Unprecedented Accountability and Transparency of Recovery Act Funds—Wave of the Future?

1. Unprecedented Accountability and Transparency of Recovery Act Funds—Wave of the Future? Toronto, Ontario Chapter Professional Development Day October 20, 2010 Jeff Hart, CGFM, CFE AGA Past National President

2. AGENDA • Overview of American Recovery and Reinvestment Act (ARRA) and Impact on EPA Operations • Job Creation/Saving • Environmental Results • Some Questions & • Key Points To Take Away

3. Some Questions For Today • How has this unprecedented level of accountability and transparency raised the bar for all US-EPA programs?  • Has it also raised the bar for all government programs?  • Has it raised the bar in Canada?  • Might it raise the bar around the world?

4. The American Recovery and Reinvestment Act (ARRA) • President Obama signed the $787 Billion American Recovery and Reinvestment Act (ARRA, or Recovery Act) of 2009 into law on February 17, 2009 in Denver, CO

5. The Recovery Act’s 3 Goals • Create new jobs and save existing jobs • Spur economic activity and invest in long-term growth, and • Foster unprecedented levels of accountability and transparency in government spending.

6. ARRA Funding - $787 Billion

7. Where is The $787 Billion Going?

8. $275 Billion for Federal Contracts, Grants and Loans • 300 different programs spanning dozens of Federal Agencies • EPA • $7.22 Billion for 6 programs • $20 Million -- Inspector General

9. EPA’s ARRA Funding $7.22 Billion BF LUST DERA SF CWSRF DWSRF

10. Region 8 ARRA Funding$384 Million • $371M in Grants and Contracts • $3.5M in ARRA Management and Oversight Funding • $9.5M in set-asides for R8 Tribes • This funding is managed out of HQ

11. Current ProgressQ3 2010 Quarterly Report • 15,764 jobs created or retained (36,092 to date) • 935 in Region 8 • 57 % CWSRF funds spent • 74% in Region 8 • 62% DWSRF funds spent • 74% in Region 8

12. Current ProgressQ3 2010 Quarterly Report • 51 Superfund sites • initiated construction • 9 in Region 8 • 8,500 diesel engines retrofitted, replaced or retired--reduced the lifetime emissions of carbon dioxide by 230,000 tons and particulate matter by 1,100 tons • 268 in Region 8 • 649 LUST site assessments begun • 55 in Region 8 • 263 Brownfields site assessments initiated • 10 initiated in Q2 2010 in Region 8

13. Colorado’s “Top 10” Categories of  $1.588 Billion ARRA Funds

14. Gene L. Dodaro , Acting Comptroller General , U.S. Government Accountability Office • “Experience tells us that the risk of fraud and abuse grows when billions of dollars are going out quickly, eligibility requirements are being established or changed, and new programs are being created.” • GAO’s Role in Helping to Ensure Accountability and Transparency, March 9, 2009

15. A key objective of ARRA is to minimize fraud, waste, and abuse • Even a 5% error rate places $40 billion of total program funding potentially at risk for fraud, waste and abuse • The federal government expects States to embed anti-fraud, waste and abuse efforts into ongoing oversight of programs • Existing systems and controls may not be capable of addressing increased expectations • The public has zero tolerancefor fraud, waste and abuse • Additional funding for audits, law enforcement and inspector general oversight

16. OMB’s Recovery Act Guidance Stresses Accountability • Funds awarded in a prompt, fair, reasonable manner • Recipients and uses of funds transparent • Funds used for authorized purposes and instances of fraud, waste, error, and abuse mitigated • Unnecessary delays and cost overruns avoided • Achieve programmatic goals

17. Section 1512 Reporting : Data Elements • Data elements to be collected were published in Federal Register 4/1/09 • Requires one report per award • There are five sections: • General Section: • One report for each award that includes project period and awarding Federal agency • Section 1: Project & Activity - Cash Received & Disbursements • Section 2: Project & Activity - Outputs & Outcomes • Status of Work Completed • Jobs Created or Retained • Section 3: Subrecipient Information • Cash Disbursed by Recipient • Date of subaward and grant period • Section 4: Aggregate Awards - Total awards <$25,000

