Just Released: Redistribution Effect of Introducing Census 2000 Data Into the CDBG Formula

The availability of Census 2000 data has impacted
communities across the country in ways both subtle and
pronounced. In the latter category, we see factors that
are changing the shape of congressional districts,
helping local organizations to better estimate community
needs, and altering the distribution of federal and state
entitlement program funds.  A new publication by HUD's
Office of Policy Development & Research titled
"Redistribution Effect of Introducing Census 2000 Data
Into the CDBG Formula" is the first of two reports that
discusses the impact of Census 2000 data on the
allocation of Community Development Block Grant (CDBG)
resources.

"Redistribution Effect" details how and why funding
allocations have shifted between jurisdictions over the
past 10 years. The report is meant to serve as a resource
for understanding the intricacies of the existing
formula. It does not discuss how the shifting allocations
have impacted CDBG targeting of community development
need. The second report, expected for release in the
winter of 2003/2004, will discuss targeting to address
community development need.

Since 1978, HUD has used a dual formula to allocate CDBG
funds among communities across the country.  Formula A
uses three variables: population weighted at 25 percent,
poverty weighted at 50 percent, and overcrowding weighted
at 25 percent.  The second formula, formula B, uses
growth lag weighted at 20 percent, poverty weighted at 30
percent, and housing built before 1940 (pre-1940 housing)
weighted at 50 percent. Under the dual-formula system,
grants are determined for each jurisdiction by both
formulas. The jurisdiction automatically receives funds
from the formula that generates the higher amount.

This report identifies a number of impacts that the
introduction of 2000 data has had on the distribution of
CDBG funds across the country.  A sample of these
findings includes:

o 61 percent of the 100 largest entitlement grantees
have experienced decreases in funding.

o Entitlement communities and states in the West are
gaining funds, while communities and states in the
Midwest, Great Plains, and Puerto Rico are losing funds.

o Sixteen percent of existing entitlement communities
are gaining more than 10 percent.

o Twenty-one percent of existing entitlement communities
are losing more than 10 percent.

Overall, the introduction of new data into the formula
over the course of the decade results in older, declining
entitlement communities funded under formula B losing
funding share, while newer, growing communities funded
under formula A are seeing their funding share increase.

"Redistribution Effect of Introducing Census 2000 Data
Into the CDBG Formula" is available for download from HUD
USER at
https://www.huduser.gov/portal/publications/commdevl/redcenscdbg.html
or in printed form for a nominal charge by calling
HUD USER at 1-800-245-2691.
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HUD USER
P.O. Box 23268
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1-800-245-2691
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