Highlights of testimony on Indiana’s proposed use of CSBG stimulus funds

Provided below are more excerpts from the testimony provided by Community Action representatives at last Thursday’s public hearings at the Indiana Housing and Community Development Authority.

These comments address the state’s plan for use of Community Service Block Grant stimulus funds from the American Recovery and Reinvestment Action of 2009.  

Selected highlights of testimony from Larry Kleeman, executive director of Lincoln Hills Development Corporation, a community action agency located in Tell City, serving Crawford, Perry and Spencer counties:

During 2008, we participated in a statewide needs assessment, as required by CSBG and Indiana Housing. Based on that needs assessment, the client expressed needs were identified as follows: Employment Services – 52 percent of clients indicated that as a major need. Knowing More of What’s Available – 40 percent, Education – 40 percent, Transportation 34 percent, Emergency rent, utilities and shelter 31 percent, Food or Nutrition – 30 percent, Health-related or Medical 24 percent, Housing Situation Improvement 21 percent.

I state that because the clients in Perry, Crawford and Spencer County expressed those categories as needs for services as part of the CSBG planning processes. I do not support the overly restrictive guidelines in the use of CSBG funds. Indiana Housing proposes to restrict the use of funds to address barriers to employment to 30 or 40 percent – I’m still unsure as to what that amount it is – but 30 or 40 percent of the funds must be used for business start-ups.

It’s our understanding that CSBG funds are to be used for services for all low-income people, defined as 200 percent of poverty or less. The elderly or permanently handicapped are generally not candidates for employment and under Indiana Housing’s proposed state plan, they would be precluded from services. And through the two loan programs, we would be spending $15,000 to $16,851 per job created with no guarantee that the job would last, nor the loan funds be paid back.

Other questions we have are, how would the loan programs be staffed? What is the typical failure rate with new business start-ups? If a new business start-up is in competition with an existing business, does the use of CSBG funds create unfair competition?

Finally, while we believe there may be merit to such loan programs, they involve longer start up and implementation, and are not suitable for stimulus funds with such a short time period. We believe that CSBG funds should be more locally driven, based on local needs, and targeted to federal objectives of the CSBG program.

Selected highlights of testimony from Todd Lare, South Central Community Action Program, located in Bloomington, serving Brown, Monroe, Morgan and Owen counties:

The state has 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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