The changing nature of EDA allocations over time in terms of types of projects funded.

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1 EDA Expenditures Analysis Fall 2003 PRELIMINARY FINDINGS Larry Wood Amy Glasmeier I. Introduction This report summarizes an analysis of Economic Development Administration (EDA) expenditure data. These data were originally provided by the EDA. The analysis includes virtually every EDA allocation from 1965 to 1997, including allocations for, amongst other things, research, public works projects, planning, and technical assistance. 1 The EDA made a total of approximately 46,000 allocations during that period of time. 2 In particular, this analysis is concerned with a few key issues, which include the following: The amount of federal allocations to the EDA over time. The changing nature of EDA allocations over time in terms of types of projects funded. The spatial distribution of EDA expenditures over time. For purposes of comparing EDA allocations over time, this research assesses EDA expenditures in terms of real dollars. 3 Furthermore, and again for comparative purposes, this research utilizes a database of county-level socioeconomic information that includes consistent spatial units of analysis over time. 4 Figures and tables are included in the Appendix. II. Allocations to the EDA Figure 1 demonstrates EDA expenditures in terms of real dollars over time. As indicated in the figure, there was a clear drop-off in EDA expenditures in 1982, and since that time the agency s expenditures have remained relatively low. Not including 1977, when EDA 1 Note that in some instances charts include information beginning in EDA allocations were exceptionally small in 1965, its first year of existence. This is presumably because the agency was just getting started and also related to agency allocative activities not really getting started until halfway through the 1965 fiscal year. In some instances 1977 allocations are also not included in charts due to the extraordinary number of allocations made during that year. 2 The EDA provided two matching databases, one of which included a total of 46,331 allocations and contained detailed and presumably more accurate information about funding sources, and another which contained a total of 46,053 allocations and contained more detailed information about the purpose of each allocation. Based upon matching project codes, these two databases were combined, leaving a total of 45,760 projects and allowing for an analysis of project types as well as allocations to individual projects. 3 Deflators used in this analysis were from the Office of Management and Budget, Budget of the United States Government, Fiscal Year 2003 Historical Tables (Table 10.1: Gross Domestic Product and Deflators Used in the Historical Tables: ; Total Non-Defense Composite Outlay Deflator), available at 4 This analysis includes 3,069 counties that serve as historically consistent units of analysis. In instances where county boundaries have changed over time (e.g. a county has split into two counties, etc.) the unit of analysis nonetheless remains the same throughout all years in the database.

2 expenditures dwarfed the agency s expenditures in all other years, from 1966 to 1981 the agency s annual real dollar expenditures averaged $972,908,308, or close to 1 billion dollars per year. 5 In 1982 total EDA expenditures dropped below $500,000,000 for the first time in the agency s existence, and between 1982 and 1997 average annual expenditures were $330,587,860, or approximately only a third of what they had been prior to While the EDA s total expenditures have dropped significantly over time, the total number of allocations in terms of projects or activities funded remained fairly steady when comparing the earlier period of the agency s operations to the later period (Figure 2). For example, prior to 1982 the average number of annual allocations was 1,180, and after 1982 the average number of annual allocations was 981. Until 1975 the EDA typically provided funding to between 800 and 1,200 activities. Between 1976 and 1983 the average number of activities funded in any given year was closer to 1,500, but from 1984 on the average number of projects funded was less than 1,000. In short, aside from a general up tick in activities funded during the mid-to-late 1970s and early 1980s, the EDA has funded a similar number of activities over time, but with the drop in total allocations to the agency beginning in the early 1980s, the EDA began providing less funds, on average, for any given activity. A major exception in EDA funding activities was in the year There was a tremendous surge in EDA expenditures that year, with the EDA providing funding to more than 10,500 public works projects in that year alone. Between 1965 and 1997, approximately 43 percent of all EDA funding occurred in 1977 alone. This tremendous increase in funding to the agency was in relation to the Public Works Employment Act of 1977, which resulted in the earmarking of $4 billion (in 1977 dollars) for the EDA to appropriate to local public works projects. 6 With more than half of all EDA public works projects having been funded in 1977, this one year can be considered an anomaly in funding appropriations to the EDA, and perhaps funding activities by the EDA as well. 7 Also of note is the slight rise in EDA allocations in 1994 and 1995, which was largely due to an increase in Title IX allocations during those years in relation natural disasters. 8 Title IX allocations, as well as the other types of activities that the EDA has funded, are described in more detail in the next section. 5 See footnote 1 in relation to why 1965 is not included in this aspect of the analysis. 6 Information available at www2.law.cornell.edu. 7 A court case in relation to the allocation of these resources suggests that there were concerns in relation to, amongst other thins, the spatial allocation of these resources. More particularly the court case dealt with issues of whether or not the public works appropriations associated with this bill were being allocated in term of competitive bidding processes. The ostensible objective of the EDA in allocating these resources remained, as had largely been the case in prior years, to allocate funds to areas of high unemployment. For more information on the court proceedings see Also, according to the database, there were two rounds of public works projects, with round I resulting in the funding of 2,062 projects and Round II resulting in the funding of 8,548 projects. Also during that year 269 public works projects were funded under the unique project code of drought assistance. 8 For example, in 1993 the EDA made 122 Title IX allocations in 1993, approximately 25 percent of which were in relation to natural disasters (primarily Hurricane Andrew). In 1994 the total number of Title IX allocations almost tripled (325), with more than one-third of these allocations going to address floods in the Midwest. Similarly, the EDA made 299 Title IX allocations in 1995, with more than one-third going either for Midwest flood assistance or in relation to Tropical Storm Alberto. By 1996 the total number of Title IX allocations dropped back to 188, with only about 190 percent of these allocations being related to a natural disaster.

