APPROPRIATIONS UPDATE

The biggest challenge for the White House and Congress will be deciding how to spend the budgetary surplus. Along those lines, will be how best to shore up Social Security. The greatest part of that challenge appears to be differences between Democrats and the Republicans are on how much of the surplus should be set-aside for social programs. The President and congressional leaders agreed that 62 percent of the surplus should be used to bolster Social Security; however Democrats seriously want to reserve another 15 percent for Medicare. Senate Minority Leader Tom Daschele (D-SD) and his House of Representatives counterpart Richard Gephardt (D-MO) said that 77 percent of the surplus should automatically be reserved for Social Security and Medicare. The President called the 77 percent proposal "a threshold decision that we all have to make."

Speaker of the House Dennis Hastert said that GOP leaders cannot make such a commitment until they review the Medicare Commission's findings. It is unlikely that Republicans would support reserving 15 percent for Medicare, since this would make it very difficult to enact the income tax cut that many want.

On Tuesday, Senate Budget Committee Chair Pete Domenici (R-NM) outlined his draft fiscal 2000 budget resolution. Domenici outlined a 10-year plan that would provide a fiscal 2000 tax cut of $5 billion, but tax relief would amount to $154 billion over the next five years and total $787 to $900 billion over the next decade. The draft also included a $40 million boost in education spending over five years and an increase in defense spending. The question on everyone's mind is how will the chairman spend more in these areas while honoring the mandatory spending caps set forth in the balanced budget agreement of 1997 (PL 105-33). Reaction to the draft was mild at best, because decisions on tax cuts and where the money would come from to pay for increases in education and defense spending had not been made. Domenici's spokesperson, Amy Call said that Domenici would offer cuts from other programs to pay for the additional spending when his committee marks up the budget resolution next month. To stay within the caps, Republicans would have to make cuts to offset any proposed spending increases and to hold discretionary spending to about $30 billion below the current fiscal year's level. House appropriators and other key decision makers are split on whether to alter the spending caps. Some Republicans are backing a 10 percent across-the-board tax cut, while Domenici has proposed a tax cut as high as 15 percent. Connie Mack (R-FL) said that Senate Republican leaders remain committed to an across-the-board cut. Daschele said Democrats continue to oppose a broad tax cut but would support eliminating the marriage penalty.

Many advocates are concerned about the proposed boost in spending for education and defense, particularly when the mandatory budget caps must be considered. Whenever the caps are considered, the cuts tend to come from social programs --housing and community development programs. It is hoped that with such a large budget surplus, the caps will be raised to a level that a suitable compromise can be reached to shore up Social Security, save Medicare, increase education spending, improve military readiness, and increase funding for housing and community development programs. It looks like Congress and the advocates have their work cut out for them this year.

HUD OVERSIGHT A TARGET OF HOUSE AND SENATE BANKING COMMITTEES

The House Committee on Banking and Financial Services met on February 3 to discuss priorities for the coming year. Rep. Leach (R-IA), Committee Chair, noted that his first priority will be the passage of financial modernization legislation this year. The committee will also focus upon oversight of the Federal Reserve Board, financial privacy issues, the International Monetary Fund, and the Y2K problem. In regards to oversight of HUD, the committee will focus upon the following areas: (1) Mark-to-Market Program; (2) HUD's reform and organization efforts, such as 2020; (3) FHA single-family appraisal process; (4) homeownership rates for minorities, inner-city neighborhoods, and women; (5) the National Flood Insurance Program; (6) the effectiveness of CDBG and HOME; and (7) HUD's efforts to address the Y2K problem.

The Senate Banking Committee has indicated that it will concentrate its legislative efforts on financial modernization legislation, a review of CRA, IMF reform, and HUD oversight, among others.

GAO REPORT SAYS HUD IS STILL A "HIGH RISK" AGENCY

As many of you know, GAO has considered HUD a "high risk" agency for the past five years. In the past two years, members of GAO's review team traveled across the country speaking with practitioners, HUD field staff and national advocates, such as NCDA. Many of NCDA members' comments appear in the report. The following is an excerpt from the cover letter of the comptroller general's repot to Congress and the overview of the full report. NCDA members can access the GAO report at http://www.gao.gov.

