The Allocation of Funds to Small Cities under the Community Development Block Grant Program An Evaluation

Abstract

Abstract A uniform point system is used by HUD area offices to determine which small city applicants (including suburbs and rural towns) are to receive funds under the Community Development Block Grant (CDBG) program. This evaluation of the point system, based on data for twenty-five states, indicates that: (1) small cities as a group receive considerably less CDBG funding relative to their need than do larger cities and urban counties, (2) tremendous variations exist in the intensity of competition across states, (3) need plays a relatively unimportant role in determining which applicants are funded, (4) the discretionary power of the area offices is the dominant factor in funding decisions, and (5) community flexibility in project design is severely constrained by the point system. These characteristics are inconsistent with the spirit of the “new federalism.” Suggestions are offered both for modification of the point system and for successful strategies to obtain funds