median income. Historically, HUD has used census long-form-sample median family income estimates, adjusted at the national level to agree with estimates from the CPS ASEC for the census income year, as the starting point to develop current fiscal year estimates for each area. To update the long-form-sample estimates, HUD uses the most recent Bureau of Labor Statistics (BLS) wage and salary data for counties, adjusted to match median income estimates for the nine census geographic divisions from the most recent CPS. As a final step, HUD projects the median family income estimates to the middle of the fiscal year for which the agency is setting housing assistance income limits.

The advent of the ACS means that HUD will no longer need to update long-form-sample median family income estimates from data sources, such as BLS person-level wage data, that do not reflect the same concept of total family income. The use of ACS county-level median family income estimates to determine area-specific eligibility for subsidized housing, however, raises at least three important issues: (1) whether achieving comparable levels of precision across areas is preferable to using the same periodicity of ACS estimates (1-year, 3-year, or 5-year) for all areas; (2) the possible effects on the accuracy of ACS income estimates from the moving reference period (respondents are asked about the prior 12 months rather than a consistent prior calendar year); and (3) the possible effects on the accuracy of ACS income estimates from the Census Bureau’s procedure for adjusting income amounts for inflation. (See ORC Macro, 2002:162–171, for a fuller discussion of these and other issues.)

Period Estimates for 1, 3, or 5 Years?

HUD requires median family income estimates each year for all 3,000-plus counties in the United States. One-year period estimates of median family income will probably be reasonably precise for counties with at least 50,000 people, and 3-year period estimates will probably be reasonably precise for counties with at least 20,000 people. (Estimates of median family income are about twice as precise and therefore have only about half the coefficient of variation of estimates of poor school-age children—see Table 2-7a.) However, 1-year period estimates will be available only for counties (and other governmental and statistical areas) with at least 65,000 people, yet three-fourths of counties are smaller than that. Moreover, two-fifths of counties have fewer than 20,000 people so that 5-year period estimates will be the only available source for about 1,300 counties (see Tables 2-4 and 2-5).

A study conducted for HUD by ORC Macro (2002:169) suggested that HUD might want to use 1-year period ACS median family income estimates for counties with 200,000 or more people, 3-year period estimates

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