Rural Economic Development
More Assurance Is Needed That Grant Funding Information Is Accurately Reported Gao ID: GAO-06-294 February 24, 2006GAO 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.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-294, Rural Economic Development: More Assurance Is Needed That Grant Funding Information Is Accurately Reported
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Report to Congressional Requesters:
February 2006:
Rural Economic Development:
More Assurance Is Needed That Grant Funding Information Is Accurately
Reported:
GAO-06-294:
GAO Highlights:
Highlights of GAO-06-294, a report to congressional requesters:
Why GAO Did This Study:
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.
What GAO Found:
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.
What GAO Recommends:
GAO recommends that the Office of Management and Budget (OMB) (1)
regularly reach out to individual agencies on Federal Assistance Award
Data System (FAADS) reporting requirements and on ways to improve the
quality of data provided to the U. S. Census Bureau (Census), (2) amend
its guidance to require agency officials to certify the accuracy and
completeness of their FAADS data reported to Census and (3) provide
support to Census with its work in notifying agencies not in compliance
with reporting requirements. OMB and the Department of Commerce
provided comments on a draft of this report and generally agreed with
the recommendations.
www.gao.gov/cgi-bin/getrpt?GAO-06-294.
To view the full product, including the scope and methodology, click on
the link above. To view the database on federal economic development
funding, click on the following link: http://www.gao.gov/cgi-
bin/getrpt?GAO-06-436sp. For more information, contact William B. Shear
at (202) 512-4325 or shearw@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Economic Development Programs Fund Activities Related to Job and
Business Creation, Infrastructure, and Markets:
We Identified Rural Areas Using a System Based on Population and
Commuting Patterns with Census Tracts:
The Amount of Economic Development Funding Rural Areas Received Varied
across Programs, Agencies, States, and Regions:
Data Submitted to Census Were Often Inaccurate and Incomplete:
Conclusions:
Recommendations:
Agency Comments and Our Evaluation:
Appendixes:
Appendix I: Scope and Methodology:
Appendix II: Funding Data for Selected Federal Programs That Fund
Economic Development Activities:
Appendix III: Comments from the Department of Commerce:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Classification Systems for Differentiating Urban and Rural
Areas:
Table 2: Program Funding Not Reported to Census by Agencies for Fiscal
Years 2002-2004 (in thousands):
Figures:
Figure 1: Rural and Urban Areas as Defined by Census:
Figure 2: Rural and Urban Areas as Defined by RUCA and Dominant RUCA
Codes:
Figure 3: Rural and Urban Areas as Defined by Rural-Urban Continuum
Codes:
Figure 4: Economic Development Funds by Agency, Including Pass-Through
Funding,(FY 2002-2004):
Figure 5: Economic Development Funds Tracked to Rural Areas (FY 2002-
2004):
Figure 6: Rural Share of Economic Development Assistance by State (FY
2002-2004):
Figure 7: Rural Economic Development Funding Per Capita, by State (FY
2002-2004):
Abbreviations:
Census: U.S. Census Bureau:
CFDA: Catalog of Federal Domestic Assistance:
CFFR: Consolidated Federal Funds Report:
DOD: Department of Defense:
DOL: Department of Labor:
DOT: Department of Transportation:
ERS: Economic Research Service:
HHS: Department of Health and Human Services:
FAADS: Federal Assistance Award Data System:
HUD: Department of Housing and Urban Development:
Interior: Department of the Interior:
OMB: Office of Management and Budget:
RUCA: Rural-Urban Commuting Area:
USDA: U.S. Department of Agriculture:
Letter February 24, 2006:
The Honorable Norm Coleman:
The Honorable Mike Crapo:
United States Senate:
In response to a congressional request, we issued a report in 1989 that
sought to determine the portion of overall federal economic development
funding that was being directed to rural areas to ensure that rural
America is not left behind.[Footnote 1] Our 1989 report sought to
determine how much of $29 billion in economic development funding from
88 programs in 1987 had gone to rural counties. In that report, we
defined rural counties as those counties with urban populations of less
than 20,000 (based on the 1980 Census)--a definition that was widely
accepted at the time. We found that while about 16 percent of the
population lived in rural counties, those counties received about 17
percent of the funding for the programs for which we were able to
report data.
Since our report was issued, researchers have developed more exact
methods of differentiating flows of federal funds between rural and
urban areas. The new systems generally rely on census tracts, which are
far more numerous than counties, and use software programs to
"geocode," or track, federal funding to that level.[Footnote 2] Because
of these developments and ongoing concerns about the amounts rural
areas have been receiving compared with their urban counterparts, you
asked us to update our 1989 report and examine the share of economic
development funds that support rural areas today.
Examining this question requires defining and identifying what
constitutes an economic development program, defining what constitutes
a rural area, and obtaining and analyzing data on federal funding
provided to these programs. As we reported in 1989 and again in 2000,
there is a lack of agreement on the definition of "economic
development."[Footnote 3] As a result, we agreed to (1) develop a way
to identify federal economic development programs, (2) determine which
system of classifying geographical areas as rural or urban best suits
the purposes of this report, (3) use the economic development framework
and classification system to identify rural areas and report the amount
and share of economic development funding these areas have received,
and (4) examine issues related to reporting requirements for federal
agencies that disburse economic development funds.
We identified economic development programs using the same list of
economic development activities that we used for our 2000 report,
supplemented by activities we identified through other research studies
and information provided by federal program officials and external
rural development groups.[Footnote 4] Using this list as our criteria,
we identified about 135 programs from the Catalog of Federal Domestic
Assistance (CFDA) that appeared to fit our framework.[Footnote 5] We
discussed these programs and our reasons for choosing them with the
administering federal agencies, regional commissions, and regional
authorities. Based on those discussions and a more detailed review of
the programs, we modified our framework somewhat and reduced the number
of programs to 86. We then attempted to obtain obligation data for each
of the programs from the Federal Assistance Award Data System (FAADS),
which is maintained by the U.S. Census Bureau (Census) for the Office
of Management and Budget (OMB) and used to prepare the annual
Consolidated Federal Funds Report (CFFR).[Footnote 6] If we found that
agencies were reporting inaccurate or incomplete data to FAADS, in most
cases we obtained the corrected data directly from the federal agencies
and regional commissions and authorities. Following a recommendation we
made in 2004 on defining rural areas, we used a classification system
that is based on characteristics at the census tract level and geocoded
the data to differentiate between rural and urban areas.[Footnote 7] We
compared our findings using both this new system and the system that we
used in our 1989 report. Appendix I contains a full description of our
scope and methodology.