This report addresses the major performance and management challenges that have limited the effectiveness of the Department of Housing and Urban Development (HUD) in carrying our itss mission. It also addresses corrective actions that HUD has taken or initiated on these challenges, inlcuding the reforms it announced in June 1997 and further actions that are needed. For many years we [GAO] have reported significant management problems at HUD. These problems are the results of serious deficiencies in internal controls, information and financial management systems, organizational structure, and staffing. These deficiencies cut across HUD's program areas.

HUD is making significant changes and has made credible progress since 1997 in laying the framework for improving the way the Department is managed. HUD's Secretary and leadership team have given top priority to addressing the Department's management deficiencies. This top management attention is critical and must be sustained in order to achieve real and lasting change. Importantly, given the nature and extent of the challenges facing the Department, it will take time to implement and assess the impact of any related reforms. Whil major reforms are under way, several are in the early states of implementation. Consequently, we continue to believe, as we reported in 1995 and 1997, that these management deficiencies, taken together, place the integrity and accountability of the HUD's programs at high risk...

The Challenges

We [GAO] designated HUD as a high-risk area in 1994 because of four serious, long-standing department-wide management deficiencies. We [GAO] reported on these deficiencies and HUD's progress in resolving them in 1995 and 1997. Taken together, these deficiencies placed the integrity and accountability of HUD's programs at high risk. Specifically, internal control weaknesses, such as a lack of necessary data and management processes were a major factor leading to the HUD scandals of the 1980s. Second, poorly integrated, ineffective, and generally unreliable information and financial management systems did not meet the needs of program managers and weakened their ability to provide management control over housing and community development programs. Third, HUD had organizational deficiencies, such as overlapping and ill-defined responsibilities and authorities between its headquarters and field organizations and a fundamental lack of management accountability and responsibility. Finally, an insufficient mix of staff with the proper skills hampered the effective monitoring and oversight of HUD's programs and the timely updating of procedures. Resolving these management deficiencies is particularly critical for HUD because its housing and community development programs rely extensively on the integrity of thousands of diverse individuals and entities, such as cities, public housing authorities, mortgage lenders, contractors, and property owners over whom it does not have direct control.

HUD continues to make credible progress in overhauling its operations to correct its management deficiencies..While major reforms are under way, our recent work indicates that internal control weaknesses and problems with information and financial management systems persist. Furthermore, recent reforms to address the Department's organizational and staffing problems are in the early stages of implementation, and it is too soon to tell whether or not they will resolve the major deficiencies that we and others have identified...We [GAO] continue to believe, as we reported in 1995 and 1997 that these deficiencies, taken together, place the integrity and accountability of HUD's programs at high risk. To resolve these management deficiencies, the Department needs to ensure that the actions being taken eliminate the remaining major internal control weaknesses; strengthen the management and oversight of efforts to integrate HUD's information and financial management systems and correct these systems' weaknesses; ensure that the field offices have enough staff to carry out the work assigned, including the monitoring of programs and activities and the assessment of outcomes; and ensure that all staff have the skill s needed to perform their functions.

BILL INTRODUCED IN THE HOUSE TO PROVIDE POST-CENSUS REVIEW TO LOCAL GOVERNMENTS

Rep. Miller (R-FL) has introduced The Local Census Quality Check Act (H.R. 472) to restore post-census review to local jurisdictions as part of the upcoming decennial census. The bill has been reported out of the Subcommittee on the Census and is awaiting mark-up by the full House Government Reform and Oversight Committee. The legislation would allow local governments to review household counts for any discrepancies prior to the final tabulation of the census. This same practice was done after the 1990 census. In the fall of 1990, the Census Bureau gave local governments a chance to review the housing unit counts collected in the census before the numbers were finalized. Local officials also received the population counts but were not allowed to challenge those numbers. According to the U.S. Conference of Mayors, about 25 percent of all governments participated in the post-census local review. The program added about 125,000 people (living in 81,000 housing units) to the 1990 census at a cost of $9.6 million. GAO and other independent evaluators have considered post-census local review as generally not cost-effective.

