As its name might suggest, t he S upplemental Poverty Measure (SPM) was developed to supplement , but not replace , the official poverty measure by addre ssin g some of its met hodological limitations . T he official measure provides a consistent historical view of poverty in the United States , but t he SPM may be better suited to help ing c ongress ional policymakers and other experts understand how taxes and government programs affect the poor . Also, it may better illustrate how medical expenses and work-related expenses such as child care can affect a family's economic well-being . This report describes the SPM , how it was developed, how it differ s from the official poverty measure , and the insights it can offer . This report will not dis cuss potential consequences of changes to anti-poverty programs, nor will it provide an analys is of poverty trends . The official measure of poverty was developed in the 1960s by Mollie Orshansky, an analyst at the Social Security Administration. It was based on food costs in that decade as well as the share of a family's total budget that was devoted to food according to family budgets in the mid-1950s. The food cost it used was the U.S. Department of Agriculture's (USDA's) Economy Food Plan. A 1955 survey of family consumption determined that about one-third of a family's spending was on food. Thus, the poverty thresholds were developed as three times the cost of the Economy Food Plan, with some adjustments for two-person families and single individuals to account for their higher fixed costs. In the current official measure of poverty, the thresholds developed in the 1960s have been adjusted only for price inflation, as measured by the Consumer Price Index for All Urban Consumers (CPI-U). Under the official poverty measure, an individual is counted as poor if his or her family's pre-tax money income falls below the poverty threshold. Pre-tax money income excludes the value of government noncash benefits provided either privately or publicly, such as health insurance, Supplemental Nutrition Assistance Program (SNAP) benefits, or housing assistance. It also does not consider taxes paid to federal, state, or local governments, or tax benefits (such as the Earned Income Tax Credit, EITC) that might be received by families. The official poverty measure is computed for the non-institutionalized population. The SPM was designed to address limitations of the official poverty measure. Like the official poverty measure, it is a measure of economic deprivation. It defines poverty status for families and individuals by comparing resources against a measure of need . Measures of need are used to establish poverty thresholds that are valued in dollars. The SPM poverty thresholds measure a standard of living based on expenditures for food, clothing, shelter, and utilities (FCSU), and "a little more" for other expenses. The resources measured against those thresholds represent disposable income (after taxes and certain other expenses), including the value of noncash benefits, that are available to families to meet those needs. The SPM is considered a research measure, because it is designed to be updated as techniques to quantify poverty and data sources improve over time, and because it was not intended to replace either official poverty statistics or eligibility criteria for anti-poverty assistance programs. Both the SPM and the official measure determine the poverty status of people and families by comparing their financial resources against poverty thresholds. For both measures, poverty thresholds vary by family size and composition, and families whose resources are lower than the thresholds are considered to be poor. The differences between the SPM and the official measure reflect changes in household composition in the more than 50 years since the official measure was developed. The differences also partly spring from attempts to more accurately assess the needs and resources of families. Some of the innovations surrounding the calculation of needs and resources embodied in the SPM are based on data that were not yet available when the official measure was developed. The measures differ in their definitions of the following: N eed , as it is used in the thresholds (the dollar amounts used to determine poverty status). Unlike the official measure, the SPM's measure of need is geographically adjusted based on housing costs by metropolitan area or by state for nonmetropolitan areas. Furthermore, three sets of SPM thresholds are computed by the housing status of a family—as homeowners with a mortgage, homeowners without a mortgage, or renters—to reflect differences in housing costs. Thus, while the official poverty measure uses 48 poverty thresholds to represent families' needs, the SPM uses thousands. F inancial resources that are considered relevant for comparing against the measure of need as specified in the thresholds. Financial resources to meet needs, whether in the SPM or the official measure, are based on the sum of income of all family members. While the official measure uses money income before taxes, the SPM makes additional adjustments and considers a wider range of resources. F amily , for the purpose of assigning thresholds and counting resources. The SPM uses an updated approach to more explicitly take account of how household members share resources based on their