UPDATE:

Within two days of getting the bad passport, I received my birth certificate. I sent the passport in with my certificate again along with a signed letter explaining what happened and the correction application. I got the corrected passport back today. It took 2 weeks and everything is good to go!

PROTIP: pay attention to the correction application PDF you fill online for printing. It automatically populates the State of birth by your home address. I crossed it out and wrote the correct State in. No need to send in another photo if your passport is NEW and to be corrected within 90 days of receipt. Write on the envelope to be sent, "DATA ERROR - EXPEDITE."