Rural Development

Many of the 63 million people living in rural counties in the United States still lack access to clean drinking water and sanitary waste disposal facilities. Continuing a long-standing effort, the Agriculture Department's (USDA) Water and Waste Disposal Program funds water and sewer projects in rural communities. The program is now the major source of federal funds targeted to water and sewer projects in rural areas. In fiscal year 1994, USDA provided about $1.3 billion for the program. This report provides information on (1) funding levels for the program and the projects supported, (2) the formula that USDA uses to allocate loan and grant funds among its state offices, and (3) the approach that USDA state and district offices use to distribute funds within states.

GAO held that: (1) the USDA water and sewer program has provided loan and grant support totalling about $28 billion, supporting almost 17,000 projects, and assisting over 12,500 communities throughout the United States; (2) the three factors that USDA considers in its allocation formula for water and sewer funds are rural population, rural poverty, and rural unemployment; (3) no state may receive more than 5 percent of the total available funds in the initial allocation; (4) the allocation formula may partially reflect states' needs and ability to pay, but it does not reflect cost differences between states; and (5) although USDA state and district offices have considerable flexibility in determining the amount of grant assistance for individual projects under the current approach, this flexibility can result in differing funding decisions for similar communities.