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Tuesday, February 28, 2012

Community Services Block Grants (CSBG): Background and Funding


Karen Spar
Specialist in Domestic Social Policy and Division Research Coordinator

Community Services Block Grants (CSBG) provide federal funds to states, territories, and tribes for distribution to local agencies to support a wide range of community-based activities to reduce poverty. Smaller related programs—Community Economic Development (CED), Rural Community Facilities (RCF), Job Opportunities for Low-Income Individuals (JOLI), and Individual Development Accounts (IDAs)—also support anti-poverty efforts. CSBG and some of these related activities trace their roots to the War on Poverty, launched in the 1960s. Today, they are administered at the federal level by the Department of Health and Human Services (HHS).

The Consolidated Appropriations Act, 2012 (P.L. 112-74), provided full-year funding for CSBG and related agencies for FY2012. The law maintained the block grant and RCF at approximately their FY2011 levels, provided an increase for CED, eliminated JOLI, and reduced spending for IDAs. Specifically, after implementation of an across-the-board rescission of 0.189%, the act provides approximately $677 million for CSBG (which is just slightly less than FY2011); $30 million for CED (up from $18 million in FY2011, but up to $10 million of the FY2012 appropriation may be used for the Administration’s Healthy Foods Financing Initiative); $5 million for RCF (same as FY2011); no funding for JOLI (which had received $1.6 million in FY2011); and $20 million for IDAs (down from $24 million in FY2011).

President Obama has submitted his FY2013 budget request to Congress, proposing a sharp reduction in funding for CSBG from its final FY2012 level of $677 million to $350 million. Budget documents characterize this proposal as one of several “tough cuts to worthy programs” necessary to offset other spending increases in HHS. The Administration also sought a reduction to $350 million for CSBG in FY2012, but Congress rejected that proposal. In last year’s budget request, the Administration signaled its intent to move CSBG toward a competitive program, in which states would award block grant funds among local agencies competitively, rather than via the mandatory pass-through to designated “eligible entities” contained in current law. The Administration’s latest budget documents clarify this intent. The FY2013 budget states that HHS plans to work with Congress to develop “core” federal standards, to be augmented by the states, which would be used to measure performance of local agencies. If an existing eligible entity failed to meet the standards, the state would immediately conduct an open competition to replace that entity in serving the affected community.

The National Association for State Community Services Programs conducts an annual survey of states on the activities and expenditures of the nationwide network of more than 1,000 CSBG grantees. According to the most recent survey, the network served more than 20 million people in more than 8 million low-income families in FY2010. States reported that the network spent $16.2 billion of federal, state, local, and private resources, of which $653 million were regular federal CSBG funds and $811 million came from a one-time appropriation to CSBG under the American Recovery and Reinvestment Act (ARRA). In FY2010, the network spent almost $9.1 billion from other federal programs, plus $2.1 billion provided to other federal programs by ARRA.

The Community Services Block Grant Act was last reauthorized in 1998 by P.L. 105-285. The authorization of appropriations for CSBG and most related programs expired in FY2003, although Congress has continued to fund these programs through the annual appropriations process. No legislation to reauthorize CSBG has been introduced since the 109th Congress.



Date of Report: February 15, 2012
Number of Pages: 32
Order Number: RL32872
Price: $29.95

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The Temporary Assistance for Needy Families (TANF) Block Grant: Responses to Frequently Asked Questions


Gene Falk
Specialist in Social Policy

The Temporary Assistance for Needy Families (TANF) block grant funds a wide range of benefits and services for low-income families with children. TANF was created in the 1996 welfare reform law (P.L. 104-193). This report responds to some frequently asked questions about TANF; it does not describe TANF rules (see, instead, CRS Report RL32748, The Temporary Assistance for Needy Families (TANF) Block Grant: A Primer on TANF Financing and Federal Requirements, by Gene Falk). 

TANF Funding.
TANF provides fixed funding to states, the bulk of which is provided in a $16.5 billion-per-year basic block grant. States are required in total to contribute, from their own funds, at least $10.4 billion under a maintenance-of-effort (MOE) requirement. The basic block grant is not adjusted for inflation or changes in the cash welfare caseload (see “The Caseload,” below). It has lost 28% of its value to inflation from FY1997 through FY2011. 