3 III. Types of Projects Funded As indicated in the data provided by the EDA, the agency has funded a number of different projects over the course of its existence. The variation in the types of projects funded has likely related to, at least in part, changing mandates over time. At the same time, though distinguished as being separate programmatic activities, there is some overlap between at least some of the types of projects funded as described below. To provide one example, some Public Works activities have been similar in nature to what have been coded Title IX Economic Adjustment Assistance activities. Based upon codings in the database, as well as analysis of EDA policy documents and scrutiny of the data itself, for the purpose of this analysis all projects were included as being related to one of the following seven categories: Planning; Public Works; Defense Adjustment/Industrial Loans; Title IX Economic Adjustment Assistance; Technical Assistance; Trade Adjustment; and Research and Evaluation. Each of these project categories and corresponding EDA allocations is described in more detail below. Percent allocations to each of these types of projects are indicated in Figure 3. Planning Allocations The EDA allocates funds for planning, largely to local and regional planning agencies. 9 The EDA made a total of 13,030 allocations to planning activities between 1965 and As opposed to some of the other types of projects, planning allocations have largely been repeat allocations over time, so that any given planning entity has often been funded for a number of consecutive years. 10 Over time, individual funding allocations have averaged $81,951 per allocation in terms of real dollars. Excluding 1977, planning allocations have accounted for approximately 5 percent of all EDA expenditures over time. Until 1982, the EDA allocated, on average, $36,731,724 per year for purposes of planning. From 1982 to 1997 this average had only dropped to $30,006,812. Thus, while total allocations for planning have not been a large part of EDA expenditures when considered over the entire course of the agency s existence, these allocations have become a growing part of the agency s total budget as allocations to the agency have been cut over time. Thus, until 1982 planning expenditures accounted for, on average, about 3.5 percent of the agency s annual budget. Between 1982 and 1997 they accounted for, on average, 10 percent of the agency s annual budget. 9 A randomly selected sample of planning agencies/organizations receiving EDA funding included the following: State of Maine; Eastern Alabama Planning and Development Commission; South Jersey EDD; City of El Paso; SW Arkansas PDD; Unitah Basin EDD; Peninsula Development Association; Greater Southwest CDC; NE Texas EDD; West Central Indiana EDD; State of Indiana; NW Iowa PDC; Coastal Georgia RDC; The City of Birmingham; Calvert County Economic Development Corporation; Central Oklahoma EDD; Laguna Pueblo; Middle Rio Grande DC; North Georgia RDC; Region Five Development Commission; County of Sacramento; Shoshone-Bannock Tribes; and the Southern Oklahoma Development Association. 10 For example, the Region Five Development Commission was provided funding in every year except 1 between 1976 and Similarly, the City of Rockford was provided funding in all years from 1979 to 1987, while the South Texas Development Council was provided funding in virtually every year of the EDA s existence. There are very few instances of a funding entity receiving EDA allocations in only one year.

4 Public Works Allocations With the EDA having been created as a result of the Public Works and Economic Development Act of 1965, public works projects have long been a major focus of EDA activity. A total of 20,838 projects were labeled as public works projects in the database utilized in this analysis. However, it is of note that more than half or to be more precise 53.7 percent of these public works projects were funded in As previously noted, the EDA funded more than 10,500 public works projects that year in relation to the Public Works Employment Act of The EDA has funded an exceptionally wide range of public works projects. During the period studied, a small sample of these projects include the following: convention centers; drug treatment centers; erosion control projects; fairgrounds; fire stations; hospitals; highways and roads; historic sites; hospitals and health clinics; resorts; industrial parks; libraries; nursing schools; parking garages; public housing projects; recreation centers; retirement homes; schools; swimming pools; tourist centers; and water and sewer projects. As is indicated in Figure 4, between 1966 and 1974 the EDA allocated, on average, between 70 and 80 percent of its funds to public works projects. Thereafter public works projects were not as large a part of the EDA budget, and from 1993 to 1997 public works projects accounted for less than 50 percent of all EDA expenditures. Excluding 1977, the average number of public works projects funded by the EDA from 1966 through 1981 was 425, and the EDA spent an average annual amount of $605,860,688 on public works projects during that period of time. From 1982 to 1997 the average number of public works projects that the EDA funded in any given year was 203, or less than half of what it had been before the major decrease in allocations to the agency. Relatedly, average annual expenditures on public works projects between 1982 and 1997 were $182,066,364, or less than a third of what they had been prior to Thus, as was indicated in the annual allocations of the agency in general, from 1982 on the agency was not only funding less public works projects, but was providing even less funding for any given project. During the 1966 to 1981 period, the average public works project received, in real dollars, $1,423,991. During the 1982 to 1997 period this figure had dropped to $896,051. It is also apparent from the data that prior to 1982 the EDA was more likely to provide supplemental funds to a public works activity that it had previously funded. For example, during the period 1966 to 1982, 19 percent of all public works projects funded had been funded by the EDA previously. Successive grants were typically smaller, if not much smaller, than the initial funding for a project. 11 From 1982 on the number of grants for previously funded projects dropped significantly, so that during the period 1982 to 1997 these appropriations accounted for only 3 percent of all EDA public works expenditures. Another pattern that emerged from the analysis of the data related to the types of public works projects that the EDA has funded over time. As previously mentioned, the EDA has funded a vast range of different types of public works projects: from reservoirs to swimming pools, from 11 For example, the initial grant to one sewer project was $258,000, and the only other grant going to the project was three years later and was for $24,000. In another instance funding for a reservoir was $300,000 the first year and $115,000 the following year. In still another instance, the EDA provided $432,000 for a sewer system in one year and then in the following year $84,000 for the same project.