We conducted our review from January 2005 through December 2005 in
accordance with generally accepted government auditing standards.
Results in Brief:
Because federal agencies do not have a standard definition of what
constitutes economic development, we used a list of activities as
criteria for identifying economic development programs that are
generally accepted as being directly related to economic development by
federal agencies and external rural development groups. Our list
includes economic development activities we developed in our 2000
report on economic development issues and others we chose specifically
for this report. These activities range from constructing and repairing
roads, airports, and water systems to establishing business incubators
and developing and improving tourist areas. In general, we included
activities that provide direct assistance, primarily through job
creation or retention, rather than activities that relate directly to
individual quality-of-life issues, such as housing, education, and
health care.
We determined that, for purposes of this report, the best system for
differentiating rural from urban areas would be based on census tracts
rather than on counties. Because the number of census tracts in the
nation (about 62,000) is so much larger than the number of counties
(about 3,000), classification systems based on census measures offer a
more precise means of identifying rural areas than the older county-
based systems. Further, such a system would allow us to track federal
funding to the subcounty level. However, because data limitations meant
that we could track only about 50 percent of the funding to the
subcounty level, we chose to use a system developed in 2001 that uses
the population and commuting patterns of census tracts to classify
counties as rural or urban. With this system, we found that 19 percent
of the U.S. population resided in rural areas--a figure comparable to
the 20 percent figure cited in the 2000 Census. For purposes of
comparison, we also analyzed the data using the classification system
from our 1989 report.
The 86 economic development programs we identified provided about $200
billion in economic development funding for fiscal years 2002 through
2004 to the 50 states and Washington, D.C. Using our classification
system, we were able to track about $150 billion to the county level or
below. We found that the amount of funding rural areas received varied
by program, agency, state, and region. For example, when we analyzed
the funding by the agency providing it, we found that the amounts
provided to rural areas ranged from about 7 percent for the Department
of Labor (DOL) to more than 60 percent for the Appalachian Regional
Commission. On a state-by-state basis, the percentages varied somewhat,
but rural areas received a greater share of the economic development
funding per capita than urban areas in most of the states. Detailed
information about the share of federal economic development funding by
program, agency, state, and county can be viewed at
http://www.gao.gov/cgi-bin/getrpt?GAO-06-436sp.
In developing the funding information, we identified significant
problems with agencies' reporting of their program obligation data to
FAADS. For example, 44 of the 86 economic development programs we
analyzed either did not report any funding data or reported incomplete
or inaccurate data to FAADS during all or part of fiscal years 2002,
2003, and 2004. As a result, the obligations reported by these agencies
for the 86 programs were off by more than $11 billion during this
time.[Footnote 8] Some 19 programs (22 percent) provided no information
on obligations of about $4.5 billion. Another 25 programs reported to
FAADS amounts that varied significantly from the programs' annual
obligations, and some programs had always reported expenditure data
rather than obligation data, resulting in differences of millions of
dollars. After working with agency officials to find the reasons behind
the missing or incorrect data, we received corrected data from seven
agencies and three regional commissions, and determined that these data
were sufficiently reliable for our analysis. Although the quarterly
FAADS reporting requirement has been in place since 1982, several
factors have affected compliance with it, including Census' inability
to assure that agencies were submitting the data, a lack of knowledge
among program officials about the reporting requirements, and poor
oversight and coordination at the agencies. After we discussed the
problems with Census, they and OMB began jointly meeting with the
agencies to improve reporting compliance for all federal programs.
To help ensure that Census receives accurate funding information from
federal agencies, this report makes recommendations to OMB for
improving its oversight of compliance with FAADS reporting
requirements.
Background:
According to the National Academy of Public Administration, federal
participation in economic development evolved during the 20th century.
Economic development programs implemented during the 1930s
characteristically involved direct federal action, bypassing state and
local governments. During the 1940s and 1950s, these programs were
intended to improve housing and commercial districts in central cities.
In the 1960s, the federal government created programs to provide
economic development assistance to economically distressed areas. These
programs were expanded in the 1980s and 1990s to utilize new
technologies to create new transit systems, clean up hazardous waste
sites, and carry out other economic development activities in urban and
rural areas.[Footnote 9] Most recently, economic development
initiatives have included the revitalization of disaster areas,
including lower Manhattan after the September 11, 2001, terrorist
attacks and the Gulf Coast after the 2005 hurricane season.
A variety of federal programs and federally funded regional commissions
and authorities have helped advance economic development in communities
throughout the United States, including many communities that are
considered rural. Most of the nationwide programs do not have specific
rural economic development objectives, but the regional commissions and
authorities target economic rural areas specifically. For this reason,
a narrow definition of economic development programs that only included
those focusing exclusively on rural areas would include few programs
and limited dollars.
The nationwide programs also do not have a standard definition of
economic development. Department of Commerce officials, for example,
consider economic development programs as those that save or create
jobs. U.S. Department of Agriculture (USDA) officials consider economic
development broadly as activities that increase economic opportunities
and improve residents' quality of life. Officials at other federal
agencies, including the Department of Defense (DOD), the Department of
Transportation (DOT), and the Department of Housing and Urban
Development (HUD), said that they did not have definitions of economic
development.
Like the concept of economic development, the notion of what
constitutes rural and urban areas has evolved over several decades,
partly in response to changes in residential and commuting patterns. As
the cities and suburbs have expanded and more remote areas have become
accessible, distinctions between rural and urban areas have blurred.
