At a public hearing on February 5, three people pleaded with the members of the Davenport City Council to grant funding to the Youth Alternative Program. "We keep young people off the streets, out of trouble," said Ida Johnson of Family Services' Youth Alternative Program.

But after a decade of receiving funds from the city's Community Development Block Grant (CDBG), the Youth Alternative Program walked away with nothing when the city council allocated its nearly $2.2 million share of the federal program on February 7. Youth Alternative Program's application - asking for $43,000 - was one of nine funding requests to get no funding.

A lot of groups are bound to be disappointed when funding applications exceed available funds by more than $1.4 million. But a number of people - including some who received considerable CDBG money and others with no vested interest in the disbursements - are critical of the process of determining who gets money, as well as the system's results. They say city government gets too much money for programs that don't do as much good as those run by not-for-profits. And much of the money that goes to the city isn't subject to the same effectiveness-measuring tests that actually prevent some not-for-profit agencies from securing funding.

The City of Davenport will receive more than 60 percent of the community's CDBG money for the 2001-2 cycle, including $410,000 for administration of the block-grant program. City economic-development initiatives and staff were awarded $155,000, and city housing-rehabilitation programs and staff received $575,000.

In addition, while outside agencies generally don't get funding to cover their administrative costs, city programs received $310,000 for staff and overhead beyond the money allocated for administering CDBG funds.

City programs also secure CDBG funding much more successfully than those run by outside agencies. Aside from CDBG administrative costs, city programs were funded at 79 percent of their requests. Outside agencies only received 39 percent of their requested funds.

Rock Island and Moline also spent a large percentage of their CDBG funds on city programs and administration, but they left fewer agencies out in the cold. Rock Island funded not-for-profit organizations at nearly 70 percent of their total requests, while Moline's funding level for outside agencies was 53 percent.

Bob Zelsdorf, executive director of Neighborhood Housing Services, said he's dissatisfied with the CDBG allocation process in Davenport. His organization requested $446,000 in block-grant money this year and was awarded $195,000 (44 percent of its requests). Included in its applications was a $100,000 request to help acquire and rehabilitate a building for office space and community use that received no CDBG money.

"I don't know if the money is getting out," Zelsdorf said. "I'm wondering if it couldn't be done another way."

He said that his primary concern is that CDBG money isn't being used effectively to accomplish its national statutory goals: to help low- and moderate-income people and reduce slum and blight. "If I saw our community being revitalized ... I wouldn't be saying anything," he said. "Are we making progress, or are we standing still?"

The Process

The federal Department of Housing and Urban Development's Community Development Block Grant program was designed to be flexible, giving communities the room to address their specific needs and allowing for innovation. Money must be spent on programs that meet the basic federal goal of helping the people and neighborhoods without the resources to help themselves, but otherwise there are only a few restrictions.

Cities can only spend 20 percent of their CDBG money on administering the program - Davenport in the coming year will spend approximately $150,000 less than its administrative cap - while "public service" programs can only take 15 percent of the funding pie. The rest of the money must be spent on economic development, public facilities, long-term housing, and neighborhood programs.

For example, transitional-housing, youth, and day-care programs are among social services that fall under the "public service" category, while a housing-rehabilitation-loan program is considered "housing." The key distinction is whether a program creates a permanent or long-term change - such as a new building - or instead provides a short-term service with no lasting physical change. The CDBG program is meant to foster lasting improvements.

This year, the largest grants of "public service" funds went to the Center for Aging Services ($63,697 for social services), Humility of Mary Housing ($48,199 for transitional housing), Great River Bend Services ($40,000 for low- and moderate-income transportation to places of employment, day care, counseling, and education), and Family Resources Domestic Violence Advocacy Sheleter ($33,000). Public-service requests were funded at a 57-percent rate.

The distribution of CDBG funds is an intensive process primarily undertaken by the city-council-appointed Community Advisory Committee, which this year considered more than 30 applications for funding. All agencies requesting funding also have the opportunity to make short presentations to the committee, and provide written responses to CAC questions.

