its income), the more severe is its economic hardship.

The 2007 Self-Sufficiency Index for Howard County is that percent of households earning less than $50,000: 19.4%

The following chart illustrates this Index in strata available from Census:

2007 – Households Constituting the Hardship Index: Howard County

II – Public Assistance Matrix

In addition to the use and application of the Self Sufficiency Index for Howard County, the Center will continue to provide complementary information that further describes where and how levels of hardship are being realized through changes in request for health and human services.

Although these data are limited in that they only reflect the numbers of individuals receiving public assistance, it provides a quantitative assessment as to the extent hardship is having an impact in several areas ranging from housing to food and energy support.

The following chart displays the information for the 2007-2008 fiscal years. With the cooperation and support from each of the several name agencies and organizations, the data will be annually updated and disseminated by the Center for County wide access and use.

HOWARD COUNTY PUBLIC SUPPORT & ASSISTANCE MEASURES: FY 2007 & 2008

Measuring Material Hardship – Implementing the Index and the Public Assistance Matrix

The Center is “operationalizing” the Index and public assistance information through this website, www.policyanalysiscenter.org. The website will also include more detailed information about the Self-Sufficiency Index for Howard County including examples of the Standard for various family sizes.

In addition, the Center will continue to improve and consider expanding the amount of information available on hardship at its site by adding other measures of poverty and a calculator for the Self-Sufficiency Standard by which individuals or their counselors could enter information and determine where they stand in relation to their financial independence.

Committee on Hardship Measurement

Ron Carlson – Past Director – Policy Analysis Center
Richard Barnard – BRAC Planner – Department of Citizen Services
Bita Dayhoff – Vice President – Community Action Council
Jack Gunther – Business Development – Manager – Economic Development Authority
Anne Towne – Executive Director – Association of Community Services

Consultant: Thomas Morford – Principal – Health Policy and Operations Consulting

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