5 university auditoriums to airport hangars. However, and while there is only limited information about any given type of project included in the database, it is nonetheless clear that the types of activities the EDA has most typically funded have been water and sewer projects. Of the 20,838 public works projects funded between 1965 and 1997, approximately one-third were a water or sewer related project. 12 Moreover, since 1981 close to 50 percent of all public works projects funded by the EDA have been for a water or sewer related project. 13 Because the information in the database about project types is limited, it is difficult to make any further assertions about the types of public works projects funded by the EDA over time, though it is clear that access roads and highways accounted for as much as 10 percent or more of all EDA public works expenditures over time. Also, though economic assistance in relation to natural disasters was largely funded under the programmatic goal of Title IX projects, in some instances public works allocations have been in relation to natural disasters and economic assistance. This was especially the case in 1973, when a large number of public works allocations were made in response to damage related to Hurricane Agnes. 14 Allocations made under the auspices of Title IX did not begin until Title IX Economic Adjustment Assistance Allocations Title IX was part of the extension of the Public Works and Economic Development Act (PWEDA) signed in 1974 and was associated with providing economic adjustment assistance in relation to structural economic change. As well as having been for economic adjustment assistance in general, EDA Title IX appropriations, which totaled 2,429 allocations between 1975 and 1997, were often particularly in relation to defense adjustment assistance as well as for assistance in relation to natural disasters, such as floods and hurricanes. While approximately three-quarters of all EDA Title IX allocations were for what was termed in the database as being general economic adjustment assistance, examples of other Title IX allocations include the following (with the number of total allocations in parentheses): Hurricanes Fran and Hortense (13); 1996 Floods (38); 1997 Floods (9); Midwest Flood (approximately 159); Northridge Earthquake (20); Defense Adjustment Assistance (342); Hurricane Andrew (46); and Tropical Storm Alberto (56). During the first six years of Title IX appropriations, or in other words between 1975 and 1980, the average annual allocation to Title IX projects was $150,252,340, and the average number of Title IX projects funded was 81. Then for the 12 years between 1981 and 1992 average annual allocations, at $40,299,084, were only about a quarter of what they had been during the first 6 years of Title IX appropriations, and the average annual number of Title IX projects funded by the EDA between 1981 and 1992 was 62. Again, like some of the trends in the other types of projects funded, after 1981 the EDA was not only funding less Title IX projects, but the agency was giving less money to any given Title IX project. However, beginning in 1993, the average annual allocations for Title IX projects rose dramatically, and the average allocations to Title 12 Based on an approximation from the data that 7,184 public works projects were for water, sewer, or water and sewer related issues. 13 A total of 1,665 or 47 percent. 14 As many as public works projects were funded in relation to Hurricane Agnes. 15 About 25 public works allocations were made in relation to floods in the Midwest in 1994 and 1995.

6 IX projects would stay high thereafter, averaging $223,172,025 per year between 1993 and The average number of projects funded annually was 240 at that time. Thus, allocations for Title IX projects went from accounting for between 10 and 20 percent of the EDA s total budget between 1975 and 1992, to accounting for approximately half of its budget during the period 1993 to By the mid-1990s Title IX appropriations had obviously become a focus of EDA activities. Much of the increase in Title IX spending related to disaster relief, particularly in relation to Hurricane Andrew and flooding in the Midwest. Between 1994 and 1997, Title IX allocations that were specifically targeted towards disaster relief accounted for approximately 20 percent of the entire EDA budget. It would be interesting to assess expenditure data from 1998 to the present to see if whether or not the increased funding for disaster relief in the mid-1990s was an anomaly for only a few years or instead indicative of an agency whose mandate was increasingly one of reacting more to disasters rather than actively addressing poverty. In general, however, the Title IX appropriations, in that they have largely related to general economic adjustment assistance over time, can largely be understood as more reactionary than of being instances of actively addressing long-standing poverty. Supporting this argument, and as will be indicated in the analysis of spatial patterns of expenditure allocations, the initial impoverished communities and regions that were identified as areas of particular need by the EDA have received less than their proportionate share of Title IX appropriations over time. Defense Adjustment/Industrial Loans and Guarantees Until 1990 the EDA allocated funds for what it termed defense adjustment/industrial loans and guarantees. As is indicated in Figure 3, until 1982 these allocations were at times a large part of the budget. Thereafter there was an exceptional drop-off in allocations to these types of projects until such allocations stopped altogether in In 1979 defense adjustment/industrial loans and guarantees exceeded allocations for public works projects, but there was a notable drop-off in allocations soon thereafter. There were only 1,207 of these allocations made over time, but at close to $3 million per allocation, the average allocation to these types of projects was exceptionally high. Many of these allocations should be understood as loans and guarantees to business and industrial interests. A range of manufacturers and industries received either loans or guarantees from the EDA under this category of allocation. Though information in the database about exactly what the EDA funded in these instances is limited, a random sample of industries receiving these loans or guarantees includes the following: an adhesives manufacturer; a lumber plant; a concrete plant; a carpet manufacturer; a women s handbag manufacturer; a leather goods manufacturer; an umbrella manufacturer; an aluminum window manufacturer; and a crystal glass manufacturer. Technical Assistance Allocations During the study period the EDA made 6,946 allocations to what were understood as technical assistance projects. However, despite the large number of allocations, these projects always accounted for less than 10 percent of the EDA s budget, and in any given year these allocations were typically less than 5 percent of the agency s budget (see Figure 3). A lot of these projects were dedicated to activities such as entrepreneurial development, feasibility studies, and

