Community Development Block Grants: Entitlement Communities' and States' Methods of Distributing Funds Reflect Program Flexibility
Published: 2010-09-15T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Housing and Community Development Act of 1974 (act) creating the Community Development Block Grant (CDBG) program provides entitlement communities (metropolitan cities and urban counties) and states with significant discretion in how they distribute funds for eligible activities. Because of this discretion, entitlement communities may use a variety of processes to select individual projects and states may also use different methods to distribute funds to non-entitlement communities. GAO was asked to report on (1) the various methods by which entitlement communities use and distribute their CDBG funds to individual projects within their jurisdictions; (2) the various methods by which states distribute CDBG funds to non-entitlement communities; and (3) HUD's role in overseeing these methods. GAO interviewed CDBG administrators for 20 entitlement communities (the 10 largest by funding and 10 randomly selected) and 5 states (reflecting variety of methods used and geography) and reviewed documents related to their CDBG funding decisions, including the annual action plans for all 50 states. GAO also spoke with CDBG stakeholders, reviewed relevant statutes and regulations, interviewed HUD field office staff and reviewed monitoring documentation.
section_title: What GAO Found
paragraphs: Reflecting the program's flexibility, the 20 entitlement communities in GAO's sample distributed CDBG funds by various methods, but most used some level of competition in awarding funds. Distribution priorities and practices were based on various assessments of local needs, and in some communities, the funding decisions were also part of the local budget process. To communicate processes and award decisions to the public, all the communities in GAO's sample held at least two public hearings, more than half formed citizen advisory committees, and a few conducted needs assessment surveys, among other outreach methods. Sampled entitlement communities varied in the level of detailed criteria they used to evaluate applications, but they made the information available to potential applicants through published instructions, workshops, or the Internet. From a review of all 50 states' methods of distribution described in annual actions plans, GAO found that states used a formula, competition, open application, or a combination of methods to distribute funds to non-entitlement communities. Most states used a combination of competitive and open application processes. Whatever their method of distribution, the five states in GAO's sample evaluated applications to some degree against state priorities, which reflected a variety of needs assessments. States using some competitive distribution processes also incorporated their priorities into the scoring of applicants. All five states communicated their methods of distribution to non-entitlement communities and the public through their required annual plans and additional publications, workshops, and intergovernmental organizations. Of the non-entitlement community officials with whom GAO spoke in 10 localities, all agreed that their states clearly communicated their distribution process. HUD staff from 17 field offices (which monitor the entitlement communities and states in GAO's sample) reported very few findings or concerns related to methods of distribution. Staff told GAO that the lack of findings was due partly to program design (entitlement communities and states can choose distribution methods) and partly to HUD's risk-based monitoring. Because of the flexibility granted to entitlement communities and states, issues related to distribution methods are not rated high-risk. HUD has focused on higher-risk areas such as ensuring funds were spent on eligible activities. However, because states distribute funds to other government jurisdictions, they are required to describe their distribution methods in their plans. As part of its monitoring review, HUD staff check to ensure that the methods of distribution that state plans described were the methods used. Though few issues arose from the reviews, in a few cases HUD staff recommended that states enhance these descriptions. HUD staff also monitor grantees to ensure that public hearing and notice requirements have been met. Staff noted that none of the complaints to HUD offices had pertained to methods of distribution.

section_title: Letter
paragraphs: The Community Development Block Grant (CDBG) program provides  federal funding for housing, economic development, neighborhood  revitalization, and other community development activities. Administered  by the Department of Housing and Urban Development (HUD), the CDBG  program provides funding to metropolitan cities and urban counties,  known as entitlement communities, and to states for distribution to non- entitlement communities. The activities undertaken with program funds  must meet one of the three national objectives: (1) principally benefit low-  and moderate-income persons, (2) aid in the prevention or elimination of  slums or blight, or (3) meet urgent community development needs. In  fiscal year 2010, Congress appropriated approximately $3.95 billion for the  entitlement and non-entitlement program. Currently, 1,163 entitlement  communities and 50 states receive CDBG funds.
The Housing and Community Development Act of 1974 (act), as amended,  provides entitlement communities with significant discretion in how they  distribute funds for eligible activities. State grantees have similar  discretion in how they distribute funds to non-entitlement communities.  Consequently, entitlement communities and states may use a variety of  processes to select individual projects and units of local governments to  implement projects respectively. Because of the variety of methods, you  requested that we conduct a study identifying the types of distribution  methods used by entitlement communities and states. Specifically, our  objectives were to (1) identify and describe examples of the various  methods by which entitlement communities use and distribute their CDBG  funds to individual projects within their jurisdictions, (2) identify and  describe examples of the various methods by which states distribute  CDBG funds to non-entitlement communities, and (3) describe and  examine HUD’s role in overseeing the methods by which entitlement  communities and states distribute their CDBG funds.
To address the first objective, we conducted a literature review and  examined reports related to CDBG. We also interviewed the CDBG  administrators for the 10 largest entitlement communities (by funding) to  determine how they distribute their funds and how they communicate  those processes and results to the public. We drew a sample of 10  additional communities, considering city/county status and geography, and  conducted similar interviews with CDBG administrators. These  entitlement communities were selected for comparative and illustrative  purposes. Results from this nongeneralizable sample cannot be used to  make inferences about all entitlement communities nationwide. We also  judgmentally selected 3 communities (from the 20), taking into account  geographic and program diversity, and interviewed stakeholders involved  in the CDBG process, such as community organizations and members of  citizen advisory committees. For the second objective we reviewed the  most recently available annual action plans covering 2008 through 2010  (required and reviewed by HUD) for all 50 states to identify the types of  methods of distribution. From this review, we judgmentally selected five  states that represented a variety of distribution methods, geography, and  funding amount, and we interviewed their CDBG administrators. We also  interviewed local non-entitlement officials about the CDBG process and  how it is communicated to the public. For both objectives, we interviewed  issue-area experts and relevant associations such as the National League  of Cities and the Council of State Community Development Agencies to  obtain their views on the distribution process. For the third objective, we  reviewed relevant statutes and regulations to understand HUD policies  and practices for oversight of methods of distribution and to determine  how the agency ensures states’ compliance with the requirement to  publish their distribution methods. Finally, we interviewed HUD staff from  the 17 field offices that oversee our selected entitlement communities and  states.
