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CDBG Formula Allocation Changes

The amounts authorized for formula allocation under the CDBG formula decreased by 1.34% for FY 2002 from $4,399,300,000 to $4,341,000,000. The actual change in allocation for an individual entitlement community or state differs from the average based on two influencing factors:

  1. Changes to the population and growth lag formula variables with use of population from the 2000 census instead of 1999 population estimates and
  2. Changes to all the formula variables that are caused by revisions to the geography of metropolitan cities and urban counties.

Overall Funding by Category

The following table describes the changes to formula funding and eligible areas by category.

CDBG Formula Amounts and Eligible areas

  FY 2001
FY 2002
Allocation ($000)
Change in
FY 2001
Count of
Eligible Areas
FY 2002
Count of
Eligible Areas
Overall $4,399,300 $4,341,000 -1.34%    
Entitlement communities $3,079,510 $3,038,700 -1.34% 1,013 1,024
Central cities $2,103,233 $2,064,618 -1.87% 539 539
Other Metro Cities $360,664 $355,436 -1.47% 321 326
Urban Counties $615,613 $618,626 0.49% 153 159
State Non- entitlement $1,319,790 $1,302,300 -1.34% 51 51

Geographic Area Changes

For FY 2002 that are a relatively small number of metropolitan cities and urban counties that had changes to their geographic area or classification. These cities and urban counties are shown below:

Metropolitan Cities Status Change
Lakewood Township NJ New Metro city based on population
Franklin Township NJ New Metro city based on population
Coon Rapids MN New Metro city in "joint grant agreement" with Anoka MN
McKinney TX New Metro city based on population
Flower Mound Town TX New Metro city based on population
Urban Counties Status Change
Mobile County AL New Urban County
Stanislaus CO CA New Urban County
Manatee County FL New Urban County
Marion County FL New Urban County
Dauphin County PA New Urban County
Richland County SC New Urban County

There were a number of relatively small changes in the formula factors to the urban counties that had changes to participation of their included places. In addition, the states that have metropolitan cities or urban counties with eligibility changes, especially those states with the new urban counties, will have reduced formula factors.

Impact of Population Change

The 2000 Census population changes were greater than would be expected for the nine-month period from July 1999 to April 2000. In general, an increase in population greater than that experienced in all metropolitan areas helps communities that benefit from formula A and hurt communities with formula B. On the other hand a decrease in population has the opposite effect.

Under the CDBG dual formula, allocations are based on formula A or formula B, whichever provides the higher grant. For entitlement communities, formula A has factors for population, poverty and overcrowded housing, while formula B has factors for population growth lag, poverty and pre-1940 housing. Population growth lag is the shortfall in population that a community has when comparing its population to the population it would have had if it grew like all metro cities from 1960 to the 2000. (States use population instead of growth lag in formula B.)

There are 993 entitlement communities with no changes to HUD geography as described above. Over a third of these communities had population changes over the nine month period that were greater than +/- 5%. However, since the population factor does not account for most of the funding in an allocation and since many of the allocations for these communities were relatively small, the impact on allocation change is generally less than $100,000 and the percentage change in allocation is less than 5%. Even with the decrease in funding, only 31 of these 993 communities had a change in allocation is more than $100,000 and a percent change in grant more than +/- 5%.

The following chart shows how the funding formula affects the 31 entitlement communities with a change in allocation of more than $100,000 and greater than +/- 5% and that had no change in the HUD geography. The chart shows the count of these communities by percentage change in population and shows whether they had an increase or decrease in funding under formula A or B.

FY 2002 entitlement grantees with allocation increases or decreases greater than $100,000 and +/- 5% of the allocation.

Population Change A - increase in
A-decrease in
B-increase in
B-decrease in
loss greater than 5%
loss 0-5%
gain 0-5%
gain greater than 5%

Reasons for Population Change

There are three main reasons for a larger than expected population change for any given entitlement community or state:

  1. Error with the estimate. Previous estimates of population may be understated for counties and large communities and states with significant immigrant populations. The Census Bureau reviewed of the process for producing national estimate as part of its work in determining whether to adjust the 2000 population counts for redistricting or other uses. The Bureau found the process for estimating immigrant population at a national level did result in undercounts. Similar processes are used in developing population estimates at the state and county level. Local estimates are shares of the county estimates based on housing estimates and so are indirectly affected by the immigrant estimate undercount.

  2. Reduction in the undercount. Previous estimates may be understated for communities with significant minority populations. The census 2000 did a much better job than the prior decennial census in reducing minority undercounts. Since population estimates are based on adjustments to the decennial census, entitlement areas with minority population that are more frequently uncounted would likely have had continued undercounts with the estimates.

  3. Change in the geographic area. While the Census Bureau did not revise geographic boundaries for HUD's entitlement areas. The HUD changes to geography, as described above in the section on geographic changes, affect all the formula factors for urban counties and states.

The Census Bureau's web site provides detail their analysis of the reduction of the undercount and problems with estimates using immigrant populations. In particular, see the second report to the Executive Steering Committee on the Accuracy and Coverage Evaluation Policy (http://www.census.gov/dmd/www/EscapRep2.html). The Census Bureau also has a site describing their methodology (http://www.census.gov/population/www/methodep.html) for population estimates.

Content Archived: April 28, 2011

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