Qualifying Zip Codes for ESAs
A ZIP CODE QUALIFIES FOR THE ESA PROGRAM WHEN…
The Median Family Income for the Zip Code is benchmarked. Benchmarking occurs when the Zip Code Median Family Income is divided by two potential numbers. Either the:
The Tennessee state median family income level OR
The MSA median family income level.
Whichever is greater.
DEFINING MSA -
An MSA is a “metropolitan statistical area” MSAs are used by the census bureau, and they can be thought of simply as metropolitan areas. MSA median incomes are almost always larger than the overall state median income. As a result, many metro zip codes are included as “low income” because they are low relative to the local MSA median. They would not be low-income relative to the Tennessee median.
Federal anti-poverty programs (Community Reinvestment Act and the New Markets Tax Credit) use this standard – “80% of the greater of either.” Either being the Tennessee median family income or the median family income for the MSA.
ONCE THE ZIP MEDIAN FAMILY INCOME IS DIVIDED…
By either the state median or the MSA, the resulting percentage will either qualify a zip code or disqualify the zip code. For example:
Benchmarking Median Family Income for Chapel Hill TN, zip code 37034:
Chapel Hill TN zip code 37034 is located in Marshall County, a rural county that is not located in a Metropolitan Statically Area (MSA). To benchmark the zip code’s median family income we would use the following data:
Zip code 37034 median family income: $67,476
Tennessee state median family income: $57,747
MSA median family income: (N/A - zip code is in a rural county)
Because the zip code is located in a rural area, the state median family income of $57,747 is used for benchmarking the relative family income level of the area. Therefore, the Benchmarked Median Family Income for this zip code is:
Since this benchmarked value is greater than 100%, the zip code does not qualify for economic development ESAs, given a 100% threshold. The same calculation is used when qualifying for a 80% threshold.