We conducted this performance audit from November 2009 to September  2010 in accordance with generally accepted government standards. Those  standards require that we plan and perform the audit to obtain sufficient,  appropriate evidence to provide a reasonable basis for our findings and  conclusions based on our audit objectives. We believe that the evidence  obtained provides a reasonable basis for our findings and conclusions  based on our audit objectives. (More information on our scope and  methodology is contained in app. I.)
subsections: section_title: Background
paragraphs: The CDBG program has two basic funding streams (see fig. 1). After funds  are set aside for purposes such as the Indian CDBG program and allocated  to insular areas, the annual appropriation for CDBG formula funding is  split so that 70 percent is allocated among eligible metropolitan cities and  urban counties (entitlement communities) and 30 percent among the  states to serve non-entitlement communities. Entitlement communities  are (1) principal cities of metropolitan areas, (2) other metropolitan cities  with populations of at least 50,000, and (3) qualified urban counties with  populations of at least 200,000 (excluding the population of entitled cities).
HUD distributes funds to entitlement communities and states using a dual  formula system in which grants are calculated under two different  weighted formulas and grant recipients receive the larger of the two  amounts. The formulas consider factors such as population, poverty,  housing overcrowding, the age of the housing, and any change in an area’s  growth (growth lag) in comparison with other areas. HUD ensures that the  total amount awarded is within the available appropriation by reducing the  individual grants on a pro rata basis. Entitlement communities and states  can have more than one agency administer parts of the CDBG program but  one agency must be designated the “lead” (typically a Department of  Community Development or similar entity) and single point of contact  with HUD. The entitlement communities may carry out activities directly  or in the case of urban counties, they may award funds to other units of  local government to carry out activities on their behalf. In addition,  entitlement communities may award funds to subrecipients to carry out  agreed-upon activities. Entitlement communities are subject to very few  requirements relating to distribution of their CDBG funds. As long as  entitlement communities fund projects that are eligible and meet a  national objective, submit required plans and reports, and follow their  stated citizen participation plans, they have a large amount of discretion as  to how and what they fund. Unlike entitlement communities, states must  distribute funds directly to recipients, which again are local units of  government (non-entitlement cities and counties). The states’ major  responsibilities are to (1) formulate community development objectives,  (2) decide how to distribute funds among non-entitlement communities,  and (3) ensure that recipient communities comply with applicable state  and federal laws and requirements.
Grant recipients are limited to 26 eligible activities for CDBG funding. For  reporting purposes, HUD classifies the activities into eight broad  categories—acquisition, administration and planning, economic  development, housing, public improvements, public services, repayments  of section 108 loans, and “other” (includes nonprofit organization capacity  building and assistance to institutions of higher learning). Recipients may  use up to 20 percent of their annual grant plus program income on  planning and administrative activities and up to 15 percent of their annual  grant plus program income on public service activities. Additionally, the  act requires that recipients certify that they will use at least 70 percent of  their funds for activities that principally benefit low- and moderate-income  people over 1, 2, or 3 years, as specified by the recipient. Generally, an  activity is considered to principally benefit low- and moderate-income  people if 51 percent or more of those benefiting from the activity are of  low- or moderate-income.
To receive its annual CDBG entitlement grant, a recipient must submit a 3  to 5-year consolidated plan, a comprehensive planning document and  application for funding, to HUD for approval. This document identifies a  recipient’s goals, which serve as the criteria against which HUD will  evaluate a recipient’s performance annually. The consolidated plan must  include a citizen participation plan for obtaining public input on local  needs and priorities, informing the public about proposed activities to be  funded, and obtaining public comments on performance reports. Annually,  recipients must submit an action plan that identifies the activities they will  undertake to meet the goals and objectives identified in their consolidated  plan as well as an evaluation of past performance and a summary of the  citizen participation process. Moreover, on an annual basis, recipients  must submit a consolidated annual performance and evaluation report  (CAPER) that compares proposed and actual outcomes for each goal and  objective in the consolidated plan and, if applicable, explains why the  recipient did not make progress in meeting the goals and objectives.  Similar to entitlement communities, states must submit their consolidated  plans, annual action plans, and performance and evaluation reports (PER).  However, the states’ action plans must describe methods for distributing  funds to local governments to meet the goals and objectives in their  consolidated plans instead of a list of activities as provided by entitlement  recipients.
HUD’s Office of Community Planning and Development (CPD) administers  the CDBG program through program offices at HUD headquarters and 43  field offices located throughout the United States. Staff in the  headquarters offices set program policy, while staff in the 43 field offices  monitor entitlement recipients directly and monitor the states’ oversight of  non-entitlement recipients. A CPD director heads each unit in the field  offices. CPD field staff are responsible for grant management activities  that include annual review and approval of consolidated plans and action  plans, review of annual performance reports, preparation and execution of  grant agreements, closeout activities, and technical assistance.
section_title: Entitlement Communities Drew on Program Flexibility in Distributing Their CDBG Funds and Communicating with the Public and Applicants
paragraphs: Reflecting the flexibility of the CDBG program, entitlement communities  used various methods to distribute their funds. For example, most of the  medium and large communities in our sample of 20 entitlement  communities used competitive processes for a portion of their CDBG  funds. These communities aligned award decisions with local priorities  and, in some cases, elected officials and the budget process factored  strongly in funding decisions. Some local officials told us they could adjust  their funding priorities and practices from year to year as needed. To  solicit public input and communicate processes and award decisions, all  the communities in our sample met the program requirement to hold at  least two public hearings, and most took additional steps, including  holding multiple community meetings, forming citizen advisory  committees, conducting needs assessment surveys, and making  information available online. Most of the representatives of community  organizations with whom we spoke thought the cities clearly  communicated their distribution practices, although some thought that  newer or less sophisticated applicants might have more difficulty  obtaining funding.
subsections: section_title: Entitlement Communities Selected Their Distribution Methods Based Largely on Local Priorities and Incorporated Political and Public Input
paragraphs: Our interviews with 20 entitlement communities demonstrated that the  sample grantees took advantage of the CDBG program’s flexibility to  distribute their funds in the ways that the grantees felt fit their local needs  and circumstances.
subsections: section_title: Distribution Methods and Application Process
paragraphs: Most of the medium and large entitlement communities with which we  spoke had some level of competitive process for distributing CDBG funds,  especially for public services such as childcare, senior services, or  employment training. Some communities required government agencies  to apply through the same process as nonprofits and other subrecipients.  In several communities that distributed funds competitively, the CDBG  administrators issued a request for proposal (RFP) describing the local  funding priorities, eligible uses for CDBG funds, and, in some cases,  specific selection criteria and related points for meeting those criteria.  Processes for evaluating applications varied, but commonly involved some  level of review by local staff, sometimes followed or accompanied by a  review by program experts or a citizen committee. In several communities,  the mayor, the local governing board (such as the city council), or both  had input and final approval authority for funding recommendations. For  example, in Los Angeles, CDBG administrative staff conducted a high-level  review of all applications to ensure they were eligible and met a national  objective. The departments that administered individual categories of  funds then ran their own RFP processes and assembled teams of subject  experts and department staff to evaluate proposals. The mayor and city  council also had the opportunity to review projects that the departments  recommended for funding. The city council issued the final approval  following a public hearing at which council members, community  organizations, and members of the general public could provide input on  the funding recommendations. (See app. II for information on the methods  used by all of the entitlement communities in our sample.)