Federal agencies use different criteria as to what constitutes a rural
area. Depending on the agency and the program, the criterion most often
used to define rural areas is population, especially at USDA, which
uses varying thresholds ranging from 2,500 or less to 50,000. Some
agencies and programs that fund economic development activities do not
focus on serving rural or urban areas but instead provide competitive
or formula-based grants to eligible applicants from any
location.[Footnote 10]
FAADS is a centralized reporting system that OMB established in April
1980 to gather and disseminate information on the domestic financial
assistance provided by federal agencies. Authorized by the Consolidated
Federal Funds Report Act of 1982,[Footnote 11] FAADS is a quarterly
report of financial assistance awards made by each federal agency. OMB
has designated Census as its executive agent to manage and operate the
system, which the Congress and public officials use for policy and
trend analyses, revenue forecasting, oversight, and legislative
initiatives. Federal agencies and regional commissions and authorities
that administer financial assistance programs are required to report
quarterly to FAADS on the financial assistance awards they make.
Economic Development Programs Fund Activities Related to Job and
Business Creation, Infrastructure, and Markets:
Because federal agencies do not have a standard definition of what
constitutes economic development, we developed a list of activities
that were generally accepted as being directly related to economic
development. As agreed with your office, we based our framework on our
prior work, a review of other research studies, and discussions with
federal officials and rural development groups.[Footnote 12] We also
held discussions with the administering federal agencies, regional
commissions, and regional authorities to reach consensus on the
activities and programs we selected.
Our framework includes nine economic development activities:
* planning and developing strategies for job creation and retention;
* constructing and renovating commercial buildings;
* establishing business incubators (facilities to help small businesses
get started);
* constructing industrial parks;
* developing infrastructure by constructing and repairing roads, water
and sewer systems, and airports;
* supporting entrepreneurial activities;
* promoting the development of new markets for existing products;
* developing telecommunications and broadband infrastructure and
enabling technology transfer; and:
* developing and improving areas for tourism.
The first five activities listed above, with the exception of
developing airports, are from our 2000 report.[Footnote 13] That list
was developed based on a general consensus of officials from (1) the
Department of Commerce's Economic Development Administration, whose
mission is to help economically distressed areas, (2) other federal
agencies involved with economic development, and (3) several national
associations familiar with economic development. For this report, we
confirmed the 2000 list with officials from the same federal agencies
and organizations and also reached a general consensus on the four
additional items. In general, we focused on activities that directly
affected the overall development of an area, such as job creation,
rather than on activities that improved individuals' quality of life,
such as housing and education. However, we did include job training
that had a direct impact on economic development by, for example,
preparing employees for work in a specific industry or business in a
particular area.
We identified 86 federal programs at 10 federal agencies and 3 regional
commissions that included one or more of the activities in our economic
development framework. Many of these programs were not labeled as
economic development programs, but some of their activities suggested
that they supported this goal. For example:
* The goal of USDA's Empowerment Zone and Enterprise Community program
for rural areas is to stimulate the creation of new jobs, particularly
for the disadvantaged and long-term unemployed, and to revitalize
economically distressed rural areas.
* The Department of the Interior's (Interior) Bureau of Indian Affairs
Facilities Operations and Maintenance program provides funding for
basic services at noneducational facilities located on reservations.
* The Department of Commerce's Trade Adjustment Assistance program
provides assistance to firms and industries adversely affected by
increased imports.
* The Appalachian Regional Commission, which oversees the Appalachian
Development Highway System, aims to open up areas with development
potential where commerce and communication have been inhibited by lack
of adequate access.[Footnote 14]
The number of programs each agency and commission administered that met
one or more of the components of our economic development framework
varied from one at the Denali Commission--established in 1998 to
address the needs of rural Alaska--to 29 at USDA. We included only
economic development programs that received funding during our review
period (fiscal years 2002 to 2004). Thus, we did not include programs
such as DOD's base closing economic assistance programs because DOD
reported no obligations for these programs during those years. Appendix
II contains more detailed information on each of the 86 programs.
We Identified Rural Areas Using a System Based on Population and
Commuting Patterns with Census Tracts:
Since our 1989 report, which used county-level data to classify rural
and urban areas, a variety of more sophisticated classification systems
have been developed that use census tracts to differentiate between
rural areas and urban areas. These classification systems provide a
more precise way of differentiating between rural and urban areas than
county-based systems. Further, computer software programs can now
geocode federal funding data below the county level. Due to data
limitations that only allowed us to identify subcounty level recipients
for about half of the funding, we chose to use a system developed in
2001 which relies on both population and commuting patterns of census
tracts to classify each county as rural or urban based on the counties
dominant commuting patterns. Although this approach does not fully
resolve all the classification problems inherent in county-based
systems that are based on political boundaries rather than demographic
characteristics, it allowed us to geocode most of the data and was most
comparable to census population data.
We considered a number of county-based and subcounty systems for
analyzing the data (table 1).
Table 1: Classification Systems for Differentiating Urban and Rural
Areas:
Classification system: Rural-Urban Continuum Codes;
Developed by: USDA/Economic Research Service (ERS);
Geographic unit: County;
First developed: 1975.
Classification system: Urban Influence Codes;
Developed by: USDA/ERS;
Geographic unit: County;
First developed: 1993.
Classification system: 2000 Census-urbanized areas and urban clusters;
Developed by: Census;
Geographic unit: Census tracts;
First developed: 2001.
Classification system: Rural-Urban Commuting Area (RUCA);
Developed by: Office of Rural Health Policy, Department of Health and
Human Services (HHS) and USDA/ERS;
Geographic unit: Census tracts or zip codes;
First developed: Late 1990s.
Classification system: Dominant RUCA;
Developed by: Washington Office of Community and Rural Health;
Geographic unit: County based on dominant census tracts;
First developed: 2001.
