1.) The process for developing the 2000 standards began even before OMB had  published the 1990 standards. Changes in Terminology Accompanied Definitional Changes

The 2000 standards differ from the 1990 standards in many ways, and the  Census Bureau and OMB have stated that the new standards are simpler  and more transparent than the previous standards. The 2000 standards  define certain important concepts differently from those used in the 1990  standards. One of the most notable differences between 1990 and 2000 is the  introduction of a new designation for less populated areas—micropolitan  statistical areas. Another change in the 2000 standards was in how an outlying county could  link to a central county (or counties) and become part of a metropolitan or  micropolitan statistical area. 2000 Standards Affected How and Whether Many Counties Were Included in New Statistical Areas

When OMB issued its June 6, 2003, newly configured statistical areas using  the 2000 standards for the United States, five counties that had been part  of metropolitan statistical areas, no longer qualified for this designation. 2 and  3.) Impact of Revised Standards on Four Selected Federal Programs Varied

Some federal agencies are required by statute to use metropolitan  statistical areas to allocate program funds and implement other aspects of  their programs. More specifically, OMB urges agencies,  organizations, and policymakers to carefully review program goals to  ensure that appropriate geographic entities are used to determine eligibility  and allocation of federal funds for these programs. As a result of changes in the standards in 2000, eligibility under CDBG has  already expanded; eligibility under the locality pay program is expected to  be expanded in January 2005; HHS anticipates under its proposal that  hospital payments for fiscal year 2005 will be affected, but with no net  increase in funding; and eligibility under the Ryan White CARE Program is  unaffected by the standards because the boundaries for providing services  are set by statute. Under current law, HUD uses  designated metropolitan statistical areas, in part, to determine the  eligibility of city and county governments to receive CDBG formula  entitlement funds. According to HUD officials, OMB’s 2000 standards resulted in new  eligibility for 60 cities that would provide them under the GDBG formula  with a total of $36.2 million in CDBGs. OMB’s process for reviewing and revising statistical  areas was undertaken without regard to their effect on any federal  programs (that is, for nonstatistical purposes). Micropolitan statistical area: A CBSA associated with at least one urban  cluster that has a population of at least 10,000, but less than 50,000. Two adjacent metropolitan statistical areas are  combined as a single metropolitan statistical area if:   (A) the total population of the combination is at least  one million and (1) the commuting interchange  between the two metropolitan statistical areas is equal  to at least 15% of the employed workers residing in the  smaller metropolitan statistical area, or equal to at least  10% of the employed workers residing in the smaller  metropolitan statistical area and the urbanized area of  a central city of one metropolitan statistical area is  contiguous with the urbanized area of a central city of  the other metropolitan statistical area or a central city in  one metropolitan statistical area is included in the  same urbanized area as a central city in the other  metropolitan statistical area; AND (2) at least 60% of  the population of each metropolitan statistical area is  urban.
Why GAO Did This Study

For the past 50 years, the federal government has had a metropolitan area program designed to provide a nationally consistent set of standards for collecting, tabulating, and publishing federal statistics for geographic areas in the United States and Puerto Rico. Before each decennial census, the Office of Management and Budget (OMB) reviews the standards to ensure their continued usefulness and relevance and, if warranted, revises them. While designed only for statistical purposes, various federal programs use the statistical areas to determine eligibility and to allocate federal funds. OMB advises agencies to carefully review program goals to ensure that appropriate geographic entities are used in making these decisions. GAO was asked to examine the process used for developing the OMB standards issued in 2000 and their effects on certain federal programs. Specifically, GAO agreed to report on (1) the process used to develop the 2000 standards, (2) how the 2000 standards differed from the 1990 standards, (3) how the application of the standards affected the geographic distribution of counties into statistical areas, and (4) the effect of standards on the eligibility and funding allocations for four federal programs.

What GAO Found

The new standards for federal statistical recognition of metropolitan areas issued by OMB in 2000 differ from the 1990 standards in many ways. One of the most notable differences is the introduction of a new designation for less populated areas--micropolitan statistical areas. These are areas comprised of a central county or counties with at least one urban cluster of at least 10,000 but fewer than 50,000 people, plus adjacent outlying counties if commuting criteria is met. The 2000 standards and the latest population update have resulted in five counties being dropped from metropolitan statistical areas, while another 41counties that had been a part of a metropolitan statistical area have had their statistical status changed and are now components of micropolitan statistical areas. Overall, the 2000 standards have resulted in changes in every state and nationwide statistical coverage has increased. Under the 1990 standards, 847 counties were in metropolitan statistical areas. Now, there are 1090 counties in metropolitan statistical areas and 690 counties in micropolitan statistical areas. Of the four federal programs GAO reviewed to determine the impact of the 2000 standards, eligibility under one has expanded; eligibility under another is expected to expand in January 2005; the agency overseeing another anticipates under its proposal that program payments for fiscal year 2005 will be affected, but with no net increase in funding; and eligibility under another program is unaffected because the geographic boundaries used to determine eligibility are set by statute. For example, the standards have resulted in new eligibility in fiscal year 2004 for 60 cities to receive a total of $36.2 million in Community Development Block Grants, which provide funds to revitalize neighborhood infrastructure. This funding increase required a 1.2 percent funding cut for all other grantees because a cut is required to offset increases due to expanded eligibility.