The Omnibus Budget Reconciliation Act (OBRA) of 1981 (section 673(2)) transferred the responsibility of annually updating the Federal Government's poverty guidelines from the Community Services Administration (CSA)--formerly the Office of Economic Opportunity (OEO) until 1975--to the Department of Health and Human Services (HHS).(1) This note provides background information about the 1992 update of the guidelines.(2) A more detailed account of the Bureau of the Census poverty thresholds--the principal version of the Federal poverty measure and the source from which the poverty guidelines are calculated each year--will be in the Summer issue of the Bulletin.
POVERTY GUIDELINES AND POVERTY THRESHOLDS
The HHS poverty guidelines, shown in table 1, are a simplified version of the Federal Government's official statistical poverty thresholds.(3) (Table 1 omitted) Both thresholds and guidelines are a series of income levels, with different values for family units of different sizes, below which the family units are considered poor for statistical or administrative purposes. The principal differences between the thresholds and the guidelines have to do with the issuing agency and the purpose. The poverty thresholds are issued by the Census Bureau and are generally used for statatical purposes--for example, for determining the number of persons in poverty and presenting data classifying poor persons by type of residence, race, and other social, economic, and demographic characteristics. The poverty guidelines are issued by HHS and are used for administrative purposes--for instance, for determining whether a person or family is financially eligible for assistance or services under a particular Federal program. As described below, the poverty guidelines are derived from the poverty thresholds.
The poverty guidelines are sometimes incorrectly referred to as the OMB (Office of Management and Budget) poverty guidelines. This is the result of confusing language in the original 1972 legislation requiring the annual updating of the guidelines. That language referred to the poverty thresholds--the starting point for calculating updated poverty guidelines--not as "the Census Bureau poverty thresholds" but as "the official poverty line (as defined by the Office of Management and Budget)." (The reason for referring to the thresholds with these words was a 1969 OMB directive that made the Census thresholds the official Federal statistical definition of poverty.) The OMB does not issue and has never issued the poverty guidelines, and the authority for using the poverty guidelines for administrative purposes has always been contained in legislation governing OEO/CSA and (later) HHS programs.
A major reason for issuing poverty guidelines distinct from the statistical poverty thresholds is that the poverty thresholds for a given calendar year are not published in final form until late summer of the following calendar year.(4) Issuing poverty guidelines during the first few months of the year avoids the need to use 2-year-old poverty thresholds for half the year when determining financial eligibility for certain Federal programs for which poverty status is an eligibility criterion. Table 2 shows the procedure used to derive the poverty guidelines from the thresholds. (Table 2 omitted)
Poverty guidelines issued from 1965 to 1982 had separate figures for farm and nonfarm families, as did the poverty thresholds from which these guidelines were derived. The farm/nonfarm distinction was eliminated as a result of one of several technical changes in the official statistical definition of poverty announced by the Bureau of the Census in December 1981.(5) Accordingly, the poverty guidelines given in table 1 are applicable to both farm and nonfarm families. Table 3 shows both the farm and nonfarm guidelines for a family of four for 1965-82. (Table 3 omitted) Note that the farm/nonfarm distinction was not the same as a rural/urban distinction. …