Transfer Payments
Transfer payments to persons is income payments to persons for which no current services are performed. They are payments by government and business to individuals and nonprofit institutions serving individuals.(1)
Transfer payments accounted for more than 13 percent of total personal income at the national level in 2001 (table F).
Estimates are prepared for approximately 50 subcomponents of transfer payments.(2) The subcomponents are classified by source–government or business–and may also be classified by recipient–individuals or nonprofit institutions serving individuals. In this discussion, transfer payments are presented in three major groups–government payments to individuals, government payments to nonprofit institutions serving individuals, and business payments to individuals and to nonprofit organizations serving individuals.
At the state level, approximately 90 percent of the estimates of transfer payments are derived from data for the payments. The remaining 10 percent are allocations of the national estimates in proportion either to data that are related to the components or to the most relevant population series.
Most of the state estimates of transfer payments are based on data for a calendar year, but some of the estimates are based on data for fiscal years. When data for fiscal years are used, the data for the two fiscal years that overlap the calendar year are averaged with the appropriate weights to yield the data for the calendar year.
This section is organized according to the order of the presentation of the components and subcomponents in table F. Each estimated item is briefly defined, and the preparation of the state estimates is described.
Government Payments to Individuals
Transfer payments by government to individuals accounted for about 95 percent of total transfer payments at the national level in 2001.
The national estimates of government payments to individuals are generally based on source data on the actual payments to the individual beneficiaries or to the vendors that provide specified goods or services to the beneficiaries. Expenditures for administrative costs are excluded. For Federal programs, the data are typically drawn from the Treasury Department's Monthly Treasury Statement or from administrative reports of the Federal agencies that administer the programs. For programs partially funded by the Federal government but administered by state or local governments, the source data are typically drawn from reports by the responsible Federal agencies, based on data reported by the state or local government agencies. For programs operated and funded exclusively by state and local governments, the source data are typically drawn from Census Bureau publications, including State Government Finances.(3)
Retirement and disability insurance payments
Government payments of retirement and disability insurance benefits to individuals accounted for almost 39 percent of total transfer payments at the national level in 2001.
Old–age, survivors, and disability insurance (OASDI) payments.–These benefits, popularly known as social security, consist mainly of monthly payments received by retired and disabled workers, dependents, and survivors and of lump–sum payments received by survivors.
The state estimates of the OASDI benefits consist of the estimates for four categories of these payments. The estimate for each category is based on calendar year tabulations of the payments from the Social Security Administration (SSA).
Railroad retirement and disability payments.–These benefits are received by retired and disabled railroad employees and their survivors under the Federal program of retirement insurance for railroad employees, who are not covered by OASDI.
The state estimates are based on fiscal year tabulations of the benefits disbursed by the Railroad Retirement Board.
Workers' compensation.–These benefits consist of the payments that are received by individuals with employment–related injuries and illnesses and by the survivors of individuals who died of employment–related causes. The payments are from both Federal and state government funds.
The state estimates of the payments received from the Federal fund, which covers only Federal civilian employees, are based on payments data from the Department of Labor.
Compensation payments to both public and private employees from state–administered workers' compensation funds consist of the payments received under exclusively state–administered workers' compensation insurance programs, the payments received under state–administered insurance programs that compete with private insurance programs, and the payments received under the state–administered programs for second–injury funds.
The state estimates of these benefits are derived from fiscal year data for the payments from state workers' compensation funds by the state of work from the Census Bureau's annual State Government Finances. These data are adjusted to a place–of–residence basis by BEA.
Other government retirement and disability insurance payments.–These benefits consist of the payments of temporary disability benefits, the payments of black lung benefits, and the payments of benefits by the Pension Benefit Guaranty Corporation.
Temporary disability benefits are the benefits received by workers who are unemployed because of nonoccupational illnesses or injuries. These benefits are from state–administered programs, which exist only in California, New Jersey, and Rhode Island.
The estimate for California is based on calendar year data provided by the California Development Department. The estimates for New Jersey and Rhode Island are based on fiscal year payments data from the Census Bureau's annual State Government Finances.