7 organizational support, though there was a range of other activities as well. The average number of technical assistance allocations between 1966 and 1981 was 283. From 1982 to 1997 this dropped to 142. Annual expenditures for technical assistance allocations averaged $40,531,423 until 1981, and thereafter averaged $12,232,735. As opposed to the Defense Adjustment/Industrial Loan and Guarantee allocations that averaged close to $3 million per allocation, or the Public Works projects that averaged about $1.3 million per allocation, individual Technical Assistance allocations averaged only $125,000 over time. Trade Adjustment Allocations and Research and Evaluation Allocations What were termed trade adjustment allocations were an exceptionally small part of EDA allocations over time, totaling only 407 individual allocations in the database. These allocations did account for, however, 6 percent of the EDA s budget in The EDA began funding these types of projects in 1975, when it funded a total of 5 such projects in that year. The agency continued funding a few trade adjustment projects in any given year thereafter until The agency then stopped funding these types of projects altogether until 1992, and then between 1992 and 1997 it funded, on average, 16 projects in relation to trade adjustment in any given year. All of the projects in the 1990s did not have a spatial code associated with them. These allocations were often to regional Trade Adjustment Assistance Centers (TAACs). In the 1970s trade Adjustment allocations were made to companies such as clothing and footwear manufacturers in relation to organizational support issues. In short, however, these projects have been an exceptionally small part of the EDA budget over time. The same is true of 986 allocations in the database for Research and Evaluation in that such allocations have also been a small part of the EDA budget over time. Also, as was the case with the Trade Adjustment allocations made in the 1990s, the majority of the Research and Evaluation projects did not have a spatial code associated with them. The Research and Evaluation allocations accounted for less than 1 percent of EDA allocations in almost every year. The high point for these allocations was in 1984 when they accounted for a total of 3.7 percent of total allocations in that year. These types of expenditures included allocations to consultants, such as the Rand Corporation, universities and colleges, and individuals. In this analysis these allocations are not assessed as being a part of the EDA s development allocations. IV. Geographic Distribution of EDA Development Allocations This part of the analysis assesses the spatial allocation of EDA expenditures. It includes all counties within the contiguous 48 states for which a county-level spatial identifier was associated with a particular allocation. Some allocations were not spatially oriented, including most of those designated for research and development. Any projects that were not spatially referenced in the database were not included in this aspect of the analysis. In short, this part of the analysis includes an assessment of slightly more than 41,000 EDA projects, or approximately 90 percent of all of the projects in the databases initially provided by the EDA. Remaining projects were typically either in Alaska or Hawaii, in other U.S. territories, were statewide projects, or were for research and evaluation and were not coded spatially.

8 Allocations to 5a and 5b Counties In accordance with the Area Redevelopment Act (Public Law 87-27), in 1965 the EDA designated "Redevelopment Areas," which included counties or clusters of counties, county equivalents, or Indian Reservations within the United States that were to be, at least in part, the focus of EDA policy. Redevelopment Areas, in accordance with sections 5(a) and 5(b) of the Area Redevelopment Act, included areas that met the following criteria: For 5(a) designated areas, nontemporary unemployment was 6 percent at the time of designation and had averaged 6 percent for either 1) 3 out of the preceding 4 years and had been 50 percent or more above the national average, or 2) 2 out of the preceding 3 years and had been 75 percent or more above the national average, or 3) 1 out of the preceding 2 years and had been 100 percent or more above the national average. The EDA selected 5(b) Redevelopment Areas based upon one or more of the following criteria: 1) low income 2) low farm income 3) rural development 4) low production farming 5) very small area of substantial and persistent unemployment 6) other needs A total of 912 counties met the EDA's 5(a) or 5(b) criteria, with 166 and 746 counties meeting the 5(a) and 5(b) criteria respectively. 16 There was no overlap between 5(a) and 5(b) counties. As indicated in Figure 5, a large number of 5(a) and 5(b) counties (246) were in the Appalachian Region, which reflects, along with the inception of the Appalachian Regional Commission (ARC) in 1965, the federal government's nascent concern in the 1960s with Appalachia's socioeconomic conditions. The EDA also designated a large number (128) of Redevelopment Areas in the Mississippi Delta Region. In general, 5(a) and 5(b) counties were distributed throughout much of the U.S., often in clusters, and there was a considerable number of such designations in Appalachia, the Mississippi Delta Region, and Indian Reservations in the Southwest. The EDA designated very few Redevelopment Areas in states such as Iowa, Kansas, Nebraska, and South Dakota, or more generally the central U.S. In the 1960s, EDA Area Redevelopment counties, when compared to the rest of the nation, were characterized by the following conditions: 17 Low per capita income and high rates of unemployment relative to much of the rest of the U.S. 16 5(a) and 5(b) counties or areas were aggregated to correspond with the historical database of county-level socioeconomic database previously described in footnote Based primarily upon 1960 and 1970 U.S. Census data.

