Order Code RL32872
CRS Report for Congress
Received through the CRS Web
Community Services Block Grants (CSBG):
Funding and Reauthorization
Updated July 20, 2005
Karen Spar
Specialist in Social Legislation
Domestic Social Policy Division
Garrine P. Laney
Analyst in Social Legislation
Domestic Social Policy Division
Congressional Research Service { The Library of Congress

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Community Services Block Grants (CSBG):
Funding and Reauthorization
Summary
Community Services Block Grants (CSBG), administered by the Department
of Health and Human Services (HHS), provide federal funds to states, territories and
Indian tribes for distribution to local agencies to reduce poverty. Several related
national activities — Community Economic Development, Rural Community
Facilities, National Youth Sports, Community Food and Nutrition, Job Opportunities
for Low-Income Individuals (JOLI) and Individual Development Accounts (IDAs)
— also provide grants to local communities for a variety of anti-poverty initiatives.
CSBG and related activities trace their history to the War on Poverty of the 1960s.
On June 21, 2005, the House passed H.R. 3010, its FY2006 appropriations bill
for the Departments of Labor, HHS, and Education, and Related Agencies. The
House-passed bill would provide a total of $384.7 million for community services
programs, compared to FY2005 funding of $726.5 million. The FY2006 amount
includes $320 million for the Block Grant, which received $636.8 million in FY2005.
The House would fund the Block Grant, Community Economic Development, JOLI,
Rural Community Facilities, and IDAs. It would not, however, fund the National
Youth Sports and Community Food and Nutrition programs. On July 14, 2005, the
Senate Appropriations Committee reported its version of H.R. 3010, with a total of
$708.9 million for community services programs, restoring CSBG funding to its
FY2005 level, and providing approximately the same amounts for Community
Economic Development, JOLI, Rural Community Facilities, and IDAs as the House-
passed bill. Unlike the House, however, the Senate Committee would also fund the
Community Food and Nutrition Program in FY2006 at its FY2005 level.
President Bush’s FY2006 budget request included a “Strengthening America’s
Communities” initiative (SACI), which would eliminate 18 existing community and
economic development programs and replace them with a new grant administered by
the Commerce Department. CSBG and three related activities (Community
Economic Development, JOLI, and Rural Community Facilities) would be eliminated
as a result of this proposal. Unrelated to the SACI proposal, the Administration also
requested no funding for the National Youth Sports and Community Food and
Nutrition programs, although it did request funding in FY2006 for IDAs.
Funding authorization for CSBG and related activities expired at the end of
FY2003, although Congress has continued to fund the programs. The House and
Senate each passed reauthorization bills in the 108th Congress, but conferees never
met to resolve differences. Legislation similar to last year’s House-passed bill is now
pending before the House Education and the Workforce Committee (H.R. 341). Both
House and Senate bills of the 108th Congress (and H.R. 341) contained provisions
intended to improve program quality and accountability, establish new program goals
and activities, and improve grantee monitoring and fiscal controls. A key
controversy in the 108th Congress focused on current law provisions that allow
religious organizations to discriminate in hiring on the basis of religion; amendments
were offered — and defeated — during committee and floor debates that would have
prohibited such discrimination. This report will be updated.

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Contents
Recent Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
The Block Grant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Local Delivery System . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
State Role . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Allocation of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
CSBG Program Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Related Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Community Economic Development . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Job Opportunities for Low-Income Individuals (JOLI) . . . . . . . . . . . . . 6
Rural Community Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
National Youth Sports Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Community Food and Nutrition Program . . . . . . . . . . . . . . . . . . . . . . . 7
Individual Development Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
FY2006 Budget Proposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Strengthening America’s Community Initiative (SACI) . . . . . . . . . . . . . . . 8
Zero Funding Requests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Request for IDAs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Reauthorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Program Goals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
State Plan Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Training and Technical Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Grantee Funding Reduction or Termination . . . . . . . . . . . . . . . . . . . . 12
Grantee Monitoring and Fiscal Controls . . . . . . . . . . . . . . . . . . . . . . . 12
Faith-Based Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Recent Funding History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FY2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FY2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
List of Tables
Table 1. Enacted Funding for CSBG and Related Activities,
FY2001-FY2005 and the FY2006 Budget Request . . . . . . . . . . . . . . . . . . . 16

