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Students Increase Poverty Rate, Grant Money For Bloomington

Bloomington receives a high number of grant dollars because federal and state grants are distributed based on poverty rates.

IU Students

Photo: Indiana Public Media

Students generally have low incomes, and some say that has inflated Bloomington's poverty rate.

Bloomington has the third highest poverty rate in the nation according to U.S. Census data that ranked all cities with populations greater than 65,000. That number however is largely inflated by the city’s student population, which is nearly half of the city’s population.

Many of them are considered to live below the poverty line because they do not have a steady personal income, and most rely on their parents’ financial support. That inflates the city’s poverty rate.

According to information from the 2010 U.S. Census Bureau, nearly 40 percent of Bloomington residents live in poverty. That number is critical when it comes to applying for federal and state grants that are often distributed, at least in part, based on census data.

Bloomington Director of Community and Family Resources Pete Giordano says that is working to the city’s benefit.

“That may be a good thing for the community in that it brings more dollars into the community,” he says.

So when organizations in Bloomington submit applications, they are given money based on the 40-percent poverty rate.

Who Wins And Who Loses In Grant Formulas

The South Central Community Action Program, whose headquarters is in Bloomington, is one of the groups that is benefitting from the current funding formula. It depends on federal and state grants to fund its Head Start, affordable housing and weatherization programs. 

“Counties that are largely rural and that don’t have a large population tend to lose compared to us that have the student population.

Director Todd Lare says he often gets complaints from other communities that say his organization is receiving an unfair amount of money and, actually, he agrees that the formula should be reformed.

“I think that counties that are largely rural and that don’t have a large population tend to lose compared to us that have the student population that counts into our poverty rate,” Lare says. “So they typically will ask the state to reconsider the allocation formulas.”

Last year, Lare was a part of a committee that revised the formula for Community Development Block grants, the federally funded grants that supports affordable housing, anti-poverty programs.

“The net result was that rural areas that are less populated got a little bit more money, but we set a floor so that urban areas didn’t lose below a certain level,” he says.

In October, Lare was appointed as the chair of a committee that will evaluate the formula for energy resource grant– another grant that is at least in part distributed based on census data.

Some organizations like the SCCAP that serve multiple counties, including Monroe County, choose to distribute the money based on population, meaning that although the organization is getting more money because of Bloomington’s high poverty rate, the money is still distributed evenly throughout all the counties. So surrounding areas, not just Bloomington, are benefitting from the city’s high poverty rate.

Imperfect, But Getting The Job Done

The Housing and Urban Development Department is one of the federal agencies that distributes grant money. HUD Indiana Office Director John Hall says the grant formula is not perfect, but it does its job.

“I would say that it is an adequate system,” he says. “Can it be improved? I would say yes. That would be something anyone might say could happen.” 

Not paying attention to areas that may not be as bad as the worst eventually leads to a worst kind of scenario.

But Hall worries if the funding formula changes drastically it could create problems. Bloomington organizations plan on receiving a certain amount of federal and state assistance. Without those funds Hall says some essential services would just go away.

“There needs to be a wider net only because not paying attention to areas that may not be as bad as the worst eventually leads to a worst kind of scenario,” he says.

Giordano agrees. He says the argument that Bloomington receives more than its fair share ignores the problems the city does have.

“What it does is masks the fact that we do have real poverty in this community,” Giordano says. “The demand on social service agencies are increasing at the same time that the resources are dwindling so I think even if the 39-percent rate is double what it may be, we’re still looking at a poverty rate of 1 in 5 in this community, which is significant.”

One in five is also the statewide poverty average.

Bloomington has also been ranked the city with the most income inequality.

Gretchen Frazee

Gretchen Frazee is a reporter/producer for WFIU and WTIU news. Prior to her current role, Frazee worked as the associate online content coordinator for WFIU/WTIU. She graduated from the University of Missouri-Columbia where she studied multimedia journalism and anthropology. You can follow her on Twitter @gretchenfrazee.

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