WASHINGTON — State and local government officials agreed with federal lawmakers yesterday that they should make every effort to prevent and minimize waste, fraud, and abuse of funds authorized by the economic stimulus package, but had questions about how to do so.
Testifying before the House Committee on Oversight and Government Reform, the officials said that the huge, rapid influx of funds from the new stimulus law, coupled with recent staff reductions and shrinking municipal budgets, make monitoring the spending a great challenge.
Although current conditions “make accountability more critical than at any other time in our government,” said Illinois auditor general William Holland. “We are still uncertain as to our specific roles, and what the costs and funding sources for fulfilling our roles will be.”
Holland testified on behalf of the National Association of State Auditors, Comptrollers, and Treasurers. He called for “timely and expeditious” guidance from the federal government on what information should be gathered on stimulus projects and how it should be reported to the federal government.
Jerome Heer, director of audits for Milwaukee County and member of the National Association of State Procurement Officials, said, “The majority of our local government agencies are very small compared to the resources we audit.” Many large cities and counties lack independent auditing functions, and those that do oftentimes employ just one or two people, he added.
Earl Devaney, chairman of the Recovery Act Accountability and Transparency Board, which is charged with oversight of the stimulus package, testified that his team plans to “work tirelessly” to reduce wasteful and abusive losses “to the lowest level possible.” However, he noted that the month since the package was signed into law has largely been spent getting the board up and running.
The board officially meets for the first time next week, and is still acquiring staff, office space, and equipment, he told the committee.
He also said that the Obama administration’s stimulus Web site, Recovery.gov, which ultimately will provide information on the projects that received stimulus spending, is still in its “infancy.” But he said that he hopes that the site, ultimately, will provide “an historic level of transparency” and “to do so ... in a user-friendly manner.”
Although the board’s main objective is to prevent fraud, Devaney admitted, “I’m afraid my 38 years of experience informs me that some level of waste and fraud is regrettably inevitable.”
Committee chairman Edolphus Town, D-N.Y., agreed with Devaney that it is vital to stop fraud before it starts, because “once fraudulent dollars go out the door, the federal government historically is only able to recollect pennies on the dollar.”
He echoed calls from state and local officials for the Recovery Act Accountability and Transparency Board — dubbed the RAT board —to provide uniform standards for collecting and reporting project information. Some states are already spending stimulus dollars without knowing what information should be collected, he said.
“This needs to be fixed, and this needs to be fixed immediately,” he said. He also requested a comprehensive examination by the RAT board on contracts that have already been awarded to ensure the money has been spent appropriately.
Rep. Gerry Connolly, D-Va., said it is vital to ensure not just federal oversight of the funds, but also state and local monitoring, because “this is really where the rubber meets the road.”
However, he expressed concerns about “unfunded mandates” on municipal governments “that are already in dire fiscal straits.” He suggested setting aside some additional funds to help municipalities pay for monitoring in future legislation.
Jerry Brito, a senior research fellow at the Mercatus Center at George Mason University, an economic policy center, said it would be “very troubling” if every layer of contracts and grants were not disclosed. Current guidance from the federal government seems to indicate that contracts and grants beyond initial allocations do not need to be disclosed, he said.
“If the government wants meaningful accountability, we must have transparency at every level,” he testified.