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Community Services Block Grants (CSBG):
Funding and Reauthorization
Recent Developments
On July 14, 2005, the Senate Appropriations Committee reported its version of
H.R. 3010, the FY2006 funding bill for the Departments of Labor, Health and Human
Services, and Education, and Related Agencies. The bill contains a total of $708.9
million for community services programs, maintaining the Community Services
Block Grant (CSBG) and several related national activities at approximately their
FY2005 funding levels. The reported bill contains no funding for the National Youth
Sports Program.
Earlier, on June 21, 2005, the House passed its version of H.R. 3010, including
total funding of $384.7 million for community services programs. The House bill
would reduce the CSBG by about half and would provide no funding for National
Youth Sports or the Community Food and Nutrition Program. Total funding for
community services programs in FY2005 is $726.5 million.
Included in President Bush’s FY2006 budget request is a proposed
“Strengthening America’s Communities” initiative, which would eliminate 18
existing community and economic development programs (among which are the
CSBG and several related national activities), and replace them with a new program
administered by the Commerce Department. The President also does not request
FY2006 funding for the National Youth Sports or Community Food and Nutrition
programs, although this decision is not related to the “Strengthening America’s
Communities” proposal. (For further information on the President’s initiative, see
FY2006 Budget Proposals included in this report.) On January 25, 2005,
Representative Osborne introduced H.R. 341, the Improving the Community Services
Block Grant Act, which would, among other provisions, reauthorize the CSBG and
related activities in their current form for FY2006-FY2012. (For details of H.R. 341,
see Reauthorization in this report.)
Background
Administered by the Department of Health and Human Services (HHS), the
Community Services Block Grant (CSBG) program provides federal funds to states,
territories and Indian tribes for distribution to local agencies in support of a variety
of antipoverty activities. The origins of the Community Services Block Grant date
back to 1964, when the Economic Opportunity Act (P.L. 88-452; 42 U.S.C. § 2701)
established the War on Poverty and authorized the Office of Economic Opportunity
(OEO) as the lead agency in the federal antipoverty campaign. One of the most

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significant OEO programs was Community Action, under which a nationwide
network of local Community Action Agencies (CAAs) was developed. A key feature
of Community Action is the direct involvement of low-income people in the design
and administration of antipoverty activities, through mandatory representation on the
CAAs’ governing boards. Currently, at the local level, CAAs are the primary
grantees of the CSBG.
In 1975, OEO was renamed the Community Services Administration (CSA), but
remained an independent, executive branch agency. In 1981, CSA was abolished and
replaced by the CSBG, to be administered by HHS. At the time CSA was abolished,
it was administering nearly 900 CAAs, about 40 local Community Development
Corporations, and several small categorical programs that were typically operated by
local CAAs. The CSBG Act was enacted as part of the Omnibus Budget
Reconciliation Act of 1981 (P.L. 97-35, Title VI, Section 671; 42 U.S.C. § 9901) as
partial response to President Reagan’s proposal to consolidate CSA with 11 other
social service programs into a block grant to states. Congress rejected this proposal
and instead created two new block grants, the Social Services Block Grant, under
Title XX of the Social Security Act, and the CSBG, which consisted of activities
previously administered by CSA. The CSBG Act was reauthorized in 1984 under
P.L. 98-558, in 1986 under P.L. 99-425, in 1990 under P.L. 101-501, in 1994 under
P.L. 103-252, and in 1998 under P.L. 105-285. The authorizations for CSBG and
related programs expired in FY2003. Reauthorization legislation was passed by the
House and Senate during the 108th Congress but was not enacted; it remains an issue
in the 109th Congress.
Several related national activities — Community Economic Development,
Rural Community Facilities, National Youth Sports, Community Food and Nutrition
programs as well as Job Opportunities for Low-Income Individuals and Individual
Development Accounts — also offer grants to assist local low-income communities,
with economic development, rural housing and water management, food and
nutrition, and instructional assistance for low-income youth, among other services.
These activities are administered at the federal level by the same Office of
Community Services at HHS that administers the CSBG, and in some cases, are also
authorized by the CSBG Act.
This report provides background on the CSBG program and related activities
and a funding history, and addresses current budget issues and legislative activity,
including reauthorization of these programs.
The Block Grant
Use of Funds. CSBG funds are used for activities designed to have a
“measurable and potentially major impact on causes of poverty.” The law envisions
a wide variety of activities undertaken on behalf of low-income families and
individuals, including those who are welfare recipients, homeless, migrant or
seasonal farm workers, or elderly. States must submit an application and plan to
HHS, stating their intention that funds will be used for activities to help families and
individuals achieve self-sufficiency, find and retain meaningful employment, attain
an adequate education, make better use of available income, obtain adequate housing,
and achieve greater participation in community affairs. In addition, states must