Source: ERS, HHS, and the State of Washington's Office of Community and
Rural Health:
[End of table]
We found shortcomings with most of these systems. For example:
* Many studies that have evaluated the rural share of federal programs,
including our 1989 report, have used the rural-urban continuum codes
devised by the Economic Research Service (ERS) of the USDA.[Footnote
15] These codes distinguish counties by their degree of urbanization
and proximity to a metropolitan area or areas. While using rural-urban
continuum codes allows geocoding at the county level, the results are
often skewed, particularly in the western states, where counties often
are very large. For example, using this approach, more than 50 percent
of the nation's rural population would live in counties that would be
considered urban (based on the 2000 Census).
* Urban influence codes, which were developed by ERS in 1993 as a way
to measure rurality by quantifying the influence of urban areas on
rural areas, use only county-level data and are based solely on urban
factors. As a result, the classifications are heavily skewed toward
urban.
Beginning in the 1990s, ERS and other organizations have developed
subcounty classification systems that attempt to better capture
differences between rural and urban areas. These subcounty
classification systems include elements such as commuting zones and
labor market areas that are more precise than the county level systems
in order to capture the economic and social diversity of rural
areas.[Footnote 16] Some use census tracts (about 62,000) or other
geographic areas smaller than counties (about 3,000) that can better
reflect rural-urban differences.
Census's urbanized areas and urban cluster system defines rural areas
by exclusion--that is, it views as rural all areas that it has not
already identified as urban. Census defines urbanized areas as
continuously built up areas with a population of at least 50,000 and
compromising one or more places and adjacent densely settled areas.
Urban clusters are densely settled territories with at least 2,500 but
fewer than 50,000 people. Collectively, urbanized areas and urban
clusters are referred to as urban areas and essentially depict densely
settled territory as it may appear from the air (see fig. 1).
Figure 1: Rural and Urban Areas as Defined by Census:
[See PDF for image]
[End of figure]
On the basis of these definitions, data from the 2000 Census suggest
that 59 million Americans (20 percent of the population) reside in
rural areas. As we reported in our 2004 report, using urbanized areas
and urban clusters is an effective way to make consistent eligibility
determinations for individual rural economic development programs when
data is available at the census tract level.[Footnote 17] However, we
found that our ability to track funds to the local level varied
significantly across agencies. For example, while rural housing and
most other USDA program data could be geocoded to the local level, most
DOT spending could be tracked only to the counties. Thus, while
geocoding data using urbanized areas and urban clusters would
effectively show rural and urban differences, limitations with the data
would only allow us to geocode about half of the data under this
classification system.
Ultimately, we chose the dominant RUCA system, developed by the
Washington State Office of Community and Rural Health in 2001, because
it uses both census tracts and county codes to determine which areas
are rural. Using this system we were able to code 99 percent of the
economic development funding.[Footnote 18] The dominant RUCA system is
based on the 10-tiered subcounty RUCA system developed by ERS in
conjunction with the Department of Health and Human Services (HHS) in
the late 1990s. RUCA reflects both where people live and work by using
both population and commuting relationships to classify census tracts.
The dominant RUCA system classifies each county as rural or urban based
on the dominant commuting patterns.
Figure 2 shows a map of the rural and urban areas as defined by both
the census tracts on which the RUCA codes are based and by the dominant
RUCA system that we used due to the data limitations.
Figure 2: Rural and Urban Areas as Defined by RUCA and Dominant RUCA
Codes:
[See PDF for image]
[End of figure]
Although the census tract RUCA code map better reflects where people
live and work, using the dominant RUCA system we determined that 19
percent of the U.S. population resided in rural areas. This figure is
comparable to the 20 percent figure cited in the 2000 Census.
The rural-urban continuum classification system does not explicitly
define rural. However, the rural-urban continuum codes can be combined
to create rural and urban designations. (See fig. 3.)
Figure 3: Rural and Urban Areas as Defined by Rural-Urban Continuum
Codes:
[See PDF for image]
[End of figure]
For example, in our 1989 report we defined as rural any county whose
urban population was less than 20,000 people. Using this definition,
slightly more than 10 percent of the U.S. population resides in rural
areas, or only half the 20 percent rural figure cited in the 2000
Census.
The Amount of Economic Development Funding Rural Areas Received Varied
across Programs, Agencies, States, and Regions:
The 86 economic development programs we identified that met one or more
of the criteria from our list of economic development activities
provided about $200 billion in funding to the 50 states and Washington,
D.C. for fiscal years 2002 through 2004.[Footnote 19] We were able to
use geocoding to track about $150 billion of those dollars to the
county level or below. We could not track beyond the state level
another $50 billion that was passed through state capitals to county
and local jurisdictions because we could not identify final recipients.
If we had geocoded the funding for pass-through programs at the state
capitals, the share of spending associated with urban areas--where
state capitals are typically located--would have been overstated. For
the approximately $150 billion that we could geocode to the county
level or below, our analysis showed that during fiscal years 2002
through 2004, rural areas received more economic development program
assistance dollars per capita than their urban counterparts. The
overall shares of funding varied by the administering program and
agency, and by the state and region receiving the money, with rural
areas receiving a greater share of the funding in some cases and urban
areas in others.
When we analyzed economic development funding by program, we found wide
variations in the percentage of funding that went to rural areas. The
funding ranged from a high of 100 percent for the Interior's
Improvement and Repair of Indian Detention Facilities Program down to
about 1 percent for DOT's Transit Planning and Research Program and
HUD's Brownfields Economic Development Initiative. The programs with
the highest percentage of rural funding tended to be from USDA, whose
funding decisions are primarily based on specific definitions of rural,
and from Interior and the commissions and authorities whose programs
serve rural areas. In contrast, HUD, the Environmental Protection
Agency (EPA), and DOL were among the agencies with the lowest
percentage of funding reaching rural areas who also had significant
pass-through dollar amounts. Most program funding by these agencies to
eligible applicants is done using a formula or on a competitive basis
without differentiating between rural and urban areas.
