U.S. Department of Housing and Urban Development

Mel Martinez, Secretary

Roy A. Bernardi, Assistant Secretary for Community Planning and Development

Keeping

Your CDBG

Funds Moving

$ Guidelines for $

Managing Your 

Overall Community

Development Block 

Grant Program in 

a Timely Manner

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Introduction

C

ities and counties that receive Community Development Block Grant (CDBG)

funding need to implement their programs in a timely manner. Running a local

CDBG program in a timely manner helps

meet the program goal of improving the lives

of residents of the community, particularly

those of low and moderate income. Furthermore, experience shows that delays usually

increase costs, primarily because of inflation.

Program directors and managers of CDBG

grantee organizations that either have fallen

behind in their timely expenditures of CDBG

funds, or are at risk of doing so, should particularly find the suggestions in these guidelines

helpful in managing their programs. Because

operating a timely program simply reflects

good management practices, any grantee 

interested in improving its program management should benefit from these guidelines—

whether or not it is having a timeliness

problem.

Key Steps for Managing a Timely CDBG Program 

In 2000, HUD cosponsored a number of

CDBG Timeliness Conferences for entitlement grantees interested in improving the

timely performance of their programs. During these workshops, participants identified

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certain key processes and procedures that

helped keep program funds flowing. These

guidelines highlight some of these elements

of a timely program that you can adopt to 

improve the way you manage the program 

in your community.

Building Awareness of the Timeliness Issue

Don’t make timely conduct of a local

CDBG program an afterthought, considered

only when you develop a large backlog of

unexpended funds, then allowed to drift into

the background after the backlog has been

sufficiently reduced. Unless you keep the

timely flow of funds in mind on an ongoing

basis, a problem can develop quickly. 

The use of one or more reports that display the current status of funds on hand is

essential for this purpose. The Integrated

Disbursement and Information System (IDIS)

has been modified to enable a grantee to produce a report that shows how much money

a grantee needs to draw down by the next

60-day test to reach the 1.5 standard defined

in 24 CFR §570.902. You should run this report monthly. 

Moreover, you will need the attention

and cooperation of almost all segments of the

program staff to keep program funds moving.

In fact, it helps to make awareness of how

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Keeping Your CDBG Funds 

Moving: Guidelines for 

Managing Your Overall 

Community Development

Block Grant Program in 

a Timely Manner

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Keeping Your CDBG Funds Moving

timely the program is moving a key part of

almost all deliberations about the program.

❉ Timeliness should be built into the

process of determining which activities

to fund.

❉ Each project to be funded should have 

a schedule for the use of projected funds,

preferably tied to key project milestones,

so that actual performance can be measured against expectations and problems

can be identified at an early stage. 

❉ There should be contingency plans for

dealing with a backlog of unexpended

funds if one begins to emerge.

❉ Timeliness needs to be factored into the

content and frequency of reports used in

program management.

In short, keeping aware of program timeliness on an ongoing basis should be built

into your entire local CDBG program.

Organizing and Staffing for Accountability

How you organize and staff your CDBG

program can make a big difference in how

well your program flows. The number and

type of staff you maintain can be important

to the success of your program. Equally important, however, is the need to clearly assign responsibilities. There is no set formula

for determining how many staffers a grantee

needs to operate its CDBG program or how

the staff should be organized. Among the

factors that should be taken into consideration are the size and complexity of the local

CDBG program, the local program’s relationship to other grantee activities, and the

number and type of subgrantees used in carrying out the program. Monitoring projects

is important to any scheme for managing

timeliness. Therefore, the more projects and

entities that are involved in using CDBG

funds (that is, subrecipients or grantee agencies), the more staff that is needed to monitor

the projects they carry out. 

A project management system should be

used. Each project must have clear objectives

and measurable results. The larger the number of projects and entities involved in the

program, the greater the need for a system to

track them. Projects can get lost and escape

your attention easily in very large programs.

A system containing information on all of

your projects, including operating agency,

obligations, and expenditures will prove highly beneficial for monitoring the progress of

the entire program. The system should also

show the current status of each project in

terms of both financial and physical completion. There are many computerized grantmanagement programs used for this purpose,

but a manual system may be sufficient for

some smaller grantees. For example, a simple,

computer-generated spreadsheet can be suitable for this purpose if it contains the critical

information needed to track progress and

expenditures on a cash flow basis. 

Each project should have a schedule

showing when you plan to obligate and expend the funds programmed for it, ideally

tied to its specific key milestones. This will

enable a comparison of expenditures and

drawdowns with that timetable on an ongoing basis and lead to early identification of

delays as they develop. It is a good idea to

provide copies of your periodic reports to

each party involved in the program. Reports

should show the progress of all projects, not

just the recipient’s own segment, to give all

parties a picture of how their projects fit into

the total program.
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Keeping Your CDBG Funds Moving

Financial management is essential to

timely performance. At least one person

should be given the responsibility for monitoring the entire program’s financial needs

and performance on an ongoing basis. This

person needs to receive, review, and generate

reports on the financial performance of all

participating projects and entities. The frequency of such reports should be at least

quarterly, preferably monthly. If any problem appears to be developing for a particular project or entity, more frequent reports

should be provided for the problem area(s).