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ensure that funds will be used to address the needs of youth in low-income
communities; coordinate with related programs, including state welfare reform
efforts; and ensure that local grantees provide emergency food-related services.
Local Delivery System. States are required to pass through at least 90% of
their federal block grant allotments to “eligible entities” — primarily (but not
exclusively) Community Action Agencies (CAAs) that had been designated prior to
1981 under the former Economic Opportunity Act. The distribution of these funds
among local agencies is left to the discretion of the state (although states may not
terminate funding to an eligible entity or reduce its share disproportionately without
determining cause, after notice and an opportunity for a hearing). There are more
than 1,000 eligible entities around the country, of which approximately 80% are
private nonprofit organizations and about 20% are public agencies. Many of these
organizations contract with others in delivering various services. Once designated
as an eligible entity for a particular community, an agency retains its designation
unless it voluntarily withdraws from the program or its grant is terminated for cause.
Eligible entities are monitored within a systematic schedule; return visits are made
when goals are not met. In designating new or replacement entities, states may select
a public agency only when no qualified private nonprofit organization is available,
in accordance with the 1998 CSBG amendments.
Local activities vary depending on the needs and circumstances of the local
community. Each eligible entity, or CAA, is governed by a board of directors, of
which at least one-third are representatives of the low-income community. Under the
1998 amendments to the CSBG Act, low-income board members must live in the
community that they represent. Another third of the board members must be local
elected officials or their representatives, and the remaining board members represent
other community interests, such as business, labor, religious organizations, and
education. A public entity must either have a governing board with low-income
representation as described above, or another mechanism specified by the state to
assure participation by low-income individuals in the development, planning,
implementation and evaluation of programs.
There is no typical CAA, since each agency designs its programs based on a
local community needs assessment. Examples, however, of CSBG-funded services
include emergency assistance, home weatherization, activities for youth and senior
citizens, transportation, income management and credit counseling, domestic
violence crisis assistance, parenting education, food pantries, and emergency shelters.
In addition, local agencies provide information and referral to other community
services, such as job training and vocational education, depending on the needs of
individual clients.
State Role. At the state level, a lead agency must be designated to develop the
state application and plan. As noted above, states must pass through at least 90% of
their federal CSBG allotment to local eligible entities. States also may use up to
$55,000 or 5% of their allotment, whichever is higher, for administrative costs.
Remaining funds may be used by the state to provide training and technical
assistance, coordination and communication activities, payments to assure that funds
are targeted to areas with the greatest need, supporting “asset-building” programs for
low-income individuals (such as Individual Development Accounts, discussed later),

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supporting innovative programs and activities conducted by local organizations, or
other activities consistent with the purposes of the CSBG Act. In addition, as
authorized by the 1998 amendments, states may use some CSBG funds to offset
revenue losses associated with any qualified state charity tax credit.
Allocation of Funds. Of funds appropriated annually under the CSBG Act,
HHS is required to reserve 1.5% for training and technical assistance and other
administrative activities, and half of this set-aside must be provided to state or local
entities. In addition, half of 1% of the appropriation is reserved for outlying
territories (Guam, American Samoa, the Virgin Islands, and the Northern Mariana
Islands). The law further requires that 9% of the total appropriation be reserved for
certain related activities, which are described below, and that the remainder be
allocated among the states. In practice, however, Congress typically specifies in
annual appropriations laws exactly how much is to be made available for the block
grant and each of the related activities. Block grant funds are allotted to states
(including Puerto Rico) based on the relative amount received in each state, in
FY1981, under a section of the former Economic Opportunity Act. HHS may allow
Indian tribes to receive their allotments directly, rather than through the state.
CSBG Program Data
The Community Services Block Grant Statistical Report FY 2003 is comprised
of data based on a Community Services Block Grant Information System (CSBG/IS)
survey that is administered by the National Association for State Community
Services Programs. Forty-nine states, the District of Columbia, and Puerto Rico
provided information on the level and uses of their FY2003 CSBG funds, the sources
and uses of other funding, their activities, as well as the number and characteristics
of participants in their programs. For FY2003, these states, the District of Columbia,
and Puerto Rico reported using the vast majority of funding (92%) for grants to local
eligible entities to address a variety of needs.1 Administrative expenditures
accounted for 4% of funding, with the remaining 4% of funds used on state
discretionary projects. Of 1,080 local eligible entities, Community Action Agencies
(CAAs) comprised nearly 88%, the overwhelming majority. These local agencies
served 96% of all U.S. counties. CAAs client demographics reveal heterogeneous
groups of low-income participants. Typically, a client of a CAA:
! lived in a family with children,
! was white and non-Hispanic,
! was very poor, and
! had family members currently working or with work experience.
Nearly 60% of CAAs’ participant families included minor children. While 35%
of the children lived with both parents, over half lived only with their mothers, and
single fathers headed another 6% of families. About 8% of program participants
were at least 70 years of age, with another 10% between 55 and 70 years old. CAAs’
1 Information in this section is based on the National Association for State Community
Services Programs, Meg Power, et al., Community Services Block Grant Statistical Report
FY2003 (Washington, D.C. Nov. 2004).

