Metro Codes Could Change Funding

May 21, 2004
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GRAND RAPIDS — The U.S. General Accounting Office is expected to release a report soon that will clarify how differences in new Metropolitan Statistical Area standards will affect the distribution of federal funds.

The new standards affect a number of state and federal programs that use metropolitan designations for funding and regulatory purposes.

Last June, the Office of Management and Budget (OMB) designated 49 new MSAs and revised the definition of existing MSAs.

At the same time, the OMB designated two new sets of statistical areas: Combined Statistical Areas (CSA) and Micropolitan Statistical Areas (MiSA).

CSA is the new classification for an area composed of adjacent metropolitan and micropolitan areas that have demonstrated economic or social linkage. “Micropolitan” refers to an urbanized area that includes at least one county and has a population of at least 10,000 but less than 50,000.

CSAs are automatically created when there is 25 percent or more employment interchange, or commuting, between two metropolitan or mircropolitan statistical areas, according to the OMB.

The areas that combine retain their own designations as metropolitan or micropolitan statistical areas within the larger CSA. The new designations are effective as of January 2005.

The new Grand Rapids-Wyoming-Holland CSA includes the Allegan Micropolitan Statistical Area, Grand Rapids-Wyoming Metropolitan Statistical Area (MSA), the Holland-Grand Haven MSA and the Muskegon MSA.

The four counties that comprised the 1993 Grand Rapids MSA — Kent, Ottawa, Muskegon and Allegan — are no longer in the same MSA, but are in the same CSA.

The Grand Rapids-Wyoming MSA includes the principal cities of Grand Rapids and Wyoming, and Barry, Ionia, Kent and Newaygo counties.

The realignment impacts federal statistical agencies, regulatory agencies, Medicare and many of the government funding programs that are based on MSA data.

The changes could affect Medicare payment rates, according to the OMB, but Medicare won’t begin to use the revised MSAs until fiscal 2005.

MSAs also are used to allocate funds in some federal community development programs and in calculations for federal employee locality pay, among other uses.

According to Jenny Shangraw, information resource manager for The Right Place Inc., when the Kent-Ottawa-Muskegon-Allegan MSA was created in 1993, it took several years before the MSA caught the interest and attention of other marketing and development entities.

She expects interest in the new CSA will lag somewhat initially, but that the overall change will be for the best.

“We predict that we’ll probably move up from about 57th in population to maybe 43rd among all CSAs. We’re also guessing it will take perhaps a year before commercial services such as the survey of buying power and other ranking entities start publishing the CSA data.

“We don’t see a negative at all. We just see that it’s going to be a new way to look at our marketing area. We go from 1.1 million people to 1.3 million people.”

Shangraw expects big box store operators and restaurant chains will view this as an attractive market and that more and more companies will want to come into this area because it’s a bigger market.

But which revised standard will federal funding agencies base their funding support on — CSAs or MSAs?

The new Grand Rapids-Wyoming MSA constitutes a much smaller population than the previous MSA, Shangraw observed, so if those agencies use MSA data, it will be “very much a negative” for this area.

“Allegan County becomes a micropolitan and is no longer part of our MSA. They would probably be hurt quite a bit. Ottawa now is a separate MSA, as is Muskegon. They’re no longer part of this big group, and that greatly affects a whole slew of programs.”

Michigan Department of Labor and Economic Growth, for example, only publishes data on non-farm employment — or employment by industry — for the MSAs, Shangraw pointed out.

“Well, now we have three metropolitan areas plus the combined statistical area. So are they going to then publish data on employment by industry for those different MSAs?”

The problem, Shangraw said, is that employment by industry is currently only collected on the MSA level of the four counties (Kent, Ottawa, Muskegon and Allegan) and now has to be completely divided.

Paul Mackun, a geographer with the U.S. Census Bureau, said the OMB designed CSAs, MSAs and MiSAs strictly for statistical purposes, not for programmatic purposes.

“We designed these areas for federal statistical agencies to release data, whether it be the Census Bureau, the Bureau of Labor Statistics or the Bureau of Transportation Statistics.

“However, there are some funding agencies and other agencies that may use them as well, though they’re not designed for those purposes. If those agencies use them, then they decide on their own if they’re going to use them and how they’re going to use them.”

The OMB has cautioned that statistical areas are not intended to serve as a general-purpose geographic framework for non-statistical activities.

“OMB recognizes that some legislation specifies the use of Metropolitan Statistical Areas for program purposes, including the allocation of federal funds, and will continue to work with the Congress to clarify the foundations of these definitions and the resultant, often unintended consequences of their use for non-statistical purposes,” the office stated in its Feb. 18 bulletin.

“OMB urges federal agencies that use the statistical areas for allocating program funds to provide information to the public on their plans and schedules for using the new definitions.”

Last July, the Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census requested that the GAO examine how the new standards are to be used in federal funding formulas and explain how the differences in MSA standards will affect the distribution of federal funds.

The GAO report is supposed to be due any day now, said Jon Brandt, press secretary for Congressmen Vern Ehlers, R-Grand Rapids.

“We’ve asked the GAO to try to compile that information for us so we can get a more complete answer. But, ultimately, it will depend on how the various agencies write their rules and regulations as to what data they are going to use to do that.

“One of the things we’ve also asked for is some sort of assurance from the OMB that this switch is not going to be detrimental to our area. The first part of that process is this GAO report we asked for.”

“All I can say right now is that a final report is imminent.”

Dave Yonkman, press secretary for Congressman Pete Hoekstra, R-Holland, said the change potentially could affect more than 100 federal programs.

“From what I understand, the list of programs will be released as part of the GAO study,” he added.

One federal funding program that won’t be affected is of the Department of Housing and Urban Development’s Community Development Block Grant (CDBG) program. Robert Duncan, deputy director of the program, said the change in statistical area designations is negligible in regard to CDBG funding. 

“For Grand Rapids it has no effect whatsoever. My formula looks at the demographics that we use for Grand Rapids as a percent of all the demographics for all cities that qualify in the country as a whole, and they get their proportionate share of the total appropriation. No change.”

CDBG funding would only change if there were changes in the city’s demographics, such as a decrease in population, he said.

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