Each member of the 15-person committee reviews the applications and rates them numerically on five criteria: project information, project effectiveness, the organization's capacity to complete the project, the project's compatibility with local goals, and the organization's ability to leverage other resources. (All five factors are weighted equally in tallying the points for each application.) Members also list a preferred funding level for each application.

City staff compiles the results, and in January the CAC meets to approve funding recommendations to the city council. The process is open, meaning that members make motions on funding levels and vote on them. For instance, motions to fund Neighborhood Housing Services's $286,000 loan-and-grant-program request at $200,000 and $100,000 were defeated, but a third motion at the $150,000 level passed.

Zelsdorf claims the current process is arbitrary. "Why not $160,000?" he asked. "Why not $175,000? Why not $190,000?"

The CAC generally starts with projects about which there is a broad consensus - requests that members agree should be fully funded or receive nothing. After that, applicants are basically fighting each other for the money that's left over. "We're forced to compete with each other," Zelsdorf said.

"It all comes down to this annual free-for-all," said Shelley Sheehy, a housing activist. While CAC meetings are open to the public, very few people actually attend. "I'm the only one that's ever there," Zelsdorf said. "There's a perception that the meetings aren't open." He added that it's imperative for agencies and the public to attend. "We need to go so we know what's going on."

Jim Hoepner, chair of the CAC, defends the process and says that complaints should be expected when there are more requests than funds. "No matter how we cut the pie, somebody's not going to get everything they want," he said. "There are unhappy people when programs don't get funded. It's difficult to say no."

But using the compiled evaluation data as a starting point, the give-and-take process helps find common ground in a large group of people, he said. And, he stressed, all of the CAC members have "a real desire to help people who are needy." He pointed out that the committee regularly recommends funding public-service programs at the maximum 15-percent level - instead of using those funds for other programs - and that Davenport uses significantly less than its cap for CDBG administrative expenses.

Pat Berg Yapp, who just finished her first CDBG cycle on the CAC, said that the application and funding process needs to be fine-tuned. "I think it needs some work," she said.

Berg Yapp said that even though "every proposal is studied [and] dissected," the resulting point system isn't satisfying. "There has to be a better way to blend all those" different criteria and mandates, including the respective goals of HUD, the city, the CAC, and the programs.

The point system itself does seem poorly constructed. Because all five criteria are given the same zero-to-five scale and are simply added together, some components that seem essential - such as meeting a community need or consistency with city goals - are minimized in the process. For example, a program that does not fulfill any community need might get a zero for the "project information" category but could still get funded if it's strong in the other four areas.

The CAC clearly puts greater emphasis on some items.

For example, the CAC zero-funded the Youth Alternative Program because it had difficulty offering evidence that the program worked. That failure in one category, however, should have merely reduced its point total, not eliminated it from consideration.

But while the five-criteria point system is a starting point, it does not have any binding effect. The CAC can recommend funding to programs that score no points and could suggest zero funding for an agency that meets all its requirements.

Zelsdorf said the application of evaluation criteria in the funding process was "purely subjective."

Hoepner said he's generally happy with how the CAC makes its funding decisions. "It's not perfect, no," he said, but it's more objective than many of its alternatives. The CAC has discussed the possibility of asking for competitive proposals from agencies to perform specific services. For instance, the CAC could ask for proposals to rehabilitate houses in low-income neighborhoods, and only the one judged best would get the money set aside for that particular program.

City Bias

Hoepner was open about the funding process and its inherent challenges, but he had little to say about the dominance of city programs on the funding list; he couldn't offer an answer why city programs get funded at a better rate than agencies. "I'd never really looked at it from that standpoint," he said.

The CAC is not consciously trying to steer money to the city, he said. "We don't sit down as a committee and say we're going to give the city this, that, and the other."

Most importantly, he said, the city continues to get so much in CDBG funds because it's "an effective provider of the service."

Greg Hoover, Davenport's housing and neighborhood-development manager, said that city housing programs cover the entire city, while Neighborhood Housing Services and other applicants for housing CDBG funds have target areas. More importantly, he said, Davenport's funding level "speaks well of how the city programs are run in the eyes of the CAC and the council."