State Spending.
Though TANF is best known for funding cash welfare payments for needy families with children, the block grant and MOE funds are used for a wide variety of benefits and activities. In FY2009, expenditures on basic assistance (cash welfare) totaled $10.7 billion— 29.8% of total federal TANF and MOE dollars. TANF also contributes funds for child care and services for children who have been, or are at risk of being, abused and neglected. 

Cash Welfare Caseload.
A total of 1.9 million families, composed of 4.6 million recipients, received TANF- or MOE-funded cash in June 2011. The bulk of the “recipients” were children— 3.4 million in that month. The cash welfare caseload is very heterogeneous. The type of family historically thought of as the “typical” cash welfare family—one with an unemployed adult recipient—accounted for less than half of all families on the rolls in FY2009. Additionally, 14.7% of cash welfare families had an employed adult, while almost half of all families had no adult recipient. Child-only families include those with disabled adults receiving Supplemental Security Income (SSI), adults who are nonparents (e.g., grandparents, aunts, uncles) caring for children, and families consisting of citizen children and ineligible noncitizen parents. 

Cash Welfare Benefits.
TANF cash benefits are set by states. In July 2010, the maximum monthly benefit for a family of three ranged from $923 in Alaska to $170 in Mississippi. Benefits in all states represent a fraction of poverty-level income. In the median jurisdiction (District of Columbia), the maximum monthly benefit of $428 for a family of three represents 28% of poverty-level income. 

Cash Welfare Work Requirements.
TANF requires states to engage 50% of all families and 90% of two-parent families in work activities. However, these standards are reduced by caseload reduction from FY2005. Further, states may get an extra credit against these standards by spending more than required under the TANF MOE. In FY2009, states achieved an all-family participation rate of 29.4% and a two-parent rate of 28.3%. That year, eight jurisdictions failed the all-family standard, and seven jurisdictions failed the two-parent standard. States that fail to meet work standards are at risk of being penalized by a reduction in their block grant.



Date of Report: February 1
7, 2012
Number of Pages:
36
Order Number: R
L32760
Price: $29.95

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Small Business: Access to Capital and Job Creation


Robert Jay Dilger
Senior Specialist in American National Government

The SBA administers several programs to support small businesses, including loan guaranty programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion. Congressional interest in these programs has increased in recent years, primarily because assisting small business is viewed as a means to enhance economic growth.

Some, including President Obama, have argued that current economic conditions make it imperative that the SBA be provided additional resources to assist small businesses in acquiring capital necessary to start, continue, or expand operations and create jobs. Others worry about the long-term adverse economic effects of spending programs that increase the federal deficit. They advocate business tax reduction, reform of financial credit market regulation, and federal fiscal restraint as the best means to assist small business economic growth and job creation.

Several laws were enacted during the 111th Congress to enhance small business access to capital. For example, P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA), provided the SBA an additional $730 million, including $375 million to temporarily subsidize SBA fees and increase the 7(a) loan guaranty program’s maximum loan guaranty percentage to 90%. P.L. 111-240, the Small Business Jobs Act of 2010, authorized the Secretary of the Treasury to establish a $30 billion Small Business Lending Fund to encourage community banks to provide small business loans ($4 billion was issued), a $1.5 billion State Small Business Credit Initiative to provide funding to participating states with small business capital access programs, numerous changes to the SBA’s loan guaranty and contracting programs, $510 million to continue the SBA’s fee subsidies and the 7(a) program’s 90% maximum loan guaranty percentage through December 31, 2010, and about $12 billion in tax relief for small businesses. P.L. 111-322, the Continuing Appropriations and Surface Transportation Extensions Act, 2011, authorized the SBA to continue its fee subsidies and the 7(a) program’s 90% loan guaranty percentage through March 4, 2011, or until available funding was exhausted, which occurred on January 3, 2011.

This report addresses a core issue facing Congress during the 112th Congress: What, if any, additional action should the federal government take to enhance small business access to capital? After briefly discussing the role of small business in job creation and retention, this report provides an assessment of the supply and demand for small business loans, including the number and amount of small business loans guaranteed by the SBA. It examines selected laws enacted during the 110th and 111th Congresses that were designed to enhance small business access to capital by increasing the supply of small business loans or the demand for small business loans, or both. It also examines recent actions concerning the SBA’s budget.