USDA had the most programs providing economic development funding for
rural areas, but DOT provided the largest amount of economic
development funding overall (fig.4).[Footnote 20] DOT also accounted
for the largest overall amount of pass-through dollars ($37.9 billion),
but higher percentages of funds from EPA, DOL, and HUD were sent to
state capitals. We were unable to track 88 percent of EPA's funding, 79
percent of DOL's, or 75 percent of HUD's below the state level, and
excluded those dollars from our analysis. Examples of programs that we
could not track below the state level are DOL's Employment Service
program and EPA's capitalization grants for clean water and drinking
water.[Footnote 21]
Figure 4: Economic Development Funds by Agency, Including Pass-Through
Funding,(FY 2002-2004):
[See PDF for image]
[End of figure]
Figure 5 shows the approximately $150 billion in economic development
funding that we could track below the state level by agency under both
the dominant RUCA and rural-urban continuum models during fiscal years
2002-2004. Under both models, the amount of federal agency, regional
commission, or authority funding to rural areas varied widely. For
example, using the dominant RUCA model we found that the amounts
provided to rural areas ranged from 7 percent or less for the portion
of DOL and EPA funding we could track to about 58 percent for USDA and
77 percent for the Delta Regional Authority.
Figure 5: Economic Development Funds Tracked to Rural Areas (FY 2002-
2004):
[See PDF for image]
[End of figure]
The share of economic development funding that rural areas received
also varied by state. Under the dominant RUCA model, the shares varied
from 85 percent of the total funding in Wyoming to 3 percent in
Massachusetts. Figure 6 shows the percentage of economic development
funding in each state that went to rural areas.
Figure 6: Rural Share of Economic Development Assistance by State (FY
2002-2004):
[See PDF for image]
[End of figure]
The amounts also varied by region of the country. As shown in figure 7,
rural residents in the western states generally received more economic
development funding per capita than residents in the mid-Atlantic and
midwest states. For example, Alaska and North Dakota residents received
more than $1,200 a year during fiscal years 2002 through 2004, while
residents of all states east of the Mississippi River received $800 or
less per year during the same time period.
Figure 7: Rural Economic Development Funding Per Capita, by State (FY
2002-2004):
[See PDF for image]
[End of figure]
Detailed information on the share of federal economic development
funding that rural areas received, listed by program, agency, state,
and county under both the dominant RUCA and rural-urban continuum
classification systems, can be viewed at http://www.gao.gov/cgi-
bin/getrpt?GAO-06-436sp.
Data Submitted to Census Were Often Inaccurate and Incomplete:
OMB requires that all federal agencies submit financial assistance
award data to Census for their programs on a quarterly basis, but our
review showed that the data submitted were often inaccurate and that
some data were missing altogether. We worked with Census officials to
find the reasons for the incorrect and missing data, and ultimately we
received corrected information from seven agencies and three
commissions. With these corrections, we determined that the data were
sufficiently reliable for our analysis. The agencies involved took a
number of significant actions in order to provide corrected data for
the programs we reviewed, and these actions should improve FAADS
reporting in the future.
During our review, which covered fiscal years 2002 through 2004, we
looked at the quarterly files of standardized records that FAADS
maintains on financial assistance awards made by federal agencies. For
those programs for which information had been submitted to FAADS, we
checked the amounts against agency obligation data provided by the
agency or the CFDA record. When we found significant discrepancies, we
contacted the agencies to determine the reasons for these differences.
If the FAADS data were deemed incorrect, in most cases we obtained
corrected information from the agencies and replaced the FAADS
information with that data for our analysis. In cases where the
discrepancy could not be resolved, we used the agency obligations data
provided to us by the agency.
We found that for 44 of the 86 economic development programs included
in our analysis, the administering agencies either did not report any
funding data or reported incomplete or inaccurate data to FAADS during
all or part of fiscal years 2002 through 2004. Total obligations that
were reported to Census during those years for these programs were off
by more than $11 billion, including obligations of about $4.5 billion
for 19 programs (22 percent) that had not been reported at all, and a
total of about $7 billion for 25 programs that was either over-or
underreported. The programs we reviewed accounted for less than 10
percent of the federal programs that should be providing obligation
information to FAADS. Since the FAADS reporting requirements are the
same for all federal agencies and commissions that administer financial
assistance programs--not just those involved in economic development--
the amount of unreported and misreported funding is likely far greater
than the $11 billion we identified during our review.
Even though the FAADS reporting requirement has been in place since
1982, for the agencies we reviewed, several factors affected the extent
of compliance with the FAADS requirements. These factors included:
* a lack of controls and resources at Census to determine whether
agencies were actually submitting the data,
* a lack of knowledge among program officials about the FAADS reporting
requirements, and:
* poor oversight and coordination at the agencies responsible for
ensuring both compliance with the reporting requirement and the
accuracy of the data submitted.
A Census official noted that, over the years, Census has worked with
agencies to increase reporting compliance, but with limited success.
Because we identified so many programs for which data had not been
reported to FAADS, we worked with agency officials to identify the
agencies' reasons for not submitting the information. The agencies were
either unaware of the requirements, did not have computer databases
containing the necessary information, or were using expenditure instead
of obligation data. Several program officials subsequently instituted
corrective actions to improve FAADS reporting, and these improvements
should eventually be reflected in the annual CFFR.
Census Cannot Assure Compliance with FAADS Reporting Requirements:
Our review showed that Census could not ensure that federal agencies
were complying with the FAADS reporting requirements. According to our
Standards for Internal Control in the Federal Government and related
documents, an agency's system of internal control should include
appropriate measures that will ensure the validity, accuracy, and
completeness of the data in agency systems and capture erroneous data
that can then be reported, investigated, and promptly
corrected.[Footnote 22] However, according to a Census official, a lack
of resources had kept the bureau from establishing an effective system
to monitor whether agencies were submitting the required information.
Further, Census does not have an adequate process for determining
whether an agency has failed to report particular program data in a
given year.