relationships, which the Census Bureau's definition of "family" (used in the official measure) does not capture completely. One of the most important differences between the two measures, however, is that the SPM is intended to be revised periodically, using improved data sources and measurement techniques as they become available, while the official poverty measure is intended to remain consistent over time. A summary of the differences is provided in Table 1 . The SPM was developed after decades of research focused on overcoming the limitations of the official poverty measure. These limitations are not easy to surmount, as evidenced by dozens of alternative poverty measures developed over the years by the Census Bureau and by academia, and the working papers and reports written about those measures. Over time, the official poverty measure has faced criticism, including the following: The official poverty thresholds are not adjusted to reflect geographic variations in costs. Owing to the limitations of the source data available at the time the official measure was developed, it is based on money income before taxes; however, most individuals pay for their basic necessities using after-tax income. This represents a disconnection between the way needs were specified in the thresholds (which represent a level of need) and the definition of resources available for meeting those needs. The official measure captures the effects of some but not all government programs intended to provide relief for the poor because the income used in the official measure is money income before taxes. The programs that are captured are those that provide money income benefits before taxes: Social Security, Supplemental Security Income (SSI), Temporary Assistance for Needy Families (TANF), and any state or local relief programs based on money income. The programs that are not captured are the EITC and the Child Tax Credit, which, despite their large effects for low-income workers with children, are not considered because they are tax credits and only reflected in after-tax income; and a host of noncash benefits such as the Supplemental Nutrition Assistance Program (SNAP), the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), housing subsidies, and subsidized medical care. Many of these programs did not exist when the official measure was developed in the 1960s. The official measure captures neither the needs incurred nor the resources brought in by household members who are not related by birth, marriage, or adoption. These include unmarried partners and their children (if any are present) and foster children not legally adopted. While the official measure is adjusted for overall inflation, it does not consider the extent to which the prices of basic necessities have shifted in relation to all goods and services. Therefore, it can be argued that the inflation adjustment used in the official measure does not accurately reflect the purchasing power needed, in a practical sense, to remain at the poverty line compared to previous decades. While there has been broad agreement among poverty scholars that these issues are drawbacks to the official poverty measure, overcoming them has proven to be difficult. Scholars in the federal government, universities, and private research institutions have spent decades developing approaches to address these shortcomings and evaluating the effectiveness of those approaches. For example, adjusting the poverty thresholds by g eographic variations in costs i s difficult , because price levels within a state can vary greatly among its different metropolitan areas , as we ll as between metropolitan and nonmetropolitan areas . Numerous approach es were developed over the years to adjust thresholds geographically, and because of a lack of comprehensive small-area geographic detail on prices, earlier approaches were more limited in their ability to accurately reflect cost variations within states . Research inquiries into the other issues listed above— particularly the valuation of noncash benefits s uch as subsidized health care— proved to be just as thorny. In attempting to address the shortcomings of the official poverty measure, dozens of alternative poverty measures were developed over multiple decades. For instance, in the 1980s the Census Bureau began providing alternative definitions of income that subtracted taxes from income and estimated the monetary value of noncash benefits, and showed the effects of these definitions on estimated poverty rates, in an "R&D" series of reports. The approaches used in these reports for estimating the value of noncash benefits were discussed in a conference attended by analysts from the federal government, universities, and other research institutions. Eventually, as variations of the Consumer Price Index (CPI) were developed by the Bureau of Labor Statistics, the Census Bureau began to include poverty estimates based on those indices in the R&D series as well. Between 1992 and 1995, a panel from the National Academy of Sciences (NAS) met to develop recommendations for an improved poverty measure, in response to a congressional request from the Joint Economic Committee and funded through the Bureau of Labor Statistics, the Department of Health and Human Services, and the Food and Nutrition Service of the U.S. Department of Agriculture. The NAS report was published in 1995.