9 Small populations, including a smaller percentage of the population living in urban or metropolitan areas. While close to 70 percent of the U.S. population was living in urban areas in the 1960s, Redevelopment Areas typically had urban populations of approximately 20 percent. Furthermore, most 5(a) and 5(b) counties were located a relatively long distance from metropolitan areas, which often limited employment opportunities and access to social services for residents of such counties. High rates of poverty. In 1960, the median poverty rate in 5(a) and 5(b) counties was percent, compared to percent in counties that were not designated as being a part of a Redevelopment Area. Educational attainment rates well below the national average. Approximately only onequarter of all residents 25 years old and over living in Area Redevelopment counties had High School degrees in 1960, while this figure was closer to 40 percent throughout the rest of the nation. Substandard housing conditions. The number of families without plumbing in EDA Redevelopment Areas was more than twice as high as in the rest of the U.S., one indicator of poor housing conditions in these areas relative to the rest of the U.S. EDA Allocations to 5(a) and 5(b) Counties It is assumed in this analysis that, at least throughout the first few years of the program, the EDA would have allocated a disproportionate share of funds for development projects to 5(a) and 5(b) counties rather than to other counties in the U.S. A total of approximately 30 percent of all counties in this analysis (912 of a total of 3,069 counties) qualified as either a 5(a) or 5(b) county. It is clear that the EDA was successful in allocating the majority of its funds to 5(a) and 5(b) designated counties in the early years of its existence. However, it is also clear that the EDA gradually began increasingly allocating fewer funds to 5(a) and 5(b) counties over time. An overview of this aspect of the analysis is as follows. As indicated in Table 1, for the first five years of its existence the EDA allocated more than 50 percent of it public works allocations annually to 5(a) and 5(b) counties. By 1971, however, public works allocations to these counties had dropped to 48 percent of all public works expenditures, and this drop gradually continued until In 1977, the year that the EDA allocated funds to more than 10,000 public works projects, 5(a) and 5(b) counties only received 20 percent of all public works allocations, somewhat less than what would be considered a proportionate share of 30 percent. From 1978 onwards, 5(a) and 5(b) almost invariably received not much above or below what might be considered their fair share of public works allocations. In short, from about the mid-1970s on, the 5(a) and 5(b) counties were no longer the target of EDA public works activities. This is clearly evident in Figure 5. As indicated in Table 2, the pattern of allocations to 5(a) and 5(b) counties in terms of Defense Adjustment/Industrial Loans and Guarantees allocations is somewhat similar to that of public works allocations, especially in that they were above average during the first few years of the

10 EDA s existence, then tailed off dramatically after that. Unlike the public works allocations, however, throughout most of the 1970s 5(a) and 5(b) counties were receiving far less than their fair share of funds. Similarly, in terms of other types of funding activities, EDA appropriations have rarely been disproportionately higher in 5(a) and 5(b) counties. For example, as is indicated in Table 3, Title IX appropriations have only been disproportionately higher to 5(a) and 5(b) in 4 out of 23 years total, and even in those years only slightly above 30 percent. By contrast, in 1977 and (a) and 5(b) counties only received 5 percent and 7 percent of Title IX appropriations respectively. As indicated in Tables 4 and 5, Trade Adjustment as well as Technical Assistance allocations to 5(a) and 5(b) counties have almost always been disproportionately low in such counties, often well below 30 percent of total Technical Assistance allocations. Planning allocations to 5(a) and 5(b) counties have also often been disproportionately low. However, the county-level spatial association of these references is questionable, as planning agencies that have received EDA funds often work at the multicounty level. Table 7 provides an indication of the extent to which EDA development allocations have gone to 5(a) and 5(b) counties over time. These allocations include all categories of allocations aside from planning and research and evaluation. As is indicated in this table and clearly indicated in Figure 6, after (a) and 5(b) counties rarely received more than their proportionate share of EDA development funds, and in many years received well below what could be considered their proportionate share of funds. EDA Allocations to Counties Measured by the Economic Health Index The next part of this analysis utilizes a measure of economic health to determine the general economic characteristics of counties that have received funds from the EDA throughout the course of the agency s existence. This section presents an index of economic distress that emphasizes comparative rates of unemployment, income, level of transfer payments, and labor force participation for counties throughout the contiguous 48 states. The index was originally developed as an alternative measure of distress for the ARC. 18 The index draws in part on traditional measures of economic health used by other federal agencies, including the EDA and the ARC. However, it also contains some significant additions. Specifically, it is composed of four individual indices: a per-capita market income index, which compares a county s income level, less transfer payments, to the national level; an unemployment rate index which compares the county-level civilian unemployment rate to the national civilian unemployment rate; a labor force participation index; and a per-capita transfer payments to per-capita market income ratio index. 19 The indices are then summed to arrive at an index of economic health. The index is designed to indicate how individual counties deviate, in both positive and negative terms, from national economic conditions. The Economic Health Index evaluates each county relative to all others, and tracks changes in county scores over time. 18 A. Glasmeier and K. Fuellhart, Building on Past Experience: Creation of a New Future for Distressed Counties (Washington, D.C.: Appalachian Regional Commission, 1998). 19 The inclusion of measures of transfer payments and labor force participation are designed to assess the extent to which the population depends on external sources of unearned income (e.g., transfer payments) and the share of the population that depends on the labor of others.

