Lee’s Summit is increasing scrutiny on how local dollars are spent to take advantage of an annual federal grant.
City Manager Steve Arbo said his administration is going to try to get a more accurate account of the city’s administrative costs for Community Development Block Grants during the 2013-14 fiscal year that starts July 4.
The city is getting $305,228 in CDBG funding, according to recently announced figures from the U.S. Department of Housing and Urban Development.
Lee’s Summit automatically gets an annual allotment based on income levels of households in the city.
While discussing the spending plan for the for the grant in May, the City Council debated how much it should keep for its administrative costs. It currently hasn’t been setting aside any, but instead put it all into services.
At that meeting, several council members said the city needs to recover some of those costs, roughly estimated at $195,000 annually. That amount, compared to the grant total, shocked sensibilities. The council didn’t deduct any administrative costs this year, but said it would reconsider for the 2014 grant cycle.
Councilmember Brian Whitley said he is philosophically opposed to residents being effectively taxed twice.
Councilmember Derek Holland speculated at the meeting that it’s time for the city to refuse the money.
He quipped “It’s possible as a city we should say ‘We’re not playing anymore, keep your money’... we might set an example that money doesn’t grown on trees in Washington and we’ve got to spend it if it’s there.”
In a recent interview, Holland said he made the comment “off-the-cuff” and wouldn’t go that far. But he said the city does need to improve efficiency or recovering expenses, if it’s 5, 10 or the maximum 20 percent of the grant, which is allowed.
“We have to look at what we can do to reduce overhead costs,” Holland said.
Geneva High, director of Lee’s Summit Social Services, said loss of HUD money would make it harder for agencies like hers to provide service for low to moderate income families and individuals.
“This would take a huge amount of assistance out of our agency and would greatly impact our services to these families,” High said. “The city employees who administer the program do a fantastic job in placing funding where it is most needed.”
Arbo said in an interview that city staff does its best to efficiently manage the program, but it has to comply with federal rules for sharing the funds and seeing that applicants are properly qualified.
“Not only has the program become more complex for the city, but it has become more complex for the applicant,” Arbo said. “Our role has expanded significantly in the last 5 or 6 years.”
The agency requires the city to assist applicants, to ensure they understand procedures, approve their applications, and then review detailed reports coming back from the applicants.
Roberta McArthur, director of One Good Meal, can testify to the extent of paper pushing. She, as a one-person office, asked for the funding several years until she couldn’t justify the time.
She said she had to document age, income and ethnicity for every meal delivered, since her clientele is so fluid.
“It’s crazy,” McArthur said.
Nearby cities also have to devote large amounts of staff time to overseeing the CDGB. Christina Leakey who supervises CDBG funds for Independence, said that city is getting $788,842 for 2013 and also has about two full-time staff people working on administration of the program. She noted they also work on other grants from HUD.
Independence does take its 20 percent allowance for its administration costs.
“The city always needs the maximum,” Leakey said.
Leakey said there is a heavy burden for reporting to HUD, “It is true, if you get $10 or $10 million,” she said.
Cities can reduce costs by putting all of its CDBG money into a single project, such as new sidewalks, which cuts paperwork considerably but doesn’t meet the spirit of HUD’s objectives, she said.
But when a city takes steps to distribute funds to groups like Lee’s Summit Social Services, it requires specialized knowledge and time for administration and increases costs, she said.
Scott Allen, director of Community Development for Blue Springs, said the amount of staff devoted to CDBG varies seasonally, but it certainly requires at least one full-time position in his city and costs more than the amount allowed by the feds.
Blue Springs traditionally takes only about 3 percent for administration.
Allen said the city hasn’t tracked the costs closely, but expects it takes at least one full-time staff person.
Blue Springs has been using its CDBG money mostly for rehabilitating sidewalks and a first-time home buyers and minor home repair programs., it is getting $212,434.
It doesn’t make pass-through grants to other agencies, he said.
HUD recognizes the problem.
“We understand that there have been concerns across the board from grantees that the amount of administration money available is not sufficient to administer the entire program,” said Agatha Gutierrez , public affairs specialist for Region VII which includes Missouri.
The limited amount of funds is directly related to the reduction in the overall appropriation from Congress, she said in a written statement, and virtually every year for the past 10 or more years, the CDBG allocation has been cut.
She said amounts allocated for administration are statutory so HUD cannot revise the program rules to allow for more administrative costs; such a change would require Congress to revise the laws and/or appropriation language.
For example, in some of HUD’s homeless programs there is a required match. In others, there is a limitation on the amount of administration funds available, she said.
“In virtually all federal grant programs, there is an expectation that the entity administering the grant will participate in the administration of the program,” Gutierrez said.