Fahe believes that to solve the unfairness in the income limit system, Congress should insert language that causes income limit calculations to use the higher of the county AMI, the state non-metropolitan AMI, or the national non-metropolitan AMI.
Despite Congress’ best intentions when they created the system that disburses federal housing and community development dollars, there is a deep unfairness inherent in that system. Poor rural counties in poor states do not have the same safety mechanism that poor rural counties in rich states have. This proposal outlines that unfairness, and suggests a legislative reform to ensure that the safety mechanism, as Congress originally intended, actually works for everyone in the nation.
The U.S. Department of Housing and Urban Development (HUD) produces, for every Metropolitan Statistical Area (MSA) and non-metropolitan county, a measure known as the Median Family Income, more popularly referred to as Area Median Income (AMI). This measure reflects the median income for families living in the area in question, and is used as the basis of the calculations which establish “income limits.”
|Perry KY||Randolph WV||Washington DC|
|AMI for community||$45,400||$54,900||$121,300|
|“Very low income”||$25,600||$27,450||$60,650|
|“Extremely low income”||$25,600||$25,750||$36,400|
|Difference between “average family” income and “low income” limit||$4,450||$11,000||$43,700|
In a major metropolitan area like Washington, D.C. with a high AMI, the fractional calculations set income limits with a lot of range in between them. In places like Perry County, Kentucky however those income limit brackets are right on top of one another – the difference between an average family and a low income family is considered to be only $4,450 per year. The closer these numbers are to one another, the higher the indication that a community is struggling.
|Income Category||Rural Population||Urban Population||Sum||% Rural Population Included||% Urban Population Included|
|“Very Low Income”||477,671||21,163,298||21,640,969||1.0%||7.7%|
|“Moderate-Low Income 1”||14,553,852||110,128,163||124,682,015||31.6%||40.1%|
|“Moderate-Low Income 2”||24,122,586||138,720,683||162,843,269||52.3%||50.5%|
A smaller percentage of residents – not just a smaller absolute number of residents – are eligible for federal programs in these non-metropolitan counties. In urban areas, 30.4% of the population qualifies as “low-income” whereas in rural areas only 16.3% of the population does.
Congress placed a “state floor” into the calculation of non-metropolitan county AMIs to prevent a particularly poor county from suffering from a depressed AMI. If the median income of the entire nonmetropolitan area of the state was higher than a county’s AMI, that county shall use the higher number. However, this system breaks down in states with concentrations of rural poverty. In regions like Appalachia (e.g. Kentucky, West Virginia), the Mississippi Delta (e.g. Mississippi, Louisiana), and along the southern border (e.g. New Mexico, Arizona) concentrations of rural poverty artificially lower AMI calculations state wide.
This disparity can be erased and communities in economically distressed counties in poorer states can receive the federal funding they should already be receiving by revising the original mechanism put in place by Congress. This mechanism – the state floor – can be extended to include a national floor. The national floor proposed here would increase the AMIs for 998 counties across the country. 245 of those counties are in Appalachia, and 190 are in the Mississippi Delta, where these income limit issues are most acute due to concentrated rural poverty and low state AMI floors.
To learn more about the “National Floor” proposal Fahe supports, and why, click here to read our full position statement.
For more information on this issue, including data on affected counties and states, please contact Joshua Stewart, Senior Advocacy Manager at Fahe, via email at email@example.com or via phone at 859.986.2321 ext. 6261