Some national interest groups and many Democratic members of Cngress think that census sampling would be a better alternative to post-census review and would allow a greater number of undercounted populations, such as minorities, children, and the poor, to be included in the total count. Census data is used to apportion congressional seats, redraw congressional districts, and distribute federal funds to state and local governments, so accuracy is critical.

In a recent survey conducted by the U.S. Conference of Mayors, information was gathered from 34 cities to determine the impact of the 1990 undercount on cities, and the likely impact of similar inaccuracies in the 2000 census. The survey found that of the 34 cities responding to the survey, 20 estimated a total loss of $536 million in federal and state funds during the 1990s as a result of the 1990 undercount. The estimated loss in federal and state funds during the 1990s varied from a high of $184.4 million in Chicago, to $120 million in Los Angeles, $40,000 in Cincinnati, $1.3 million in St. Petersburg, Florida and $1 million in Charleston.

The Clinton Administration announced yesterday that it will produce two population counts for the 2000 census--one based on the traditional head count and one using statistical sampling. The administration plans to use the traditional head count to determine reapportionment of House seats. Statistical sampling would be used to determine a count for allocating billions in federal funds. Republicans are adamantly opposed to this plan, citing the Constitution and the 1974 Census Act as the legal basis for a traditional head count of the population. In a recent Supreme Court ruling, statistical sampling was ruled illegal for the purposes of congressional apportionment. The Court did not rule whether or not statistical sampling could be used for other purposes, such as allocation of federal dollars.

MOVEMENT ON H.R. 10--THE FINANCIAL MODERNIZATION BILL

In the coming days, Senate Banking Committee Chair Phil Gramm (R-TX) is expected to introduce his own version of a financial modernization bill. Senator Gramm has been a vocal opponent of the Community Reinvestment Act, and he is expected to include additional anti-CRA provisions in his bill. Senator Gramm expects the Senate Banking Committee to vote on the Senate's financial modernization bill on March 3. H.R. 10 allows for the creation of large financial institutions without correspondingly expanding CRA's reach. The bill makes it easier for banks to shift assets to insurance companies and securities firms not covered by the CRA, resulting in fewer resources for banks to lend in under-served communities. You can reach all of your Representatives and Senators through the Capitol Switchboard at 202-224-3121.

VIOLENCE AGAINST WOMEN ACT (H.R. 357) GAINS MOMENTUM

The proposed Violence Against Women Act of 1999 would strengthen programs and services for victims of domestic violence. Under the Violence Against Women Act of 1994, battered women's shelters received $325 million in funding for services such as case management and counseling. These shelters are often co-funded with CDBG, HOME and ESG dollars. The 1999 bill, H.R. 357, which would authorize $1 billion for services at battered women's shelters and $50 million for supportive housing for domestic violence and sexual assault victims. The bill was introduced by Representatives John Conyers, (D-MI), Connie Morella (R-MD) and Lucille Roybal-Allard (D-CA). The McAuley Institute has worked to get these housing provisions into this bill. So far, H.R 357 has 121 co-sponsors (all but one a Democrat) but more are needed.

HUD NOTICES

HUD Releases Interim Regulation on Public Housing Agency Plans and Guidance on Other Provisions of the Quality Housing and Work Responsibility Act, Including the Home Rule Flexible Grant Demonstration

With the passage of the Quality Housing and Work Responsibility Act of 1998-- public and assisted housing reform legislation--comes many new requirements for PHAs in the administration of their programs. PHAs will now be required to develop and implement a five-year PHA plan and an annual plan. In implementing this new component of the legislation, HUD issued an interim rule on February 18 which describes the contents and process for the plan. HUD is seeking comments on this interim rule by April 19, 1999. Similar to the consolidated plan, the five-year plan and annual plan require the PHA to outline its operations, its needs, and its strategies in addressing those needs. Like the consolidated plan, the PHA plan incorporates a citizen participation process. The PHA plan will eventually consolidate all PHA information that is required to be submitted under existing HUD planning and reporting requirements into one document.