18. Certification and Maintenance of Effort • Certification • Certification elevated to the Governor, Mayor or other State officials • Upfront certification prior to spending • Infrastructure investment has been reviewed • Full responsibility is accepted as to the appropriate use of the taxpayers’ funds • Maintenance of Effort • Federal funds cannot be used to supplant local funding • Must be used for additive projects, not applied to cut-backs • Governments will need to document current level of effort

19. Recovery Accountability and Transparency Act Board • coordinate and conduct oversight • quarterly reports • recommendations • may send Flash reports to the President and Congress problems that require immediate attention • established and maintains a user friendly website, Recovery.gov, to foster . accountability and transparency

20. Recovery Accountability and Transparency Act Board • The Honorable Earl E. Devaney, Chairman • The Honorable Phyllis K. Fong, Inspector General Department of Agriculture • The Honorable Todd J. Zinser, Inspector General Department of Commerce • The Honorable Gregory H. Friedman, Inspector General Department of Energy • The Honorable Daniel Levinson, Inspector General Department of Health and Human Services • The Honorable Richard L. Skinner, Inspector General Department of Homeland Security • The Honorable Glenn A. Fine, Inspector General Department of Justice • The Honorable Calvin L. Scovel, Inspector General Department of Transportation • The Honorable Eric M. Thorson, Inspector General Department of Treasury • The Honorable J. Russell George, Treasury Inspector General for Tax Administration • Mary Mitchelson, Acting Inspector General Department of Education

21. Recovery.gov Website • Detailed data on contracts and grants • Progress reports on spending and accomplishments • Links to grant, loan, contract opportunities • Map-based view of where the spending is going • Subscription content to be informed with targeted changes • Ability for access to bulk data for individual analysis • Reports from GAO, IG, CEA • Vignettes on results/accomplishments • Responses addressing public feedback

24. EPA Oversight • Assistant Administrator---”Senior Accountable Official”--lead and coordinate all agency activities related to stimulus funding • Steering Committee--senior managers monitor stimulus project planning and implementation meets weekly • Inspector General--$20 million for oversight Public can track EPA's distribution of stimulus cash on the agency's Web site

27. Development of the Stewardship Plan • Required broad participation • Plan addresses following areas: • Grants management • Interagency Agreements • Contracts management and procurement issues • Payroll and human capital • Budget Execution • Performance reporting • Financial reporting

31. OIG Focus • IG focus on OMB accountability objectives • Evaluate the process for awarding funds • Review the quality of data systems • Assess performance • IG will conduct: • Performance audits • Financial audits • Investigations of fraud, waste, and abuse

32. Types of OIG Reviews • Forensic Audits • Performance Audits • Program Evaluations • Investigations

33. Forensic Auditsof Recipients and Subrecipients

34. Identifying Candidates • Unusual Patterns of Drawdowns • Prior Report Findings • Hotlines • Recovery Accountability and Transparency Board Referrals • Prior Issues with Recipient or Subrecipient

35. What Does the OIG Review? • Construction Site • Progress/Materials • Individuals Working • Buy American Requirements • Davis Bacon Requirements

36. What Is OIG Reviewing? • Loan-Recipient Office • Procurement • Financial Systems • Project Oversight • Recipient Reporting

37. On-Going Performance Audits • Competition for DERA Grants • Contractor Performance Evaluations • EPA and State Oversight of Clean Water SRF Projects • Implementation of Recovery Act Stewardship Plan for Superfund Remedial Program Contracts

38. On-Going Performance Audits • Resources for Recovery Act Oversight • Use of Interagency Agreements • Financial Reporting of ARRA • Effectiveness of EPA Data Quality Review Process