Although Census prepares quarterly compliance reports showing whether
agencies are meeting their reporting requirements, the reports we
reviewed did not capture the extent of the misreporting we found. While
Census officials told us that they had attempted to "persuade" agencies
to submit data in the past, it became apparent from our findings that
the effect of these efforts had been limited. During the course of our
review, we talked with Census officials about the significant lack of
compliance with FAADS reporting requirements, and officials from Census
and OMB held several discussions about the problem. The culmination of
these discussions was a meeting held in April 2005 between OMB, Census,
and most of the agencies responsible for reporting information to
FAADS. The purpose of the meeting was to allow OMB and Census to
explain to the agencies the importance of submitting their obligation
information on all programs on a quarterly basis as required. In
addition, in June 2005, officials from the two agencies met with
representatives of HUD to emphasize the need for compliance and
accurate reporting, and in November 2005 Census and OMB held a second
multiagency meeting.
Even after this renewed emphasis on compliance and accurate reporting,
Census officials told us that some agencies had continued to submit
improper data that were not necessarily reliable, forcing Census to
devote staff resources to cleaning up the information. For example, the
officials said that even though they had frequently pointed out data
problems to HUD, the same errors kept occurring with each submission.
HUD officials told Census and OMB staff at a June 2005 meeting that
they would try to improve their reporting accuracy. According to a HUD
official, the agency was commended by OMB at the November 2005
multiagency meeting for reducing its error rate by half. However,
Census officials told us that while HUD's progress is commendable,
HUD's error rate remains higher than that of most agencies.
Federal Agency Staff Lacked Knowledge about FAADS Reporting
Requirements:
A number of federal program officials who had not submitted FAADS
information to Census were not aware that they were required to do so.
In fact, a number of federal agency and regional commission officials
told us that they had never heard of FAADS. As shown in table 2, CFDA
program funding not reported to Census for fiscal years 2002, 2003, or
2004, accounted for about $4.5 billion.
Table 2: Program Funding Not Reported to Census by Agencies for Fiscal
Years 2002-2004 (in thousands)A:
CFDA program number: 10.353; CFDA program name: National Rural
Development Partnership;
Agency: USDA;
FY 2002: $2,283;
FY 2003: $2,802;
FY 2004: $2,664;
Total: $7,749.
CFDA program number: 10.665;
CFDA program name: Schools and Roads/Grants to States;
Agency: USDA;
FY 2002: $357,009;
FY 2003: $713,639;
FY 2004: $739,998;
Total: $1,810,646.
CFDA program number: 10.666;
CFDA program name: Schools and Roads/Grants to Counties;
Agency: USDA;
FY 2002: $4,905;
FY 2003: $4,956;
FY 2004: $6,834;
Total: $16,694.
CFDA program number: 10.673;
CFDA program name: Wood In Transportation;
Agency: USDA;
FY 2002: $0;
FY 2003: $0;
FY 2004: $392;
Total: $392.
CFDA program number: 10.674;
CFDA program name: Forest Products Lab: Technology Marketing Unit;
Agency: USDA;
FY 2002: $0;
FY 2003: $548;
FY 2004: $0;
Total: $548.
CFDA program number: 10.855;
CFDA program name: Distance Learning and Telemedicine Loans and Grants;
Agency: USDA;
FY 2002: $118,707;
FY 2003: $138,815;
FY 2004: $685,905;
Total: $943,427.
CFDA program number: 10.859;
CFDA program name: Assistance to High Energy Cost/Rural Communities;
Agency: USDA;
FY 2002: $0;
FY 2003: $18,500;
FY 2004: $31,104;
Total: $49,604.
CFDA program number: 12.002;
CFDA program name: Procurement Technical Assistance For Business Firms;
Agency: DOD;
FY 2002: $17,410;
FY 2003: $22,324;
FY 2004: $13,220;
Total: $52,954.
CFDA program number: 14.246;
CFDA program name: Community Development Block Grants Brownfields
Economic Development Initiative;
Agency: HUD;
FY 2002: $25,314;
FY 2003: $0;
FY 2004: $0;
Total: $25,314.
CFDA program number: 14.248;
CFDA program name: Community Development Block Grants (CDBG)/Section
108 Loan Guarantees;
Agency: HUD;
FY 2002: $310,974;
FY 2003: $333,683;
FY 2004: $289,082;
Total: $933,739.
CFDA program number: 14.250;
CFDA program name: Rural Housing and Economic Development;
Agency: HUD;
FY 2002: $25,000;
FY 2003: $0;
FY 2004: $0;
Total: $25,000.
CFDA program number: 15.048;
CFDA program name: Bureau of Indian Affairs Facilities/Operations and
Maintenance;
Agency: Interior;
FY 2002: $56,773;
FY 2003: $44,664;
FY 2004: $35,400;
Total: $136,837.
CFDA program number: 15.063;
CFDA program name: Improvement and Repair of Indian Detention
Facilities;
Agency: Interior;
FY 2002: $0;
FY 2003: $0;
FY 2004: $569;
Total: $569.
CFDA program number: 15.124;
CFDA program name: Indian Loans/Economic Development;
Agency: Interior;
FY 2002: $4,500;
FY 2003: $4,717;
FY 2004: $3,143;
Total: $12,360.
CFDA program number: 20.907;
CFDA program name: Minority Institutions;
Agency: DOT;
FY 2002: $442;
FY 2003: $442;
FY 2004: $200;
Total: $1,084.
CFDA program number: 20.930;
CFDA program name: Payments For Small Community Air Service
Development;
Agency: DOT;
FY 2002: $20,000;
FY 2003: $19,863;
FY 2004: $21,803[B];
Total: $61,666.
CFDA program number: 90.100;
CFDA program name: Denali Commission;
Agency: Denali Commission;
FY 2002: $91,594;
FY 2003: $93,961;
FY 2004: $120,074;
Total: $305,630.
CFDA program number: 90.201;
CFDA program name: Delta Area Economic Development;
Agency: Delta Regional Authority;
FY 2002: $26,570;
FY 2003: $7,203;
FY 2004: $3,595;
Total: $37,368.