One person should be responsible for

ensuring that CDBG funds are drawn down

regularly. This person should work closely

with the community’s accountants to ensure

that they synchronize and reconcile records.

For many grantees, expenditures move ahead

of CDBG drawdowns by a considerable period of time, because they have another source

of funds (such as local general funds) to cover them in the interim. Special efforts should

be made to minimize the time lag between

expenditures and drawdown of CDBG funds.

It may help to let subgrantees and contractors know upfront that they should bill as

costs are incurred, rather than accumulating

expenditures for an extended time before

asking for reimbursement. 

Be prepared to manage staff turnover.

Make sure you realign responsibilities so that

all functions are properly covered if an employee leaves or is reassigned. When a seasoned employee leaves, be prepared to deal

with the fact that he or she may be replaced

with someone who is less knowledgeable

about the program. It helps to have written

job descriptions so that new staff members

can review them to gain an understanding of

what specifically is required of them. Do not

delay training new staff on program rules

and requirements. HUD’s Guide to National

Objectives & Eligible Activities for Entitlement

Communities is available and can be a good

starting point for such training. Contact your

local HUD Field Office to determine if it can

make training available to your new staff.

Streamlining Program/Project Implementation

An important way to avoid a funds backlog is to design your program with an eye to

minimizing the amount of CDBG funds that

will sit idle for a long period of time. Work

at the front end to identify where projects

might be delayed in implementation and

take steps to minimize those delays before

they materialize. Work closely with all potential subrecipients and grantee agencies

as they develop ideas about activities proposed for CDBG funding. Avoid prematurely

funding projects not ready to move forward

quickly. Help subrecipients and other agencies stage projects properly so large amounts

of CDBG funds do not sit idle.

Consider phasing large projects over several years. For example, in the first year, fund

only the feasibility and/or design portion(s)

of the project. If property acquisition is one

of the first steps in a construction project,

consider funding only the acquisition phase

this year, leaving the construction costs for

the following year(s). If relocation is likely,

delay funding the construction phase until

the relocation is well under way or has been

completed.

For many grantees, large public works

projects become stumbling blocks to timely

performance, because capital improvement

projects inherently take a long time to conclude. Sometimes, public works departments
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Keeping Your CDBG Funds Moving

to be considered both in deciding how many

staff you need and for setting the program

schedule for the year. It may be necessary to

adjust your program schedule to allow more

time for both project definition and applications review. Where possible, sequence events

and schedule parallel actions to minimize 

delays in implementation. Use a monitoring

visit to serve dual purposes. You might conclude the visit with a discussion about, and

assessment of, additional projects for possible

funding by CDBG in the future.

Ensuring Timely Expenditure Information Availability

As previously mentioned, the review of

program expenditures and drawdowns should

occur at all stages of the program schedule.

To ensure that an accurate picture is available for this purpose, establish and implement a system for regularly gathering such

information from each entity participating in

the program for use in your project management system. Uniformity is critical for this

purpose. If some participants report monthly

and others report quarterly or semiannually,

a complete picture of program expenditures

will not exist for some timeframes. The deadlines for reports should be fairly uniform for

the same reason. Include expenditure reporting requirements in your contracts and

agreements with all participating entities.

Make the required content and frequency

of these reports and the deadlines fit within

the overall program status report(s) you intend to use to track program expenditures

and drawdowns.

Preparing for Problems in Advance

The more projects and entities involved

in your program, the more likely it is that

you will encounter delays. Some types of 

do not carry out CDBG-funded public improvements in a timely manner, in part because they give priority to projects that are

funded locally. Some grantees have decided

not to use CDBG funds for extensive public

works, preferring to use CDBG funds for

short-term activities. Others have avoided

giving the funds to their public works departments and have found other agencies that

can do the work faster. Still others have used

the Reimbursement for Pre-Award Costs

provision in the CDBG regulations [24 CFR

§570.200(h)]. 

Under the pre-award provision, a grantee

can carry out a project using non-CDBG

funds exclusively, or in large part, with the

understanding that they may reimburse

those non-CDBG funds from one or more

future CDBG program years. To use this provision, there must be another funding source

available. Moreover, when being carried out,

the pre-award project needs to meet all the

requirements that would otherwise apply to

a CDBG-funded project (for example, environmental review and Davis-Bacon).

