FAQs | County Distress Rankings (Tiers)

We've gathered answers to the most common questions about the state's County Distress Rankings, also known as the County Tiers system.

Tiers System Frequently Asked Questions (FAQs)

What are the County Development Tiers?

What are the County Development Tiers?

North Carolina's County Development Tiers system ranks all 100 of the state's counties based on economic well-being and relative economic distress. This Tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state.

North Carolina state law, G.S. 143B-437.08, lays out the method and timeline through which the Department of Commerce calculates and publishes the annual County Development Tiers. The Tiers must be published on or before November 30 of each year and incorporate the most recently available data at the time of its release.

The process assigns each county to a designation of Tier One (most distressed), Tier Two, or Tier Three (least distressed). Assuming no ties in rankings, the statute requires 40 Tier One, 40 Tier Two, and 20 Tier Three counties each year. In the event of a tie for the final position as a Tier One or Tier Two county, both counties are placed in the lower tier.

What are the factors that are used to calculate the County Development Tiers?

What are the factors that are used to calculate the County Development Tiers?

The Development Tier Designation statute (G.S. 143B-437.08) provides specific guidelines for calculating the Tiers. Four equally weighted factors are used in the calculation (the data sources we use for each factor are provided in parentheses):

  • Average unemployment rate for the most recent twelve months for which data are available (N.C. Dept. of Commerce's Local Area Unemployment Statistics program (LAUS))
  • Median household income for the most recent twelve months for which data are available (U.S. Census, Small Area Income & Poverty Estimates)
  • Percentage growth in population (minus prison population) for the most recent 36 months for which data are available (N.C. Office of State Budget & Management)
  • Adjusted property tax base per capita for the most recent taxable year (N.C. Dept. of Public Instruction)
How are the factors calculated to determine the final Tier ranking?

How are the factors calculated to determine the final Tier ranking?

Each county is ranked from 1 to 100 on each of the four economic data factors, making the highest possible County Rank Sum 400, and the lowest 4.

After calculating this County Rank Sum, counties are then ranked from most distressed (1) to least distressed (100) in order to determine their Economic Distress Rank.  Then, based on where a county lands on this Economic Distress Ranking, we assign them to one of the three development tiers, following the statute requirement that 40 counties will be Tier One (most distressed), 40 will be Tier Two, and 20 will be Tier Three (least distressed).  Occasionally, a tie in Economic Distress Ranking will occur, in which case a county is assigned to a lower tier, which can result in slight variations of the 40/40/20 formula.

Note that the 2018 Appropriations Act (S.L. 2018-5, Section 15.2.(a)) eliminated several “adjustment factors” that are no longer used to calculate the final tier ranks.  These adjustments previously included an additional screening step that took into consideration small population sizes and poverty rates.  In addition, §143B-437.07.(d) calls for the Department of Commerce to publish the state performance statistic for each of the four factors, alongside the county values. Any county underperforming the state average on any of the four factors may request assistance from the Department to improve their performance on the given factor.

What programs are impacted by the County Development Tiers?

What programs are impacted by the County Development Tiers?

The County Development Tier system is incorporated into various state programs to encourage economic activity in the less prosperous areas of the state.

In some cases, a given program's use of the Tiers system is required by statute.  In other cases, state agencies and even private-sector or nonprofit organizations choose to adopt the Tiers system as guidance for determining eligibility requirements for a particular program.

There is no current, centralized list of state programs that incorporate the Tiers system.  However, a legislative study conducted in 2015 published a helpful list of many of the programs in its Program Evaluation Report from that year.

As for the programs administered by the North Carolina Department of Commerce, here's the list of Commerce programs that use the Tiers system.

How County Tier Rankings Impact N.C. Commerce Programs

Competitive Incentive Programs

Job Development and Investment Grant (JDIG)

  • Total awards may be up to 80% of tax withholdings from newly created jobs in Tier 1, 75% in Tiers 2 and 3
  • Companies receive 75% of total award amount in Tier 3 (25% to Utility Account), 90% in Tier 2 (10% to Utility Account), and 100% in Tier 1
  • Annual commitment cap reserves at least $5 million for bottom 50% of counties by economic distress rank

One North Carolina Fund (OneNC)

  • Local government match depends on Tier:
    • $1 for every $3 in state funds in a Tier 1
    • $1 for every $2 in state funds in Tier 2
    • $1 for every $1 in state funds in Tier 3

Public Infrastructure

Community Development Block Grant – Economic Development (CDBG-ED)

  • No Tier Limitation, but
  • No Local Match required for 25 Most Distressed (Economic Distress Ranking)

State Rural Grants Economic Infrastructure Program

  • No Tier Limitation, but
  • Priority given to Tier 1 & Tier 2 Counties

Industrial Development Fund (IDF) Utility Account

  • 80 Most Distressed (Tiers 1 & 2)
  • No Local Match required for 25 Most Distressed (Economic Distress Ranking)

Building Renovation and Downtown Development

Community Development Block Grant – Economic Development (CDBG-ED)

  • No Tier Limitation, but
  • No Local Match required for 25 Most Distressed (Economic Distress Ranking)

State Rural Grants Building Reuse Program

  • Tiers 1 & 2 + Rural Census Tracts in Tier 3 Eligible
  • Priority to 80 Most Distressed Counties
  • In Tier 1 or 2, priority to towns less than 5,000

For the purposes of these Commerce programs, the terms of grant agreements are determined at the time of award, so terms for a particular award do not change even if a county shifts tiers in a subsequent year.

Why did my county change Tier?

Why did my county change Tier?

You'll find brief explanations for why each county changed its tier level in the comprehensive County Tiers Ranking Memo we publish each year.

Are the County Development Tiers final at the time of publication? Is there an appeal process for counties?

Are the County Development Tiers final at the time of publication? Is there an appeal process for counties?

The County Tiers are final at the time of publication and there is no appeal process. The County Tiers are governed by statute and published each year on or before November 30. The newly calculated County Tiers then take effect on January 1 following their publication.

Has the methodology for calculating the County Development Tiers changed recently?

Has the methodology for calculating the County Development Tiers changed recently?

The County Tiers methodology has been consistent for several years.

The most recent change was enacted in 2019, by way of Section 15.2.(a) of the FY 2018-2019 state budget, which eliminated adjustments in the County Tiers system for counties with small populations and, in some cases, high poverty rates. This legislation also eliminated the requirement that any county given a Tier One designation must retain that designation for at least one additional year.

Beginning with the 2019 version of the County Development Tiers, the Tiers have been determined solely through the four equally weighted factors.  These factors have been consistently used by the system since at least 2007.