Posted by Nashla Rivas Salas and Doug Turetsky, April 28, 2011

There aren’t many government programs that pump millions of dollars into some of the city’s poorest neighborhoods and give residents of those neighborhoods a say in how that money is spent. The Community Services Block Grant, a program whose lineage dates back to the 1960s and President Lyndon Johnson’s War on Poverty, is a clear exception. But now President Barack Obama, a former community organizer, wants to cut the block grant’s funding in half in next year’s federal budget.

In federal fiscal years 2009 and 2010 the nationwide allocation for the Community Services Block Grant was $700 million. The initial allocation for the current year was also $700 million, but was cut by $20 million in the recent Capitol Hill budget deal that averted a government shutdown. The President’s budget proposal for 2012 seeks only $350 million for the block grant program.

Over the past seven years, New York City has received upwards of $30 million annually through the block grant. The city’s share comes via the state, which determines how much will go to eligible localities. (The state can peel off up to 10 percent of the statewide allocation for administration and oversight.) The city’s allocation this city fiscal year is nearly $32 million. About 30,000 New Yorkers, from youth to seniors, benefit from programs run by service providers funded by the block grant.

The city divvies up the federal dollars geographically based on areas of each borough with high concentrations of poverty. In these so-called Neighborhood Development Areas, at least 30 percent of the residents have incomes below poverty level. There are 43 Neighborhood Development Areas in the city: 12 in the Bronx, 17 in Brooklyn, six in Manhattan, seven in Queens, and one in Staten Island (maps).

Each Neighborhood Development Area receives an allocation based on its share of residents living in poverty. This year, the largest allocation, about $750,000, goes to Brooklyn 12, which includes parts of Sunset Park, Borough Park and other neighborhoods. The next largest allocation, about $740,000, goes to Manhattan 12 (Washington Heights, West Harlem). In the Bronx, the largest allocations, which total about $625,000 each, go to Bronx areas 4 and 5 (Highbridge, Morris Heights, Mount Hope). In Queens the largest allocation is about $485,000 and goes to Queens 12 (South Jamaica, Richmond Hill). Staten Island’s allocation is about $230,000.

Giving community residents a say in how the money is spent was a hallmark of the 1964 Economic Opportunity Act, the forerunner of the current block grant program. The original act promoted “maximum feasible participation,” and directed money to organizations that sought to empower local residents in efforts to end poverty. When the program was recast as a block grant in 1981, the notion of local participation continued.

The city’s Department of Youth and Community Development serves as what is known as a Community Action Agency. Although final determinations are up to the city agency, there’s a board comprised of low-income residents, elected officials or their representatives, and other New Yorkers that participates in decisions about the kinds of antipoverty activities that can be funded with block grant dollars and the groups selected to provide the services. There are now nine types of services ranging from health initiatives to support services for immigrants to adult literacy eligible for block grant funds.

Each Neighborhood Development Area has its own advisory board that prioritizes the eligible services within its boundaries. The neighborhood boards include up to 12 members who live in the community, six of them selected by the city agency and the other six by local elected officials. Each development area’s block grant funding is then allocated based on the priorities set by the advisory board, which solicits public input at community meetings. In Brooklyn 12, for example, the top ranked needs are housing assistance and services for seniors. Queens 12 splits the top allocation among programs aimed at middle school and high school students and services to promote family health.

Community participation is no guarantee that funding will go to the most effective programs. A June 2006 U.S. Government Accountability Office report found shortcomings in the states’ monitoring of the groups receiving community services funding.

Part of President Obama’s agenda for the block grant is to address concerns about the effectiveness of programs funded with community services dollars. To do this he proposes creating competition for the allocations among Community Action Agencies. This would be a big departure from current practice, which distributes funds to states based on their share of dollars when the original program was turned into a block grant in 1981. This change, along with the President’s plan to slice community services funding in half, means New York could lose a substantial amount of federal funds for some of the poorest areas in the city—at a time when state and local resources for these communities are already strained.

