Why is the Community Development Block Grant (CDBG) program important in thinking about how quickly economic stimulus outlays might actually reach nonprofits and communities?
Because CDBG is one of the true mainstays of government funding for community-based nonprofits for their core program activities.
Enacted in 1974, CDBG is one of HUD’s oldest, continually running program. CDBG funds are provided by formula to nearly 1,200 state and local units of government (plus, of course, the obligatory additional CDBG funds awarded as Congressional earmarks). Typically, between 10 and 12 percent of CDBG funds are used for “public services”, which is the part of CDBG that most municipalities use to fund a variety of local nonprofit human and social services. The following shows the some of the kinds of services that have been funded through CDBG from FY2001 through FY2008:
Total CDBG Public Services funding: $4.101 billion, including $335.2 million in senior services funding, $81.0 million in services for the disabled, $34.2 million in legal services, $588.2 for youth services, $101.3 million for battered/abused spouse services, $215.2 million for employment training, $276.1 million for child care services, $35.8 million for landlord/tenant counseling, $178.2 million in health services, and much more.
Aside from these public service expenditures, of course CDBG supports community development activities in which many nonprofits participate. $9.387 billion has gone for housing activities such as new construction and rehab of single family and multi-family affordable housing, lead-based paint testing and abatement, and operating and repair of foreclosed properties. An additional $3.33 billion has gone for CDBG-funded economic development projects, including $224.7 million for micro-enterprise development.
All told, CDBG is a potpourri of program activities that affect a wide range of nonprofits. But many communities have been notoriously slow in getting their CDBG dollars deployed and spent. The standard measure for an entitlement community having problems with CDBG is when it has more than 1.5 times its current year CDBG allocation still unspent. The number of such communities has declined over the years due to HUD staff paying more attention, per Congressional mandate, to ensuring timely expenditures. According to the latest numbers we’ve seen, the number of communities above 1.5 is down from over 300 to around 40 (according to the Bush Administration’s FY2009 CDBG budget proposal justifications).
Nonetheless, the existence of 40 or more entitlement communities with more than 1.5 times their CDBG allotments backlogged suggests that there are many more of the over 1,000 CDBG entitlement communities with 1.0 or more CDBG allocations languishing. Nationally, for 2006, the national average for unspent CDBG funds was 1.42, somewhat indicative of the fact that many recipients were fundamentally aiming to get below the 1.5 timeliness threshhold (warranting increased HUD oversight if they didn’t). In the past, the bulk of all backlogged CDBG funds were concentrated in some 20 entitlement cities characterized by consistently tough community conditions where the money was desperately needed. For example, for the period of July1, 2005 through June 30, 2006, the City of Philadelphia was slated to get $59.7 million in CDBG while it had over $90.7 million in unspent CDBG funds from previous years. Cambridge, Massachusetts, on the other hand, for the 2006-2007 period, had $2.0 million in unspent CDBG as it awaited its entitlement grant of $3.3 million. To its credit, Lowell, Massachusetts, a city challenged by a very difficult economy, expected a $2.4 million entitlement grant in 2006-2007 while sitting with only $1.8 million unspent from previous years.
Be assured that the critics of the economic stimulus will point to funding clogged in local, state, and federal agencies as evidence that government programs don’t work, that the stimulus was simply a plan to “throw money at problems”, and the like. It is up to everyone–government agencies and nonprofit “subrecipients”–to get funds deployed to help people in need at this time in our nation’s economic crisis.
The ability of state and municipal “CDBG entitlement” recipients to get these funds into the hands of nonprofit and for-profit developers in a timely fashion is an important indicator of how quickly nonprofits will be receiving funds through the economic stimulus program–and an object lesson in what nonprofits will have to do to come to the table to make sure that the funds do get deployed as they should be to address the nation’s continuing economic decline.
{ 5 comments… read them below or add one }
thanks for the little history lesson. i was always wondering what the role of the cdbg in the economic stimulus was.
Billions in CDBG are spent by local governments on public infrastructure (roads, drainage, water and sewer improvement, etc) especially through the 30% of CDBG funding made available through the “states and small cities” program (as opposed to the entitlement program that serves big cities and urban counties). The backlog that exists is partly due to the states’ distribution procedures; once a grant is awarded to a local government, procurement, environmental review, acquisition, and other policies can take several months to complete. Engineering design, which is an ineligible expense if completed prior to project funding, takes additional time and can further delay implementation.
Even with these delays, in Texas right now more than 600 CDBG project applications (95% are for water or sewer improvements) are pending in the state’s program. With sufficient funding, nearly all could be started within 30 days, bid in 90, and completed in 12 months, investing more than $200 million for critical infrastructure in the state’s poorest communities. Unfortunately, without any additional funding through stimulus fewer than a third of the projects will receive funding; the rest will have to wait til 2010 or beyond for another shot at funding.
We keep hearing that CDBG is drying up and in fact our allocations from cities we serve has regularly decreased over the past several years. You did not mention this. Is it an accurate statement?
Hi
I would like to add to the previous question and ask if there is a good source for the long term funding history of the CDBG. The administrators of the grant in my city indicate that the funding is in decline but I can not verify to what degree this is the case over the last 30 years.
I also wonder if there is much concern out there about the 20% cost of administration. Is is the accepted norm?
Thanks
Stan
Dear Stan: I generally find myself going to the HUD website itself for the CDBG annual reports that HUD files with Congress. The problem, however, is that you have to try to figure out what what slice of the CDBG appropriation was diverted out of the formula allocations into earmarked grants. CDBG has had a difficult history of large chunks going out as earmarks. If there are other sources that might follow some of this, they might be the Council of State Community Development Agencies (COSCDA), the National Association of Housing and Redevelopment Officials (NAHRO), and some of the other national associations of essentially municipal or state agencies that live off of CDBG. The admin set aside as well as the public services set aside have had their share of criticism over time. Remember that in addition to the specific admin cut, there are usually admin lines in the specific CDBG-funded programs of most municipalities and states. When I ran CDBG for Jersey City a couple of decades ago, it roiled me to see how much “hidden” admin there was in the various line items in the city’s CDBG budget. It’s not that I’m critical of admin, you need admin to make programs work, but the admin should be transparent, people should know who’s getting it and how. Good luck with your investigations. Thanks for your comments.