Do not wait until you are ready to move

a project forward to conduct the needed environmental reviews. Even for projects with

funding staged over more than one grant

year, the environmental review and the release of funds request can cover the entire

project, not just the portion to be funded for

the year at hand. Moreover, your environmental assessment and request for environmental release of funds can even be done

before grant award. Make sure that you allow sufficient time in your schedule for those

projects that involve historic preservation.

Doing such work upfront can take a lot

of time and effort and is a factor that needs
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Keeping Your CDBG Funds Moving

Monitoring for Timeliness

The kind of reporting systems mentioned

above will help in early identification of

problems. However, reports may not always

reveal the cause of the problem. Have your

staff regularly contact all participating entities and conduct periodic onsite inspections.

Such monitoring can be very staff intensive,

so there will naturally be limits on how frequently such contacts and visits can be made.

Your staff should be in contact with each participating entity on at least a monthly basis.

Site visits should be made on a semiannual

basis to ensure that problems can be identified without losing too much time before an

adequate response can be provided. When a

problem has been identified, even more frequent visits may be appropriate.

Reacting to Incipient Problems

The earlier you identify a problem, the

more likely you will be able to take action to

prevent prolonged delays. Sometimes, it is

just a matter of calling a problem to the attention of the entity running the project.

Your staff may also be able to provide some

assistance in overcoming a delay. Deobligating funds from a project should be a last

resort. Assuming that the project has been

identified as responding to a high-priority

need in the community, replacing it with

something else may mean you will be supporting a less critical project. Therefore, identifying at the start potential delays and what will

be done to address them is the best strategy

for dealing with timeliness. As soon as it is

clear that a project is not progressing according to plan, you need to discuss the problem

with the entity or staff running the project.

The object of such discussions should be to

identify the reason(s) for the delay and to

decide what action, if any, needs to be taken

delays can be anticipated. If your schedules

are too optimistic and do not provide for the

kinds of delays that experience has shown

can occur, your overall program timeliness

will frequently run into snags. Look at your

actual experiences with projects in the past.

Have you allowed enough time in the schedule for property acquisition, historic preservation compliance, environmental impact

reviews, and so on?

Also, if you assume that one or more

projects will run into obstacles that cannot

be predicted and cannot be overcome without producing delays in spending CDBG

funds, you can be ready with alternatives.

Having in mind specific projects and operating entities to substitute for a troubled project

can help minimize the impact of a delayed

project on the overall timeliness of your program. As part of the process for preparing

your Consolidated Plan and your annual

Action Plans, identify and include backup

projects that you can substitute if any of your

higher priority projects run into delays. Depending on how you describe such projects

in your Action Plan and the requirements

of your published Citizen Participation Plan,

you may be able to reduce the time and effort required to notify citizens properly of

your intent to deobligate funds from a particular project and fund one or more others

in its place.

Building these early action concepts into

your overall CDBG program will help all participating entities understand in advance your

intention to take actions to keep the program

timely. It should also help to increase the likelihood that they will accept the idea that

their project(s) may be postponed, or even

terminated and replaced, if they experience

undue delays.
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Keeping Your CDBG Funds Moving

income and being prepared to put it to use

quickly are key to this issue. If you do not

properly anticipate program income, you can

develop a backlog quickly because you must

use program income before you can make

new draws from your line of credit. Check to

see how accurately you have been predicting

the amount of program income you will receive when you prepare your Action Plan

each year. Check your projected amounts

against the amount actually received over the

past several program years. If you are consistently underestimating the amount you actually receive, you will not be prepared to use

those funds, thus affecting your overall program timeliness.

To some extent, you can control the

amount of CDBG program income you 

receive. Some types of activities produce

program income, whereas others do not.

Usually, a decision is made to use CDBG

funds in a way to produce income (for example, lend, rather than grant, funds), which

then may be used to address other community concerns. Because using program income

can pose an added burden to a community

that already is experiencing difficulty spending its grant funds in a timely manner, it may

be sensible to make program decisions that

will minimize the amount of income the

program will receive. However, because the

object of the CDBG program is to make the

most impact on reducing the community’s

needs, it is clearly preferable to find ways to

manage the program in a way that will lead

to timely expenditure of both. You may know

about a large amount of program income that

you will be receiving, but you may not be able

to tell in which year it will come (for example, from the sale of land). Try to identify

projects that could make use of such income

if it is received during the coming year as

part of preparing your Action Plan.

to prevent or minimize the delay. Ultimately,

you may find that it is unlikely that the project can proceed without further prolonged

delay, despite the best efforts of all involved.

In such a case, you should take action immediately to find a substitute project that can

use the funds faster.