A few of the small and medium-sized entitlement communities in our  sample used large proportions of their CDBG funds for housing activities  or public works projects, and they directly spent those monies through  local governmental departments. For instance, Lincoln Park, Michigan,  planned to spend more than 70 percent of its 2010 CDBG allocation on  infrastructure projects such as streets and utilities, which the public  services department would carry out or bid to private contractors. The  Lincoln Park official we interviewed stated that capital improvement  needs, such as streets and utilities projects, were the city’s highest priority  for CDBG funds due to a lack of other funds to carry out such projects.  South Gate, California planned to direct about 50 percent of its 2010  allocation to the parks department, based on the results of a series of  public and city staff meetings at which citizens and city officials agreed  that their parks were the highest-priority need. In South Gate and a few  other communities, the government agencies still had to submit letters of  request or formal applications.
In cases in which smaller communities distributed funds to subrecipients,  they often used less formal application and review procedures than some  of the larger communities. For example, in Bismarck, North Dakota, which  primarily distributed its funds to subrecipients, the CDBG administrator  sent application packages to organizations on the city’s mailing list and  reached out directly to organizations of which she knew that might have  had a CDBG-eligible funding need. A committee of two city officials and a  nonprofit official reviewed the applications but did not use a formal  ranking system. Gloucester Township, New Jersey, awarded funds based  on a discussion between the council and mayor on how proposals met  overall township needs. Some of the smaller communities in our sample  did not receive applications from many more organizations than they  could afford to fund. For instance, Bismarck funded 16 of 22 applications  for 2010 and Dover, Delaware, funded 6 of 9 applications. Officials from  Gloucester Township and Deltona, Florida, stated that they rarely rejected  applications.
In a few entitlement communities, governmental departments that  administered some funds in-house used first-come, first-served, or “rolling”  application processes to make small awards for certain activities. For  example, Cleveland’s community development department used such a  process to award funds for housing rehabilitation and storefront  renovation programs. Gloucester Township’s grants office planned to  award several small home improvement loans to low- and moderate- income residents for abatement of code violations and emergency repairs.  Applicants had to meet certain income thresholds to qualify for the no- interest loans.
Two of the entitlement commnitie in osample prticipted in conorti with other  locl entitlement commnitie to more  effectively trget CDBG nd other HUD fnd,  nd redce dminitrtive co. Specificlly,  the city of Grem, Oregon, i  memer of  the Portlnd Conortim, which o inclde  the city of Portlnd nd Mltnomh Conty.   While the two citie nd the conty ech  receive their own CDBG lloction nd  ditribute the fnd throgh epte  process,  Grem officited tht the  conortillow them to prioritize need on   metropolitn or regionl level rther theptely for ech jridiction. Likewie, the  city of Saasot, Florid, joined Saasot  Conty nd the citie of North Port nd Venice  in  conortim thllow them to dminiter  housing nd commnity development  progr nd llocte rerce based on the  entire conty’ need nd not just individual  jridiction. According to the Saasot  Conortim’ 2005-2010 conolidted pln,  thi greement crete  ndrd et of rle  for housing nd commnity development  progr for ll of the jridiction nd  redce dminitrtive co y rnning  progr throgh one centrl office.
The three counties in our sample of entitlement communities used three  different methods to distribute their CDBG funds, based on size and the  capacity of their participating localities to administer the funds. For  example, Los Angeles County, California, the country’s largest urban  county with a population of about 10 million people, distributed its funds  to participating cities and unincorporated areas by formula. In turn, the  participating cities could distribute their funds through competition or  other methods, while the county’s community development department  worked with the county’s five district supervisors to identify projects for  funding in the unincorporated areas. Dane County, Wisconsin, ran a  competitive process for most of its funds, citing the importance of  providing standardized treatment across municipal, nonprofit, and for- profit applicants because of the high level of competing needs in the  county. Greenville County, South Carolina, contracted with a countywide  redevelopment authority to administer the funds. The redevelopment  authority used a formula to determine the award amounts for the five local  municipalities and a large unincorporated area. However, it retained  control over the distribution method for all the funds, with some awards  made competitively to nonprofit subrecipients and housing developers and  others bid to contractors.
section_title: Use of Local Priorities to Review and Select Projects
paragraphs: Officials from a majority of the entitlement communities in our sample  noted that they based their funding priorities on various assessments of  local needs, and these priorities influenced the selection of CDBG  projects. They funded projects based on priorities identified in their  consolidated plans, other strategy documents, or citizen input. For  instance, South Gate, California’s consolidated planning process resulted  in the city’s focus on funding its parks. In addition, an official from  Greenville County stated that the majority of funding for the county’s  unincorporated area went to “target neighborhoods,” which had developed  master plans to meet their most pressing needs.
In some of the larger entitlement communities we interviewed, elected  officials’ priorities also factored strongly in the distribution process.  Officials from Chicago, Detroit, and New York reported that their CDBG  funding processes were integrated with their local budget processes.  Therefore, CDBG spending priorities often were viewed in the context of  mayoral and city council priorities, and the city’s current fiscal strength.  Officials in Los Angeles stated that city council members sometimes made  changes to proposed economic development or infrastructure projects  based on their knowledge of what was needed in their communities. They  added that council members occasionally tried to fund projects outside of  the competitive process. In those cases, the administrative department  reviewed the requests to ensure they met federal and city CDBG priorities.  In addition, an official from Philadelphia stated that for 36 years, a  consensus had existed between the mayor and city council that housing  activities were the city’s highest CDBG priority.