Black lung benefits are the benefits received by the coal miners who are totally disabled by black lung disease (pneumoconiosis) and by the eligible survivors of miners whose deaths were caused by the disease. Individuals whose eligibility was established before July 1973 receive their benefits from SSA; those whose eligibility was established since June 1973 receive benefits from the Department of Labor.
The state estimates of the payments from SSA are based on summations of data provided by SSA for one month of each quarter of the year. The state estimates of the payments from the Department of Labor are based on fiscal year payments data from the Census Bureau's annual Federal Expenditures by State.
Pension Benefit Guaranty benefits are paid by the revolving fund of the Pension Benefit Guaranty Corporation (PBGC) to individuals whose PBGC–insured pensions cannot be paid by the private pension plans that are liable for the benefits.
The national estimate is allocated to states in proportion to OASDI payments, which are assumed to reflect the geographic distribution of the retired population.
Medical payments
Medical payments accounted for more than 41 percent of total transfer payments at the national level in 2001.
Medicare payments.–These benefits are Federal Government payments made through intermediaries to beneficiaries for the care provided to individuals under the medicare program.
The state estimates of the payments under the medicare provisions for hospital insurance and supplementary medical insurance are based on adjusted fiscal year data for the amounts that are paid as reimbursement for hospital and medical expenses as reported by the Centers for Medicare and Medicaid Services(CMS).
Medical vendor payments.–These medical benefits are received by low–income individuals; the benefits are called vendor payments because they are measured as the payments to the vendors of the medical services. These payments consist mainly of the payments made through intermediaries to the vendors for care provided to individuals under the federally assisted, state–administered medicaid program and state children's health insurance program (SCHIP), but these payments also include payments made under the general assistance medical programs of state and local governments.
The state estimates of the payments made under the medicaid program and SCHIP are based on payments data from CMS. The state estimates of payments made under the general assistance medical programs are based on payments data that are obtained from the state departments of social services by CMS.
Military medical insurance payments.–These benefits are vendor payments made under the TriCare Management Program, formerly called the Civilian Health and Medical Plan of the Uniformed Services program, for the medical care of dependents of active duty military personnel and of retired military personnel and their dependents at nonmilitary medical facilities.
The state estimates are based on payments data from the Department of Defense.
Income maintenance payments
Income maintenance payments accounted for about 10 percent of total transfer payments at the national level in 2001.
Supplemental security income payments.–These benefits consist of the payments received by low–income persons who are aged, blind, or disabled from both the Federal Government and state governments.
The state estimates consist of the estimates of the Federal Government payments of basic benefits and the estimates of the state government payments of supplemental benefits. Both of these estimates are based on data that are published in the "Annual Statistical Supplement" to SSA's Social Security Bulletin.
Family Assistance.–These benefits were payments to low–income families under the state–administered Aid to Families with Dependent Children (AFDC) and emergency assistance programs that received Federal matching funds. During 1997, these programs were superseded by the Temporary Assistance to Needy Families (TANF) program.
The state estimates through 1996 were based on unpublished quarterly data for these payments from the Administration for Children and Families (ACF) of the Department of Health and Human Services. The state estimates for AFDC and emergency assistance for 1997 were based on ACF unpublished data for the Federal grants to the states for fiscal year 1997. These data were adjusted to reflect (1) the number of months during calendar year 1997 that the AFDC and emergency assistance programs were in operation in each state, and (2) the fund matching percentage that was required of each state. The state estimates of the TANF payments for 1997 through 2001 were based on fiscal year direct data from the ACF Web site.
Food stamps.–These benefits are measured as the value of the food stamps issued to qualifying low–income households in order to supplement their ability to purchase food. Eligibility is determined by the state authorities' interpretation of Federal regulations; the Food and Nutrition Service of the U.S. Department of Agriculture pays the cost of the stamps.
The state estimates are based on tabulations of the value of the distributed stamps from the Department of Agriculture.
Other income maintenance payments.–These benefits consist of general assistance payments, foster care payments, earned income tax credits, energy assistance payments, and the value of vouchers issued under the Women, Infants, and Children program.