39. GAO Findings to Date • May 26, 2010--Clean Water Projects Are Underway, but Procedures May Not Be in Place to Ensure Adequate Oversight • Dec. 10, 2009—One Quarter of Recovery Act Funds Administered by States and Localities Has Been Paid Out • Nov. 19, 2009--Recipient Reports: Good Initial Efforts to Ensure Accurate Reporting but Significant Data Quality Issues Need Addressing • Sept. 23, 2009--Need for Recovery Act Accountability and Reporting Challenges to Be Fully Addressed

40. GAO Findings to Date • May 26, 2010--Clean Water Projects Are Underway, but Procedures May Not Be in Place to Ensure Adequate Oversight • June 22, 2010--EPA Submitted Accurate and Timely Recovery Act Financial Reports • September 27, 2010-- EPA Effectively Reviewed Recovery Act Recipient Data but Opportunities for Improvement Exist --Identified errors in 3 percent of recipient entries. EPA did not identify any of these errors as significant. • Several OIG site inspections revealed nothing that would require action.

41. GAO Findings to Date • May 26, 2010--Clean Water Projects Are Underway, but Procedures May Not Be in Place to Ensure Adequate Oversight • Dec. 10, 2009—One Quarter of Recovery Act Funds Administered by States and Localities Has Been Paid Out • Nov. 19, 2009--Recipient Reports: Good Initial Efforts to Ensure Accurate Reporting but Significant Data Quality Issues Need Addressing • Sept. 23, 2009--Need for Recovery Act Accountability and Reporting Challenges to Be Fully Addressed

42. Region 8 ARRA Monthly ReportSept. 2010 Outlay Rate and Jobs Reported *Full Jobs Created number unavailable for Eureka IAG

43. R8 Outlays Compared to AwardsCumulative through the end of May 2010 Amounts in millions 74% 74% 51% 71% 44% 37% 58%

44. Regional AccomplishmentsCumulative through FY10 Q3 (6/31) • Nearly $312M in CW and DW SRF projects have started construction. • 1 Superfund project achieved design completion. • 1 Brownfields property has been cleaned up. • 1,000 diesel engines have been retrofitted, replaced or retired. • 25,000 tons of CO2-equivalent emissions have been avoided. • 32 LUST assessments and 15 cleanups have been completed.

45. Selected 2010 Brownfields Accomplishments City of Missoula, MT • $25,000 -- asbestos abatement at former freight depot • Now a community nutrition center + 17 low-income homes • Provides fresh local food for neighborhood with household income level $7,000 below median • households receiving public assistance is twice as high as the city overall

46. Selected 2010 DERAAccomplishments • Sioux Falls, SD School District • Replacing 10 buses, new lower-emission models + installing 20 pre-heaters • New engines + idle reduction + fuel conservation programs • Highest honor possible--Gold Level “Green Fleet Certification”

47. ARRA Success – DieselEmissions Reduction Act (DERA), Decker, Montana • State of MT in partnership with Decker Coal Company • $700k to repower 4 high emissions oversized coal-hauling dump truck engines • Old engines used Ultra Low-Sulfur Diesel fuel but still emitted high levels of particulate matter and toxics

48. Jobs, Health, + 76% Return on Investment • 9.29 mechanical and administrative jobs created or retained in environmental justice community • $532k in health care cost savings associated with • premature mortality • chronic & acute bronchitis • respiratory symptoms • asthma exacerbation • nonfatal heart attacks • hospital admissions • emergency room visits • work loss days, and minor restricted activity days

49. Exceeded Original Pollution Reduction Goals by 114%

50. Implications to EPA • ARRA significantly increased EPA’s Budget and Increases Risk of Error/Mistakes • With limited time to obligate funds and high priority from the Administration to spend funds quickly/accurately/well, stewardship of funds takes on a “higher profile” • Unprecedented transparency to public – EPA records/results open to increased scrutiny