Good morning. I am pleased to be here in St. Louis on behalf of Secretary Alphonso Jackson.

Thank you, Chairwoman Waters for scheduling this field hearing to discuss the Community Development Block Grant (CDBG) program. The Office of Block Grant Assistance, within the Office of Community Planning and Development at HUD, is responsible for administration of the CDBG Program.

The CDBG program has been the Federal government's primary vehicle for assisting state and local governments in undertaking a wide range of community development activities aimed at improving the lives of low- and moderate-income families. Since its inception in 1974, more than 123 billion dollars have been appropriated for the CDBG program. These funds provide a ready source of funding for housing rehabilitation, public services, infrastructure, and economic development activities.

The President's Fiscal Year 2009 Budget proposes a funding level of 3 billion dollars, with the recognition that the program's impact has become diffused over time. Concurrently, the Administration is proposing CDBG reform legislation that will improve CDBG's ability to target funding to community development needs and demonstrate results.

These revisions address the CDBG formula, implementation of a CDBG challenge grant, consolidation of duplicative programs and improved performance measurement requirements that will better enable HUD and its grantees to demonstrate the benefits of the CDBG program. These reforms, if enacted, will strengthen and sustain the CDBG program in the future. The implementation of this reform package is essential to ensure that CDBG funds flow to the Nation's neediest communities to expand economic opportunity in measurable ways.

One of the distinguishing features of the CDBG program is the importance of local decision making. The CDBG authorizing statute requires citizen participation in the development of plans for the use of CDBG funds and enables local officials to make the final funding decisions. HUD's focus is on the question of whether the activities funded by the local government meet applicable requirements with a particular focus on whether they are eligible for CDBG funding and meet a CDBG national objective. HUD's monitoring processes are intended to assure that these requirements are met by grantees in the course of administering their CDBG programs.

HUD collects extensive data on the use of CDBG and other formula program funds through its Integrated Disbursement and Information System (IDIS). IDIS supplies drawdown data and also collects information with regard to accomplishments and performance measures. HUD provides detailed disbursement information for each CDBG grantee on its website and aggregates the data to provide a nationwide snapshot on the uses of CDBG funds. Looking back over the past seven years, we see little change in the percentage of funds disbursed on a year to year basis for particular types of activities such as public improvements, housing, public services and economic development.

Public improvements represent the largest use of CDBG funds, accounting for approximately 32 percent of annual disbursements in each of the past seven years. The dollar amount associated with these disbursements is in excess of $1.5 billion annually and HUD tracks disbursements for 24 different categories of public facilities though IDIS.

With regard to housing activities, the largest single use of CDBG funds is for rehabilitation of single residential units. In FY 2007, more than 582 million dollars or 12.75 percent of all CDBG funds were disbursed for single family rehabilitation purposes. This resulted in assistance to more than 117,000 housing units nationwide in FY 2007.

Economic development is a focus of this hearing as well and, over the past several years, CDBG grantees have been disbursing between 8 and 9 percent of their funds for economic development activities such as financial assistance to for-profit entities and commercial/industrial infrastructure development. As an example, grantees disbursed $378 million for these economic development activities during FY 2007. It should be noted that the vast majority of CDBG-funded economic development activities are being carried out through the State CDBG program.

HUD is pleased with the initial results of the new performance measurement framework that establishes clear, measurable goals and community progress indicators for our formula programs. The collaborative effort to develop the framework stretched over two years and involved grantees, public interest groups and the Office of Management and Budget. The framework was put in place in March of 2006 and grantees were requested to begin entering data for all activities open in IDIS as of October 1, 2006. Fiscal Year 2007 represented the first full year of data from the framework and HUD has been reviewing those data with an eye toward improving our reporting guidance and ultimately obtaining enhanced data from our grantees on the results being achieved with these funds.

CDBG helps communities across the nation address a variety of needs. However, reforms are necessary to improve the ability of the program to improve and expand the economic opportunities of the lives of low- and moderate-income Americans. By revising the CDBG formula, adding a Challenge Fund, consolidating programs that duplicate efforts, and implementing a new performance measurement framework, we will successfully address the many concerns regarding the CDBG Program.

I thank you for this opportunity to speak with you about the CDBG Program and I look forward to answering your questions.

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