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clients were extremely poor — 71% of families had incomes below the HHS poverty
guideline (for 2003) of $15,260 for a family of three. Of poor clients participating
in the program, 26% (about 1 million) had incomes below $7,630 for a family of
three. Nearly 13% of families’ incomes exceeded the poverty guideline but were
lower than 125% of the guideline, while the incomes of another 15% were slightly
higher.
The CSBG statistical report used CSBG family income data to estimate the
percentage of all individuals living in poverty and their families who were served by
CAA programs in 2003. Based on 2003 Census data for 48 states reporting
CSBG/IS income data, 34.9 million residents of these states were living in poverty.
CAAs provided services to more than 13 million individuals who were members of
almost 6 million poor families. In addition, CAAs assisted 3 million people living
in “near-poor” families.2 The “working poor” were substantial users of CAAs’
services in FY2003. Nearly two million families, almost half of those reporting their
income, included at least one member of the 2003 workforce. States reported that
individuals who left Temporary Assistance for Needy Families to obtain employment
were especially vulnerable if they became unable to work, because of the shortage of
jobs that pay a living wage and have benefits. CAA programs provided appropriate
emergency assistance and referrals to resources that would help such persons until
they could return to work.
Other data on CAAs’ clients revealed that they are ethnically diverse — with
53% white, 23% African-American, 16% Hispanic, 4% American Indian/Alaskan,
2% Asian, and 2% other. Program data on the education of more than 4 million
adults participating in CSBG programs show that 56% had a high school diploma or
equivalency certification, and only 20% of adult program participants had pursued
post-secondary study. The education level of a majority of adult CSBG clients
suggested that the odds of their escaping poverty without additional training were
very low.3
In FY2003, state governments were unable to increase funding for supportive
services for the poor, including services that could sustain self-sufficiency.
Compared to FY2002 resources for CSBG-related activities, both federal and state
FY2003 funding had declined by 4%. The report’s data indicated that FY2003
CSBG funding was below FY2002 levels, both nominally and in inflation-adjusted
dollars. In FY2003, there was a slight growth in funding from local and private
sources; however, funding from federal and state governments stagnated, reportedly
causing a reduction in the total resources of the CSBG network.4
Related Activities
In addition to the block grant itself, the CSBG Act authorizes several related
national activities that are administered through the Office of Community Services
2 Ibid., pp. iv-vi, 22-23.
3 Ibid., pp. vii-viii, 25.
4 Ibid., pp. xiii, 72.

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within HHS. Also, two other programs that are not directly authorized by the CSBG
Act — Job Opportunities for Low-Income Individuals and Individual Development
Accounts — are administered by the Office of Community Services and are included
in the six separate activities described below. Funding authorization for all these
activities expired at the end of FY2003; however, Congress has continued to
appropriate funds for them.
Community Economic Development. The Community Economic
Development program helps support local community development corporations
(CDCs) to generate employment and business development opportunities for low-
income residents. Projects must directly benefit persons living at or below the
poverty level and must be completed within 12 to 60 months of the date the grant was
awarded. Preferred projects are those that document public/private partnership,
including the leveraging of cash and in-kind contributions; and those that are located
in areas characterized by poverty, a Temporary Assistance for Needy Families
(TANF) assistance rate of at least 20%, high levels of unemployment or incidences
of violence, gang activity, and other indicators of socioeconomic distress.
During FY2005, the $27.3 million appropriation for Community Economic
Development activities supports the award of 39 grants, of which 24 are new and 15
are continuations, 7 contracts, and 2 interagency agreements.5
Job Opportunities for Low-Income Individuals (JOLI). JOLI is
authorized under the Family Support Act of 1988, (P.L. 100-485, Section 505), and
as amended, the Personal Responsibility and Work Opportunity Reconciliation Act
of 1996, (P.L. 104-193, Section 112). Although JOLI is not authorized under the
CSBG Act, it is funded and administered as one of the CSBG-related activities. JOLI
funds are awarded on a competitive basis to community based, non-profit and tax-
exempt organizations, including community development corporations, faith-based,
charitable, and tribal organizations. Organizations awarded grants must demonstrate
and evaluate ways of creating new employment opportunities with private employers
for individuals who receive TANF and for other individuals whose family income
level does not exceed 100% of the official poverty guidelines. Examples of these
projects include self-employment and micro-enterprise, new businesses, expansion
of existing businesses, or creating new jobs or employment opportunities. Funds for
this project cannot be used for new construction or for the purchase of real property.
With its FY2005 appropriation of $5.44 million, JOLI awarded 10 grants, 2
contracts, and 2 interagency agreements.6
Rural Community Facilities. Funds are for grants to public and private
nonprofit organizations for rural housing and community facilities development
projects to train and offer technical assistance on: home repair to low-income
families, water and waste water facilities management, and developing low-income
rental housing units.
5 Department of Health and Human Services Fiscal Year 2006, Administration for Children
and Families, Justification of Estimates for Appropriations Committees, p. 151.
6 Ibid., p. D-154.