General assistance payments are the benefits received from state and local governments by low–income individuals and families who do not qualify for help under federally supported programs.(4)
The state estimates are based on payments data from the various state departments of social services.
Foster care and adoption assistance payments are received from state and local governments by families that care for foster children or that adopt children under federally aided programs. Both the payments made directly to families and the payments made to the nonprofit organizations that supervise the programs in some cases are included.
The state estimates are based on data from ACF on the Federal grants that are made to the states. The data are adjusted to reflect the fund matching percentage that is required of each state.
Earned income tax credits are Federal income tax refunds to low–income workers, mainly those who have minor children. Eligibility for the tax credits is determined by the size of the adjusted gross income, or the earned income, and by certain household characteristics. The portion of the credit that is counted as a transfer payment is calculated as the excess of the tax credit over the tax liability.
The state estimates are derived from tabulations of the amount of payments disbursed to the residents of each state from the Internal Revenue Service.
Energy assistance payments consist of the cash benefits received by needy households and the vendor payments to suppliers to help defray the cost of home heating, cooling, and weatherization under the federally funded and state–administered energy assistance programs.
The state estimates are based on payments data published by the Office of Energy Assistance of the Department of Health and Human Services.
The Women, Infants and Children program is fully funded by the Food and Nutrition Service, operating mainly through state agencies. The transfer payments under the program take the form of vouchers issued to low–income women who are pregnant or who have young children; the vouchers are used to purchase supplemental nutritious foods.
The state estimates are based on direct data provided by the Food and Nutrition Service.
Unemployment insurance payments
Unemployment insurance payments accounted for almost 3 percent of transfer payments at the national level in 2001.
State unemployment compensation.–These benefits consist mainly of the payments received by individuals under state–administered unemployment insurance (UI) programs, but they include the special benefits authorized by Federal legislation for periods of high unemployment.(5) The provisions that govern the eligibility, the timing, and the amount of the payments vary among the states, but the provisions that govern the coverage and the financing are uniform nationally.
Under the Federal–state UI system, an unemployed individual who lives in one state may be eligible for UI benefits from another state.(6) Therefore, the estimate for each state is calculated as the total payments by a state minus the payments by that state to the residents of other states plus the payments by other states to the residents of that state. The state estimates are based on the data for the payments from the Labor Department's Employment and Training Administration (ETA).
Unemployment compensation of railroad employees.–These benefits are received by workers who are unemployed because of sickness or because work is unavailable in the railroad industry and in related industries, such as carrier affiliates. This UI program is administered by the Railroad Retirement Board under a Federal program that is applicable throughout the Nation.
The state estimates are based on adjusted fiscal year data for these payments from the retirement board.
Unemployment compensation of Federal civilian employees.–These benefits are received by former Federal employees under a Federal program administered by the state employment security agencies.
The state estimates are based on data for the payments from ETA.
Unemployment compensation of veterans.–These benefits are received by unemployed veterans who have recently separated from military service and who are not eligible for military retirement benefits; the compensation is paid under a Federal program that is administered by the state employment security agencies.
The state estimates are based on payments data from ETA.
Trade adjustment allowances.–These benefits are received by workers who are unemployed because of the adverse economic effects of international trade arrangements on employment.
The state estimates are based on adjusted fiscal year data for these payments that are tabulated by "petition" (location of plant) from the Department of Labor, which administers the program.
Payments to veterans
Payments to veterans accounted for about 2.3 percent of total transfer payments at the national level in 2001.
Veterans pension and disability payments.–These benefits consist mainly of the payments that are received by veterans with service–connected disabilities and by the survivors of military personnel who died of service–connected causes. In addition, these benefits include the payments that are received by war veterans who are 65 years old or older, who have nonservice–connected disabilities, who are permanently and totally disabled, and who meet specified income requirements.
The state estimates are based on the data for these payments from the Department of Veterans Affairs (DVA).
Veterans readjustment payments.–These benefits are the payments of the allowances for tuition and other educational costs that are received by veterans and by the spouses and the children of disabled and deceased veterans and for automobiles and conveyances, and specially adapted housing for disabled veterans.
The state estimates are based on data for these payments from the DVA.
