SUMMARY OF BUDGET ESTIMATES 1. SUMMARY OF BUDGET REQUEST     The 1999 Budget proposes a separate appropriation of $45 million for the Youthbuild program. Separate and adequate funding for Youthbuild is a key tool to making welfare reform work and enabling low-income youth to make a successful transition from dependency to work. Funding Youthbuild as a separate appropriation and at a higher funding level reflects the high priority accorded and special emphasis on meeting the critical need of investing in our inner city youth.     The appropriation of $45 million will, based on historical data, serve approximately 2,250 trainees in each training cycle. Assuming that each grant runs approximately 30 months, and that an average training cycle is 12 months, this level of funding would result in 5,000 to 6,000 training slots overall.     The Youthbuild program has been successful in encouraging at-risk youth to engage in remedial education, including leadership and skills training. The Youthbuild program, which is targeted to 16- to 24-year old high school dropouts, provides disadvantaged young adults with education and employment skills through rehabilitating and building housing for low-income and homeless people. This also helps to expand the supply of housing for these individuals and/or families.     Youthbuild effectively reaches one of the most difficult to serve populations: undereducated, adjudicated, unemployed minority men and women. The issues that the young people are facing--poverty, broken homes, alcoholism and drug addiction, welfare and crime--are common across racial lines and among both men and women. The Youthbuild strategy effectively addresses these issues, in both rural and urban areas across the United States.     Youthbuild activities would also continue to be eligible under CDBG. Obligations, budget authority, and outlays for Youthbuild as a separate account (excluding 1996-1998), are shown in this Budget Justification. Funds appropriated within CDBG in 1996, 1997, and 1998 are included in the CDBG Budget Justification.     Dealing with the problems of at-risk youth is one of the major challenges facing the Nation. Youthbuild motivates young adults to take charge of their lives and become productive members of society. The Youthbuild program is a natural complement to Empowerment Zones, and there are a number of Youthbuild sites already in such Federally designated Zones and Enterprise Communities. Youthbuild offers a comprehensive system to target disconnected young adults by giving them a way to resume their education, learn marketable skills, be a positive presence in their communities and receive personal counseling, peer support, leadership development, and linkages with employers. When previously out-of-touch young people take an active role in their communities' revitalization, it not only benefits the young people, but it helps their communities and those in need of affordable housing.     The amendments to the Minimum Wage law enacted in 1996 encourage the hiring of at-risk youth by making the Work Opportunities Tax Credit available to employers who hire these young people. Youthbuild programs market this tax credit to encourage employers to hire Youthbuild graduates in their businesses, thereby helping to break the cycle of poverty and enabling at-risk youth to become contributing members of society. 2. CHANGES FROM 1997 ESTIMATES INCLUDED IN 1998 BUDGET     The outlays were $7.3 million higher than expected due to the faster utilization of grant funds in assisting youth. The accelerated utilization of funds largely reflects a modest shift in timing forward from fiscal year 1998 and is offset by lower anticipated outlays in fiscal year 1998. 3. CHANGES FROM ORIGINAL 1998 BUDGET ESTIMATES     Congress appropriated Youthbuild at $35 million ($5 million more than the original request), however, but provided funding within the CDBG account rather than a separate account as requested. Outlays decrease by $7 million due to a faster than expected spendout in 1997. EXPLANATION OF INCREASES AND DECREASES The 1999 Budget authority and obligations increase because an additional $10 million in funding is requested in 1999 and a total of $45 million as a separate appropriation. Outlays decrease by $3 million in 1999 reflecting the decrease in spendout of pre-1996 amounts. However, outlays will grow in the future as funds appropriated in this account are drawn down by grantees and utilized. PROGRAM DESCRIPTION AND ACTIVITY 1. Legislative Authority. Youthbuild is authorized by Section 164 of the Housing and Community Development Act of 1992 (P.L. 102-550), which amended Title IV of the Cranston-Gonzalez National Affordable Housing Act by adding subtitle D, "HOPE for Youth: Youthbuild." 2. Program Area Organization. The purpose of the Youthbuild program is to provide disadvantaged young adults with education and employment skills through rehabilitating and building housing for low-income and homeless people. The program includes both on-site construction work and off-site academic and job skills training. It has been successful in allowing at-risk youth to engage in remedial education, including leadership and skills training. The Youthbuild program, which is targeted to 16- to 24-year-old high school dropouts, affords intrinsic rewards to the participants and, through construction or rehabilitation of housing for low income or homeless people, helps to expand the supply of housing in these categories. Experience with the Youthbuild program has been that each site serves an average of 35 trainees. On average, 65 percent of participants enrolled in the Youthbuild program graduate, with 82 percent of graduates attaining placement in jobs or in school. The average wage earned by the graduates is approximately $7.00 an hour. The Youthbuild program supports the Deparatment's Strategic Objective #5, "Provide empowerment and self-sufficiency opportunities to support low-income individuals and families as they make the transition from dependency to work."     a. Eligible Applicants. Eligible applicants are public and private nonprofit agencies including community-based organizations, administrative entities designated under Section 103(b)(1)(B) of the Job Training Partnership Act, community action agencies, State and local housing development agencies, community development corporations, State and local youth service and conservation corps, and other entities eligible to provide education and employment training under other Federal training programs.     b. Allocation of Funds. Funds have historically been awarded on a competitive basis using the selection criteria in the statute along with other factors published by HUD in program regulations and the Notice of Funding Availability (NOFA). In addition, 5 percent of appropriated amounts each fiscal year are to be made available for technical assistance to eligible entities for the development of program proposals and the preparation of applications.     c. Eligible Activities. Youthbuild planning grants were previously awarded to cover costs associated with designing and setting up programs, and with preparing applications for implementation grants. Implementation grants fund acquisition and construction costs, administrative costs, education and job training services, support services, wage stipends, and other operating expenses. The Department now awards only implementation grants.     d. Programs Funded. Following are the number of grants and the amounts awarded for implementation grants in 1997, and estimates for implementation grants in 1998 and 1999: NOTE: Youthbuild funds for 1996-1998 were appropriated in the CDBG account and are included in the CDBG Budget Justification.