Rural Economic Development:

More Assurance Is Needed That Grant Funding Information Is Accurately Reported

GAO-06-294: Published: Feb 24, 2006. Publicly Released: Mar 27, 2006.

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GAO was asked to update its 1989 report on the distribution of economic development funding using newer tools now available for measuring the distribution of federal funds to rural areas. GAO agreed to (1) identify federal economic development programs, (2) determine the best way to identify rural areas for this report, (3) determine the amount and share of economic development funding that rural areas receive, and (4) discuss the way federal agencies report data on economic development funding.

Based on prior GAO reports, other research studies, and information provided by federal program officials and external rural development groups, GAO developed a list of activities as criteria to identify economic development programs. This list included job creation, infrastructure development, and other activities that are generally acknowledged to directly affect overall economic growth. Using this list, GAO identified 86 federal programs in 10 federal agencies and 3 regional commissions and authorities that provide economic development funding. Because federal agencies use different criteria as to what constitutes rural, determining how much funding has targeted rural areas required determining which method of defining rural was the best for tracking funding. Classification systems that can track funding data at the census tract level or below can better differentiate between rural and urban areas because they better reflect the economic and social diversity than do county-based systems that are based on political boundaries. Because limitations in the data did not allow tracking all the funding data to local levels, GAO used a system that used population and commuting relationships to classify census tracts and then classify each county as rural or urban based on the county's dominant commuting pattern. The 86 programs in 2002-2004 provided approximately $200 billion in total economic development funding, about $150 billion of which could be tracked to the county level or below. However, the amount of funding provided to rural areas varied widely by program, agency, state, and region. These calculations were complicated by significant problems with the data from the programs that federal agencies were reporting to Census. Although all federal agencies are required to submit obligations data for their programs quarterly, 44 of the programs GAO analyzed did not report any data or reported incomplete or inaccurate data for all or part of fiscal years 2002, 2003, or 2004. As a result, the reported obligations were off by more than $11 billon. Further, some 19 programs provided no information on obligations of about $4.5 billion, and another 25 programs reported amounts that varied significantly from actual obligations. The FAADS reporting requirement has been in place since 1982. But a lack of knowledge among program officials about the requirement and poor oversight has affected compliance with it.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To better ensure that Census receives accurate funding information from federal agencies, OMB should consider improving its oversight of compliance with Federal Assistance Award Data System (FAADS) reporting requirements. The Director of the Office of Management and Budget should regularly reach out to individual agencies on FAADS reporting requirements and on ways to improve the quality of the data provided to Census.

    Agency Affected: Executive Office of the President: Office of Management and Budget

    Status: Closed - Implemented

    Comments: In May 2007,OMB reported that it had assessed program efforts to improve the accuracy and timeliness of data submitted to FAADS through assessing programs using the Program Assessment Rating Tool (PART)

    Recommendation: To better ensure that Census receives accurate funding information from federal agencies, OMB should consider improving its oversight of compliance with FAADS reporting requirements. The Director of the Office of Management and Budget should amend its guidance to require agency officials to certify the accuracy and completeness of their FAADS data reported to Census.

    Agency Affected: Executive Office of the President: Office of Management and Budget

    Status: Closed - Implemented

    Comments: On March 6, 2008, OMB published a memo to all federal agencies announcing the Federal Funding Accountabilty and Transparency Act Guidelines. The guidelines discuss the Federal Procurement Data System (FPDS) and the Federal Assistance Award Database (FAADS)systems and call on all federal agencies to redouble efforts to improve data quality, as much of the data submitted in the past has been incomplete, untimely, and inaccurate. The guidelines also call for agencies to ensure appropriate oversight is provided over the accuracy and timeliness of the process, and that submissions are validated by an appropriate official.

    Recommendation: To better ensure that Census receives accurate funding information from federal agencies, OMB should consider improving its oversight of compliance with FAADS reporting requirements. The Director of the Office of Management and Budget should provide support to Census with its work in notifying agencies that do not report or significantly misreport their FAADS data.

    Agency Affected: Executive Office of the President: Office of Management and Budget

    Status: Closed - Implemented

    Comments: OMB told us in May 2007 that it works closely with Census to follow up with agences that do not report on a timely basis or significantly misreports their FAADS data. For example, at Census request, OMB organized 2 meetings in 2005 to instruct agencies on their responsibility to submit FAADS data and to do a better job in reporting to FAADS. At those 2 meetings, OMB said it provided background information about why the data was so important, how it is used, what the CFDA number is all about, ,and discussed specific data elements that were problematic for the agencies (such as congressional districts).

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