11 In the following section, the Index is used to analyze patterns of county-level economic status and allocations of EDA funds for the period 1965 to Based upon natural breaks in index scores, counties are grouped into four categories based upon their index scores: Category 1 Category 2 Category 3 Category 4 Very good economic health Good economic health Poor economic health Very poor economic health To summarize, counties in categories 1 and 2 have very good or good economic health, and counties in categories 3 and 4 have poor or very poor economic health. For the remainder of this analysis, the term distress will relate to counties either in categories 3 or 4, while nondistress will refer to counties in categories 1 or 2. EDA Allocations to Economically Distressed Counties Over Time Is indicated in Table 8 and Figure 7, while the EDA initially allocated a disproportionately larger share of funds to what might be considered distressed counties, beginning in 1975 the agency, for the first time, began allocating its development resources in disproportionately greater amounts to non-distressed counties. In more than half of the years thereafter the agency allocated a disproportionately greater share of funds to non-distressed counties. The pattern of the EDA allocating a disproportionate share of funds to non-distressed counties is perhaps more apparent and better understood when considered in the context of how much of a share of EDA development funds went to non-distressed counties in any given year, as is indicated in Figure 8. Since 1971, more than 70 percent of EDA funds have gone to non-distressed counties, with this amount being above 80 and even 90 percent in many years. EDA Allocations Relation to Unemployment Seeing that unemployment has always been an important criterion for EDA policy, the next aspect of this analysis considers EDA county-level allocations in terms of county level rates of unemployment. Table 9 indicates that for any given year unemployment rates were slightly higher in counties that received EDA allocations than in counties that did not receive allocations. On average these rates ere about 1 percent higher. This may be indicative of the EDA at least somewhat focusing on areas of unemployment. However, while there is a consistent difference over time, this difference is only minor. Concentration of EDA funding Over Time This aspect of the analysis considers the particular counties in which the EDA has focused its resources over time. During the period 1965 to 1997, the EDA made at least one development allocation to 81 percent of the counties in the contiguous U.S. Approximately 93 percent of these counties received, on average allocations for 1 or less projects per year. Thus, only 7

12 percent of the counties in the U.S. received allocations for more than 33 projects from the EDA over the period studied. As is indicated in Table 11, counties that have received the most EDA funds over time have tended to be in metropolitan areas. All but one of the top recipients of EDA dollars over time have been counties in metropolitan areas. The top recipient of EDA funds was Los Angeles County, accounting for 2.65 percent of all EDA development allocations over time. Almost all of the counties in the top 25 in terms of dollars received from the EDA are in what would be considered major metropolitan areas. Furthermore, in terms of total allocations all but 9 of the top 100 counties were in major metropolitan areas. These nine counties and their Index scores over time are as follows (obviously not scientific, just for curiosity, and I wouldn t necessarily want to make any assumptions in relation to this, as allocations could have just as likely been to areas that were evincing increasingly worse economic conditions... though I would find that somewhat doubtful in terms of there being a pattern there. It is of note that virtually all the places below have gotten worse over time according to the EHI): County Index 1960 Index 2000 Essex, NY Aroostook, ME Humbolt, CA McKinley, NM Navajo, AZ Apache, AZ Carteret, NC Otero, NM Klickitat, WA Similar patterns are evident in terms of total projects funded by county over time. In this instance all of the top 25 counties were in a metropolitan area, with the leader again being Los Angeles County. Patterns of concentration over time Nothing of particular note here. For some examples: Alameda: 1966 through , 13, 7, 11, and 11 allocations, thereafter a big drop-off. St Louis 12, 8, Los Angeles: Consistently high numbers over time, especially until the 1980s. In any given year, however, the majority of counties (that received any EDA funding) only received 1 project. In most years one of the major metro areas such as LA, DC, was the largest recipient, typically a high of between 20 and 30 projects. Aside from funding to metro areas more generally, there does not appear to be a pattern of sustained funding to a given place over time.

13 Luzerne got 60 in 73, largely in relation to Hurricane Agnes, I would suspect. 11 in 74 and then 1 or 2 projects per year thereafter. Drop-off in terms of total projects beginning later on. Still, DC got 55 in 1980, 38 in 81, and 11 in 82. At first glance the only real pattern here is large-scale funding to metro areas and, in general, widespread dispersion of funds across space. Details of particular locations within cities not possible. Best that could be done in this regard is to differentiate amongst places in nonmetro areas.

14 Appendix

15 Figure 1: EDA Expenditures (In Real Dollars). Figure Excludes 1977 $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 $500,000,000 $ Note: Real 1992 Dollars. For details see Footnote 3.