Veterans life insurance payments.–These benefits consist of the payments received by the beneficiaries of veterans life insurance policies and the dividends received by the policyholders from the five veterans life insurance programs administered by the DVA.
The state estimates are based on data for these benefits from the DVA.
Other payments to veterans.–These benefits consist of the Federal Government payments received by paraplegics and by certain other disabled veterans to purchase automobiles and other conveyances, the state and local government payments of assistance to indigent veterans, and the state and local government payments of bonuses to veterans.
The state estimates of the Federal Government payments are based on data for these payments from the DVA. The state estimates of the state and local government payments of assistance and of bonuses are based on adjusted fiscal year data from the Census Bureau's annual State Government Finances.
Federal Government education and training payments
Federal Government payments for education and training accounted for about 1.1 percent of total transfer payments at the national level in 2001.(7)
Federal fellowships.– These benefits consist of the payments to outstanding science students who receive National Science Foundation (NSF) grants, the subsistence payments to the cadets at the six state maritime academies, and the payments for all other Federal fellowships.
The state estimates of the payments to the recipients of NSF grants are based on annual NSF tabulations of the number of students receiving fellowships at each institution.
The state estimates of the subsistence payments to the cadets are based on payments data from the Maritime Administration of the Department of Transportation. The amount of the payment is assigned to the state in which each academy is located.
The national estimates of the payments to the recipients of all other Federal fellowships are allocated to states in proportion to the civilian population, because of the lack of pertinent data.
Higher education student assistance.– These benefits consist of the Federal payments, called Pell Grants, for an undergraduate education for students with low incomes.
The state estimates are based on tabulations of annual data for these payments by the location of the educational institution from the Department of Education.
Job Corps payments.–These benefits are primarily the allowances for living expenses received by economically disadvantaged individuals who are between the ages of 16 and 21 and who are enrolled in the designated vocational and educational training programs. These benefits also include the adjustment allowances received by trainees upon the successful completion of their training.
The state estimates for 1991–2001 are based on tabulations from ETA of the amount of allowances and allotments disbursed to the enrollees in 1984, the last year for which data are available.
Interest payments on guaranteed student loans.– These payments are made by the Department of Education to commercial lending institutions on behalf of the individuals who receive low–interest, deferred–payment loans from these institutions in order to pay the expenses of higher education.
The national estimate is allocated to states in proportion to the number of individuals enrolled in institutions of higher education from the Department of Education.
Other government payments to individuals
Other government transfer payments to individuals accounted for about 0.3 percent of total personal income at the national level in 2001.
Compensation of survivors of public safety officers.–These benefits are payments to the survivors of state and local government employees, such as police officers and fire fighters, who were killed in the line of duty; the payments are made under a Federal program. The amount of the payment is $100,000 plus an allowance for the increase in consumer prices since 1988.
The national estimate is allocated to states by the tabulations of the number of claims by state from the Department of Justice.
Compensation of victims of crime.–These benefits consist of state and local government payments to crime victims and to vendors on behalf of crime victims.
The national estimate of total payments is allocated to states in proportion to payments data provided by the Office of Victims of Crime of the Department of Justice.
Alaska Permanent Fund dividend payments.–These benefits are the disbursements of investment income to the residents of Alaska from the Alaska Permanent Fund. The fund, which is derived from oil revenues, pays a portion of its net investment income to every resident.
The state estimate is the amount that is paid and that is reported by the Alaska Department of Revenue.
Disaster relief payments.–These benefits are the Federal payments to the victims of disasters, such as hurricanes and earthquakes.
The state estimates are based on information from the Federal Emergency Management Agency. The estimates include the payments to the victims of: Hurricanes Andrew and Iniki, for 1992; the floods in Midwest, for 1993; and the Northridge earthquake and the floods in the South, for 1994.
Japanese interns redress payments.–These benefits are the Federal payments to the American citizens of Japanese descent who were interned during World War II. The payments began in 1990.
The state estimates are based on the tabulations of these payments by ZIP Code area from the Department of Justice. These tabulations are summed to states by BEA.
Radiation exposure payments.–These are payments made under the Radiation Exposure Compensation Act, which offers compensation to individuals exposed to radiation released during above–ground nuclear weapons tests and uranium mining.