CFDA program number: 93.768;
CFDA program name: Medicaid Infrastructure Grants to Support the
Competitive Employment of People With Disabilities;
Agency: HHS;
FY 2002: $21,228;
FY 2003: $19,727;
FY 2004: $17,945;
Total: $58,900.
CFDA program number: Total;
FY 2002: $1,082,709;
FY 2003: $1,425,844;
FY 2004: $1,971,928;
Total: $4,480,481.
Source: GAO analysis of agency data.
[A] Possible minor differences between actual funding and the amounts
and the totals in the schedule are due to rounding:
[B] This amount includes $1,929,901 that was reallocated from fiscal
years 2002 and 2003:
[End of table]
In the following examples of nonreporting that we found during our
review, the agency officials involved were not familiar with FAADS:
* Staff at two of the three regional commissions and authorities we
included in our analysis had never heard of FAADS or the CFFR and were
not aware of the reporting requirements. We provided information to
these officials about FAADS and the Census's involvement in collecting
the data. Between the two organizations, more than $340 million had not
been reported to FAADS during our 3-year review period. As a result of
our discussions about FAADS, officials at both commissions said that
they would contact Census and begin reporting the information.
* Two different HUD program officials noted that they were not familiar
with FAADS or the requirements to submit quarterly data. As a result,
for fiscal year 2002 more than $50 million dollars in funding provided
by the Brownfields Economic Development Initiative and the Rural
Housing and Economic Development program was not reported to FAADS.
* A DOD program official was not familiar with FAADS and was only
vaguely familiar with his program's CFDA number. As a result, $53
million in program obligations was not reported in fiscal years 2002
through 2004. Initially, the FAADS data we received directly from DOD
indicated that the program had received no funding for the 3 years we
included in our review. However, subsequent discussions with the DOD
official revealed that this particular program had about $53 million in
obligations for fiscal years 2002 through 2004 that was not reported to
FAADS and reflected in the CFFR.
A Lack of Oversight and Coordination at Federal Agencies Caused
Inaccurate Reporting to FAADS:
While other program managers were aware of the FAADS reporting
requirements, the information they submitted to Census was either
incomplete or inaccurate, resulting in the misreporting of another
approximately about $7 billion dollars from various agencies during
fiscal years 2002 through 2004. Several factors affected the quality of
the reporting. First, in some cases data from several programs were
combined. Second, program officials sometimes did not capture all the
necessary information. And finally, agencies lacked the controls needed
to ensure that all of the programs and the correct data were submitted,
resulting in significant over-and underreporting of obligations.
The following examples show some of the different scenarios that
affected the completeness and accuracy of agencies' submissions to
FAADS:
* Although the Appalachian Regional Commission had four separate CFDA
program numbers, for many years the agency had submitted all of its
information under one program. As a result, three CFDA program accounts
showed no funding, even though each represented a distinct program. We
also determined that the amount of funding data submitted to FAADS
appeared to be more than $30 million higher than the Appalachian
Regional Commission's annual appropriation in fiscal year 2002 and more
than $4 million higher than the Commission's fiscal year 2003
appropriation. The Appalachian Regional Commission subsequently
determined that it had counted a portion of its FAADS submission twice
and agreed to submit revised data that would reapportion its data
correctly among the four CFDA program accounts and correct for the over-
counting. These changes should lower its fiscal year 2002 total by more
than $31 million, and its fiscal year 2003 total by $4.5 million. Also,
the Appalachian Regional Commission told us that it has instituted
internal controls to prevent duplicate submissions to FAADS and to
prevent the reporting of all investments under one CFDA number.
* Interior had not updated its "cross-walk" of internal data codes that
is intended to keep current with changes in the CFDA. As a result,
Interior had underreported its FAADS data by nearly $56 million for
fiscal years 2002 and 2003. The staff member in charge of reporting to
FAADS told us that he had learned that some of his data codes were out
of date only after we questioned some inaccuracies in the data.
Interior has since rerun its data with the new codes and planned to
resubmit corrected information to Census for fiscal year 2004.
* Also, Interior's Outdoor Recreation, Acquisition, Development and
Planning program reported to FAADS obligations amounting to about $64
million. Data we subsequently obtained from the agency showed
obligations totaling more than $290 million. An agency official
explained that until recently, there had been no monitoring of the
information submitted to FAADS.
* HUD has consistently submitted to FAADS expenditure rather than
obligation data.[Footnote 23] When questioned about this practice, a
HUD official told us that the agency's systems were set up to capture
expenditure data. We found significant differences between expenditures
and obligations in the funding information for two of the six HUD
programs we evaluated. HUD met with Census and OMB in June 2005 about
the issue and was considering ways to change its system to supply the
required obligations data. Subsequently, another HUD official told us
that a new system that would collect and report program obligation data
rather than expenditure data to Census would be operational some time
during 2006.
* We questioned a FAADS submission by HHS for the department's Native
American programs for fiscal year 2002 because the more than $82
million in obligations reported for that year totaled more than three
times the $26.2 million budget for this program. For fiscal year 2003,
the $37 million reported to FAADS was about $16 million more than the
$20.8 million actual obligation amount provided to us by HHS. For
fiscal year 2004, the $37 million reported to FAADS was about $13
million more than the $23.9 million reported to us by HHS. An HHS
official said that she could not explain the discrepancies.
* For HHS's Health Care and Other Facilities program, the FAADS
submission for Fiscal Year 2002 totaled $620 million--more than $300
million more than what HHS's internal system showed. An HHS official
agreed that the appropriate figure for the year was about $314 million
and said that HHS planned to review its data system to correct the
discrepancy.
* We also questioned the figure of $1.3 billion that HHS reported for
its Community Services Block Grant Discretionary Awards program for
fiscal year 2002, because the department's internal grant-tracking
system showed a figure of about $55 million. After looking into the
discrepancy, an HHS official indicated that the department had for
several years mistakenly combined the Community Services Block Grant
program and the Discretionary Awards program under the Discretionary
Awards CFDA program number. However, the $1.3 billion total reported to
FAADS also appeared to be incorrect, as the total obligations for the
two programs combined in fiscal year 2002 was about $700 million--about
$600 million less than what was reported to Census. HHS has agreed to
correct the discrepancy, beginning with its fiscal year 2006
submission.
