Community Program in Crosshairs Must Target Performance

Five Steps to Improve Community Development Block Grants

When the Community Development Block Grant Act was enacted about 40 years ago it was hailed by lawmakers on both sides of the aisle as striking the right balance between federal policy and state powers. Today, conservative deficit hawks are looking to eliminate the program designed by President Richard Nixon and signed into law by President Gerald Ford.

The $4.4 billion block grant program, which funds antipoverty and infrastructure development in needy communities, has a history of bipartisan support and an impressive legacy of restoring the housing stock and community facilities across America cities and small towns. Given that history, the fact that CDBG is on the chopping block should be a wake-up call for mayors and housing advocates who manage and rely on block grant funding to restore houses in low-income communities, increase the supply of affordable housing, and promote community improvements in more than a 1, 000 cities and towns across the nation.

CDBG supporters may decry these cuts as an attack on cities and a direct hit on the poor, but the fate of these programs will not be preserved by combative rhetoric. Instead the interests of the poor are best served by agreeing that there is room for improvement in how these funds are used.

Block grant advocates, the Department of Housing and Urban Development, and Congress can find common ground by crafting legislation that unleashes new program capacity without the need for new funding or further cutbacks. Here are some ways to improve the block grant:

  • Increase transparency to elevate performance
  • Instill an element of competition among recipients to increase program effectiveness
  • Establish and collect standard sets of data that indicate productivity, efficiency, and impact—and publicly post the data to enable comparisons across block grant recipients
  • Increase expectations on block grant recipients to effectively use their federal dollars to raise other funds and maximize the collective impact
  • Provide competent and intensive technical support to boost performance and enable to withhold funds from recipients that fail to show reasonable improvement

Let’s examine each of these ways to improve this critical community block grant program in a bit more detail.

The first option to improve CDBG is simple: Give the public access to user-friendly information that describes what the funds are intended to be used for and concrete information on results. The site helped people track the use of Recovery Act funds and helped ensure the money was used well. The site marshaled the power of the public to improve program performance by encouraging them to be vigilant against fraud or waste. Similar transparency is also needed for CDBG: Communities should be able to see where federal dollars go and what they pay for.

Second, the program would benefit from inserting a bit of jurisdictional competition in the distribution of funds. The recent “Race to the Top” competition for federal education dollars proved that states will work hard to out-innovate each other, and that it doesn’t take much money to unleash a tide of creativity and innovation. Indeed, the Department of Education radically changed the terms on $70 billion in federal education entitlement funds with a one-time $5 billion competitive pool. New resources may not be available to stimulate innovation among block grant recipients, but officials should consider a creating a pool of $400 million or about 10 percent of the size of the block grant to fund a  "Race to the Top"-style competition.

Third, HUD can help push grant recipients to better leverage other funds to increase the impact of scarce federal dollars. One way to do this is to collect and report how well recipients are able to combine other available resources to achieve grantees’ desired results. Another option is to give bonuses to recipients that effectively integrate other funds with CDBG resources. If HUD established a competition for resources, the wise leveraging of resources might be a scoring criteria.

Fourth, there is a need for a stronger focus on outcomes. The Department of Housing and Urban Development recently instituted reforms to introduce comprehensive housing plans. These documents set out more clearly what will be done with the funds, but the next step is to call on CDBG recipients to describe what they plan to achieve with the money. For instance, CDBG funds may be used to rebuild a recreation center. This may be a reasonable expenditure, but what will it achieve? Might it drive down juvenile offending rates? If that’s the goal, it should be explicit, and grantees should collect data to demonstrate the result.

Fifth, HUD can also drive up results by collecting data from its recipients in ways that capture productivity, efficiency, impact, and innovation. We need a national template that aggregates block grant data and establishes critical performance benchmarks. These benchmarking tools are common in the private sector and increasingly used in the field of public policy. With a benchmark in hand, the public will be able to better evaluate the efficacy of these funds year to year: Is an agency achieving more, less, or the same results as the prior year(s)? Is an agency performing well compared to other like block grant recipients?

The answers to these questions will not always be good news, and that’s perhaps where the greatest potential for innovation lies. What these benchmarking reports may indicate is that many recipients need to learn new and better ways to achieve results. In part, this is because

HUD has in recent years had to expand its compliance activities and scale back its technical assistance infrastructure. HUD should have powers to require recipients with low performance to seek the department’s approval before embarking on a subsequent year’s plan. HUD also needs the resources to provide professional, smart, and creative technical assistance to underperformers so they can successfully and quickly transform into an agency that gets results.

This budget process requires tough choices, but smart choices are even more important. When it comes to block grants, their unique federal/state partnership represents an approach that has garnered decades of support from Republicans and Democrats alike. Improving the impact of federal funding is another value both parties share. That’s why joining together to improve the performance of block grants like CDBG may prove more constructive than another pitched political battle that will further divide Congress.

Donna Cooper and Jitinder Kohli are Senior Fellows at the Center for American Progress working on the Center’s Doing What Works program to reform the federal government.