HUD Has Identified Performance Measures for Its Block Grant Programs, but Information on Impact Is Limited

GAO-12-575R: Published: May 15, 2012. Publicly Released: May 15, 2012.

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What GAO Found

Information on the overall effectiveness (or impact) of the CDBG and HOME programs is limited. According to HUD officials, the agency has faced challenges in evaluating the impact of CDBG and HOME because, among other things, such an evaluation would have to compare neighborhoods that received program assistance with those that did not. Our previous work has also identified the difficulties of evaluating the impact of block grant programs that do not represent a uniform package of activities or desired outcomes across the country, as well as the common problem of attributing differences in communities’ outcomes to the effect of a program in the absence of controls for other explanations. As a result, few comprehensive studies on the impact of the CDBG and HOME programs exist, but studies that focused on specific activities have generally found that each of the programs has made positive contributions. We identified two studies that attempted to examine the overall impact of the CDBG program on communities, but both studies encountered evaluation challenges due to the program’s design. For example, a 1995 study that HUD considers the most comprehensive evaluation of CDBG suggests that, at that time, the program played a role in neighborhood stabilization and revitalization in a number of U.S. cities included in the study. However, the study states that it did not attempt to isolate the impact of CDBG-funded activities in these communities, in part because of the variability of CDBG activities at the community level. The three additional CDBG studies we identified focused on specific aspects of the program, such as disaster assistance, rather than the entire program. Similarly, we identified five studies of the HOME program. Two of these studies described implementation in the first 5 years of the program (fiscal years 1992–1996). The remaining three studies examined specific aspects of HOME and suggested some positive contributions of the program but did not evaluate its overall impact. For example, a 2008 study examined the foreclosure and delinquency rates among HOME-assisted homebuyers. It found that compared with homebuyers whose mortgages were insured by the Federal Housing Administration (FHA)—a group with a similar population of lower-income, first-time homebuyers—foreclosure rates were slightly lower for buyers who received HOME assistance from 2001 to 2005.

HUD collects performance information for both the CDBG and HOME programs, but the information varies. Using a performance measurement system that HUD activated in 2006, grantees are to select and report the objective, intended outcome, and outputs (direct products or services delivered by the programs) of each activity they undertake. In fiscal years 2007–2011, HUD collected data for the following types of activities funded under the CDBG program: public services, economic development, rehabilitation and construction of rental or homeowner housing, and homebuyer assistance. For example, for CDBG activities related to economic development, grantees reported on the total number of businesses assisted and total number of jobs created or retained. The data HUD collects for the HOME program using this performance measurement system are not as detailed as those it collects for CDBG because, according to HUD officials, the agency already collected accomplishment data for HOME prior to development of the system and there are fewer eligible activities. According to HUD officials, they also use this accomplishment data to assess the performance of the HOME program. Specifically, for fiscal years 2007–2011, HUD used the performance measurement system to report data such as the number of units assisted with HOME funds and the number of units occupied by households with income that is less than 80 percent of the area median income. In addition, HUD has collected other information since program inception, including the amount of other funds leveraged with HOME funds and the per-unit cost of HOME units. According to HUD officials and others, one of the challenges associated with creating outcome-oriented performance measures that can be uniformly applied to all CDBG and HOME activities is the grantees’ flexibility to design and implement activities tailored to meet local needs and priorities. Another challenge for measuring the outcomes of CDBG is grantees’ ability to undertake a broad range of activities.

HUD officials and others have identified promising practices for the CDBG and HOME programs that relate to program management practices and use of funds. HUD officials have identified program management practices that they believe assist CDBG and HOME grantees to implement successful programs. These practices include developing a local performance measurement system and internal operating procedures for effectively managing subrecipients. According to HUD officials, the agency has encouraged grantees to develop local performance measurement systems because of challenges in developing outcome-oriented performance measures for the programs as a whole resulting from the wide discretion provided to grantees. For example, a 2005 HUD study on promising practices in grantee performance measurement noted practices such as measuring outcomes as well as outputs and efficiency measures and choosing outcomes that tie to goals. In addition, HUD and national organizations with whom we spoke have identified a number of projects as examples of how grantees have successfully utilized CDBG and HOME funds. For example, in 2005 and 2011, HUD gave awards for a number of HOME-funded projects under various categories, including neighborhood revitalization, innovative design, reaching underserved populations, and producing sustainable housing.

Why GAO Did This Study

In fiscal year 2012, Congress appropriated about $3.4 billion for the Community Development Block Grant (CDBG) program and $1 billion for the HOME Investment Partnerships (HOME) program. The CDBG and HOME programs, which are administered by the Department of Housing and Urban Development’s (HUD) Office of Community Planning and Development (CPD), are the federal government’s largest block grant programs for community development and affordable housing production, respectively. Both programs give grantees discretion to fund a wide range of allowable activities; in particular, CDBG funds can be used for 26 eligible activities. Block grants typically devolve substantial authority for setting priorities to state or local governments, and state and local officials bear the primary responsibility for monitoring and overseeing the planning, management, and implementation of activities financed with federal grant funds. However, federal agencies have oversight responsibilities and are expected to ensure that block grant funds are used effectively.

Section 231 of the Consolidated and Further Continuing Appropriations Act for fiscal year 2012 directed us to review the effectiveness of the block grant programs administered by CPD. As part of this review, we were to examine performance metrics used by HUD and best practices utilized by program grantees. This report focuses on the CDBG and HOME programs. Specifically, this report discusses (1) what is known about the effectiveness (or impact) of the CDBG and HOME programs, (2) the performance measures HUD has in place for the CDBG and HOME programs and any challenges HUD faced in developing these measures, and (3) promising practices HUD and others have identified for the CDBG and HOME programs.

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