States Are Making Good Progress in Implementing the Small Cities Community Development Block Grant Program

In the first of a series of reports on States' implementation of block grants, GAO reviewed seven States' implementation of the Small Cities Community Development Block Grant Program to assess the initial progress they have made in administering activities under that program. The report addresses concerns about: (1) changes that have occurred as States used their flexibility in funding community development activities; (2) the methods States have used to meet public participation requirements of the program; (3) States' methods for distributing funds and selecting grantees; and (4) States' administration of activities under the program compared with how the Department of Housing and Urban Development (HUD) administered the previous program.

GAO found differences resulting from States' flexibility in allocating funds. In several States, GAO found that the percentage of funds allocated for housing rehabilitation decreased and the percentage of funds allocated for public facilities or economic development increased. GAO also discovered that, in six of the seven States, the expected percentage of low- and moderate-income beneficiaries decreased. GAO determined that States have emphasized public participation in designing their programs; each State held at least one public hearing on the subject, and most States used State Government agencies and newly established or existing advisory commissions to assist in program development. GAO found that, while all States used different methods to distribute funds and select grantees, they also adhered to their funding objectives and selection criteria in making these decisions. GAO found that both State and HUD officials generally agreed that State-administered programs compared favorably with the former HUD program, and most grantees and unsuccessful grant applicants provided favorable ratings on specific aspects of their State program. However, GAO does believe that there is a need to develop a system for reporting data on the State programs to ensure that the primary objectives of the program are being met. HUD generally concurred with the GAO findings, but believes that the need for data reporting is not as critical as GAO believes it is.