Zip Code Scoring: Targeting EITC Outreach to Delinquent Utility Customers

1. Zip Code Scoring: Targeting EITC Outreach to Delinquent Utility Customers Roger D. Colton Fisher, Sheehan and Colton Public Finance and General Economics Belmont, MA February 2003

2. Targeting Outbound Mailing • Utility objective:Reduce cost of unpaid bills, prevent shutoffs, and reduce social harms of unaffordable arrears. • Strategy:Use EITC to pay winter arrears and prevent spring payment problems. • Rationale: Data shows that EITC recipients use their EITC benefits to pay household expenses, including past-due utility bills in particular. EITC outreach is a cost-effective mechanism for receiving payment for high end-of-winter arrears.

3. What is Zip Code Scoring • Determine average arrears systemwide. • Rank each zip code by proportion of average arrears within zip to average arrears systemwide. • Overlay seven Census indicators of EITC potential. • Select Zip Codes with: (1) higher than average arrears; and (2) at least two EITC indicators.

4. EITC Indicators #1 - #2 • The percent of households with a female householder and no husband present where the female is in the workforce is above the unweighted average for all zip codes systemwide. • Single women householders often earn wages that make them eligible for the EITC. • The percentage of male workers who worked in 1999, but who worked part-time, was greater than the unweighted average for all zip codes systemwide. • Part-time workers are workers who are frequently eligible for EITC and do not realize it.

5. EITC Indicators #3 - #4 • The percentage of female workers who worked in 1999, but who worked part-time, was greater than the unweighted average for all zip codes systemwide. • There is a common misperception that workers must work fulltime to be eligible for EITC. • Within households having wage or salary income, the average wage or salary income was less than 80% of the average for all zip codes systemwide. • For a zip code to have an average wage or salary income below 80% of the weighted systemwide average, a substantially higher proportion of low wage workers must be present.

6. EITC Indicators #5 - #6 • The percentage of households with total household income between $10,000 and $30,000 within the zip code is higher than the unweighted average percentage of households with that income for all zip codes systemwide. • Households with incomes of less than $10,000, or more than $30,000, are less likely to be eligible for the EITC. • The percentage of households with incomes between 100% and 150% of the Poverty Level is higher than the unweighted average for all zip codes systemwide. • Households with incomes between 100% and 150% of the federal Poverty Level are likely to have earned income.

7. EITC Indicator #7 • The percentage of households with incomes between 150% and 200% of the Federal Poverty Level is higher than the unweighted average for all zip codes systemwide. • Households with incomes up to 200% of the Federal Poverty Level are likely to remain eligible for EITC. 200% of the Federal Poverty Level for a three-person household is $30,040, well within EITC eligibility guidelines.

8. Decision Rule for Outbound Mailings • If a zip code tests positively for an indicator, it is given a score of “1” for that indicator. The total of the scores is then summed. • To be considered a target for outbound EITC outreach to customers with arrears, a zip code must meet the size-of-arrears test and have a score of “2” or more on the EITC indicators.

9. For more information: roger@fsconline.com