Some communities drew on the CDBG program’s flexibility and revised  their funding priorities or practices to adapt to local circumstances. They  told us that severe (or catastrophic) weather events, economic conditions,  or internal reviews had caused them to change their funding priorities or  distribution methods. For example, the Deltona CDBG administrator  stated that the city was considering revising its consolidated plan to focus  on repairing the damage from recent hurricanes and other storms. Los  Angeles officials stated that the recession had caused them to focus more  heavily on family self-sufficiency and foreclosure prevention. In addition,  Los Angeles recently changed the way it funded public service activities in  response to a 2008 report by the city controller that noted a duplication of  efforts, service gaps, a lack of competition in procurement, and other  problems with the city’s anti-gang strategy and related human services.  Rather than giving grants to several individual organizations for separate  projects, the city now funds the FamilySource Program, described in the  RFP as “…an infrastructure for delivering coordinated, outcome-driven  services to the most vulnerable city residents.” Los Angeles officials  stated that this shift resulted in a denial of renewal funding for some  organizations that were not connected to the city’s new continuum of care.
section_title: Selection of Subrecipients
paragraphs: As discussed above, many entitlement communities also awarded funds to  subrecipients. In choosing which organizations to fund, some entitlement  communities told us that they tended to fund the same subrecipients  annually; this was seemingly due in large part to capacity considerations.  An official in San Francisco stated that, for several years, the city’s pool of  subrecipients had included a group of strong performers that received  funding annually. At least half of the officials we interviewed reported that  they considered applicants’ capacity to effectively carry out program  activities and meet the administrative requirements that accompanied  CDBG funding. Several communities considered past performance in  evaluating applicants, thus tending to give an advantage to incumbent  organizations. Officials in Los Angeles and San Francisco noted that  smaller organizations with limited administrative infrastructure might find  it challenging to meet CDBG application and administrative requirements.
Officials told us that new organizations were able to obtain funding in  some communities. For instance, officials in Bismarck, San Francisco, and  six other communities specifically mentioned that they encouraged new  applicants to apply or that they funded a small number of new  organizations in addition to some repeat subrecipients. San Francisco  officials stated that they encouraged smaller organizations to coordinate  with other providers or to find a fiscal agent who could focus on  administration of the funds, allowing the groups to focus on service  delivery.
section_title: Entitlement Communities Sought Public Input and Communicated about CDBG Funding through Methods such as Public Hearings, Citizen Advisory Committees, and the Internet
paragraphs: All of the entitlement communities in our sample reported that they held at  least two public hearings annually and some used citizen advisory  committees, surveys, and other outreach methods to involve and inform  the public about their distribution of CDBG funds. As previously  discussed, all entitlement communities must have a citizen participation  plan. As part of the citizen participation requirements, they must hold at  least two annual public hearings. These hearings are intended to provide  opportunities for citizens to voice concerns about how CDBG funds are  distributed and help ensure that the process is transparent, among other  purposes.
Several of the entitlement community representatives with whom we  spoke told us that attendance at public hearings generally was low. For  instance, the Detroit administrator reported that only five or six people  attended the public hearings. The CDBG administrator in Gloucester  Township stated that the public hearings were poorly attended and no one  questioned how the township spent its CDBG funds. This official equated a  lack of comments or complaints to a lack of interest in the township’s  funding process and local priorities and stated that it may be due in part to  the small amount of funding available. Officials from Los Angeles and  Dane County stated that attendance at hearings varied based on factors  such as funding availability and the relevance and timeliness of the agenda  items for local residents and community groups. In particular, a Dane  County official noted that attendance was high for public meetings  following recent flooding, when the county had a combination of CDBG  disaster assistance funding and state funding available to assist flood  victims.
subsections: section_title: Additional Steps Taken to Communicate about the Program and Local Priorities
paragraphs: Some entitlement community representatives with whom we spoke told us  that they took additional measures to involve local residents in the CDBG  process and ensure transparency (see table 1). For example, several  entitlement communities in our sample reported holding public meetings  in addition to the two required public hearings to provide more  opportunities for public involvement. For instance, Houston officials  stated that they hosted a series of meetings with each major community  and council district about proposed capital improvements, during which  they addressed CDBG planning and processes for distributing funds. Los  Angeles County officials stated that, for the unincorporated areas, they  conducted five community meetings annually throughout the county and  held them in the evenings so that residents would be more likely to attend.  They reported that participation was higher using this method than when  they used to hold just the two required public hearings.
More than half of the entitlement communities with which we met had  some form of citizen advisory committee to solicit and provide citizen  input on local priorities. The committees typically comprised local  residents who volunteered or were nominated or appointed by CDBG  administrative staff, the mayor or other government executive, local  council members, or community organizations. Because these committees  often comprised representatives from a variety of business sectors and  neighborhoods, they could provide a more knowledgeable perspective on  the needs and circumstances of different communities and applicants than  CDBG administrative staff alone could provide. A few of the committees  also included one or more representatives of local government, such as  the city council. Some communities also had the committees review CDBG  applications and either recommend specific projects for funding or  comment on proposed recommendations. For example, the Chicago  Community Development Advisory Committee’s three subcommittees  reviewed and commented on program criteria, reviewed subrecipient  proposals, and made funding recommendations in collaboration with city  staff. In San Francisco, the Citizens Committee on Community  Development could comment on the CDBG-administering office’s initial  recommendations before they went to the mayor and board of supervisors.  Similarly, after an initial eligibility screening by city staff, the Citizen  Advisory Committee in South Gate, California, reviewed and scored  applications (based in part on applicants’ oral presentations to the  committee) and passed on recommendations to the city council.