The PHA Must Ensure that its Five-year Plan and Annual Plan are Consistent with the Consolidated Plan for the Jurisdiction in which the PHA is Located

For PHAs whose jurisdictions encompass more than one consolidated plan jurisdiction, consistency is required for all applicable consolidated plans. The annual plan must contain a certification by the appropriate State or local official that the plan is consistent with the consolidated plan. As part of fulfilling this requirement, the annual plan should also be consistent with the local jurisdiction's Analysis of Impediments to Fair Housing Choice. HUD is specifically soliciting comments from PHAs on the feasibility and importance of additional steps to coordinate the five-year plan and/or annual plan with the submission of the consolidated plan, either in whole or in part. The legislation allows HUD to establish a streamlined planning process for high-performing PHAs, PHAs that administer less than 250 units of public housing (and have not been designated as a troubled agency), and PHAs that only administer tenant-based assistance.

HUD Issues Notice Which Provides Initial Guidance on Provisions of the Quality Housing and Work Responsibility Act

Regarding the Home Rule Flexible Grant Demonstration Program, this notice infers that HUD may issue additional guidance later on this provision. The notice indicates that local governments can now apply directly to HUD for participation in the demonstration and advises interested local governments to follow the statutory language in the legislation when submitting applications. The notice also advises local governments that "HUD will not approve an application unless the application presents a compelling case that the eligible jurisdiction's participation and proposal would achieve the goals of the statute in a superior manner rather than continuation of program management with the affected PHA." For further information on this Demonstration, contact Rod Solomon, Office of Policy, Program and Legislative Initiatives, Office of Public and Indian Housing 202-708-0730.

HUD OFFERS TRAINING

HUD's Office of CPD will continue its training on CDBG, HOME, economic development, and relocation. The training sessions are free and will be conducted by ICF Kaiser. The following provides you with the schedule for the training through next spring. Space is limited, so register early. Contact your local HUD field office or ICF Kaiser at 703-934-3392 for further information. To register for the courses held in Boston, please send your name, city and telephone number to ruth_mckinnon@hud.gov or contact her directly at 617-565-5348.

NCDA NOTES

NCDA TECHNOLOGY NEWS

NCDAonline UPDATE!!! If you have not logged on to NCDAonline.org with your permanent passwords, you will not be able to log on to the member only section of the website. Please contact Chandra Western at NCDA or e-mail her at chandra@ncdaonline.org. She will provide you with the information necessary to get into the "Members Only" section as well as how to personalize and make permanent your passwords and user ID. NCDA staff have discovered that members are not personalizing their passwords, they continue to use the temporary passwords to get to the members only section. PLEASE CONTACT Chandra Western TO LEARN HOW TO GET YOUR PERMANENT PASSWORDS. In response to your requests NCDAonline.org has been enhanced. As part of these ongoing enhance- ments, we will eventually discontinue the PAL system. We hope you will let us know what you think of the improvements and offer suggestions for further enhancements. There is also some confusion on entering in e-mail addresses directly online. Once you are in the members only section, click on the appropriate e-mail link and type in your name in the "subject" area. In the e-mail message area, type in "subscribe memberlist" and your e-mail address. Don't forget to put a space between memberlist and your e-mail address. This should get you on the listserv.

CALL FOR AGENDA ITEMS FOR NCDA'S 1999 ANNUAL CONFERENCE

Attached to this memo is a one-page form asking you to help us make the 1999 Annual Conference your conference. Please take one minute to let us know how you feel about agenda items, session topics, Committee Meetings, and the like. We want to make your trip to Washington as worthwhile as possible. What are your thoughts? Fax us, e-mail us, or call us at 202-293-7587. Any of the staff will take note of your suggestions.

