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Block grants could face major cuts as federal funds to fight poverty tighten

Eric Myer of Eshenaurs Fuels delivers heating fuel to a home in Harrisburg, Pa.
Eric Myer of Eshenaurs Fuels delivers heating fuel to a home in Harrisburg, Pa. (Associated Press)
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Dana M. Jones, the UPO's president and chief executive, said that his organization receives $10 million in human services block-grant funding and that a 50 percent cut would affect many of the services the UPO and its partners provide, from literacy coaching to health care for the homeless. "At the end of the day, this would impact a lot of people," Jones said.

In an op-ed last month, Jacob J. Lew, the head of the Office of Management and Budget, said the human services grants have been allocated based on a formula that does not take into account how effectively the recipients are using the money. The president, Lew wrote, wants to put some of that money into a competitive grant program, which would help ensure that communities are given the "most effective help."

The Department of Education, with its Race to the Top initiative, has been leading the administration's push to stoke such innovation and competition in social welfare spending. But the Department of Housing and Urban Development, which administers the CDBGs, has been in the mix, too, moving to rely less on formulas and more on performance in awarding grants, said Rolf Pendall, head of the Urban Institute's Metropolitan Housing and Communities Policy Center.

The proposed $300 million cut in block grants, Pendall said, appears to be a signal of the direction in which HUD wants to move. But he questions the wisdom of cutting a program without knowing what has and has not worked.

"This administration has been making a claim that it's trying to make policy based on evidence," Pendall said. "Reducing funding for a big program like this without evidence is sort of inconsistent with that principle."

A 'zero-sum game'

But he and other experts say it does allow the administration to argue that at a time of strained resources, it is making the best use of the money available by targeting a handful of communities.

"You can either keep spending a little in a lot of places, or you can use a small amount of funds to have more impact," said Barbara Sard, who worked at HUD early in the Obama administration and is now the head of housing policy at the Center on Budget and Policy Priorities.

Not that it's an easy choice, she said. "This is the problem of the zero-sum game of resources if there isn't the political will to increase resources," Sard said.

Created in the 1970s after decades of federal investment in suburban growth, CDBGs were a bid to shore up cities by sending them more federal dollars to help low- and moderate-income communities.

By design, the grants have given cities a lot of latitude in using the money, which has made it difficult to determine where the money is accomplishing its purpose and where it's not, Sard said.

"There are certainly a lot of communities that use the money for important things," she said. "There are other communities where the effectiveness of the spending could be questioned."

Boston Mayor Thomas M. Menino, a member of the executive committee of the U.S. Conference of Mayors, said that without the funds, cities would start going "backwards."

Even if the federal government hasn't closely tracked how the grant money is used, cities such as his have done so, Menino said.

"We know where the money is being spent and what it's doing to improve our city."

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