Several entitlement communities in our sample also used needs  assessment surveys or similar mass communications to gather input on  local priorities. For instance, Dane County, Wisconsin, surveyed 1,500  county residents on its most recent consolidated plan and achieved a  response rate of more than 30 percent, which allowed the county to obtain  meaningful information on residents’ priorities. Cleveland CDBG officials  stated that they found it most effective to reach out to community  members where they gathered to discuss neighborhood issues. This  included over 50 venues such as block club meetings, annual meetings of  citizen organizations, and community festivals. At these events, staff  members obtained citizen comments and used a short survey to capture  citizen ideas. Officials in several other entitlement communities also  reported using surveys to gain input on CDBG priorities, usually in  connection with their consolidated or annual action plans. Similarly, a  Chicago official stated that the city emailed more than 500 individuals and  community-based organizations to inform them about a public hearing on  unmet needs and community priorities.
section_title: Communication about the Application Process and Funding Decisions
paragraphs: Throughout the application process, the entitlement communities we  interviewed used methods such as the Internet, mass mailings, publishing  scoring systems, workshops, and letters to communicate funding  availability, requirements, and results to applicants and the public. Many  entitlement communities published information about CDBG funds on  their Web sites, making it publicly available to anyone with an Internet  connection. In addition, officials from a few of the entitlement  communities reported that they sent mailings to large lists of past and  potential applicants to notify them about funding availability. For example,  San Francisco officials told us that they sent a mailing to more than 900  community-based organizations about CDBG funding opportunities.
The majority of entitlement communities in our sample provided clear  information regarding their evaluation processes for applications. In  particular, over half of the communities spelled out specific evaluation  criteria, often with points assigned to those criteria, and they published  this information in their applications (or RFP) or application guidelines,  which they frequently made available online. Others used a more informal  rating system based on general adherence to stated local priorities,  national eligibility, or capacity to carry out the proposed project.
Half of the entitlement communities in our sample also reported that they  held workshops to explain the application process and answer questions.  These workshops helped ensure that all applicants had the opportunity to  receive consistent information about the funding process. Others provided  technical assistance throughout the application process, or connected  applicants with other organizations that could provide help. For example,  the Dover administrator told us that the city’s public notice of funding  availability included a telephone number for technical assistance. The  Dane County Web site had a question and answer page about the process  and its CDBG administrator stated that she had connected a municipal  applicant with someone from another town that recently had completed a  similar project with CDBG funds.
Most of the entitlement community officials we interviewed told us that  they sent notification letters to unsuccessful applicants at the end of the  application process. Three entitlement communities in our sample— Bismarck, Dane County, and Detroit—made public a list of all applicants’  funding results. The other communities published a list of funded projects  or activities, typically in their action plans, which they made publicly  available in hard copy, if not on the Web. In most cases, when  entitlement communities published a list of funding recommendations in  their draft action plans, the public had an opportunity to comment on or  challenge those recommendations before they were finalized for  submission to HUD. Officials from Detroit and Los Angeles also noted tha they had a formal appeals process for unsuccessful applicants to contest  funding results. t  We spoke with nine representatives of community groups in Baltimore and  Los Angeles, and most told us that, in general, they thought their localities’  CDBG funding processes were transparent. However, a representative in  Baltimore stated that organizations that had not previously received  funding had more difficulty obtaining funding than incumbent  organizations. The Baltimore CDBG official with whom we spoke  corroborated this point in stating that newer applicants tended to be at a  disadvantage when compared to those with already successful programs.  In addition, a representative in Los Angeles noted that the city’s process  was more difficult to navigate for less sophisticated or well-connected  organizations. Two community representatives said that they understood  there were limited funds and that some proposals would not get funded.  One nonprofit representative in Baltimore noted that the list of all  awarded projects in the action plan illustrated the city’s many competing  needs and helped him appreciate the difficulty the city faced in choosing  which organizations would receive funding.
section_title: States also Used Different Methods to Distribute Funds to Non-Entitlement Communities and Communicate with Recipients and the Public
paragraphs: States used program flexibility to distribute CDBG funds by varying  combinations of three methods: competitive, open application, or formula,  and are also required to describe methods in annual plans and consult  with eligible non-entitlement community recipients in developing  methods. Most states employed multiple distribution methods, with a  majority using a combination of competitive and open application  processes. The five states in our sample also used different processes to  implement the three methods of distribution. According to non-entitlement  community officials we interviewed, they generally found these processes  to be transparent. To communicate methods of distribution and obtain  applicant feedback, states in our sample generally used a combination of  similar processes, including guidance and other documents, meetings,  online resources, and intergovernmental organizations. States’ use of these  methods went beyond general requirements, such as public hearings, and  the applicants we interviewed generally viewed states’ efforts favorably.
subsections: section_title: States Primarily Distributed CDBG Funds to Non-Entitlement Communities through a Combination of Competitive, Open Application, or Formula Processes
paragraphs: Our review of all 50 states’ annual action plans showed that states used  program flexibility to implement a variety of methods to distribute funds,  but most states used some combination of three methods: competitive,  open application, or formula.
States used competitive distribution methods to allocate funds to  numerous types of CDBG-eligible activities, with awards determined by a  variety of application criteria and evaluation methods. States’ competitive  processes typically included one standard application deadline and ranked  all eligible applicants in determining awards.
States also used the open application distribution method to fund a variety  of eligible activities that met certain threshold criteria as long as funds  were available. Generally, with this process, states either did not establish  an application deadline or the application submission period extended  over several months. States’ open application processes sometimes rated  projects, but did not necessarily rank them against each other.
The formula distribution method used population and other factors to  distribute CDBG funds to all eligible non-entitlement communities through  a non-competitive process.
From our review of all 50 states’ methods of distribution described in  annual plans, we found that most states used a combination of the  competitive and open application distribution methods to distribute funds  to non-entitlement communities within defined CDBG-eligible categories,  while a few states utilized a formula to distribute some funds.
Four of the five states in our sample also used more than one method of  distribution, but combinations varied (see table 2). Based on our review of  action plans and on our interviews with officials from the five states, each  allocated the majority of their CDBG funds under one method—two used  competitive processes, two formulas, and one an open application  process—and four used another method for the remainder. For example,  Arizona distributed 85 percent of CDBG funds to non-entitlement  communities through a formula based on population and poverty rates,  but distributed the remaining 15 percent through a competitive process.
Although states used different methods of distribution, all the states in our  sample employed an application process by which units of local  government applied for funding for each project. State officials reviewed  applications to ensure projects were CDBG-eligible and met one of the  program’s three national objectives. States also conducted additional  monitoring to ensure projects matched application descriptions, including  on-site reviews. For example, Georgia’s plan requires officials to conduct  on-site visits during at least three stages of each CDBG project—prior to  approving applications to ensure applications are accurate, prior to  starting awarded projects to conduct a capacity assessment and review  compliance requirements, and at least once after project work has been  started to ensure continued compliance.
