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This report, titled “Searching for ‘The Way That Works’,” is a 1990 analysis of the Farmers Home Administration’s (FmHA) rural development policies and their implementation. Prepared for the Ford Foundation and the Rural Economic Policy Program of The Aspen Institute, the report examines FmHA’s initiatives for infrastructure and business development, focusing on their effectiveness in low-income rural communities. It also scrutinizes the agency’s administrative philosophy and political orientation, and how these factors influence program effectiveness. The report highlights several key issues in rural America, including high unemployment and underemployment, higher poverty rates compared to urban areas, contaminated groundwater, substandard housing, and inadequate healthcare access. It notes a significant reduction in federal support for rural development during the Reagan Administration, with FmHA rural development funding falling from $4 billion in 1981 to less than $1 billion in 1988. The analysis evaluates development programs based on criteria such as targeting, coverage, accessibility, efficiency, accountability, flexibility, capacity, performance, technical assistance, leveraging, outreach, and political context. It categorizes federal benefit delivery mechanisms into direct payments, centralized grant/loan assistance, decentralized grant/loan assistance, state block grants, and intermediary contracts. The report details the history of FmHA, which was created in 1946 to succeed New Deal agencies. Initially focused on agricultural needs, FmHA’s mandate expanded in the 1960s to include broader rural community development. By the 1970s, its loan portfolio had significantly grown, and the Rural Development Act of 1972 further emphasized its shift towards rural development policy coordination.FmHA’s current rural development programs are discussed, including the Water and Waste Disposal Loan and Grant programs, Community Facilities Loan program, Business and Industrial Loan program, Industrial Development Grant program, and Intermediary Relending Program. The report explains the financing mechanisms, such as the Rural Development Insurance Fund (RDIF), and points out issues like unacknowledged deficits within the RDIF.A significant portion of the report is dedicated to “needs-based programs,” specifically the Community Facilities Loan program and the Water and Waste Disposal Loan and Grant programs. It describes their administration, funding formulae, interest rates (which vary based on community income), and eligibility requirements. Case studies, like the Northern Communities Health Care, Inc. in St. Johnsbury, Vermont, and the Moncure water project in North Carolina, illustrate the practical application and challenges of these programs. The report also analyzes the geographic distribution of FmHA water and waste funds from 1985 to 1988, noting that the South Central region received a disproportionately high share of funding compared to its rural population, while the West and North Central regions were underfunded based on measures of need. It criticizes FmHA’s use of an annually updated poverty definition, which can distort the classification of poverty-level communities.