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The FY2005 appropriation of $7.24 million for Rural Community Facilities
supports the award of 8 grants, 2 contracts and 2 interagency agreements.7
National Youth Sports Program. Under this program, a grant is made to
a single organization, i.e., the National Collegiate Athletic Association, to provide
recreational and instructional services for low-income youth, typically on college
campuses. In FY2005, one award was made with the $17.86 million appropriation
for the National Youth Sports Program.8
Community Food and Nutrition Program. This program provides grants
to public and private nonprofit organizations to coordinate food assistance resources,
to help identify potential sponsors of child nutrition programs and to initiate
programs in areas with inadequate food assistance resources, and to develop
innovative approaches at the state and local level to meet the nutritional needs of
low-income people. Authorizing legislation requires that 60% of the amount
appropriated for this program (up to $6 million), must be allocated to states for
statewide programs and 40% must be awarded on a competitive basis. Amounts
appropriated in excess of $6 million are to be allotted as follows: 40% awarded to
eligible agencies for statewide grants; 40% awarded on a competitive basis for local
and statewide programs; and 20% awarded on a competitive basis for nationwide
programs, including programs benefitting Native Americans and migrant farm
workers.
The FY2005 appropriation for the Community Food and Nutrition program is
$7.2 million. This funding supports the following awards: 104 new grants, 1
contract, and 2 interagency agreements.9
Individual Development Accounts. The Assets for Independence Act
(Title IV, P.L. 105-285) initially provided for a five-year demonstration grant
initiative to encourage low-income people to accumulate savings. Individual
Development Accounts (IDAs) are dedicated savings accounts that can be used for
specific purposes, such as buying a first home, paying for college, or starting a
business. Funds are for non-profit community groups, localities, states, or credit
unions serving low-income people. Contributions are matched, and participants are
given financial and investment counseling. Non-profit groups can apply for grant
funds as individual organizations or jointly. Also, a state or local government agency
or a tribal government can apply jointly with one or more non-profit organizations.
Collaboration with a financial or for-profit community development corporation is
allowed. States that had committed at least a million dollars (using non-federal
funds) to a statewide IDA program as of the date of enactment are eligible for direct
funding from HHS.
To conduct the demonstration, grants are made to public or private nonprofit
organizations that can raise an amount of private and public (nonfederal) funds that
7 Ibid., p. D-152.
8 Ibid., p. D-156.
9 Ibid, p. D-159.

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is equal to the federal grant; federal matches into IDA cannot exceed the non-federal
matches. The maximum federal grant is $2 million a year. (For more information
on IDAs, see CRS Report RS22185, Individual Development Accounts (IDAs):
Background and Current Legislation and CRS Report RS21813, Tax Credits for
Individual Development Accounts.)
Since its creation, the Assets for Independence program has opened over 12,000
IDA accounts with deposits of over $7 million. An assessment of the program,
however, reveals it lacks “partner-supported performance measures with baselines
and ambitious targets.”10 Nevertheless, the Administration supports reauthorization
of the Assets for Independence Act, promising to work with Congress to legislatively
improve the program.11 The FY2005 appropriation for IDA is $24.7 million.
FY2006 Budget Proposals
Strengthening America’s Community Initiative (SACI)
President Bush’s FY2006 budget request includes a proposal to eliminate at
least 18 existing community and economic development programs and replace them
with a proposed “Strengthening America’s Communities Initiative.”12 Although the
Administration has yet to provide specific details of this proposal, among programs
to be included are the Community Services Block Grant and some of the related
activities discussed in this report (Community Economic Development, JOLI, Rural
Community Facilities). Programs proposed for inclusion in SACI are currently
administered by various federal agencies, including HHS and the Department of
Housing and Urban Development (HUD); however, the Administration would base
the new initiative in the Department of Commerce. The President requests $3.7
billion for FY2006 to fund the new initiative; programs that would be included are
currently funded at an estimated total of $5.6 billion. The largest program proposed
for inclusion in this initiative is HUD’s Community Development Block Grant
(CDBG), funded in FY2005 at $4.1 billion.
Three separate congressional committees have held hearings on the proposed
Strengthening America’s Communities Initiative, including the House Government
Reform Subcommittee on Federalism and the Census (March 1, 2005), the House
Transportation and Infrastructure Subcommittee on Economic Development, Public
Buildings and Emergency Management (March 17, 2005), and the House Financial
Services Committee (April 6, 2005). In general, the congressional response has not
been enthusiastic. For example, in reporting the FY2006 budget resolution
subsequently adopted by the full House (H.Con.Res. 95), the House Budget
Committee stated that the budget resolution assumes an additional $1.1 billion —
10 Ibid, p. D-164.
11 Ibid.
12 For more information on the Administration’s proposal, see CRS Report RL32823, An
Overview of the Administration’s Strengthening America’s Communities Initiative, by
Eugene Boyd, et al.