The four states using competitive processes demonstrated similarities in  applicant criteria and rating systems. Three of the four states that used  competitive processes allowed all non-entitlement communities to apply  for funds and used a point-based scoring system to evaluate applicants.  For example, Georgia’s CDBG funds could be awarded to all eligible units  of local government. Its competitive application process rated and ranked  all applicants on a 500-point scale across nine different factors, such as  demographics need, impact, and leverage of other resources. All four  states used evaluation criteria that included benefits to low-income  individuals, capacity to execute projects, and potential impact.
When using open application or formula-based processes, states tended to  vary more with respect to criteria used to assess applications or distribute  awards. All three states that used an open application method to distribute  some funds varied in some of the criteria, beyond meeting national  objectives, they used to evaluate and approve projects. For example,  South Dakota factored in leveraging from other funding sources and  maximization of local resources to evaluate all projects, while Virginia  used varying criteria across five separate open application programs that  funded different categories of projects. Furthermore, the two states that  mostly used a formula to distribute their program funds factored  population in their calculations.  Arizona also considered a poverty rate  indicator and allowed recipients to decide by region whether to receive  funding every year or to alternate funding with neighboring communities  for up to 4 years in order to apply funds to higher-cost projects.    Pennsylvania’s formula factored in the level of local government receiving  funds, and provided varying base funding amounts to counties, cities, and  other types of municipalities before factoring in population.
subsections: section_title: Use of State and Local Priorities to Review Projects
paragraphs: In all five states we reviewed, the priorities states outlined in their action  plans played a role in the evaluation and approval of CDBG projects  across all methods of distribution. States used priorities to limit categories  of eligible projects beyond broader national objectives, or to more  specifically incorporate priorities as scoring components in some  competitive distribution processes. For example, Arizona limited its  formula grants, which represent 85 percent of its non-entitlement  community CDBG allocation, to housing or community development  projects, and also uses state priorities to limit activities funded by  competitive grants. Two of the four states that used multiple methods of  distribution also used priorities to segment eligible project categories by  funding method. Virginia created priority categories, with separate  applications and funding pools. For instance, its open application funded  programs included community development, planning, and urgent needs,  and its competitive grant priorities included housing and infrastructure  projects.
While non-entitlement community officials we interviewed in these states  generally noted significant flexibility in selecting CDBG-eligible projects,  state priorities for CDBG funds were a consideration in their selection of  projects to present for funding. Local representatives in two states noted  that their knowledge of state priorities and past experience with their  states’ CDBG distribution processes significantly influenced the types of  projects for which they submitted funding applications. For example, most  non-entitlement communities in South Dakota used CDBG funds for water  and sewer projects, which were identified as a highest-need priority by  state officials and difficult to fund from other available sources.
States have flexibility in setting funding priorities, but three states noted  that CDBG-required consultation with non-entitlement communities and  local hearings were factors in developing funding priorities and methods  of distribution. For example, South Dakota officials attributed their  prioritization of water and sewer projects as a response to local feedback.  States must document these needs assessment processes for HUD’s  review, which all officials confirmed occurs. Two of the states required  recipient communities to develop a formal plan based on their local needs  assessments. For instance, Georgia requires non-entitlement community  plans to outline needs in areas such as housing, infrastructure, and quality  of life. Three states conducted additional meetings beyond the one  required public hearing. For example, Arizona officials conducted regional  meetings in each of their Councils of Government to solicit community  input. Each of our five sample states used a body similar to many  entitlement communities’ citizen advisory committees in the needs  assessment process, though these groups varied in format. For example,  Virginia’s Planning District Commissions communicated with non- entitlement communities in their areas to identify needs and develop  regional CDBG funding priorities. The state then used these priorities as  part of the scoring process for competitive fund pools and also as  evaluation criteria for open application grants.
Other governing stakeholders also factored into state priorities and  methods of distribution. According to state officials, Pennsylvania, for  example, requires new legislation to make any changes to its formula  distribution process, which officials noted would be very difficult to revise  and has remained in place since 1984. In South Dakota, the governor’s  office makes final approvals of all CDBG projects funded, after reviewing  the recommendations of program officials. All states utilized one agency to  lead administrative efforts in the CDBG distribution process, as required  by program regulations, but each state also involved additional  government offices and/or legislative bodies in the overall decision-making  process.
section_title: Use of Subrecipients
paragraphs: Unlike entitlement communities, officials in sample states generally noted  that most of their non-entitlement communities rarely used nonprofit  organizations and other subrecipients to execute CDBG-funded projects in  their local communities. Since all funds flow directly to units of local  government, these entities must contract with any subrecipient through a  separate agreement. Two of the states in our sample indicated their CDBG  programs most commonly funded infrastructure projects, and noted that  local government agencies typically executed these projects. However,  officials from three of our sample states noted that some of their non- entitlement communities used subrecipients. For instance, Georgia  officials noted that they encouraged non-entitlement communities to use  subrecipients when they possessed better capacity for a given project.  Additionally, South Dakota officials noted that they have a process in  place to review and approve all subrecipients used by non-entitlement  communities.
section_title: States Used Several Feedback Methods to Communicate Methods of Distribution and Provide Feedback to Non- Entitlement Communities and the Public
paragraphs: All five states in our sample noted that they communicated their methods  of distribution to non-entitlement communities and the public through  their required annual plans. States also made stakeholders aware of  distribution methods in several other ways—for example, through  additional publications, workshops, online support systems, and  intergovernmental organizations (see table 3). Three states published  additional documents focused specifically on the CDBG program that  supplemented their annual and consolidated plans. For example, Virginia’s  annual CDBG program design document provided details on program  changes and eligible communities, and other information beyond basic  plan requirements. Two states held workshops outlining application  procedures and methods of distribution. For instance, Georgia’s annual  applicant workshop informed local government representatives and other  interested parties of CDBG application procedures, and allowed  participants to ask questions and share information. Georgia also provided  applicants and citizens with an online customer service management  system that addressed questions on methods of distribution. Three states  worked with intergovernmental organizations (regional bodies that  represent multiple local governments) to communicate methods of  distribution to non-entitlement communities. For instance, Arizona’s  Councils of Government provided assistance with the application process  and developed funding cycles for distribution of formula grants. Non- entitlement community officials we interviewed in all five states noted that  their states’ distribution methods generally were transparent and  communicated sufficiently.
