The Fair Housing Act, title VIII of the Civil Rights Act of 1968, prohibited discrimination in the sale, rental, and financing of housing based on race, color, religion, or national origin. The act allowed the Department of Housing and Urban Development (HUD) to investigate and conciliate complaints of housing discrimination and authorized the Department of Justice to file suits in cases of a pattern or practice of discrimination or in cases of public importance. HUD was not given any authority to administratively remedy acts of discrimination against an individual, however. The Fair Housing Act also required HUD to refer housing discrimination complaints to state and local agencies where the state or local law provided rights and remedies substantially equivalent to those provided by the federal law. In 1980, HUD established the Fair Housing Assistance Program to provide financial assistance to state and local agencies to encourage them to assume a greater share of the enforcement of their fair housing laws. The Fair Housing Initiatives Program (FHIP), administered by HUD, is designed to provide a coordinated and comprehensive approach to fair housing activities in order to strengthen enforcement of the Fair Housing Act. During the 1986 Senate hearings on its proposal to establish the FHIP, HUD testified that enforcement activity, particularly testing, by private nonprofit and other private entities would be the principal focus and motivation of the program. In February 1988, the program was created as a 2-year demonstration program by the Housing and Community Development Act of 1987. About 7 months later, the Fair Housing Amendments Act of 1988 was signed into law, and it became effective in March 1989. The 1988 act attempted to remedy the enforcement shortcomings of the original legislation. It significantly strengthened federal fair housing enforcement by, among other things, establishing an administrative enforcement mechanism, allowing HUD to pursue cases filed by an individual before an administrative law judge for disposition and providing for civil penalties. In November 1990, FHIP was extended for 2 additional years, and with the enactment of the Housing and Community Development Act of 1992, it became a permanent program, effective fiscal year 1993. The 1992 act also expanded the program to reflect significant legislative changes in fair housing and lending that had taken place after the program’s creation in 1988. It authorized FHIP to implement testing programs whenever there was a reasonable basis for doing so; establish new fair housing organizations or expand the capacity of existing ones; conduct special projects to, for example, respond to new or sophisticated forms of housing discrimination; undertake larger, long-term enforcement activities through multiyear funding agreements; and pay for litigation. For fiscal years 1989 through 1997, the Congress appropriated $113 million for FHIP. The permanent program grew from an appropriation of $10.6 million in fiscal year 1993 to $26 million in fiscal year 1995 (see fig. 1). Funds for the program are distributed on the basis of competitive grants through four program initiatives. These initiatives or funding categories generally define who is eligible to receive funds and/or the focus of activities to be funded. The initiatives are (1) the private enforcement initiative—funding for private nonprofit organizations to undertake testing and other enforcement-related activities; (2) the fair housing organizations initiative—funding for private nonprofit organizations to create new fair housing enforcement organizations in those areas of the country that were unserved or underserved by such organizations or expand the capacity of existing private nonprofit fair housing organizations; (3) the education and outreach initiative—funding for private and public entities to educate the general public and housing industry groups about fair housing rights and responsibilities; and (4) the administrative enforcement initiative—funding for state and local government agencies that administer fair housing laws certified by HUD as substantially equivalent to federal law to help such agencies broaden their range of enforcement and compliance activities. Private organizations that receive grants generally are nonprofit entities and have experience in investigating complaints, testing for fair housing violations, and enforcing legal claims or outcomes. The program provides considerable flexibility in the types of activities that can be funded under each initiative. Eligible activities include education and outreach programs, testing based on complaints and other reasonable bases, the recruitment of testers and attorneys, special projects to respond to new or sophisticated forms of discrimination, litigation expenses, and the creation of new fair housing organizations in areas of the country underserved by fair housing enforcement organizations. The program is restricted from funding two types of activities: (1) settlements, judgments, or court orders in any litigation action involving HUD or HUD-funded housing providers and (2) expenses associated with litigation against the federal government. Appendix I provides additional details on the types of activities eligible for funding under the program. FHIP is an integral part of HUD’s fair housing enforcement and education efforts that are concentrated within the Office of Fair Housing and Equal Opportunity. In