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above the Administration’s request — “to accommodate higher appropriations for
programs such as the Community Development Block Grant.” The Budget
Committee further states: “Community Services Block Grants provide invaluable
assistance to low-income families and communities. These funds are used to build
healthy and stable communities. Due consideration should be given to this program
before Congress implements any changes.” In adopting its version of the budget
resolution (S.Con.Res. 18), the Senate approved an amendment to “restore funding
for the Community Development Block Grant (CDBG) program and other programs
proposed to be eliminated and to retain the administration of these programs at their
current agencies.” Formal legislation to establish the new initiative has not yet been
submitted or introduced in Congress.
Zero Funding Requests
In conjunction with the SACI proposal described above, the Administration
requests no funding in FY2006 for CSBG, Community Economic Development,
JOLI, and Rural Community Facilities. Although the President does not include two
other CSBG-related activities in his initiative — the National Youth Sports Program
and the Community Food and Nutrition Program — neither does he request FY2006
funding for them, stating that they duplicate activities that can be provided by
existing programs such as the Social Services Block Grant or under the U.S.
Department of Agriculture’s (USDA) Food and Nutrition Service. The discretionary
“outreach grants” and the Community Food Project (Section 25 of the Food Stamp
Act) are two USDA programs that provide federal support for activities similar to the
Community Food and Nutrition Program. The discretionary outreach program has
been funded at $1 million in each of FY2004 and FY2005, while appropriated
funding for the Community Food Project is $5 million a year through FY2007. The
Administration has not requested additional funding in FY2006 for the discretionary
outreach program or Community Food Project at USDA or for the Social Services
Block Grant to accommodate any increase in demand for these resources that might
result if the Community Food and Nutrition Program or the National Youth Sports
Program are zeroed out.
Request for IDAs
Individual Development Accounts, authorized by the expired Assets for
Independence Act, are the only CSBG-related activity for which the Administration
has requested funding in FY2006. The President’s budget includes a request of $24.7
million for this program.

---

CRS-10
Reauthorization
On January 25, 2005, Representative Osborne introduced H.R. 341, the
Improving the Community Services Block Grant Act, which is virtually identical
(except for dates) to legislation passed by the House during the 108th Congress (H.R.
3030).13 H.R. 341 would reauthorize the CSBG and related activities through
FY2012. In his introductory remarks, Representative Osborne noted key provisions
of H.R. 341, such as promoting increased quality and accountability of CSBG
programs, encouraging initiatives to improve conditions and eliminate barriers to
self-sufficiency in rural areas, and providing youth mentoring services to address
education needs and crime.
Other provisions of H.R. 341 would
! change the definition of the “eligible entity” by requiring such
entities to establish and meet local goals as well as state goals,
standards and requirements;
! require that a state take swift action to improve the performance or
terminate funding of low-performing eligible entities or ones that
failed to meet local and state requirements;
! provide that a state justify to the Secretary its continued support of
low-performing eligible entities;
! require a state to use funds to improve economic conditions and
remove barriers to self-sufficiency for the rural poor;
! require a local eligible entity to establish goals for reducing poverty
in the community;
! base subsequent grant awards on the success or failure of an eligible
entity in meeting goals;
! prohibit a religious organization providing services under provisions
of this act from discriminating against a person seeking assistance
because of religion or a religious belief;
! require the Secretary to establish procedures that would allow grant
funds or intangible assets acquired with grant funds to become the
sole property of the grantee if the grantee agrees to continue to use
the funds or property for the purposes for which the grant was
provided;
! add water and wastewater facility needs to activities allowed for
rural community development; and
! add improvement of academic achievement to the goals of national
or regional programs designed to provide instruction activities.
H.R. 341 was referred to the House Education and the Workforce Committee.
Subsequently, in April 2005, Representative Osbourne, Committee Chairman
Boehner, and Education Reform Subcommittee Chairman Castle requested that the
Government Accountability Office (GAO) conduct a study of the financial oversight
13 H.R. 3030 contained an unrelated unemployment compensation provision, which is not
included in H.R. 341.