Sample states also used several communication methods to provide  feedback to applicants on funding decisions, application deficiencies, and  other CDBG-related information (see table 4). Each state provided letters  or other documentation to applicants to inform them about funding  decisions and amounts, follow-up procedures, and other relevant  information. Three states also posted application information online. For  example, Virginia’s CDBG funding press release is available online, and  contains details on all applicants that received an award through their  competitive process, including amounts and projects funded. States with a  competitive process to distribute some CDBG funds used letters and  online feedback to convey decisions for both funded and denied  applicants, but generally did not make public details on unfunded  applicants. For example, Georgia sends denied applicants a detailed letter  containing their score, rank, and information on why the application lost  points for various criteria and identified ways they could improve their  application for the next funding cycle. Non-entitlement community  officials we interviewed in Georgia indicated that they found this process  useful and were able to improve on declined applications to gain funding  awards in subsequent years. States that used open application and formula  processes to distribute CDBG funds also provided applicant feedback. The  states we interviewed also provided some technical support as part of  their feedback process, with all five states willing to conduct meetings or  telephone conversations with non-entitlement communities upon request.
section_title: HUD Staff and Monitoring Results Reported Very Few Findings or Concerns Related to Methods of Distribution
paragraphs: HUD staff from the 17 field offices that monitor the entitlement  communities and states in our sample reported very few findings or  concerns related to methods of distribution. HUD requires states to  describe their methods of distribution in their annual action plans and  HUD has authority to monitor methods of distribution as part of its audit  and review responsibilities. In performing its reviews, HUD may check to  determine whether the state has distributed its funds in conformance with  the method of distribution described in its annual action plan. Entitlement  communities have no requirement to describe methods of distribution.  Instead, entitlement communities must provide a description of the  activities they will undertake during the next year to address their priority  needs and objectives.
As we previously reported and we recently verified with several HUD field  office staff, HUD uses a risk-based strategy to monitor CDBG recipients’  compliance with the program rules because it has limited monitoring  resources. Field office staff rate all recipients on applicable factors under  four categories: financial, management, satisfaction, and services and  focus on high-risk recipients to review. HUD considers recipients that  receive a score of 51 or greater to be high-risk. According to many field  office staff with whom we spoke, they reported very few findings or  concerns related to methods of distribution from their monitoring site  visits for the CDBG program over the last few years. Our review of HUD’s  monitoring reports confirmed that HUD staff reported very few findings or  concerns related to methods of distribution. This is due in part to program  design—states and entitlement communities decide which activities to  fund and how to distribute funds. Because HUD monitors the program  using risk analysis and because of the flexibility granted to entitlement  communities and states to distribute funds, issues made about the choice  of methods of distribution are not rated high-risk.
HUD’s monitoring tends to focus on higher-risk areas such as ensuring  funds are spent on eligible activities that meet one of the national  objectives. For example, in April 2010 the Portland field office completed  an on-site monitoring review of the City of Gresham’s CDBG program.  According to the field office staff, the City of Gresham was deemed high- risk because it had not been reviewed since 2005 and the city had engaged  in new activities since that time. According to the on-site monitoring letter  summarizing the results of the review, HUD staff assessed three areas of  the city’s program, including compliance with program eligibility and  national objectives. HUD staff found that all of the CDBG activities were  eligible for assistance, although one of seven projects they reviewed  needed to be recategorized in HUD’s management information system.  Furthermore, because states are required to describe their methods of  distribution, many HUD staff told us they also monitored states’  conformance with the methods of distribution described in their action  plans. For instance, in March 2008 the Atlanta field office reviewed the  rating and ranking of applications for Georgia’s regular competition for  CDBG awards and determined that the state’s system for reviewing  applications had remained basically the same for at least 10 years.  Furthermore, staff in one field office explained that for the small portion  of funds distributed competitively by the state they oversee, they reviewed  RFP and award processes to ensure that they mirrored the state’s planned  approach. Staff in two other field offices noted that they looked at a  sample of applications the state received to see whether the state rated  and ranked them in accordance with its stated method of distribution.
In addition to risk-based monitoring (on-site reviews), HUD staff conduct  annual reviews of states’ and entitlement communities’ required annual  performance reports. Many field office staff with whom we spoke said  they compared the actual activities to those proposed in the annual action  plans to ensure that entitlement communities and states were complying  with the goals and objectives identified in their plans. For instance, the  Los Angeles field office reviewed the Los Angeles County 2008 program  year performance report and noted that the county reported activities and  accomplishments that related back to strategies described in its  consolidated plan. Also, the San Francisco field office reviewed Arizona’s  2007 program year performance report and concluded that the state  undertook activities that addressed the state’s priority needs identified in  its consolidated plan.
In general, HUD field staff noted that the few problems identified during  their reviews were administrative in nature and easily resolved. For  instance, HUD staff at several field offices noted that a common problem  with the consolidated and action plans, although not related to methods of  distribution, related to the certifications that grantees had to submit to  HUD. Grantees sometimes submitted outdated certification forms, failed  to submit a renewal certification to replace the expired form on file, or  submitted a certification without a signature. HUD staff also noted a few  cases relating to requirements for states to describe their methods of  distribution. In one instance, the state had changed the amount of funding  dedicated to a certain type of project but did not revise its method of  distribution description to reflect this change. In two other instances, HUD  staff recommended that their respective states include sufficient  information in their methods of distribution to meet HUD’s requirement  relating to descriptions of all selection criteria. Officials from one state  told us that they described the criteria and rating system they would use to  evaluate applications in their RFP package but the description in their  program design was not as detailed. Although this information was  disclosed elsewhere, they explained that they began providing more  details about their criteria in the method of distribution about 2 years ago.  In the other instance, HUD staff told us that the state resolved the issue by  referring HUD staff to additional information the state included in its  separate method of distribution document.
HUD also requires CDBG grantees to develop and follow a detailed plan  that provides for, and encourages, citizen participation. The plan must  provide citizens with reasonable and timely access to local meetings and  provide for public hearings to obtain citizen views on proposals and  answer their questions. Several of the HUD staff with whom we spoke  described how they annually reviewed the citizen participation  requirement. For instance, staff in one field office stated that they  reviewed the citizen participation processes of the entitlement  communities they oversee to determine whether the process was open and  the community was reaching out to find eligible projects that met local  needs. While processes varied by entitlement communities, HUD accepted  variation so long as the citizen participation plan described how the  process worked and citizens had an opportunity to participate. According  to most field office staff with whom we spoke, grantees generally met the  citizen participation requirement. For example, staff in one field office told  us that one of the entitlement communities they oversee holds hearings in  identified neighborhoods each year to obtain public input for its advisory  committee.