CDBG 25^th ANNIVERSARY/NATIONAL CD WEEK PRODUCTS INFORMATION

NATIONAL COMMUNITY DEVELOPMENT WEEK IS: March 29--April 4, 1999

Attached to the Washington Report is an updated flyer on the products available to assist communities with their celebrations of the 25^th anniversary of the CDBG program. Please note that BASEBALL CAPS AND 25^TH ANNIVERSARY LOGO STICKERS ARE NOW AVAILABLE for purchase. Baseball caps are $10 each and a roll of 1,000 stickers is $100.

PLEASE SEND US YOUR CD WEEK/CDBG 25^TH ANNIVERSARY ACTION PLANS

We have been asked by HUD to help them make decisions on getting personnel to your events. If you have already made plans, please let NCDA staff know by filling out a one-page form and perhaps we can facilitate a key HUD speaker at your event.

NCDA ASKS MEMBERS TO ENCOURAGE MAYORS AND CITY COUNCILS TO ADVOCATE FOR AN INCREASE IN CDBG AND HOME FUNDING FOR FY 2000

Attached to this memo is a copy of a draft CDBG and HOME support letter which is based on a similar version from last year that received over 1,200 signatures from mayors, city councilors, non-profit services providers, national advocates and individuals. We hope to do better with the number of sign-ons this year. Our goal is to get 2,000 signatures for the FY 2000 budget. Please encourage your locally elected officials to sign on to this letter. We are asking Congress to fund CDBG at $5 billion and HOME at $1.8 billion.

MONTHLY CDBG AND HOME REPORTING ENDS BEFORE IT BEGINS

The February 9, 1999, issue of the Washington Report detailed a new monthly report that grantees were being required to submit to HUD on the number of jobs created or retained and the number of housing units rehabilitated. Because there are no requirements for these reports in the regulations or the statutes governing either HOME or CDBG, and because of the work NCDA and other national public interest groups have been doing over the past year to fix the problems with IDIS, NCDA staff forwarded a letter to Joe D'Agosta, Director of the Office of Executive Services. Mr. D'Agosta is responsible for the HUD field staff operations and IDIS. Because grantees and their advocates were in such an uproar over these new requirements, field staff are no longer requiring the monthly reports. They will get the needed information from IDIS as it was originally intended. A copy of the letter is attached to this memo.

FEDERAL REGISTER NOTICES

February 9, 1999. Renewal of Tenant-Based Assistance Contracts. This Federal Register notice provides the contents of a HUD notice issued to public housing agencies on December 30, 1998. The December 30, 1998 notice advised PHAs how HUD is calculating the amount of assistance available to them to renew Section 8 rental certificate and voucher contracts.

February 18, 1999. Public Housing Agency Plans; Interim Rule. This interim rule implements an important new component of public housing and tenant-based assistance operations--the public housing agency plans. Through these plans--a five-year plan and an annual plan--a public housing agency will advise HUD, its residents, and members of the public of the PHA's mission for serving the needs of low-income and very low-income families and the PHA's strategy for addressing those needs. The PHA plans constitute one of several public housing reforms made by the Quality Housing and Work Responsibility Act of 1998. This rule establishes initial procedures and requirements for development, submission, and implementation of the plans. For further information contact Rod Solomon, Office of Policy, Program, and Legislative Initiatives, Office of Public and Indian Housing, 202-708-0730.

February 18, 1999. Quality Housing and Work Responsibility Act of 1998; Initial Guidance. On October 21, 1998, President Clinton signed into law the Quality Housing Work Responsibility Act of 1998. This new statute, part of HUD's fiscal year 1999 Appropriations Act, embodies many of the reforms of the HUD 2020 Management Reform Plan that are directed at revitalizing and improving HUD's public housing and Section 8 assistance programs. The purpose of this notice is to advise the public of those public and assisted housing statutory provisions that are effective immediately and action that may or should be taken now. This notice also provides guidance on certain other provisions in the FY 1999 HUD Appropriations Act that impact public housing programs and Section 8 assistance.

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