---

CRS-11
structure of CSBG.14 Specifically, GAO has been asked for information on the
approaches states use to ensure compliance by CSBG grantees with federal laws and
regulations, efforts made by HHS to oversee states’ monitoring of CSBG grantees,
and the approaches used by states in providing training and technical assistance to
grantees using funds reserved for this purpose.
During the 108th Congress, the Committee reported and the House passed
legislation, H.R. 3030 (virtually identical to the currently pending H.R. 341), while
the Senate passed S. 1786, the Poverty Reduction and Prevention Act. Conferees
never met to resolve the differences in the two bills, and thus CSBG remains an issue
before the 109th Congress. Both bills in the 108th Congress would have reauthorized
CSBG and related programs at such sums as necessary, except for the National Youth
Sports Program, which would have been reauthorized at $15 million annually by the
House bill and $18 million by the Senate bill. The following compares provisions
of H.R. 3030 and S. 1786 from the 108th Congress; readers should note that H.R. 341,
now pending in the 109th Congress, contains the same provisions as H.R. 3030.
Program Goals. H.R. 3030 and S. 1786 contained similar provisions
concerning goals of eligible entities. H.R. 3030 would have required entities to
establish and meet locally determined goals for reducing poverty in the community.
It would also have added “improving academic achievement” to the list of required
goals. Both bills would have required an entity to include goals for leveraging
community resources, fostering coordination of federal, state, local, private and other
assistance, and promoting community involvement.
S. 1786 would have provided that grants to states support both improving the
causes of poverty and the conditions that cause poverty. The measure would have
revised the poverty line determination; it would have allowed a state to raise its
eligibility threshold to a minimum of 125% of the federal poverty line or a maximum
of 60% of state median income; however, the state would have had to give priority
to serving individuals with the lowest income who sought services. Also, S. 1786
would have made a tripartite board the sole mechanism for determining consideration
of eligible entities, and thus would have eliminated current provisions that allow a
state to specify another mechanism for doing so. H.R. 3030 did not contain
provisions concerning the poverty eligibility threshold or the role of a tripartite board
in determining an eligible entity.
State Plan Requirements. H.R. 3030 and S. 1786 would have revised state
application and plan requirements. H.R. 3030 would have specified that youth
development activities may include mentoring programs. The bill also would have
added, as a use of funds to be included in the state plan, “initiatives to improve
economic conditions and mobilize new resources in rural areas to eliminate obstacles
to the self-sufficiency of families and individuals in rural communities.” S. 1786
would have revised the current state plan provisions by requiring not only that the
Secretary review the plan but also approve it. Among information for inclusion in
a state’s plan submitted to the Secretary was an assurance that grant funds would be
14 For an explanation of the Committee’s rationale in requesting this study, see
[http://edworkforce.house.gov/press/press109/first/04apr/gaocsbg041305.htm].

---

CRS-12
used: to improve literacy, communications, and technical skills of participant low-
income families; for initiatives to assist those moving from welfare to work to obtain
jobs at decent wages with benefits; for initiatives to increase the development of
household assets of individuals (such as individual development accounts and home-
ownership opportunities); to improve economic conditions and mobilize new
resources in rural and other at-risk areas to eliminate obstacles to the self sufficiency
of persons in those communities, and for initiatives to reduce the concentration of
poverty in cities and inner suburbs and provide economic opportunities for persons
in those areas; and in support of partnerships with nonprofit or community-based
organizations that address child abuse prevention, including programs that are
school-based and that focus on adolescent victims, and victimizers.
Training and Technical Assistance. Both bills contained training and
technical assistance provisions. H.R. 3030 would have added “dissemination
regarding best practices” to the use of funds by the Secretary. S. 1786 would have
revised training and technical assistance provisions by devising, in consultation with
national and state networks of eligible entities, a strategic plan for annual technical
assistance; and would have improved management information and reporting systems
by developing a common state financial and organizational protocol.
Grantee Funding Reduction or Termination. Provisions relating to
reducing or terminating funding for eligible entities were included in H.R. 3030 and
S. 1786. H.R. 3030 would have allowed, but not required, the Secretary to review
determinations by a state to reduce or terminate funding to an eligible entity. Further,
the bill would have amended the definition of “cause” in the case of a funding
reduction to include failure to meet poverty reduction goals. States would have been
required to give priority to entities that received funding on the date of enactment, if
they fulfilled their poverty reduction goals. If no entity was entitled to such priority,
the state would designate another entity from qualified applicants. H.R. 3030 also
would have required states to replace the lowest performing existing grantees
beginning in FY2005. S. 1786 would have established procedures for termination
of designation as an eligible entity or reduction of funding by giving eligible entities
a right to a public hearing on a state decision; changing from 90 to 30 days the time
frame within which the Secretary must have made a determination concerning a
state’s decision to terminate or to reduce funding for an eligible entity; and requiring
the Secretary to continue funding the entity at its previous year’s level until a
decision was made on a state’s action.
Grantee Monitoring and Fiscal Controls.
Both measures would have
amended current provisions of the CSBG Act relating to monitoring eligible entities.
H.R. 3030 would have required federal reviews to determine whether local
performance goals were being met. S. 1786 would have changed current law
requirements for full on-site federal reviews of eligible entities every three years to
a biennial basis. In addition, S. 1786 would have required an annual follow-up visit
to entities that failed to meet state-established goals.
S. 1786 would have addressed fiscal controls by requiring states to submit a
separate audit of CSBG funds to the Secretary covering disbursements to eligible
entities, use of state administrative funds, and disbursement of state discretionary
funds; H.R. 3030 contained no such provisions. S. 1786 would have authorized the