Throughout the citizen participation process, citizens have an opportunity  to provide input on the consolidated planning process as well as discuss  their concerns about the city or state’s distribution process. However,  HUD field staff told us that citizens rarely used these venues to discuss  issues related to how a city or state distributed its funds. Most of the  discussions at these hearings focused on areas of need or on projects that  did not receive funding. Citizens also can contact their local HUD office to  express concerns about the CDBG program. Overall, several of the field  office staff with whom we spoke stated that they had received a few  complaints but none pertained to methods of distribution. Several field  office staff told us that HUD investigates complaints they receive to ensure  that grant recipients are in compliance with the program requirements.  Local non-entitlement community officials with whom we spoke  confirmed that they have not contacted HUD to express concerns about  the states’ methods of distribution. The lack of concerns raised about  methods of distribution through these venues corroborates HUD officials’  findings that methods of distribution are not a high-risk area for  compliance with program requirements.
section_title: Agency Comments
paragraphs: We provided HUD with a draft of this report for their review and comment.  HUD provided technical comments, which we incorporated into the  report, as appropriate.
We are sending copies of this report to the Secretary of the Department of  Housing and Urban Development and other interested congressional  committees. In addition, the report will be available at no charge on GAO’s  Web site at http://www.gao.gov.
If you or your staff have any questions regarding this report, please  contact me at (202) 512-8678 or shearw@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on the  last page of this report. GAO staff who made major contributions to this  report are in appendix III.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to (1) identify and describe examples of the various  methods by which entitlement communities use and distribute their CDBG  funds to individual projects within their jurisdiction; (2) identify and  describe examples of the various methods by which states distribute  CDBG funds to non-entitlement communities; and (3) describe and  examine HUD’s role in overseeing the methods by which entitlement  communities and states distribute their CDBG funds.
To identify and describe the methods by which entitlement communities  use and distribute their Community Development Block Grant (CDBG)  funds to individual projects within their jurisdictions, we conducted a  literature review and examined reports on the CDBG program and a report  on managing CDBG grantees. We also interviewed CDBG experts and  representatives of several national organizations that represent  entitlement cities and counties and potential CDBG subrecipients to  gather general information on how entitlement communities distribute  their CDBG funds. These organizations included the National League of  Cities, the National Association of Housing and Redevelopment Officials,  the National Alliance of Community Economic Development Associations,  the National Association for County, Community and Economic  Development, and the National Community Development Association.
We selected a sample of 20 entitlement communities for detailed  interviews (see fig. 2). Ten of these communities (nine cities and one  county) were the largest in terms of fiscal year 2010 CDBG allocations  from the Department of Housing and Urban Development (HUD). To  select the other 10 entitlement communities, we divided the list of 1,153  remaining entitlement communities into cities and counties. Within the  city group, we divided the communities into four regions of the country  (Northeast, Midwest/Central, South, and West). We then randomly drew 2  entitlement cities from each of the 4 regions and 2 counties from the  overall list of counties—for a total sample of 17 entitlement cities and 3  entitlement counties, which matched the national distribution of cities to  counties (approximately 85 percent and 15 percent respectively). Since we  selected entitlement communities for comparative and illustrative  purposes, results from this nongeneralizable sample cannot be used to  make inferences about all entitlement communities nationwide. We  interviewed the CDBG administrators from each of these entitlement  communities to determine how they distributed their funds and how they  shared this information with the public. We visited Baltimore, Chicago,  Los Angeles, Los Angeles County, New York, San Francisco, and South  Gate. We conducted the other interviews by telephone. We also reviewed  these communities’ annual action plans and other relevant documentation.  Lastly, we judgmentally selected three communities from the communities  we visited, taking into account geographic and program diversity, and  interviewed stakeholders involved in the CDBG process, such as  community organizations and members of citizen advisory committees. In  Baltimore and Los Angeles, we interviewed recent and current nonprofit  CDBG subrecipients to discuss their understanding of their cities’  processes for distributing funds, as well as the transparency of those  processes. In Chicago, we interviewed the executive members of the  Community Development Advisory Committee, which comprises  community members who provide input on CDBG funding priorities and  recommendations to discuss their role in Chicago’s funding process and  their views about how the process works.
To identify and describe examples of the various methods by which states  distribute CDBG funds to non-entitlement communities, we reviewed the  most recently available annual action plans covering 2008 through 2010  (required and reviewed by HUD) for all 50 states to identify the types of  methods of distribution. From this review, we judgmentally selected five  states that represented a variety of distribution methods to conduct  interviews (see fig. 2). In selecting states, we considered the distribution  methods, geographic dispersion (at least one state from the Northeast,  Midwest/Central, South, and West regions), funding amount, and states  and regions represented by the 20 entitlement communities we reviewed.  We interviewed the CDBG administrators for each state to obtain an  understanding of their methods of distribution and the level of  transparency in their process and reviewed relevant documentation. We  also interviewed officials from two non-entitlement communities from  each sample state to obtain their views on their respective state’s CDBG   distribution process and how information is communicated to the public.  Finally, we interviewed a representative from the Council of State  Community Development Agencies to obtain general information on how  its members distribute their CDBG funds.
To describe and examine HUD’s role in overseeing the methods by which  entitlement communities and states distribute their CDBG funds, we  reviewed the relevant statutes, regulations, and HUD’s policies and  procedures. In addition, we interviewed HUD staff from the 17 field offices  that oversee our sampled entitlement communities and states to gain an  understanding of their policies and practices relating to oversight of  methods of distribution and to determine how they ensure that states  complied with the requirement to publish their distribution methods. To  confirm our understanding of HUD’s monitoring efforts and annual review  of the performance and evaluation reports, we reviewed HUD documents  summarizing the results of their reviews.
We conducted this performance audit from November 2009 to September  2010 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Sampled Entitlement Communities’ Distribution Methods
paragraphs: We interviewed the Community Development Block Grant (CDBG)  administrators from each of 20 entitlement communities in our sample to  determine how they distributed their funds (see table 5). We also reviewed  these communities’ annual action plans and other relevant documentation.  For more information about how we selected these communities, see  appendix I.
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Kay Kuhlman, Assistant Director;  Rudy Chatlos; Geoffrey King; Yola Lewis; Kristeen McLain; John McGrail;  Lisa Reynolds; and Barbara Roesmann made key contributions to this  report.