Impact of the 2000 Census Data on the CDBG Program: At a Time When Local Governments Are Struggling with Budget Shortfalls, Funding from the Department of Housing and Urban Development's (HUD) Community Development Block Grant (CDBG) Program, a Stalwart to Community Development and Neighborhood Revitalization Initiatives, Has Declined

Article excerpt

When the impact of inflation is considered, HUD support has dropped by 12 percent since 1993. The drop in real funding dollars along with the effects of changing allocations in response to 2000 census data may impede development in some older communities.

A HUD report, "Redistribution Effect of Introducing Census 2000 Data Into the CDBG Formula," explains how and why funding allocations have shifted over the past ten years.

Allocation of funds for CDBG programs is based on two formulas. The first formula, originally established in the authorizing legislation of 1974, considers three variables: population is weighted at 25 percent, poverty at 50 percent and overcrowding at 25 percent. The formula weighed poverty heavily to reflect the program's intent to serve low-income communities. After enactment of the law, HUD analysis showed that although this formula addressed communities with large poverty populations, it did not capture the needs of older and declining communities.

In 1977 Congress responded to this analysis by enacting legislation to create a dual formula that would target funds for both types of communities. This dual formula (Formula A & Formula B) has been utilized since 1978. Formula B added three variables: (1) growth lag (the shortfall in population that a city or county has experienced if its current population is compared to the population predicted by the overall growth rate of metropolitan cities since 1960) is weighted at 20 percent; (2) poverty, at 30 percent; and (3) housing built before 1940, at 50 percent.

Under the 1977 legislation, grants are determined for each jurisdiction by both formulas; a jurisdiction automatically receives funds from the formula that generates the higher amount.

What the 2000 census implies for CDBG funding levels

According to the HUD study, new 2000 census data for poverty, overcrowding and pre-1940 housing have had the following impact on the redistribution of CDBG funds:

* Of the 1,024 entitlement communities, (1) 29 percent gained 10 percent or more CDBG funding, and 12 percent lost 10 percent or more.

* Of the state grantees, 14 percent gained 10 percent or more CDBG funding and 8 percent lost 10 percent or more.

This redistribution of funds is the result of changes in entitlement communities' share of persons in poverty and overcrowding. Overall, central cities throughout the country lost funds, while suburban cities and urban counties experienced funding increases.

HUD study results for the 1,024 entitlement communities in 2002, based on the combined effects of changing all of the census variables from 1990 to 2000 and adding 135 new entitlement communities between 1993 and 2002, are as follows:

Of the 1,024 entitlement communities in 2002, 29 percent were significant gainers. …