Educating Key Officials and Getting Their Support

It is critical that key officials in the local

governing body and local politicians understand the seriousness of untimely expenditures. Educate your chief executive and

council members or commissioners about 

the consequences of untimeliness. To get

their attention, you may want the help of

your HUD Field Office. If HUD officials

have not already discussed CDBG program

timeliness with key local officials, invite

them to visit your community. It is probably

easier to get the help and cooperation you

will need from local government agencies if

your chief executive is on your side. Your

council members or commissioners will be

more likely to accept the changes in projects

in their jurisdictions or pressures placed on

some of their constituent agencies if they

understand the urgency and possible consequences of your backlog problem.

Program Income

Depending on the nature of the local

CDBG program, the amount of CDBG program income a grantee receives can be a significant portion of CDBG funding for that

year. Some grantees even receive more CDBG

program income than the amount of the

annual grant. Clearly, managing the use of

program income can be just as important as

managing grant funds. It pays to think about

this issue when deciding how to run the program. Anticipating the receipt of program
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Keeping Your CDBG Funds Moving

income. By definition, program income is 

income received by the grantee or a subrecipient generated from the use of CDBG

funds. If a CBDO is not designated as a

subrecipient, and its use of CDBG funds

produces income that is not returned to the

grantee, such income will not be recognized

as part of the CDBG program. As such, that

income will not be included in the calculation for purposes of determining whether the

grantee meets the CDBG timeliness test. You

can still specify how and when such funds

may be used by the CBDO through the terms

of your written agreement, even if the income

is not CDBG program income. Any award

of CDBG funds to a CBDO should include

consideration of whether the CBDO will be

deemed a subrecipient. Of course, there are

other reasons why you may want to have any

income produced by a CBDO award considered CDBG program income, but all aspects

of this matter should be carefully thought

through before the award is made.

Benefits and Pitfalls of Revolving Loan Funds

Establishing and maintaining one or

more revolving loan funds is a routine way 

of using CDBG funds for ongoing loan programs. When you expect to use CDBG funds

over a period of years for making loans (for

example, for housing rehabilitation or business assistance), the use of a revolving loan

fund makes it possible to keep loan repayments readily available to make additional

loans for the same purpose. Unlike other program income, money in a revolving fund is

not required to be used to meet cash needs of

any other activities in the grantee’s CDBG

program before grant funds are drawn from

the U.S. Treasury. This insulation factor

makes funds in a revolving account easily accessible for making the next loan. However,

along with these advantages comes the need

Some other factors concerning the management of program income that you should

think about are discussed below.

Should Program Income Be Returned?

Frequently, funds provided to another entity will produce program income. For certain

entities, the added burden of using such income along with new grant funds may make

it unlikely that they can maintain timely expenditures of their CDBG funds. One way

you can manage the problem of spending program income in a timely manner is to avoid

allowing a problematic entity to use the income its CDBG funds may produce. Instead,

require the income to be returned to the

grantee. You may then either (a) use it at the

grantee level, (b) award the income to another entity that will put it to use faster, or

(c) return it to the entity as a reward for

quality performance.

For certain entities, pulling program income back to the grantee level may be difficult for local political reasons. If you find that

you cannot overcome political opposition to

returning program income to the grantee,

consider providing technical assistance to the

subgrantee to increase its capacity. You may

even authorize such a subgrantee to use some

or all of its program income for acquiring the

technical assistance it needs.

Should a Community-Based Development Organization

(CBDO) Be a Subrecipient?

Under the regulations (revised a few years

ago), a CBDO is not considered a subrecipient unless the grantee expressly deems the

CBDO to be so in the written agreement

made at the time CDBG funds are awarded.

The principal significance of this determination is whether the income the CDBG funds

may produce will be considered program 
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Keeping Your CDBG Funds Moving

Working Out of a CDBG Funds Backlog

The options for timely expenditures discussed above will be most important for you

if you already have a backlog that exceeds

HUD’s timeliness requirements in 24 CFR

§570.902. If so, HUD will likely request that

your community develop a Workout Plan for

returning your CDBG program to within

timeliness standards. Separate HUD guidelines titled CDBG Timeliness Workout Plans:

Guidelines for Preparation and Implementation

is available to assist you. Use the guidance

provided here, along with the Workout Plans

guidelines, to assess and modify the management of your program in your effort to reduce a backlog.

to monitor the flow of funds from such accounts. If, for any reason, the stream of new

loans lags behind the flow of repayments into

a revolving account, funds can very quickly

accumulate and create a drag on the overall

program’s timeliness. Unlike other program

income that may accumulate unexpectedly,

revolving loan funds may not be put to use

as easily. If you cannot get the stream of loan

making moving quickly enough to deplete

the backlog in a revolving fund, you may

elect to move some or all of the funds out of

the revolving account and find other uses 

for them. However, this may necessitate advance notice and opportunity for comment

from citizens, because it constitutes an

amendment to the Action Plan.
HUD–2002–13A–CPD www.hud.gov/offices/cpd/communitydevelopment/library/index.cfm May 2002