Federation Hails Continued Support for CDFIs, Despite Overall Cuts in Community Development
(February 16, 2011 – New York, NY) Despite a slew of cuts to community development programs in the Obama administration’s recently released FY2012 budget, the Community Development Financial Institutions (CDFI) Fund has emerged relatively unscathed with the President requesting $227,259,000 for FY2012. A slight reduction from the FY2010 level of $247 million, this amount was a carry-over into FY2011 through Continuing Resolutions.
“There is a lot of bad news for low-income people in the President’s budget proposal for Fiscal Year 2012: cuts in Community Development Block Grants, Community Service Block Grants, and low-income heating assistance, just to name a few,” said National Federation of Community Development Credit Unions (Federation) President/CEO Cliff Rosenthal. “But it is striking that the administration’s proposal strongly supports the CDFI Fund, with only a modest overall cut. Moreover, it requests funding for two innovative initiatives, the Bank on USA and the Healthy Food Financing Initiative, which were included in the FY2011 budget, but are vulnerable if Congress only passes Continuing Resolutions at a reduced level, rather than the previously proposed budget.”
“The immediate concern,” Rosenthal said, “is the massive cut in CDFI Fund appropriations proposed by the Republican-controlled House of Representatives – a decrease of nearly $200 million, or more than 80%, for the year ending September 30, 2011.” According to an analysis by the CDFI Fund, the impact of such a cut would undermine the economic recovery. The Fund has calculated that job creation would fall by at least 19,248; affordable housing by 14,173 units; business lending by 3,193 loans; and private-sector leveraged funding by $1.627 billion.
The CDFI Fund has been a major source of equity capital for CDCUs, providing nearly $100 million since the Fund was established in 1995. The Fund provided more than $12 million to CDCUs in 2010. The CDFI Coalition, of which the Federation is a founding member, will be rallying supporters of the Fund to fight these potential cuts.
“The proposed cuts would not take effect without the concurrence of the Senate, where strong opposition is likely, and of the President. In this context, the President’s strong support for the CDFI Fund in his FY2012 budget request is very encouraging,” Rosenthal added.
NCUA’s CDRLF Also a Target for Cuts
Another program the Federation is monitoring closely is the National Credit Union Administration’s (NCUA’s) Community Development Revolving Loan Fund (CDRLF), which the GOP-led house has also targeted for reduction. Similarly to the CDFI Fund request, FY2011 CDRLF funding remained at the FY2010 level under Continuing Resolution. Under the Obama administration’s proposed FY2012 budget, funding for the CDRLF would remain at the FY2011 level of $2 million. However, that amount could decrease substantially if H.R. 1, introduced by House Republicans last week, is approved, which seeks to cut CDRLF funding by $1.5 million.
“As with the CDFI Fund, we don’t expect much traction in the Senate, however, it is disconcerting to see these attempts to slash programs specifically designed to assist people of modest means,” said Rosenthal. “The Federation will continue to monitor the situation, and will work with our CDFI and community development allies to maintain funding for these vital programs.”
© 2011 National Federation of Community Development Credit Unions.