About one-quarter of the Department of Housing and Urban Development’s (HUD) budget—almost $6 billion in fiscal year 1998—is devoted to four formula block grant programs that support community development. While those programs have different purposes, they all provide federal funds to grantees to help finance projects and services for local residents. The grantees include (1) 964 communities known as entitlement communities—generally cities designated as central cities of metropolitan statistical areas, other cities with populations of at least 50,000, and qualified urban counties with populations of at least 200,000—and (2) 48 states and some communities besides entitlement communities whose programs are administered directly by HUD. In 1995, HUD revamped its management of these formula block grant programs. Instead of having a grantee develop separate plans for each program, a grantee is now required to develop a consolidated plan that lays out how it will use funds from the four programs for community development. To implement the use of consolidated plans and focus on performance monitoring, HUD instituted the Grants Management System—a seven-step process for managing program funds and activities—which placed greater reliance on the communities’ actions to police themselves; it also phased in the Integrated Disbursement and Information System (IDIS), which is a computerized reporting system for recording the information grantees provide on their withdrawal of grant funds and their accomplishments. HUD’s Assistant Secretary for Community Planning and Development administers four formula block grant programs that help communities plan and finance their growth and development and provide shelter and services for homeless people. The four programs are the Community Development Block Grant Program, the Home Investment in Affordable Housing Program (HOME), the Emergency Shelter Grant Program, and the Housing Opportunities for Persons With AIDS Program. The grantees in these programs distribute their grant funds to some 10,000 “subrecipients,” such as nonprofit providers, while the states distribute their grants to local governments. These subrecipients and local governments provide services directly to the beneficiaries of the programs. In order to participate in the four programs, grantees must meet general and specific requirements. For instance, in order to apply for one of the four formula grants, a grantee must develop a long-term plan, generally for 3 to 5 years, that lays out activities under all four programs. This plan must include an assessment of needs for housing and the homeless; a housing market analysis; a 1-year action plan; certifications of compliance with various regulatory requirements, standards, and procedures that the jurisdiction will use to monitor activities carried out in furtherance of the plan; and a citizen participation and government consultation plan. Projects and activities undertaken with program funds must meet the specific objectives and requirements of each program. The Community Development Block Grant Program has long been the principal federal community development program, providing funding for metropolitan cities and urban counties and for small cities. The program provides annual grants on a formula basis that takes into account population, poverty, housing overcrowding, the age of the housing, and any change in an area’s growth in comparison with that of other areas. The activities undertaken must address at least one of three national objectives: They must (1) benefit low- and moderate-income families, (2) aid in the prevention or elimination of slums or blight, or (3) meet urgent community development needs. In fiscal year 1998, the Congress appropriated about $4.9 billion for the Community Development Block Grant Program. This funding was subject to over $700 million in set-asides, including ones for Indian tribes and historically black colleges. The HOME Program provides federal assistance to participating jurisdictions or Indian tribes for housing rehabilitation, rental assistance, assistance to first-time homebuyers, and new housing construction. The HOME formula for allocating funds measures a jurisdiction’s share of the total need for an increased supply of affordable housing. In fiscal year 1998, the Congress appropriated about $1.5 billion for the HOME Program—$863 million was allocated by formula to cities, urban counties, and consortiums (contiguous units of local government), and $575 million went to the states. The program’s funding is also subject to several set-asides. The Emergency Shelter Grants Program is designed to supplement state, local, and private efforts to provide emergency shelter assistance for the homeless. Program funds can be used to rehabilitate or convert buildings for use as emergency shelters for the homeless, to pay for certain operating expenses and essential services in connection with emergency shelters for the homeless, and to conduct activities to prevent homelessness. Under this program, HUD makes grants to the states, units of general local government, and territories on the basis of the Community Development Block Grant formula. In fiscal year 1998, the Congress appropriated $823 million for Homeless Assistance Grants, of which $165 million was allocated for the Emergency Shelter Grants program. The Housing Opportunities for Persons With AIDS Program gives states and localities the resources and incentives to devise long-term strategies for meeting the housing needs of low-income persons with human immunodeficiency virus/acquired immunodeficiency syndrome (HIV/AIDS) or related diseases. HUD awards 90 percent of the annual appropriation by formula to eligible metropolitan statistical areas and states. Metropolitan areas with populations greater than 500,000 and more than 1,500 cumulative cases of AIDS are eligible for grants; the most populous city in an eligible metropolitan area serves as that area’s grantee. In addition, states with more than 1,500 cumulative cases of AIDS in areas outside of eligible metropolitan areas qualify for funds. The remaining 10 percent of the program’s annual appropriation is set aside for grants awarded on a competitive basis. In fiscal year 1998, the Congress appropriated $204 million for the Housing Opportunities for Persons With AIDS Program. HUD’s Office of Community Planning and Development (CPD) administers the four formula grant programs through 42 field offices located throughout the United States. These offices report directly to CPD’s Office of Executive Services, Field Management Division. Both headquarters and field offices are now relying on the Grants Management System to oversee grantees. Each field office is managed by a director, who is responsible for ensuring that the field office’s annual work plan is carried out. An annual work plan is based on the field office’s annual assessment of each grantee and a comparison of the grantees’ performances (known as an annual comparative review). The work plan describes the actions the field office plans to take for each grantee during the year. For example, grantees designated as needing improvement may be scheduled for technical assistance or on-site monitoring. Reporting to the director are teams of CPD representatives who are responsible for monitoring a caseload of grantees. Each team is managed by a program manager. Several types of support staff supplement the efforts of the CPD representatives. For example, financial analysts review, monitor, evaluate, and provide technical advice and assistance on financial matters concerning grant awards and grantees’ financial systems. Other support staff include environmental, relocation and real estate, and clerical staff. The 42 field offices report directly to the Office of Executive Services, Field Management Division. The division is responsible for setting priorities, promulgating departmental goals, providing resources, solving problems, representing the field offices in headquarters, training, and evaluating field offices’ performance. It operates through eight desk officers, each of whom is responsible for a number of field offices—including monitoring the offices’ operations, providing assistance, and providing input to the field offices’ end-of-the-year evaluation signed by the Director of the Office of Executive Services. The desk officers oversee the field offices through telephone conversations and E-mail correspondence, occasional on-site visits, and periodic queries to the Grants Management Process information system. This information system is a computerized management information system that the field offices use to record their interactions with their grantees. For example, once a CPD representative completes a review and assessment of the grantee’s annual plan for using its formula grant funds, the results are entered into the Grants Management Process information system. In 1995, HUD introduced the Grants Management System to ensure that formula block grantees are achieving high performance and are in compliance with program requirements. This system deemphasized compliance monitoring and placed greater emphasis on (1) promoting a more collaborative approach that includes up-front assistance to help grantees achieve their goals and identify and solve their problems and (2) ensuring that grantees develop systems to monitor their own performance. Before the Grants Management System, HUD’s primary activities in administering the block grant programs were to assist communities in understanding program requirements and to monitor local programs to ensure compliance with statutory and regulatory requirements. The Grants Management System and the information systems supporting it—the Integrated Disbursement and Information System (IDIS) and the Grants Management Process information system—are intended to help HUD comply with the requirements of the Government Performance and Results Act of 1993 (P.L. 103-62). The act requires agencies to establish long-term general goals as well as associated annual goals. In addition, agencies must measure their performance against the goals they have set and report publicly on how well they are doing. The Grants Management System is intended to target limited resources so that they can best be used to achieve locally defined goals while also providing best practices to serve as models to enhance and improve performance among all grantees.