OMB Agrees with KLC; Drops MSA Change

The White House Office of Management and Budget (OMB) has dropped a proposed rule change to increase the minimum population requirement of central cities within a metropolitan statistical area (MSA). OMB agreed with comments submitted by the Kentucky League of Cities that the agency had “insufficient justification at this time” to make the change.

The day before President Biden took office, OMB issued a notice from the Metropolitan and Micropolitan Statistical Area Standards Review Committee that recommended increasing the minimum urban population from 50,000 to 100,000. That recommendation would have removed the MSA status of Bowling Green, Elizabethtown, and Owensboro, as well as the other areas included in their broader MSA footprint.

OMB originally argued that the MSA designations – which have changed over time and receive periodic reviews – exist purely for statistical purposes. As a result, OMB did not consider any policy impacts associated with the proposed change. KLC argued that by ignoring the potential impact on public policy, the proposal to modify the MSA determination ignored one of President Biden’s first executive orders. The order, entitled “Modernizing Regulatory Review,” requires agencies to quantify impacts and ensure no harmful effects result from regulatory changes.

The public notice stated that OMB “does not take into account or attempt to anticipate any public or private sector nonstatistical uses that may be made of the delineations.” KLC argued the lack of review dismisses the myriad ways MSA designations affect communities and the residents they serve.

Many federal grant programs use MSA status to determine eligibility. For example, the Community Development Block Grant (CDBG) program uses MSAs as one way to qualify as an entitlement community. Elizabethtown received over $213,000 in flexible CDBG funding in FY 2021; the city would lose its entitlement funding if OMB finalized the proposed population change.

In response to public comments, OMB will publish a notice in the Federal Register on July 16 that states “further research is necessary before deciding whether to change the criteria that determine whether an area is considered metropolitan.”

OMB will work with the Standards Review Committee – a group of statisticians and demographers – over the coming years to determine whether current population patterns warrant a change to the MSA definition.

Go here to review KLC’s public comments on the proposed change.