---

CRS-13
Secretary to withhold administrative funds from states that were not in compliance
with the CSBG Act and provide funds directly to the eligible entities. H.R. 3030 and
S. 1786 would have provided that funding be directed at improving the self-
sufficiency of families and individuals in rural communities.
Both H.R. 3030 and S. 1786 contained similar provisions that would have
authorized the Secretary to allow grantees to keep assets obtained with program
funds. H.R. 3030 would have allowed the Secretary to add water and waste water
treatment to the list of community facility needs. H.R. 3030 would have allowed
funds to be used for construction or substantial rehabilitation of buildings and
facilities and for loans or investments in private business enterprises owned by
community development corporations. S. 1786 would have authorized the Secretary
to allow funds for long-term loans or investments for private business enterprises,
capital to businesses owned by community development corporations, and marketing
and management assistance for businesses providing jobs and business opportunities
to low-income individuals.
Faith-Based Organizations.
Another key provision of H.R. 3030 and S.
1786 related to the participation of faith-based organizations in CSBG-funded
programs. H.R. 3030 would have prohibited discrimination against a beneficiary or
potential beneficiary of the program on the basis of religion. S. 1786 would have
added religion to current provisions of the CSBG Act that prohibit exclusion of a
person from program participation based on color, national origin, sex, or age. S.
1786 also would have amended current law, which requires government agencies to
consider participation of religious organizations on the same basis as other
nongovernmental organizations, to require religious organizations to meet
requirements of the act.
There was debate on H.R. 3030 both in the House Committee on Education and
the Workforce and on the House floor on provisions in current law that allow a
religious organization to discriminate in hiring. The Committee defeated an
amendment that would have prevented a grantee from using religion as a basis for
discriminating against a job applicant and agreed to one that would have prohibited
a religious organization from using religion or a religious belief as a basis for
discriminating against a person seeking program services.
After considering a number of amendments, the House passed H.R. 3030 on
February 4, 2004. The House rejected H.Amdt. 459 (Woolsey) in the nature of a
substitute that would have prohibited organizations from using CSBG funds to
discriminate in hiring on the basis of religion. The House rejected both H.Amdt. 460
(Robert Scott) which would have required organizations to separate their religious
services or activities from programs that used CSBG funds and H.Amdt. 461 (Robert
Scott) which would have prohibited the use of federal CSBG funds to discriminate
in hiring based on religion. (See CRS Report RL32736, Charitable Choice Rules
and Faith-Based Organizations, by Joe Richardson, for a discussion of these rules
and the CSBG).

---

CRS-14
Recent Funding History
FY2006
On July 14, 2005, the Senate Appropriations Committee reported its version of
a funding bill for the Departments of Labor, HHS, and Education, and Related
Agencies (H.R. 3010), containing a total of $708.9 million for community services
programs in FY2006, compared to total funding in FY2005 of $726.5 million. The
Senate committee bill would maintain the CSBG at its FY2005 level of $636.8
million, despite the Administration’s request for zero funding. In its bill report
(S.Rept. 109-103), the committee said it “rejects” the Administration’s
recommendation to eliminate funding for the CSBG: “The Committee continues to
recognize the importance of CSBG and the Community Action Agencies it funds in
helping meet the extraordinary challenges facing low-income communities.”
Likewise, the Senate Committee would maintain current funding levels for most
related activities, with the exceptions of a slight increase for Rural Community
Facilities and zero funding provided for the National Youth Sports Program.
In contrast, on June 21, 2005, the House passed its version of H.R. 3010, with
a total of $384.7 million for community services programs. The bill would provide
$320 million for the block grant, for a reduction of about half. FY2005 funding
levels would be maintained for Community Economic Development, JOLI, and Rural
Community Facilities. Funds for Rural Community Facilities would be allocated to
regional rural community assistance programs for the sole purpose of improving
water and wastewater facilities in poor, rural communities, not for home repair to
low-income families nor for developing low-income rental housing units, as in the
past. The same provision is included in the Senate committee bill. Neither the
House-passed H.R. 3010 nor the President’s request would fund the National Youth
Sports or the Community Food and Nutrition programs. (See Table 1 for details.)
FY2005
The Consolidated Appropriations Act, 2005 (P.L. 108-447; H.R. 4818), enacted
December 8, 2004, provided $732.4 million for community services programs. The
following funding amounts do not reflect the mandatory reduction of 0.80%: $641.9
million for CSBG; $33 million for Community Economic Development (of which
$5.5 million was for JOLI); $7.3 million for Rural Community Facilities; $18 million
for National Youth Sports; $24.9 million for IDAs and $7.2 million for Community
Food and Nutrition. The President requested FY2005 funding of $552 million for
community services programs, for distribution as follows: $495 million for CSBG;
$25 million for IDAs; and $32 million for community services discretionary
programs. He did not request funding for Rural Community Facilities, the National
Youth Sports program or the Community Food and Nutrition program. See Table
1 for funding levels that reflect the required FY2005 rescission as well as funding for
other fiscal years.

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CRS-15
FY2004
Enacted on January 23, 2004, the Consolidated Appropriations Act, 2004 (P.L.
108-199), provided total FY2004 funding of $735.7 million for community services
programs, which was subject to a 0.59% across-the-board rescission.

---

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