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<br />HOUSING and COMMUNITY
<br /> DEVELOPMENT
<br />
<br />I"ohmw 7, Nt/mhcr 11 August 1981
<br />
<br />Congress Passes Major Changes
<br />· ' - Sm.Il C :ies
<br />
<br />provide for thc l~ansfcr of the HUD Small Cities CDBG
<br />Program from HUD Area Offices to state governments
<br />as earl}' as October 1, 1981. Transfer of the Small Cities
<br />program to statcs docs not affect the Entitlement CDBG
<br />Program fm cities ovcr 50,000 population and Urban
<br />
<br /> --Reduce the size and budget of the federal
<br /> government.
<br /> --Streamline administrative and compliance
<br /> requirements of federal pro..2ram~.
<br /> --kearrar~ge the inrcr-goveni~cu{~;} s,'ztcm and
<br /> rdiancc local ?vc;'nmcnts have dcvdoped o~
<br /> federal agencies and thereby bridge the gap bctween
<br /> local governments and state governments.
<br /> Under Reagan's state block grant concept, a grant is made
<br />to the state for a specific purpose, and the state, rather than a
<br />federal agency, will control how the money is to be spent
<br />
<br />Counties. Thc State Dcpartmcnt of Energy, Planning and
<br />Development has begun to examine possible implications of
<br />statc administration with local government officials and
<br />associations throughout the state.
<br />In Fcbruary of 1981, the Reagan Administration, through
<br /> Secretary David Stockman made public
<br /> their strategy of "devolving" the federal government
<br /> of certain categorical assistance programs and transferring
<br /> them to states in the form of block grants while at the same
<br /> time reducing the federal budget. President Reagan's federal
<br /> philosophy holds that financial assistance programs are
<br /> more responsive and flexible when administered by state
<br /> governments. This does not necessarily mean, however, that
<br /> programs were not run effectively or efficiently under
<br /> federal agency control. The major effort here is to
<br /> consolidate and "devolve" up to 100 existing categorical
<br /> grant programs to state governments in the form of block
<br /> grants tailored to individual conditions,' policies and
<br /> strategies of each state. At the present time, the Reagan
<br /> Administration is looking into the establishment of state
<br /> block grants in three major areas: Health and Social
<br /> Services, Education, and Community Development; A
<br /> number of other areas are also being considered for state
<br /> block grants, including energy, housing, and community
<br /> services. In addition, President Reagan recently created a
<br /> Federalism Advisory Committee to examine other
<br /> programs that could be transferred to states and local
<br /> governments. Establishing state block grant programs
<br /> accomplish a number of President Reagan's
<br />objectives:
<br />--Peel back power from the Federal Government to
<br />state and local governments and give states more
<br />flexibility and control over programs.
<br />
<br /> within the statutory provisions of the enabling legislation,
<br />
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<br /> Prior to the proposed State Small Cities Block Grant
<br />Program, HUD-Washington set up a number of
<br />demonstration projec?s aimed to show how states can play a
<br />more active ro]ein the administration of Small Cities grants.
<br />For example, in 1977, four states were awarded funds under
<br /> combined HUD/FmHA demonstration program to
<br />administer grants to small communities. Then, in 1980,
<br />HUD selected two states (Kentucky and Wisconsin) to
<br />demonstrate how states can handle the Small Cities pre-
<br />application system. The purpose of this demonstration was
<br />to determine if increased state involvement in the Small
<br />Cities CDBG pre-application system would result in more
<br />effective targeting of financial resources in response to state
<br />and local development priorities. It was also intended to
<br />show how a state pre-application selection system would
<br />change the distribution of HUD funds to smaller
<br />communities.
<br />"HUD's Assistant Secretary for Community Planning
<br />and Development, Stephen Bollinger, recently
<br />pointed out that in the past six years of the Small
<br />Cities CDBG Program, less than 20 percent of the
<br />eligible recipients ever received HUD funds."
<br />Each state was allowed to develop its own selection criteria,
<br />review process, and pre-application' procedures for the
<br />Small Cities Program. In developing the selection criteria,
<br />both Wisconsin and'Kentucky worked closely with
<br />representatives from their respective township, county, and
<br />municipal associations.
<br /> "Stephen Bollinger states that 96 percent of the
<br /> participants in Kentucky's demonstration program
<br /> thought it was less complicated dealing with the
<br /> ~tate."
<br />
<br /> State CDBG continued on page 3
<br />
<br />HOUSING AND COMMUNITY DEVELOPMENT BRIEFS is a joint publication of the League of Minnesota Cities, the
<br />Dept. of Energy, Planning and Development, the Minnesota Housing Finance Agency, and the Minnesota Chapter of the
<br />National Association of Housing and Redevelopment Officials. Prepared by the Dept. of Energy, Planning and
<br />Development, the Minnesota Housing Finance Agency, and the Minnesota Chapter oftheNafional Association ofltousing
<br />and Redewlopment Officials, 200 Capitol Square Building, St. Paul, MN 55101. Michael Auger, Editor (612/296-2394; Toll-
<br />free, 1-800-652-9747}.
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