Academic journal article Cityscape

Using American Community Survey Data for Formula Grant Allocations

Academic journal article Cityscape

Using American Community Survey Data for Formula Grant Allocations

Article excerpt

Abstract

This article discusses the use of census data to support grants from the federal government to state and local governments and shows how the Census Bureau's new American Community Survey affects grants through the Community Development Block Grant program.

Introduction

The U.S. Department of Housing and Urban Development (HUD) administers funding for a number of community development programs that rely on local entities (such as city or county governments, public housing agencies, and community-based nonprofits) to carry out the activities. These community development funds typically are distributed in one of two ways: by grant competition or by formula.

With a grant competition, HUD publishes a Notice of Funding Availability (NOFA) that establishes the purpose of the program and the criteria by which funds will be awarded. Interested organizations submit applications, and HUD staff review the applications using the criteria established in the NOFA. HUD administers major programs such as HOPE VI, Choice Neighborhoods, and round 2 of the Neighborhood Stabilization Program on a competitive basis. Competitive programs enable HUD to influence the types of projects funded and to limit grants to high-quality projects and capable organizations. One challenge in administering these programs is determining accurately and fairly which projects are high quality and which organizations are capable.

Formula grant programs are designed to simplify the federal role and to allow grantees to make key decisions about which projects are appropriate. Formula grant programs also provide funds to all applicants that meet the specified qualification criteria. HUD's major formula grant programs include the Community Development Block Grant (CDBG) program, the HOME Investment Partnerships Program, and the Public Housing Capital Fund. Each of these programs has an established formula that specifies the variables and variable weights that HUD must use to distribute funding. Each year, HUD updates the underlying data and the total funds available, and the results of the formula determine how much each particular grantee gets. Data used to run the formula must be available and consistently collected across the universe of potential grantees. As a result, the Census Bureau - and particularly the decennial census - has historically been the authoritative source.1 The detailed survey component of the decennial census (the "long form") has been replaced by the American Community Survey (ACS), which will provide annual estimates of demographic, social, and economic characteristics of neighborhoods across the United States. For programs that are required to use census data for distributing formula grants, the ACS is likely to be the new standard. The rest of this article will address the transition from decennial census data to ACS data, particularly for HUD's CDBG program.

Introducing ACS Data Into the CDBG Formula

The Census Bureau released the first ACS estimates in 2010, based on surveys completed from 2005 through 2009. HUD is using these data in formula allocations for the first time in fiscal year (FY) 2012. A recent HUD report, Redistribution Effect of Introducing 2010 Census and 2005-2009 ACS Data Into the CDBG Formula, discusses how that transition affects grants under the CDBG program (Joice, Winter, and Johnson, 2011). This article presents the key findings and implications from that research.

HUD bases CDBG allocations on two formulas, Formula A and Formula B, which rely on five variables specified by Section 5306 of the Housing and Community Development Act: population, people in poverty, overcrowded households, housing units built before 1940, and population growth lag. Exhibit 1 shows the source for each of these variables for the CDBG allocations made in FY 201 1 and the source that will be used in FY 2012. For each grantee, HUD computes these variables as a share of the nationwide total. …

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