0. 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

1. 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

2. 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?

3. 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

4. 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.
Save and Create more than 3.5 million jobs over two years;
Take a big step toward computerizing Americans’ health records, reducing medical errors, and saving billions in health care costs;
Revive the renewable energy industry and provide the capital over the next three years to eventually double domestic renewable energy capacity;
Undertake the largest weatherization program in history by modernizing 75 percent of federal building space and more than one million homes;
Increase college affordability for seven million students by funding the shortfall in Pell Grants, increasing the maximum award level by $500, and providing a new higher education tax cut to nearly four million students;
As part of the $150 billion investment in new infrastructure, enact the largest increase in funding of our nation’s roads, bridges, and mass transit systems since the creation of the national highway system in the 1950s;
Provide an $800 Making Work Pay tax credit for 129 million working households, and cut taxes for the families of millions of children through an expansion of the Child Tax Credit;
Require unprecedented levels of transparency, oversight, and accountability.

5. ARRA Funding - $787 Billion
The Recovery Act provides $787 Billion, which breaks down to:
$288 Billion in tax cuts
$224 Billion in increased federal spending for education and health care as well as entitlement programs (such as extending unemployment benefits), and
$275 Billion for Federal contracts, grants and loans.

6. Where is The $787 Billion Going?
Circle chart taken right off Recovery.gov, and do not add up to $787B for some reason.

7. $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

8. EPA’s ARRA Funding $7.22 BillionBF
LUST
DERA SF
CWSRF
DWSRF
EPA’s $7.2 Billion was divided as such:
I go into each of these programs in the following slides, and there is a list of acronyms at the back of the presentation.
$4B for the Clean Water State Revolving Fund
$2B for the Drinking Water State Revolving Fund
$600M for the Superfund Program
$300M for the Diesel Emissions Reduction Act Program
$200M for the Leaking Underground Storage Tank Program
$100M for the Brownfields Program
$20M for the Office of the Inspector General

9. 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

10. Current Progress Q3 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

11. Current Progress Q3 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 Q in Region 8
FY 2010 Quarter 3 Highlights
As of June 30, 2010
Clean Water State Revolving Fund
 1,777 projects have begun construction with 124 complete
 $1.1 billion (30%) in funds went to “green” projects
Drinking Water State Revolving Fund
 1,324 projects have begun construction with 110 complete
 $500 million (29%) in funds went to “green” projects
Diesel Emissions Reductions
 8,500 diesel engines have been retrofitted, replaced, or retired
 These engines have reduced the lifetime emissions of carbon
dioxide by 230,000 tons and particulate matter by 1,100 tons
Brownfields
 263 properties have been assessed with 8 properties cleaned up
 15 properties totaling 23 acres are now ready for reuse
Leaking Underground Storage Tanks
 649 site assessments have begun with 340 completed
 402 cleanups have begun with 326 completed
Superfund
 51 sites and 57 remedial action projects have on-site construction
 Small business socio-economic contractors are leading cleanups
at 45% of sites

12. Colorado’s “Top 10” Categories of $1.588 Billion ARRA Funds
State Fiscal Stabilization Fund
$760,242,539
IDEA Part B Grants to States
$148,730,571
MEDICAL ASSISTANCE PROGRAM
$140,911,583
Title I Grants to Local Educational Agencies
$110,905,813
Weatherization Assistance for Low-Income Persons (A)
$79,531,213
State Energy Program (A)
$49,222,000
Section 8 Housing Assistance Payments Program Special Allocations
$35,545,846
EPA Drinking Water SRF
$34,352,000
EPA Clean Water SRF
$31,347,700
Tax Credit Assistance Program
$27,349,670
Total CO budget=$19 billion, ARRA=8%

13. Gene L. Dodaro , Acting Comptroller General , U. S
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

14. 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 tolerance for fraud, waste and abuse
Additional funding for audits, law enforcement and inspector general oversight

15. 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

16. 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
Source: Federal Register April 1, 2009

17. Certification and Maintenance of Effort
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
Source: recovery.gov

18. 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

19. 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

20. 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
Source: Recovery Act Architecture Package v0.032

23. 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

26. 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
OCFO Briefing: 2009 EPA Comptroller/FMO/Budget Workshop
San Antonio, TX - April 2009

27. DRAFT RECOVERY ACT STEWARDSHIP PLAN
EXECUTIVE SUMMARY
May 5, 2009
The Recovery Act Steering Committee established an Agency-wide Internal Controls Workgroup that was charged with creating the Recovery Act Stewardship Plan.
Subcommittees are made up of Program Office, administrative, and Regional representatives with an OIG advisor.
The Stewardship Plan is based on the five GAO Internal Control Standards: Control Environment, Risk Assessment, Control Activities, Information and Communication, and Monitoring. Risk mitigation strategies from the OMB 02/18/2009 and 04/03/2009 Recovery Act Guidance documents and the OIG’s “Initial Plan for Oversight of Recovery Act Funds” were addressed. Additionally, OIG Open Audit Issues, OEI’s Management Action Plan, other agencies’ best practices (DOJ, USPS, Commerce, DOI, and NSF), and the Agency’s Katrina Stewardship Plan were all considered during the development of the Recovery Act Stewardship Plan.

