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

By Henri E. Cauvin
Washington Post Staff Writer
Thursday, March 3, 2011; 9:36 PM

Community development block grants have been a vital source of federal anti-poverty money for decades, supporting affordable housing, job training and an array of other programs serving low-income communities.

When President Obama, in his 2012 budget, proposed cutting funding for CDBGs, as they are known, by about $300 million, local officials across the country worried about their already-battered finances.

Then House Republicans offered their take on the nearly $4 billion grant program.

Not only did they urge cutting the program by more than half, to $1.5 billion, they also endorsed making the cuts in the middle of the current fiscal year, part of the $61 billion in proposed cuts that have helped set up the budget battle.

Even with Congress having voted this week on smaller cuts to keep the government funded through March 18, the far bigger trims proposed by the Republicans are still on the table.

Cuts might not be finalized, but their seeming inevitability has made clear to America's cities that they face a new reality in Washington.

Since the GOP's election victories last fall, the Obama administration has been under greater pressure to reduce the deficit, and some anti-poverty programs are slated for significant cuts in the president's budget.

One is the Low Income Home Energy Assistance Program, which would shrink 50 percent, to $2.6 billion. The administration has said the impact of the cut would not be significant because the program's funding was increased in 2009 to address a spike in energy prices, which have since fallen. But critics have noted that energy prices are forecast to sharply increase again next year.

Another program facing cuts is the Special Supplemental Nutrition Program for Women, Infants and Children. Known as WIC, it would be cut by about 10 percent, or about $752 million, which could lead to waiting lists. The extent of the impact, though, is hard to predict. Some unspent funds from last year are available, but food prices are rising.

Obama's budget avoids cutbacks in some of the government's central anti-poverty initiatives, including Temporary Assistance for Needy Families, which provides cash stipends; the Supplemental Nutrition Assistance Program, better known as food stamps; and the Housing Choice Voucher Program, or Section 8, which provides housing subsidies.

Cities' choice

For nearly 40 years, what has distinguished block grants is the autonomy they offer cities to spend the funds on initiatives they choose. But with the Obama administration increasingly demanding assurances that federal money is being spent on projects with a successful track record, block grants have come under more scrutiny.

The president's budget also proposes a $350 million, or 50 percent, cut in a similar but smaller block-grant program aimed at human services. Such a reduction could affect groups such as the United Planning Organization, the District's designated recipient of human services block-grant money.

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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