Note: Nashla Rivas Salas was a member of Neighborhood Advisory Board Queens 3 and Doug Turetsky served as the Manhattan Borough President’s representative to the citywide Community Action Agency board.

Posted by J.W. Mason, January 16, 2009

As many Capitol Hill watchers expected, the latest version of a federal stimulus bill from the House includes significant assistance to state and local government. Some of the aid would come from Washington picking up a bigger share of Medicaid costs, just as it did temporarily in the wake of September 11.

The details of the bill probably will not be available for several weeks. But it’s expected that some key provisions of the new bill will resemble those in H.R. 7110, a federal stimulus bill passed by the House in October 2008, which also included language increasing the federal Medicaid share. So the earlier bill still serves as a good indicator of how much in Medicaid savings—a nearly $6 billion a year expense in the city’s budget—New York may be able to expect.

Currently, the share of a state’s Medicaid costs covered by the federal government, called the Federal Medicaid Assistance Percentage or FMAP, is based on mean state income, with higher-income states getting a lower federal share of Medicaid spending than poorer ones. (This formula is sometimes criticized for focusing on average incomes rather than the fraction of low-income residents.) FMAPs range from 50 percent to 75.84 percent; New York is one of a number of states with 50 percent. The 2008 stimulus bill would leave this basic structure in place but increase the FMAP by 1, 2, or 4 percentage points depending on various economic trends. In the absence of a major improvement in the state economy, New York would meet the criteria for the full 4 percentage point increase. So, federal payments would have increased by 8 percent, from 50 percent to 54 percent of total Medicaid spending.

New York is one of a handful of states that requires counties (including New York City) to bear a portion of the nonfederal share of Medicaid. The 2008 bill specifically required states to share the savings from an increased FMAP with local governments in proportion to their current share of costs. Therefore, one would expect it to reduce both the state and the city’s Medicaid costs by 8 percent. But two special Medicaid payments to hospitals with a high proportion of low-income and uninsured patients—the Disproportionate Share Hospital and Upper Payment Limit programs—were specifically excluded from the FMAP increase.

New York City hospitals receive about $2 billion through these special payments, and the state and local shares are different from other Medicaid payments; most importantly, the city pays the entire nonfederal share of the $760 million going to public hospitals through these programs. As a result, they account for a large fraction of city Medicaid spending—about 12 percent. Relatively little of the special payments go to hospitals in other parts of the state, and in all other counties the cost is divided between county and state, just like other Medicaid spending. So New York City would get significantly less relief under the 2008 stimulus bill than other counties in the state.

By IBO’s estimate, the 2008 stimulus bill would reduce state Medicaid expenditures by 7.7 percent, or $1.1 billion. Counties outside of New York would save a similar proportion of their Medicaid costs. But New York City savings would be nearly a full percentage point lower: 6.8 percent, or $377 million for 2009. If the higher federal match covered all Medicaid payments, the city would save an estimated $428 million.

It appears that the FMAP increase being considered now is somewhat larger—4.8 percentage points, plus more for states with high unemployment. New York’s unemployment rate of 6.1 percent in November 2008 (the most recent month available) was significantly below the national average, so under this formula, as opposed to the one in the 2008 bill, the state may get only the basic FMAP increase. That means the savings to the city and state would be 20 percent higher than estimated above. Of course, the exact savings depend on the details of the bill, which are still being worked out; in particular, it is unclear whether the new stimulus bill will have the same exclusion for the special Medicaid payments as the 2008 bill.

One other point is worth noting: The state legislation that capped annual growth in local Medicaid spending is specifically written to limit local shares of Medicaid spending before the federal match. So in the absence of specific language like that in the 2008 bill, nothing in state law would require an increase in FMAP to be shared with New York City or other local governments. This is an issue New York City policymakers will want to watch closely as negotiations over the federal stimulus move forward.