In terms of number of households assisted, though, not-for-profit organizations seem to be doing more with CDBG money than the City of Davenport, even without considering block-grant money the city spends on administering its housing programs.

In the program year 1999-2000 program year, Davenport used $1.03 million in CDBG money to rehabilitate 46 properties, at a cost per house of $22,300. Neighborhood Housing Services used $287,000 in block-grant funds to rehab 17 homes, an average of $16,900 per house.

A comparison of some home-buying programs is even more dramatic. Davenport helped five families buy homes at a cost of $315,000 during the program year. Approximately $128,000 came from CDBG, meaning that block grants paid $25,600 for each home. Yet a United Neighbors program used $40,000 in CDBG money to help buy 107 homes during the same period, with more than $5 million in private leveraged funds and money from other government sources.

Several people familiar the CDBG funding process assert that not-for-profit agencies are by many measures more effective at administering their programs.

Mary Ellen Chamberlain, the executive director of the Riverboat Development Authority and a former board member of Neighborhood Housing Services, said that city programs are actually less effective than those of not-for-profit groups in several key areas.

"The amount of actual rehab per dollar is much greater with the agencies than with the city," she said. She added that not-for-profit organizations get a better return on CDBG money because they spend less money on administration and are able to leverage more money with the federal funds. Each CDBG dollar goes farther, she said.

Sheehy also said the city is pretty much doing the same things in its housing-rehab programs as Neighborhood Housing Services. "It's never brought up that the city is duplicating services" that could be done at less cost in the not-for-profit sector, Sheehy said.

And like Chamberlain, Sheehy thinks not-for-profit organizations do a better job than the city with many programs. "You've got nonprofit organizations that have gone out and leveraged millions of dollars ... with little or no help from the city," she said.

Still, "the city gets whatever it asks for," Sheehy said.

A bias toward city programs might be built into the system, Zelsdorf said. "The aldermen and the mayor appoint members to the CAC," he said. "Also, the city staff basically works for the CAC. If there's a question, the answer comes from them."

Sheehy puts it bluntly. Members of the city staff are "the ones who bring them the sodas and sandwiches and work the long hours with them," she said. "Are they going to cut their budget?"

Double Standard

If there's seemingly a bias toward the city in the allocations of CDBG money, there's an even more evident one in the process: the issue of administrative expenses.

Beyond CDBG administration, the City of Davenport will receive $310,000 in the coming program year for staff and housing-rehab and economic-development program overhead.

Yet administration and staff-cost requests from not-for-profit agencies are generally turned down. Berg Yapp said she also wondered why the city received administrative dollars while not-for-profit groups did not. "It's something I think that needs to be looked at," she said.

Hoepner said there might be some bias against using CDBG money for not-for-profit administration. There's no federal or local prohibition against using CDBG money for administration, but "there might be some feeling in that direction" on the CAC, he said. "We would rather do something for the program" and not cover overhead.

But that rule of thumb doesn't apply to city programs, seemingly.

The irony is that while the City of Davenport has reliable and relatively plentiful funding resources and still gets administrative funds from CDBG, not-for-profit groups scrape for every dollar and have few places to turn to pay the salaries of a director, bookkeeper, or secretary.

But Hoover said the city gets administrative money while outside agencies do not because not-for-profit groups have funding options that the city does not. "The city doesn't have the ability to raise money from foundations," he said.

Sheehy said that funds from government and private sources for specific programs are more plentiful than money for general not-for-profit operations. "How can you get operational funds anywhere but block grants?" she asked. "They're the building blocks. ... The operational money is the hardest to come by."

Chamberlain said that it's difficult to even have programs without an adequate staff. "That's the meat and potatoes of your agency."

Measuring Outcomes

Ostensibly, any argument about whether Davenport's current CDBG outlay is fair should be solved by awarding programs grants based on how well they accomplish their goals.

The Davenport CAC is trying to implement some accountability standards, in part because of a directive from the federal Department of Housing and Urban Development. (It's not a formal regulation yet, said city CDBG Coordinator Rita Pribyl, but it should become one in the next few years.)

