Statements and Speeches

Hearing Statement: "Assessing Grants Management Practices at Federal Agencies"

Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security

Jul 26 2012

WASHINGTON – Today, Sen. Tom Carper (D-Del.), Chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security, chaired the hearing "Assessing Grants Management Practices at Federal Agencies."

For more information on the hearing or to watch a webcast of the hearing, please click here.

A copy of Sen. Carper's opening statement, as prepared for delivery, follows:

"Today's hearing will focus on some challenges related to federal agencies' grant management practices and the opportunities that exist for addressing them.

"Each year, the federal government allocates billions of dollars through grants to state and local governments, educational institutions, medical researchers and others. Effective management of these grants involves, among other things, ensuring that the funds are spent properly and are actually achieving results for taxpayers. Now, more than ever, it is important that we ensure strong, effective oversight over grant money.

"From fiscal years 1990 through 2010, federal grant spending increased from about $135 billion annually, to over $612 billion, almost one-quarter of the fiscal year 2010 federal budget. This money went out through more than 1,600 federal grant programs managed by 23 federal grant-making departments and agencies.

"These programs help first responders and state and local government improve their ability to withstand disasters. They fund efforts to find cures to cancer and other diseases. They help communities deal with transportation challenges. It is our responsibility in Congress and in the administration to ensure that all of this money is spent as intended and that, at the end of the day, we see real results.

"As everyone in this room knows, both the federal government and most state and local governments have struggled with record budget deficits in recent years. Today, our national debt stands at more than $15.8 trillion, well over double what it was just ten years ago. The last time our national debt was this high was at the end of World War II. That level of debt was not sustainable then, and it is not sustainable today. In order to address the burden this debt places on our country, we need to look in every nook and cranny of federal spending – in programs large and small – and make certain that the resources we're investing are being spent efficiently and effectively. We need to demand results and focus the scarce resources taxpayers entrust us with on our highest priorities as a country, and solutions that are proven effective in addressing the many challenges we face.

"Across the federal government, program managers need to sharpen their pencils and stop making the kind of expensive, avoidable mistakes that lead to improper payments. According to the Government Accountability Office, federal agencies made an estimated $115 billion in improper payments in 2011.

"Federal grants are not the whole cause of improper payments. Errors and fraud, unfortunately, occur in all categories of federal spending. But improving management and accountability in grant spending is one important piece of the puzzle when it comes to curbing waste and fraud. Success in doing so will help us as we work to curb our federal debt and, in the case of federal grants, it will help get better results both for grant recipients and the public at large.

"Ultimately, all of us – Congress, the Administration, state and local governments, and grant recipients small and large – want to improve the way grants are managed and need to work together to do so. Our witnesses today will detail some important progress that has been made during the last few years in improving the oversight and management of federal grants. We will also be looking today at additional steps that the federal government should take.

"One stark example of the need for improved federal grants management is the problem of money remaining in expired grants accounts. After a grant is awarded, the recipient has a specific amount of time to complete the grant requirements and spend the funds. The grant must then be "closed out," a process which includes an audit of the spending. In effect, the grant recipient has to show the receipts for the money spent. However, according to the Government Accountability office, at the end of fiscal year 2011, almost $1 billion in undisbursed funding remained in expired grant accounts.

"We have a chart that shows the amount of money in expired grants within one grant management system, called the Payment Management System. The chart shows $794 million dollars in grant funds remaining in accounts after the expiration date, sometimes going back as long as five to ten years.

"GAO has also identified an additional federal grant management system with $126 million in expired grant money. This is simply unacceptable. Our GAO witness will describe how a lack of timely grant close out will lead to a higher risk of waste and fraud.

"A second problem we will discuss today is that of "draw down," or ensuring that grant recipients spend their awarded money in a timely manner. Unfortunately, problems have been identified in this area as well. For example, since its formation, the Department of Homeland Security has provided state and local governments with over $35 billion in grant funding to help prepare for disasters and acts of terrorism.

"However, for a variety of reasons, the Department and its stakeholders have struggled to "draw down" some of this money and put these funds to work in our communities. This could be due to sloppy bookkeeping or problems with how the grant program is structured. It could even be a sign that some of the unspent funds were not needed and could have been put to better use elsewhere. For whatever the reason, this is another issue that needs addressing.

"Finally, we will discuss the importance of measuring performance in our grant programs. As I said earlier, we must work smarter with our limited resources. This includes finding better ways to look at what we get for the grant money we spend.

"I look forward to hearing today from Danny Werfel, the Comptroller of the Office of Management and Budget, about how the Administration intends to build on what has worked so far in grants management and oversight, and also to improve the performance of those initiatives that have not worked as well. I also look forward to hearing from officials from two of the largest grant-making federal agencies, the Department of Health and Human Services and the Department of Homeland Security, about grants management within their agencies.

"We are here today in large part because we have a moral imperative to ensure that grant dollars are well spent, and have proper oversight. At the same time, we must also ensure that the scarce taxpayer resources we invest are being spent as effectively as possible, and show good, measurable results."