Why the Formula for Allocating Community Development Block Grant Funds Should Be Improved

CED-77-2: Published: Dec 6, 1976. Publicly Released: Dec 6, 1976.

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A review of the formula used to allocate Community Development Block Grant funds by the Department of Housing and Urban Development (HUD) revealed inequities. In the Block Grants program, funds for the improvement of urban communities were to be allocated according to a needs formula based on population, overcrowded housing, and the extent of poverty.

In determining poverty, which receives a double weight in the formula, HUD does not recognize regional differences in cost of living as authorized by legislation. Proposed allocations by HUD for 1977 are based on 1973 census population estimates and 1970 data on poverty which would lead to a shift of funds to wealthier suburban areas. GAO believes that funds should be distributed on the basis of the latest census data.

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