Date Published: March 2019
The grantee should draw more program income for the public service activities. The grantee needs to use program income first to comply with 24 CFR 570.504(a)(2)(ii).
The amount of CDBG funds obligated/expended* within a program year to support public service activities may not exceed 15% of the total grant awarded to the grantee for that year plus 15% of the total program income it received in the preceding program year. This cap on public service activities only determines the maximum amount of CDBG funds the grantee can obligate/expend for public service activities for a program year. As long as the total amount of funds used for public service activities is equal to or less than 15% of the grant plus the prior year program income, the grantee has options to obligate/draw the entire amount for public service activities from grant funds, program income, or a combination of grant funds and program income.
For example, if a grantee's FY 2018 grant is $500,000, and the grantee received $100,000 in program income during program year 2017, the maximum amount of CDBG funds it can use for public service activities for program year 2018 is $90,000 (($500,000 + $100,000) X 15% = $90,000)). The grantee can draw the entire $90,000 from grant funds, or program income, or use a combination of grant and program income funds, as long as the total amount of funds used for public service activities is equal to or less than $90,000. The grantee must follow the "program income first" regulation. Therefore, whether program income or grant funds should be used to pay for the public service activity will depend on whether the grantee has PI on hand when it is ready to pay the invoices.
*Note: The 15% public service cap is determined based on obligations for Entitlement grantees. However, it is based on expenditures for state grantees.