Human Services News

HUD News Release 06-056

Across America, there are areas of high poverty and community distress that currently receive less federal funding than more affluent communities.

Funding formulas intended to measure need haven't changed since 1978 while the country has undergone significant and dynamic demographic and socio-economic change.

To correct this funding disparity, Housing and Urban Development Secretary Alphonso Jackson today is offering Congress The Community Development Block Grant (CDBG) Reform Act of 2006 that seeks to change to the underlying formulas to CDBG.

"More than 30 years ago, CDBG was designed to target the needs of our cities, counties and states," said Jackson.

Last year, HUD published CDBG Formula Targeting to Community Development Need, the Department's fifth major analysis of how the hallmark block grant program meets the needs of urban America.

For example, Congress modified CDBG's formulas in 1978 and determined that the number of homes built before 1940 was a good measure of community development need.

The CDBG formula allocates funding in such a way that many high-need areas receive similar grants compared to more affluent communities.

CDBG's formula currently rewards towns with large college student populations by including the incomes of these full-time dependant students in calculating poverty.

The number of households living in poverty, excluding full-time dependant college students.

In addition to modernizing CDBG's formula, HUD proposes to create a minimum grant threshold for entitlement communities to be eligible for an annual allocation.

The CDBG Reform Act is designed to further enhance performance measurement and accountability in the block grant program by holding communities more accountable in fostering suitable living conditions, developing affordable housing, and creating economic opportunity.

HUD also proposes to offer $200 million in "challenge grants" to be awarded to certain entitlement communities that target their CDBG funding to areas of concentrated need.

These challenge grants must be used in targeted neighborhoods as part of a community's strategy to expand economic opportunities in these distressed areas.