The state estimates are based on direct data from the Department of Justice.
Payment of anti–terrorism judgments.– These are payments from the U.S. Treasury to satisfy certain court judgments against countries found to have sponsored terrorism.
In the absence of any pertinent data, the national estimates are allocated to states in proportion to the civilian population.
Federal educational exchange payments.–These benefits are payments to students who participate in the Fulbright scholarship program and in other international educational exchange programs.
In the absence of any pertinent data, the national estimates are allocated to states in proportion to the civilian population.
Bureau of Indian Affairs payments.–These benefits are the payments to American Indians for educational and social services that are not available to them from state or local agencies.
The state estimates are based on data for these payments from the Bureau of Indian Affairs.
Government Payments to Nonprofit Institutions Serving Individuals
Transfer payments to nonprofit institutions serving individuals by Federal, state, and local governments and by business accounted for about 2.2 percent of total transfer payments income at the national level in 2001.
Federal Government payments
These payments consist mainly of the payments to private nonprofit hospitals for hospital construction and the payments to private educational institutions on behalf of the recipients of Federal fellowships, Pell grants, and other education and training programs.(8)
The national estimate is based on data from the Monthly Treasury Statement. Because state–level data are unavailable, the national estimate is allocated to the states in proportion to the civilian population.
State and local government payments
These payments consist of the payments for job training by state and local governments and the payments for educational assistance by state governments.
Job Training Partnership Act payments.–These payments are made to the private nonprofit institutions that provide job training under a work–study program funded by the Federal Government. The national estimate is based on data from the Monthly Treasury Statement. Because state–level data are unavailable, the national estimate is allocated to the states in proportion to the civilian population.
Educational assistance.–This assistance consists of payments to private nonprofit educational institutions for educational assistance other than under the Job Training Partnership Act. The national and state estimates are based on data for state government expenditures for "other education assistance and subsidies" from the Census Bureau's annual State Government Finances.
Business Transfer Payments
Business transfer payments to individuals
Business transfer payments to individuals accounted for about 2.0 percent of total transfer payments at the national level in 2001.
These payments consist primarily of personal–injury liability payments to individuals other than employees.
Because pertinent data are unavailable, the national estimates are allocated to states in proportion to the civilian population.
Business transfer payments to nonprofit organizations serving individuals
Business transfer payments to nonprofit organizations serving individuals accounted for about 1 percent of total transfer payments in 2001.
These transfer payments consist mainly of corporate gifts of money, securities, and real property to nonprofit institutions serving individuals.
The national estimate is based on data tabulated from Federal corporate income tax returns by the Internal Revenue Service. Because state–level data are unavailable, the national estimate is allocated to the states in proportion to the estimates of the wage and salary disbursements of membership organizations, many of which are nonprofit institutions that receive transfer payments from businesses.
Footnotes
1. Transfer payments from the rest of the world are netted against similar payments to the rest of the world, and the net payments, called "personal transfer payments to rest of the world (net)," are entered in the national income and products accounts as part of personal outlays.
2. The state estimates of transfer payments in subcomponent detail for 1948–2001 are available in table SA35 on this disc.
3. For detailed information on the methodology used to prepare the national estimates, see U.S. Department of Commerce, Bureau of Economic Analysis, Methodology Paper Series MP–5, Government Transactions (Washington, DC: U.S. Government Printing Office, November 1988). This publication is available on BEA's Internet site: Go to www.bea.gov and select "Methodologies."
4. The Federal Government neither funds nor regulates these programs.
5. The program for Federal civilian employees and that for veterans are administered by the states, but the benefits are classified in other subcomponents of unemployment insurance payments.
6. The state of the resident handles the claim and then sends it to the state that is responsible for paying the benefits.
7. The large portion of the payments under most of these programs are made to the school that the recipient attends. The payment is classified as a transfer payment to a nonprofit institution if the school is privately administered and as a government grant–in–aid or as a government purchase of services if the school is publicly administered.
8. These payments exclude the payments to private educational institutions for research and development under Federal contracts, which are treated as government purchases.
