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Measuring Equity in Federal Infrastructure Spending

A new report from the Urban Institute tracks how a year of infrastructure and housing grants align with federal priorities for equitable spending.

Researchers from the Urban Institute found that formula funding programs, which provide the lion’s share of transportation funding to states, are likely to reinforce existing patterns of use.
(Lev Kropotov/Shutterstock)
In Brief:
  • The Urban Institute analyzed all federal grants funded through the Infrastructure Investment and Jobs Act in 2022.

  • The report found much infrastructure funding reinforces the status quo, while some competitive grant programs tend to prioritize areas with more people of color.

  • Cities and counties with fewer local government workers tend to be underfunded compared to jurisdictions with more staff capacity.

  • Billions of dollars from the long-anticipated Infrastructure Investment and Jobs Act (IIJA) began flowing to cities and states last year. Dozens of newly flush programs are helping to repair aging bridges, design safer streets, replace diesel-fueled buses and build high-speed Internet connections.

    But is the money being equitably spent?

    A new report from the Urban Institute digs into the question, analyzing a full year of grants from 66 federal programs funded through the IIJA and the Department of Housing and Urban Development. The report tracks grants issued in 2022. It compares areas that received grants with those that didn’t receive grants on characteristics like racial demographics, average incomes and levels of need based on specific program targets.

    The researchers found that formula funding programs, which provide the lion’s share of transportation funding to states, are likely to reinforce existing patterns: Most transit funding, for example, goes to places that already have more transit service, rather than to car-centric places with few alternative travel modes. Competitive grants are often more targeted to areas with higher shares of people of color, the report found. And communities with less government staff capacity to apply for grants are substantially less likely to receive funding.

    But the researchers were careful to note that there are many ways to understand equity in infrastructure spending. The report was published alongside an interactive tool allowing users to explore how individual grant programs and specific places stack up against each other. The tool displays data on per capita funding in different locations, with measures of equity based on the concentration of grants in certain types of communities, the degree to which they reach high-need areas and the overall evenness of distribution across the country.

    “We were very cognizant that there’s not a single number or statistic that will tell you whether or not a program is equitable, which is why we came up with these various measures,” says Amanda Hermans, a research analyst in Urban’s Metropolitan Housing and Communities Policy Center.

    Fair Funding

    While the term “equity” is used in lots of ways, a key question for infrastructure funding is whether it reaches places that need it the most. That requires understanding inequitable patterns of spending in the past, which helped create racial and class inequities in access to clean water, fast Internet, safe transportation options and affordable housing. The Biden administration’s Justice40 Initiative is aimed at promoting equity in federal funding, by pushing for “disadvantaged communities” to receive at least 40 percent of the benefits of federal spending programs.

    The Urban Institute researchers developed a variety of ways to test that concept, focusing on the “distributional equity” of IIJA and Department of Housing and Urban Development programs — specifically, how well the programs prioritize underserved communities based on race and income data.

    The biggest federal formula programs, like the National Highway Performance Program, tend to give more per capita funding to states with smaller populations and greater land area, which also tend to be whiter than other states, the report found. States with more people of color got much lower per capita funding from the program.

    Grants in many competitive transportation programs did tend to be given to areas with higher shares of people of color, the report found, suggesting that, “in selecting projects for competitive awards, federal transportation officials have prioritized these historically underinvested communities.” However, both formula and competitive grants “disproportionately underfund” areas with lower median incomes.

    The authors cautioned against over-interpreting any single finding, emphasizing that many programs have both positive and negative consequences. Funding from a highway program that goes to an underinvested area may also harm some communities in that area with higher rates of pollution, for example. Funding for affordable housing may disproportionately go to areas with lower incomes and higher shares of people of color.

    But that reflects both the need in those areas and the fact that other areas have historically opted out of providing affordable housing, says Yonah Freemark, a senior research associate at the Metropolitan Housing and Communities Policy Center. In that case, funding that flows to disadvantaged areas may continue to support the status quo, Freemark says.

    Localities Need Staff Capacity

    The report recommends that Congress reform some of the biggest formula funding programs, which “are rarely changed and often reflect decisions made decades ago,” so that they distribute money more equitably based on today’s needs. It also recommends that grant-making agencies should give priority to applications from communities with higher shares of people of color and low-income households.

    Another important finding was that cities and counties with low staff capacity, meaning fewer local government workers per capita, are getting less funding from competitive grant programs. That won’t be a surprise to officials and advocates, which have talked about the need to build local capacity to navigate grant-making opportunities since before the IIJA was passed.

    Some groups, like the National League of Cities and Bloomberg Philanthropies, have been hosting trainings for local officials on how to apply for various infrastructure grants. The federal government should play a role in supporting local governments with low staff capacity, the report says. And for those cities and counties that are in the position to hire more staff, the report shows a clear link with opportunities for federal funding.

    “It does seem to be apparent that among a number of the federal competitive grants, having more staff who work in a policy area in your community is associated with you having a better chance of winning a grant and getting more dollars out of that grant,” Freemark says.
    Jared Brey is a senior staff writer for Governing. He can be found on Twitter at @jaredbrey.
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