16 Figure 2: Total Number of Allocations to All Projects and Programs by Year. Figure Excludes Total Number of Allocations Note: Does not include 1965 or Includes allocations for all activities, including planning.

17 Figure 3: Percent EDA Allocations to All Projects Figure excludes Percent EDA Allocations Pct PW Pct T9 Pct Def Ind Pct TA Pct Plan Pct Trad Note: Abbreviations are as follows: Pct PW percent allocations to public works projects; Pct T9 percent allocations to Title IX projects; Pct Def Ind percent allocations to Defense Adjustment/Industrial Loans and Guarantees; Pct TA percent allocations for technical assistance; Pct Plan percent allocations for planning; Pct Trade percent allocations for trade adjustment assistance.

18 Figure 4: Percent EDA Allocations to Public Works Projects Figure excludes Percent of Total EDA Allocations Notes: Does not include 1977, when close to 100 percent of the agency s allocations went to public works projects. See report for information regarding special circumstances that year.

19 Figure 5: EDA 5A and 5B Counties

20 Table 1: Public Works Allocations to 5A and 5B Counties PW$65 PW$66 PW$67 PW$68 PW$69 PW$70 PW$71 PW$72 PW$73 PW$74 PW$75 PW$76 PW$77 PW$78 PW$79 PW$80 PW$81 PW$82 PW$83 PW$84 PW$85 PW$86 PW$87 PW$88 PW$89 PW$90 PW$91 PW$92 PW$93 PW$94 PW$95 PW$96 PW$97 Not A 5A or 5B County 5A or 5B County Total % of Total % of Total N Sum Sum N Sum Sum N Sum 1 $276, % 4 $23,934, % 5 $24,210, $293,247, % 180 $679,814, % 224 $973,062, $280,582, % 186 $504,636, % 282 $785,218, $281,354, % 178 $364,974, % 279 $646,328, $259,772, % 149 $317,345, % 230 $577,118, $259,386, % 152 $280,101, % 254 $539,487, $263,296, % 128 $243,013, % 218 $506,310, $327,865, % 186 $275,691, % 378 $603,557, $356,692, % 177 $312,623, % 378 $669,315, $272,054, % 170 $205,707, % 377 $477,761, $247,546, % 119 $161,363, % 293 $408,910, $300,705, % 133 $171,400, % 331 $472,106, $ % 604 $2,853,353, % 1738 $ $239,234, % 128 $140,816, % 315 $380,051, $341,024, % 104 $311,675, % 302 $652,700, $329,133, % 92 $105,099, % 294 $434,232, $335,075, % 80 $78,424, % 250 $413,499, $129,905, % 52 $59,997, % 157 $189,902, $225,264, % 112 $97,799, % 303 $323,063, $160,586, % 88 $67,720, % 251 $228,306, $141,437, % 71 $57,185, % 195 $198,622, $96,592, % 65 $51,805, % 159 $148,398, $95,283, % 70 $54,172, % 189 $149,455, $94,606, % 66 $51,960, % 182 $146,566, $78,248, % 76 $57,387, % 171 $135,636, $73,626, % 48 $43,603, % 126 $117,230, $93,049, % 59 $49,003, % 158 $142,053, $95,382, % 60 $57,648, % 160 $153,031, $85,760, % 50 $52,224, % 133 $137,985, $130,235, % 54 $59,046, % 170 $189,281, $134,314, % 59 $55,880, % 177 $190,194, $116,497, % 45 $42,098, % 145 $158,596, $96,586, % 68 $54,042, % 168 $150,628,471 Note: 5A and 5B counties accounted for 30 percent of the total counties in this analysis.

21 Figure 5: EDA Public Works Allocations to 5A and 5B Counties Percent of Total Allocations Note: 5A and 5B counties accounted for 30 percent of the total counties in this analysis.

22 Table 2: Defense Adjustment/Industrial Loans and Guarantees Allocations to 5A and 5B Counties DI$65 DI$66 DI$67 DI$68 DI$69 DI$70 DI$71 DI$72 DI$73 DI$74 DI$75 DI$76 DI$77 DI$78 DI$79 DI$80 DI$81 DI$82 DI$84 DI$86 DI$89 DI$90 N Not Designated 5A or 5B Designated 5A or 5B Total % of Total % of Total Sum Sum N Sum Sum N Sum 13 $40,690, % 35 $59,705, % 48 $ $51,434, % 39 $ % 49 $ $86,425, % 28 $ % 55 $ $ % 26 $48,344, % 46 $ $73,722, % 14 $62,130, % 35 $ $60,774, % 14 $62,452, % 27 $ $61,994, % 12 $74,019, % 30 $ $ % 18 $49,137, % 39 $ $ % 9 $22,424, % 38 $ $34,723, % 3 $4,695, % 10 $39,418,999 6 $ % 7 $11,656, % 13 $ $99,740, % 15 $46,296, % 46 $ $ % 11 $31,054, % 49 $ $ % 18 $49,181, % 75 $ $ % 23 $ % 101 $ $ % 22 $54,787, % 90 $ $92,656, % 4 $13,119, % 46 $ $9,740, % 1 $1,106, % 5 $10,846,896 1 $2,900, % 1 $2,900,232 2 $12,066, % 2 $12,066,612 1 $622, % 1 $622,778 1 $1,609, % 1 $1,609,467 Note: 5A and 5B counties accounted for 30 percent of the total counties in this analysis.

