Brown County, Monroe County, Morgan County, Owen County

Testimony for CSBG Stimulus Public Hearing

Here is the testimony Todd Lare has prepared for Thursday morning’s Community Services Block Grant public hearing in Indianapolis.

Testimony provided by: Todd Lare, Executive Director, South Central Community Action Program, Inc.

Date: Thursday, May 28, 2009 

My name is Todd Lare and I serve as Executive Director of South Central Community Action Program, Inc., providing services in Brown, Morgan, Monroe and Owen counties.  We are extremely pleased that Community Services Block Grant (CSBG) was included in the stimulus funding received in Indiana and anxiously await our opportunity to use it to make a difference in the communities we serve.  I appreciate the opportunity to offer comments at today’s public hearing.

Federal guidance with regard to CSBG funds mandated that 99% of funding be passed directly to community action agencies to be used in the same myriad of ways that our normal allocation of CSBG funding is used.  But, allocation methods used, as per the guidance should also be the same as normal.  Section 42 United States Code 9908(b)(8) says that, “any eligible entity in the State that received funding in the previous fiscal year through a [CSBG] grant …  will not have its funding terminated … or reduced below the proportional share of funding the entity received in the previous fiscal year unless, after providing notice and an opportunity for a hearing on the record, the State determines that cause exists for such termination or such reduction, subject to review by the [HHS] Secretary.” 

Cause for funding reduction, which is not only a reduction in dollars but also in percentage of total state CSBG funds includes: 1) the result of the most recently available census or other appropriate data; 2) the designation of a new eligible entity or; 3) severe economic dislocation.

 The change to the allocation proposed by the state plan is awarding higher amounts to those counties above the state’s unemployment rate.  This does not take into account that the entire state has rates of unemployment that have dramatically increased.  It also does not take into account other factors which may be equally important.  For instance, the Census data released last year shows that Monroe County, one of our four counties, had the largest increase in poverty of any county in the country between 2006 and 2007.  The rate released in 2008 was 41.7%.  While some may argue that this is inaccurate because students are included in the rate, there was a dramatic increase in the course of one year and the student population did not change.  

Additionally, communities like ours have seen dramatic economic changes, including the large departure of manufacturing jobs over the past several years, not just as a result of the latest national economic trend.  Our communities continue to feel the pain associated with the loss of those jobs, while the numbers do not show up in current unemployment statistics.  Those measures do not capture those who have depleted their unemployment benefits or who have been displaced and are now underemployed.  Underemployment has always been a significant problem in the communities we serve.

According to the 2007 Needs Assessment conducted by our agency, SCCAP ranked 5th in the number of people at or below 200% of the federal poverty line, 62,997 people.  This combined with the trend toward dramatic increases in poverty, and unemployment rates which have doubled in the past couple of years should be enough to support the continued need for CSBG assistance within our region.  The CSBG funding is meant not only to assist with unemployment and its effects, but is also to be used to sustain families and help remove barriers which could cause them to lose employment and stability.  We certainly cannot support losing revenue under the new allocation which would be given to other parts of the state.  I stand in opposition to the change in allocation formula proposed in the state plan and would ask the Secretary of the Department of Health and Human Services to deny this portion of Indiana’s plan.  Should that not occur, I would hope to utilize the appropriate appeals process allowed under 42 USC 9908(b)(8) and (c) and Section 678C of the Community Services Block Grant Act.

On May 13, 2009, the Indiana Housing and Community Development Authority (IHCDA) gave each agency a listing of the allocation they might expect to receive.  I believe this allocation took into account a change in the allocation which I now also oppose, but before the unemployment piece was added to the new allocation formula.  At that time, SCCAP was to receive $647,397.  A few days later, on May 18, the CSBG State Plan was posted to the IHCDA website.  That listed SCCAP’s allocation at $540,486.63.  So, in 6 days, our proposed allocation was reduced $106,910.37.  Of the 24 agencies receiving CSBG, 12 were cut and 12 received increases.  Some small agencies that benefitted from the first allocation change to provide small rural community action agencies more funding were cut by adding the criteria including unemployment.  This was not a transparent process and does not seem like a valid method given the fact that one factor counteracts another.