30. 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
OCFO Briefing: 2009 EPA Comptroller/FMO/Budget Workshop
San Antonio, TX - April 2009

31. Types of OIG Reviews Forensic Audits Performance Audits
Program Evaluations
Investigations

32. Forensic Audits of Recipients and Subrecipients

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

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

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

36. 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

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

38. GAO Findings to Date
May 26, 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, Recipient Reports: Good Initial Efforts to Ensure Accurate Reporting but Significant Data Quality Issues Need Addressing
Sept. 23, Need for Recovery Act Accountability and Reporting Challenges to Be Fully Addressed

39. GAO Findings to Date
May 26, Clean Water Projects Are Underway, but Procedures May Not Be in Place to Ensure Adequate Oversight
June 22, EPA Submitted Accurate and Timely Recovery Act Financial Reports
September 27, 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.

40. GAO Findings to Date
May 26, 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, Recipient Reports: Good Initial Efforts to Ensure Accurate Reporting but Significant Data Quality Issues Need Addressing
Sept. 23, Need for Recovery Act Accountability and Reporting Challenges to Be Fully Addressed

41. Region 8 ARRA Monthly Report Sept. 2010
Outlay Rate and Jobs Reported
Program
(A) Amount Awarded
(B) Total Outlays (thru 6/30/10)
(B/A) Cumulative %
National Average % Outlays
Reported Jobs (for FY10 Q3)**
Drinking Water SRF
$134,452,000
$99,708,207
74%
62%
357
Clean Water SRF
$126,354,000
$93,932,258
57%
363
604b
$1,303,000
$761,574
58%
N/A (included in CWSRF) 5
Superfund
$64,150,180
$32,960,256
51%
56%
140
DERA
$17,770,597
$12,551,798
71%
43% 45
LUST
$9,773,000
$4,286,841
44%
38% 19
Brownfields
$5,429,900
$2,009,292
37%
26% 6
Totals
$359,232,677
$246,210,226
69%
935
*Full Jobs Created number unavailable for Eureka IAG

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

43. Regional Accomplishments Cumulative 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.

44. Selected 2010 Brownfields Accomplishments
City of Missoula, MT
$25, 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

45. Selected 2010 DERA Accomplishments
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”

46. ARRA Success – Diesel Emissions 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
Contact: Kyle Olson, EPA Region 8, Office of Partnerships and Regulatory Assistance ,

47. 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

48. Exceeded Original Pollution Reduction Goals by 114%
CO=carbon monoxide
HC=hydrocarbon
NOx=nitrogen oxide

49. 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
OCFO Briefing: 2009 EPA Comptroller/FMO/Budget Workshop
San Antonio, TX - April 2009

50. Some Themes From PSMW-Halifax (June 2010)—Same in U.S.
Difficult Economy
Structural Deficits
Unsustainable
“Back to Balance”
Cut Services/Costs
Increased Public Pressure to Reduce Costs Yet Maintain/Increase Services

51. Implications of Increased Transparency & Accountability
Increased Scrutiny
Increased Risk & Decreased Tolerance for Mistakes & “Mismanagement”
Increased Demand for Improved Management/Results
Increased Demand for Quality Data/Info

52. Open Government Directive
December 2009, Office of Management and Budget
publish government information online,
improve information quality,
create and institutionalize an open government culture, and
create an enabling policy framework for open government.

53. High Note! Implications/Opportunities for Us
FM’s Role More Important Than Ever
Increased Attention on:
Data/Info for Decision-making
Internal/Management Controls
ID & Mitigating Risks (financial & program)
Measuring/Improving Program Results

56. Recovery.gov opening book on open government
“Agencies at all levels of government must view this as not just a passing management phenomenon, but as a way to rethink how government communicates with the public.
…the new accountability and transparency movement will likely increase public expectations for real-time spending information.

57. October 17, Jeffrey C. Steinhoff, executive director of KPMG Government Institute and managing director of KPMG LLP
“…government managers will be on the hot seat like never before.
Is government turning a new page in accountability, transparency and intergovernmental relations?
It will be up to everyone to find new ways to meet the goals of open government and satisfy a public that is more insistent than ever on knowing what it is getting for its tax dollars.”

58. Questions?
Jeff Hart