23 Table 3: Title IX Allocations to 5A and 5B Counties T9$75 T9$76 T9$77 T9$78 T9$79 T9$80 T9$81 T9$82 T9$83 T9$84 T9$85 T9$86 T9$87 T9$88 T9$89 T9$90 T9$91 T9$92 T9$93 T9$94 T9$95 T9$96 T9$97 Not Designated 5A or 5B Designated 5A or 5B Total % of Total % of Total N Sum Sum N Sum Sum N Sum 28 $89,275, % 8 $9,022, % 36 $98,297, $67,717, % 9 $19,885, % 31 $87,602, $126,390, % 5 $6,251, % 28 $132,641, $86,300, % 10 $16,252, % 43 $102,552, $132,541, % 22 $42,873, % 104 $175,415, $143,026, % 19 $40,456, % 105 $183,482, $44,256, % 4 $6,724, % 25 $50,981, $40,455, % 14 $8,782, % 41 $49,237, $37,080, % 15 $7,435, % 56 $44,515, $26,241, % 19 $15,767, % 58 $42,009, $30,412, % 22 $11,452, % 70 $41,865, $18,357, % 21 $12,165, % 59 $30,522, $19,182, % 24 $10,877, % 62 $30,060, $20,394, % 20 $8,688, % 58 $29,082, $22,625, % 19 $8,524, % 57 $31,150, $34,786, % 17 $9,576, % 54 $44,362, $18,096, % 22 $9,079, % 57 $27,175, $18,745, % 24 $7,550, % 63 $26,296, $100,603, % 21 $7,658, % 80 $108,262, $313,708, % 54 $45,974, % 214 $359,682, $265,601, % 52 $50,462, % 211 $316,063, $114,093, % 43 $31,349, % 148 $145,443, $123,979, % 60 $27,692, % 198 $151,671,864 Note: 5A and 5B counties accounted for 30 percent of the total counties in this analysis.

24 Table 4: Trade Adjustment Assistance Allocations to 5A and 5B Counties TRAD$76 TRAD$77 TRAD$78 TRAD$79 TRAD$80 TRAD$81 N Not Designated 5A or 5B Designated 5A or 5B Total % of Total % of Total Sum Sum N Sum Sum N Sum 5 $75, % 5 $75,461 8 $305, % 2 $42, % 10 $348, $26,688, % 12 $1,135, % 68 $27,824, $8,986, % 6 $413, % 33 $9,399, $16,157, % 2 $108,897.7% 23 $16,266,077 5 $5,417, % 5 $5,417,360 Note: 5A and 5B counties accounted for 30 percent of the total counties in this analysis.

25 Table 5: Technical Assistance Allocations to 5A and 5B Counties TEC$65 TEC$66 TEC$67 TEC$68 TEC$69 TEC$70 TEC$71 TEC$72 TEC$73 TEC$74 TEC$75 TEC$76 TEC$77 TEC$78 TEC$79 TEC$80 TEC$81 TEC$82 TEC$83 TEC$84 TEC$85 TEC$86 TEC$87 TEC$88 TEC$89 TEC$90 TEC$91 TEC$92 TEC$93 TEC$94 TEC$95 TEC$96 TEC$97 Not Designated 5A or 5B Designated 5A or 5B Total % of Total % of Total N Sum Sum N Sum Sum N Sum 29 $5,490, % 44 $5,223, % 73 $10,713, $15,258, % 70 $10,635, % 116 $25,893, $27,522, % 134 $11,856, % 237 $39,378, $27,757, % 49 $6,343, % 126 $34,100, $28,137, % 42 $5,596, % 130 $33,734, $31,307, % 44 $3,361, % 134 $34,669, $26,359, % 56 $5,332, % 153 $31,692, $24,035, % 48 $3,266, % 165 $27,302, $23,313, % 50 $11,767, % 187 $35,080, $32,935, % 41 $3,586, % 169 $36,522, $18,181, % 35 $3,609, % 128 $21,790, $24,828, % 48 $4,916, % 175 $29,745, $19,649, % 32 $2,507, % 133 $22,157, $20,370, % 26 $2,833, % 130 $23,204, $18,101, % 36 $3,083, % 150 $21,184, $35,414, % 29 $2,415, % 134 $37,830, $34,684, % 14 $1,143, % 82 $35,827, $10,865, % 20 $1,144, % 97 $12,009, $10,604, % 6 $534, % 55 $11,139, $10,606, % 17 $974, % 94 $11,581, $10,831, % 14 $767, % 94 $11,599, $9,093, % 21 $1,165, % 93 $10,259, $7,499, % 15 $867, % 88 $8,367, $6,727, % 13 $813, % 93 $7,541, $5,739, % 20 $1,268, % 91 $7,007, $4,930, % 13 $1,005, % 77 $5,935, $4,860, % 22 $1,027, % 100 $5,888, $7,775, % 20 $1,368, % 93 $9,144, $12,027, % 22 $1,537, % 136 $13,564, $9,523, % 21 $1,370, % 124 $10,894, $8,613, % 22 $2,010, % 123 $10,623, $6,556, % 22 $1,408, % 104 $7,964, $7,035, % 15 $1,108, % 96 $8,143,551 Note: 5A and 5B counties accounted for 30 percent of the total counties in this analysis.