We all have heard that results of the U.S. Census are used to determine how billions of dollars in federal grants and loans are distributed around the country. But how much does it matter? Who receives this funding? How much of this federal funding goes to rural areas? And which rural areas benefit most?
We can begin to answer some of these questions thanks to some unique research conducted by the Brookings Institution, a non-profit, non-partisan research group in Washington, D.C. Scholars there identified nearly $450 billion in federal grants, loans and direct payments that were distributed based, in part, on data from the U.S. Census. They made a special file available to us that shows how those funds were distributed to each county.
Most (93%) of these federal funds came out of four program functions: health care (mostly Medicaid); transportation (such as highway planning and construction); income security (such as Section 8 Housing Vouchers); and education, training, employment, and social services (such as Special Education Grants to States). The information is available online here.
I used Brookings’ county-level data to look at the distribution of $450 billion in federal funding — the money that in 2008 was distributed according to the Census. There was a wide disparity from place to place in the amount received per person. Some counties showed no funds received, or just a few dollars per person. Other counties received tens of thousands of dollars per person.
Rural counties received more funding per capita than either urban or exurban counties. Rural counties in the South received the highest per capita payments.
(Rural counties are those considered “non-metro” by the Census. Exurban counties are “metro” counties where about half the people live in rural settings. These are largely fast-growing counties on the edges of metropolitan areas. Urban counties are all other “metro” counties. To see a map of urban, rural and exurban counties, go here. For a more complete description of the Yonder’s definitions, go here.)
The map above shows the distribution of these federal funds in rural America. Counties in green received more than the national average of $1,469 per person. Counties in shades of red received less than the national per capita average.
The map shows that historically poor parts of rural America — the Mississippi Delta, Appalachia, the Rio Grande Valley — received more funding than the national average. Nationally, rural counties received $1,719 per person. Urban counties received $1,414. Exurban counties received $1,108 per person.
In general, the more rural a county is, the higher the per capita funds received. I looked at the per capita expenditures for 12 county types, a ranking of all counties from the most urban to the most rural. (The 12 county types are based on the Urban Influence Codes set up by the U.S. Department of Agriculture, which can be found here.)
In the most urban counties, federal funds averaged $1,357 per person. In the most rural counties (places that aren’t adjacent to any urban area and have no town of more than 2,500 people), the payments averaged $2,407 per person.
This finding should not be too surprising since many of the programs that use funding formulas are designed to aid the areas with the highest levels of need. Andrew Reamer from the Brookings Institution found that the child poverty rate was one of the measures most closely related to per capita expenditure differences across the states.
The child poverty rate in the most urban counties was 16%. In the most rural counties, it was 27%. So the funding formulas seem to be working in terms of getting the most aid to the counties with greatest need.
Reamer found that most of the variation in per capita funding from state to state was due to four factors: the percent of children in poverty; the states’ average annual pay; Medicaid family income limits for children; and the percent of the population that is rural.
But what causes the differences in per capita spending from county to county? There are big regional variations. The chart below shows how rural, exurban and urban counties varied across the four Census regions (South, Northeast, Midwest and West). The highest funding went to rural counties in the South, which received payments 135% of the national average. Exurban counties in the West received the lowest funding, just 69% of the national average.
Among rural counties, those in the Midwest had the lowest overall per capita payments.
The map at the top of the page begs as many answers as it provides. Agricultural areas are relatively prosperous, so that may explain why there are so many low-per-capita-payment counties in Kansas and the panhandles of Texas and Oklahoma. But why aren’t there similar numbers of low payment counties in Nebraska and the Dakotas?
Rural counties in the South have the highest payment rates, largely because poverty rates in the rural South are high. But payments to urban counties in the South are significantly lower. Is that because of increasing regional income inequality in the South between rural and urban areas? Or is there something else at work? As well, several Mountain states have large numbers of red and green counties side-by-side. Why is that?
What is clear is that the distribution of federal funds varies dramatically across the country. Funds do flow to poorer places, and rural America — especially the rural South — receives more of this funding than urban counties do largely because rural counties are home to higher proportions of poorer people.
William O’Hare is Senior Consultant at the Annie E. Casey Foundation and president of O’Hare Data and Demographic Services LLC.