Moving beyond the allocation method, the state has also imposed restrictions which I believe are unwarranted and not directed by the federal legislation.  Guidance from the Department of Health and Human Services to the states said, “Under the regular CSBG program, eligible entities use funds to provide services and activities addressing employment, education, better use of available income, housing, nutrition, emergency services and/or health to combat the central causes of poverty.  Such services continue to be supportable under the CSBG Recovery Act fund.  In recognition of the intent of Recovery Act funds, States should encourage their eligible entities to support employment-related services and activities that create and sustain economic growth.”  Indiana’s plan says that 60% of the CSBG funding may be used for these purposes and 40% must be used for one of two microloan programs dictated by the state.  If an agency chooses not to adopt one of those programs, those funds will be lost and allocated to other agencies.   This, too, is different than what was presented to agency Executive Directors on May 13.  At that time we were told 60% could be used for normal activities, 10% could be used for administrative purposes and 30% in the two microloan categories.  It should also be noted that a potential issue with the use of funds for a microloan program could be that to the extent those funds are used to buy or improve real property, this may be a violation of 42 USC 9918.

At the May 13 meeting, I raised concern that I don’t believe the microloan categories, as presented, represent a significant need in the communities we serve or that we could not spend the nearly $200,000 in that way to those eligible.  Further, the suggested method to be used requires applicants to put up a fee before benefits can be accessed, which may not be a legal way to access these funds.  I asked that the state administration consider eliminating the mandate of using the microloan OR include a 3rd category which would allow for loans to individuals meeting the criteria for the purchase of, or maintenance of, a vehicle.  While the other two categories do not show up as a need for us, the need for affordable and reliable transportation is a HUGE need for our clients.  Since my intended use of the funding is based on Needs Assessment data collected locally every 3 years, I also asked the state what research had been used in making the determination to so narrowly restrict the use of CSBG funding within the 200% of poverty and below demographic.  To date, I have not received an answer as to whether the transportation component will be added or what data was used to suggest that microloans were a need in our local communities.  Therefore, I must stand in opposition to any narrowly defined restriction in the use of CSBG funding.  ARRA guidance says the states should “encourage” the use of funding for jobs related issues.  It does not, however, say that you should mandate use under the fear of losing funding, to be spent on things that are not of significant public need while those documented needs must be ignored or inadequately funded as a result.

For the past 2 Needs Assessments which IHCDA mandates that we do, our region has scored high in the need for transportation assistance.  In 2007, 23.1% of respondents considered this a major need, up from 18.1% three years earlier.  This ranked 5th highest in our needs list.   31.8% of SCCAP survey respondents did not have a car in working order (compared to 28.6% statewide).  Of these 50% considered this to be a barrier or problem and 29% said they could acquire better employment if they had a car in working order.  At its most basic level, this says to me that decisions on funding of this nature, designed to be flexible at the national level, is best made on the local level, not as a mandate.

For several months we have been forced to plan for a moving target on how to use these funds.  In February, we did an assessment of internal and county needs and started compiling a list of how the stimulus funding may be used.  In March, we followed IHCDA’s advice that provided 4 areas which funding may be used for.  At that time, we were urged to work on ideas centered on job creation and retention.  We took that to heart and started working on those plans.  In April, we were also told that there should be a jobs focus.  Now, suddenly, in May, we are told there is a 60/40% requirement not previously on the radar and which I don’t see as a major need in my region.  Failing to embrace this bad idea comes with the threat of receiving 40% less funding than the allocation formula would provide.  If all funding is not made available for normal CSBG uses, or the 40% category is not expanded for transportation, I stand in opposition to the state plan as it is submitted to HHS.  I cannot support the loss of resources nor wasting this funding.

So, in closing, I would ask that the Department of Health and Human Services reject the funding formula changes suggested by the state, specifically the use of unemployment as an additional factor.  I would also urge them to re-emphasize to the state that the funding can be used, in its entirety, as normal CSBG funding can be used and that they should not impose a mandate based on perceived need over documented need on the local level.   I ask that my comments be included, in their entirety, in the documentation submitted to the Department of Health and Human Services.  I thank you for the opportunity to provide this testimony on the proposed CSBG State Plan.

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