addition to FHIP, this office is responsible for the oversight of the Fair Housing Assistance Program, investigation and processing of fair housing complaints, and referral of complaints to Justice when appropriate. FHIP links and extends fair housing enforcement and education and outreach activities to many state and local governments and communities across the country. The program makes it possible for HUD to look comprehensively at fair housing problems and to work with the whole spectrum of agencies that are involved in fighting housing discrimination. Taken together, FHIP and the Fair Housing Assistance Program, form a national fair housing strategy through greater cooperation between the private and public sectors. In fiscal year 1996, FHIP accounted for about 22 percent of the Office of Fair Housing and Equal Opportunity’s $76.3 million budget (see fig. 2). HUD uses discretion in deciding how FHIP funds are allocated among the four program initiatives. Reflecting the program’s principal focus, HUD’s budget requests to the Congress set forth how it plans to divide the total amount of dollars requested for FHIP among the four initiatives. Notices of funding availability in the Federal Register indicate the dollar amounts HUD makes available for competition under each program initiative. According to the Acting FHIP Division Director, the Assistant Secretary for Fair Housing and Equal Opportunity determines how funds are allocated on the basis of legislation, administration and agency priorities, and input from the housing industry and fair housing groups. HUD’s allocations for FHIP have consistently reflected that enforcement activities are the principal focus of the program. In annual budget justifications to the Congress, HUD discusses its emphasis for the year and indicates how much of FHIP’s total budget request it plans to allocate to each FHIP initiative. Table II.1 in appendix II shows by fiscal year the dollar amounts HUD anticipated it would allocate to each initiative. The Congress has appropriated amounts equal to or greater than the amounts HUD requested each fiscal year until 1996. In accordance with its budget plans, HUD has made the largest portion of FHIP dollars available for the private enforcement initiative. In 2 fiscal years (1993 and 1994) in which HUD received appropriated amounts higher than its budget requests, the additional dollars available resulted in the private enforcement initiative’s receiving significantly more money than initially planned. Overall, HUD made about 48 percent of FHIP funds available for the private enforcement initiative (see table II.2). The relationship between HUD’s proposed allocations for each initiative and the funds made available indicates that the dollar amounts were basically the same in 4 of the 8 years (fiscal years 1989 through 1991 and 1995). For the remaining years, allocations varied considerably from HUD’s initial budget plans primarily because appropriated amounts for FHIP overall were either higher or lower than the budget requests. The variations were as follows: In fiscal year 1992, the amount appropriated for FHIP was the same as the budget request. The private enforcement initiative’s allocation was $1.3 million less than HUD initially anticipated; the administrative enforcement initiative’s was $0.9 million more, and the education and outreach initiative’s was $0.4 million more. In fiscal year 1993, FHIP’s appropriation was $3 million higher than the budget request. The private enforcement initiative’s allocation was $1 million more; the education and outreach initiative’s, $0.5 million more. The fair housing organizations initiative, which was authorized in late 1992, received a $2.6 million allocation. The administrative enforcement initiative’s allocation was $1.1 million less than anticipated, however. In fiscal year 1994, FHIP’s appropriation was $3.6 million higher than the budget request. Of this, HUD allocated $3 million to the private enforcement initiative and $0.6 million to the fair housing organizations initiative. In fiscal year 1996, FHIP’s appropriation was 43 percent lower than the budget request. While the budget request included funds for all initiatives, owing to the reduced appropriation, HUD did not allocate any funds to the administrative enforcement initiative. Allocations to the other three initiatives ranged from 30 to 120 percent of the amount initially requested. From fiscal year 1989 through fiscal year 1996, HUD received 2,090 applications for FHIP grants and approved about one-quarter of these applications for funding. Historically, the demand for education and outreach grants has exceeded that for the other three initiatives each fiscal year except for 1996. For the 3 most recent years (fiscal years 1994 through 1996), the greatest demand, as measured by the amounts requested on applications, has been for the private enforcement initiative. In fiscal year 1996, the number of applications for grants decreased from 300 in each of the 3 previous fiscal years to 91. The most significant decrease was for education and outreach grants, dropping to 19 applications from over 200 the prior year (see table II.3). HUD told us that the significant drop in education and outreach applications is primarily attributable to language in the 1996 appropriations law requiring applicants to meet the definition of a qualified fair housing enforcement organization in order to be eligible for FHIP funds.