It will be up to local governments to establish what benchmarks they will use to measure effectiveness. "They will not say youth programs have to be measured A-B-C-D," Pribyl said. "There'll be some general guidelines." One key concept will be having agencies conduct tests before and after a service is provided. It's part of an effort to achieve "accountability through outcomes," she said.

But instituting these quality-control measures has worked against some not-for-profit groups. "Some programs are struggling with how to measure success," Pribyl said. "It's a very slow process, especially with some of our smaller agencies. It's a little intimidating. ... It would be unfair to expect every agency to have the same level of sophistication" in its monitoring. One example would be the Youth Alternative Program.

Hoepner said that he is confident the program is effective, but based on its application it "does not have adequate measuring systems in place." Supporters of the program explained the challenge at a public hearing.

"This program is a difficult one to measure because it's prevention," said Tom Wilson. Nonetheless, he said, the program is trying to collect information about its effectiveness. "We are gathering this data," he said, but Family Resources is having difficulty getting people to fill out the forms. "Is it as good as we'd like it to be? No it's not."

Accountability is a relatively new concept with CDBG funding. HUD used to conduct annual monitoring visits, but those don't happen any longer. Recipients of CDBG money file quarterly reports with the city - showing, for instance, how much money was spent and where, and how many people were served by a particular program - and from those the city files an annual report with HUD.

That type of reporting was relatively easy for any agency to accomplish. The challenge in meaningfully quantifying results of a program is to step beyond a people-served model and actually show that a particular program or service improved people's situations in the long run. And that's more difficult for short-staffed social-service not-for-profits than the types of city programs run by public departments.

While the Youth Alternative Program struggles to prove that it has decreased the number of youth in trouble, the city can point to rehabilitated houses as its measurable result. Meanwhile, transitional-housing programs can cite statistics about how many people have come through their doors but will have more difficulty saying with any certainty what its long-term effects have been.

Pribyl acknowledged that it's easier for certain types of programs to evaluate themselves because of the nature of what they do. Bricks-and-mortar programs have physical results; social-service programs do not. "I don't have an answer [of how] to level the playing field," Pribyl said. Berg Yapp said the CAC tweaked the funding application to try to draw out attainable, concrete program goals that could be used to measure success, but the format might need revision because the committee did not get the types of responses it was looking for. "It's not enough to just say you want a good after-school program," she said. "People in the funding community need to know what they're buying."

Instead of getting reasonable goals - for example, a jobs program might set an ultimate goal of having 60 percent of participants in a job for at least six months - agencies sometimes were too broad (eliminating unemployment, for instance) or too narrow (having participants fill out an agency-satisfaction survey).

Berg Yapp added that agencies should be familiar with "outcome-based" measurement systems. "It could be a training issue, but a lot of these organizations already get money from the United Way [which has an outcome-based evaluation model]. So they should know."

While agencies try to figure out how to measure their results, the effect of some CDBG funds that go to the city will be impossible to measure.

CDBG money allocated to the city is subject to the same reporting requirements as funds that go to not-for-profit groups, but administrative costs of any kind do not have to prove their effectiveness. "How can you measure those things?" Hoover asked. "We haven't been able to tie that down."

He added that outside agencies that get administrative funds also do not have to show that the money produced quantitative results. "The CAC does not ask how efficiently NHS [Neighborhood Housing Services] runs its programs, ... and they don't ask the city," he said. (NHS was awarded $45,000 for staff, the only not-for-profit agency that received administrative funds.)

Sheehy said that the city basically isn't subject to the same requirements as outside agencies. "There's no gauge of performance for their programs," she said.

Add to that the fact that city staff monitor programs' progress and report it to HUD, and it's not hard to see why city programs usually come out ahead when CDBG money is handed out. "There should be some objective comparison of performance," Sheehy said.

HUD can demand repayment of improperly used CDBG funds, but Pribyl said that has happened rarely. Sheehy said the federal agency does not often act on its own, but it will respond if citizens complain about CDBG funding. She noted that HUD forced repayment of some of Des Moines' CDBG money because of concerns citizens raised that the funds were being used to build parks in well-to-do areas.

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