Date of Report: February 16, 2012
Number of Pages: 27
Order Number: R40985
Price: $29.95

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Monday, February 27, 2012

The LIHEAP Formula: Legislative History and Current Law


Libby Perl
Specialist in Housing Policy

The Low Income Home Energy Assistance Program (LIHEAP) provides funds to states, the District of Columbia, U.S. territories and commonwealths, and Indian tribal organizations (collectively referred to as grantees) primarily to help low-income households pay home energy expenses. The LIHEAP statute provides for two types of funding: regular funds (sometimes referred to as block grant funds) and emergency contingency funds. Regular funds are allocated to grantees based on a formula, while contingency funds may be released to one or more grantees at the discretion of the Secretary of the Department of Health and Human Services based on emergency need.

Regular LIHEAP funds are allocated to the states according to a formula that has a long and complicated history. (Tribes receive funds based on either their number of federally eligible LIHEAP households compared to the total number in the state or on agreements with their states, whereas territories receive a set percentage of total LIHEAP regular funds.) In 1980, Congress created the predecessor program to LIHEAP, the Low Income Energy Assistance Program (LIEAP) as part of the Crude Oil Windfall Profits Tax Act (P.L. 96-223). Because Congress was particularly concerned with the high costs of heating, funds under LIEAP were distributed according to a multi-step formula that benefitted cold-weather states. In 1981, Congress enacted LIHEAP as part of the Omnibus Budget Reconciliation Act (P.L. 97-35), replacing LIEAP. However, the LIHEAP statute specified that states would continue to receive the same percentage of regular funds that they did under the LIEAP formula.

When Congress reauthorized LIHEAP in 1984 as part of the Human Services Reauthorization Act (P.L. 98-558), it changed the program’s formula by requiring the use of more recent population and energy data and requiring that HHS consider both heating and cooling costs of low-income households (a change from the focus on the heating needs of all households). The effect of these changes meant that, in general, funds would be shifted from cold-weather states to warm-weather states. To prevent a dramatic shift of funds, Congress added two “hold-harmless” provisions to the formula. The result of these provisions is a current law, three-tiered formula (sometimes referred to as the “new” formula), the application of which depends on the amount of regular funds that Congress appropriates.

The Tier I formula is used to allocate funds when the total LIHEAP regular fund appropriation is less than or equal to the equivalent of a hypothetical FY1984 appropriation of $1.975 billion. Above this level, funds are allocated according to Tier II of the formula, which includes a holdharmless level to prevent certain states from losing LIHEAP funds. Finally, Tier III applies to appropriations at or above $2.25 billion, and includes a second hold-harmless provision, the holdharmless rate. Since FY1986, LIHEAP regular fund appropriations have exceeded the equivalent of an FY1984 appropriation of $1.975 billion in FY2006, when the regular fund appropriation was $2.48 billion; in FY2008, when appropriations slightly exceeded the trigger; in FY2009 through FY2011, when Congress directed that $840 million be distributed according to the “new” LIHEAP formula; and in FY2012, when Congress directed that $497 million be distributed according to the “new” formula.



Date of Report: February
14, 2012
Number of Pages:
38
Order Number: R
L33275
Price: $29.95

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.

Small Business Administration: A Primer on Programs


Robert Jay Dilger
Senior Specialist in American National Government

The Small Business Administration (SBA) administers several programs to support small businesses, including loan guarantee programs to enhance small business access to capital; contracting programs to increase small business opportunities in federal contracting; direct loan programs for businesses, homeowners, and renters to assist their recovery from natural disasters; and small business management and technical assistance training programs to assist business formation and expansion.

Congressional interest in the SBA’s loan and contracting programs has increased in recent years, primarily because small businesses are viewed as a means to stimulate economic activity, create jobs, and assist in the national economic recovery. Many Members of Congress also regularly receive constituent inquiries about SBA disaster loans, the loan guarantee programs, and contracting programs. This report provides an overview of these programs, including changes made by P.L. 111-5, the American Recovery and Reinvestment Act, and P.L. 111-240, the Small Business Jobs Act of 2010. It also provides an overview of the SBA’s budget. This report references other CRS reports that examine the SBA’s programs in greater detail.



Date of Report: February 15, 2012
Number of Pages: 29
Order Number: RL33243
Price: $29.95

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