* The Small Business Administration (SBA) did not include in its FAADS
submission the funding for a special loan program under its Small
Business Loan program that was set up to assist the World Trade Center
area after the September 11, 2001, terrorist attacks. As a result, the
agency's obligations were underreported by about $828 million for
fiscal year 2003 and about $3.1 billion for fiscal year 2004. According
to an SBA official, the agency will review the data that it provides to
FAADS more closely in order to avoid such discrepancies in the future.
According to the Census official who oversees the FAADS program, most
of the agency staffs who submitted the data to Census had very little
involvement with program operations, adding that the individual program
managers who were most knowledgeable about the data's accuracy and
completeness generally did not get involved. OMB has required since
fiscal year 1982 that agency officials review and sign off on a
compliance form when submitting quarterly data. The form contains a
series of statements, including one that reads, "All agency financial
assistance award programs are covered in agency's FAADS sources."
However, the official we spoke with who oversaw the program and had
been involved with it since 1996 said that he had never seen a
compliance form accompanying a quarterly report. It appeared that
neither Census nor OMB was enforcing the requirement. Both Census and
OMB staff told us that OMB had previously considered amending its
guidance (Circular A-89) on reporting financial assistance data to
specifically require that each agency appoint an official responsible
for certifying that the FAADS data were accurately reported to Census.
However, at the time of our review, the guidance had not been amended.
Officials in a number of agencies commented about the lack of controls
for submissions of data to FAADS and told us that requiring data
certification would likely improve data quality. For example, one FAADS
coordinator noted that the agency had no internal control checks in
place to determine which programs should report cost information in any
particular quarter or whether program personnel were submitting the
required cost information. Other agency officials indicated that their
agencies had no controls over FAADS data, including having individuals
responsible for certifying that the data submitted was correct.
Finally, one USDA official noted that USDA had been recording some
FAADS information manually rather than through an electronic system but
added that the agency is expected to automate the data collection
system in 2006.
Conclusions:
The federal government funds a wide variety of programs that provide
rural areas with economic development money. These programs provide
assistance that directly supports communities' economic well-being
through such activities as creating and helping to retain jobs;
constructing and repairing roads, airports, and water systems;
establishing business incubators; and developing and improving tourist
areas. Exactly how much assistance rural areas receive from the various
economic development programs depends on how "rural" is defined, a
definition which is constantly changing as advances in transportation,
computer technology, and telecommunications--along with the spread of
suburbia--continue to blur many of the distinctions between rural and
urban life. We found that the amount of economic development funding
provided to rural areas varied widely by program, agency, state, and
region.
However, both the Congress and the public are at a disadvantage in
trying to assess the exact levels of funds rural areas receive because
agencies have not provided accurate funding data for economic
development programs. Our review showed that the data were often
inaccurate or had not been reported at all. As a result, the
information published by Census in reports issued to the Congress and
the general public for the programs we examined was off by billions of
dollars. We reviewed fewer than 10 percent of the programs that are
required by OMB to provide obligation information to Census. Because
the reporting requirements do not differ for the remaining 90 percent
or more of the programs that are required to report to FAADS, the
accuracy of the remaining program data are likely questionable. OMB has
recently begun to meet with agency officials to improve agency
reporting, and several agencies have agreed to implement changes that
should ensure more accurate and complete compliance. Such efforts
should improve the data submitted to FAADS. But the types of errors we
identified will persist unless OMB emphasizes the importance of
establishing improved controls at the agencies and at Census, including
requirements that agencies certify their FAADS submissions and that
Census notify agencies when significant errors occur.
Recommendations:
To better ensure that Census receives accurate funding information from
federal agencies, OMB should consider improving its oversight of
compliance with FAADS reporting requirements. We recommend that the
Director of the Office of Management and Budget:
* regularly reach out to individual agencies on FAADS reporting
requirements and on ways to improve the quality of the data provided to
Census, and:
* amend its guidance to require agency officials to certify the
accuracy and completeness of their FAADS data reported to Census, and:
* provide support to Census with its work in notifying agencies that do
not report or significantly misreport their FAADS data.
Agency Comments and Our Evaluation:
We provided Commerce and OMB with a draft of this report for review and
comment. The Deputy Secretary of Commerce provided written comments
that are provided in appendix III. OMB provided oral comments, stating
that it agreed that improvements are needed in the FAADS reporting
process. OMB officials said that they would continue to regularly reach
out to individual agencies on FAADS reporting requirements, and when
requested by Census, will provide support in notifying agencies that do
not report or significantly misreport their FAADS data. They also said
that they would discuss the need for having higher-level agency
officials certify FAADS data submitted to Census at their next
agencywide outreach meeting in April 2006.
The Deputy Secretary of Commerce wrote that the Census generally agrees
with the report's conclusions and recommendations and that the
difficulties GAO encountered with FAADS provide insights into the
breadth and depth of the complexities involved for its staff in
collecting, analyzing, and tabulating this large governmentwide data
set. He wrote that the department will work with OMB and the individual
reporting agencies to identify additional resources and streamlined
methodologies to make future data more complete and accurate.
The Census official who oversees FAADS provided us with oral comments
that expanded on the Deputy Secretary's comments, stating that he
agreed with the need for OMB to regularly outreach to individual
agencies and to require agency officials to certify the accuracy and
completeness of data reported to FAADS. He also agreed that there is a
need to identify and notify agencies that do not report or
significantly misreport their FAADS obligation data, and noted that his
office has been routinely reporting problems to agencies. However, he
said that his office needs more support from OMB to succeed in this
area. For example, he said that Census contacted 12 federal agencies in
mid-September 2005 informing them about significant data problems with
their fiscal year 2004 FAADS data submissions, including many of the
items we reported as missing in this report. However, he said that 7 of
the 12 agencies did not respond in any way as to how they planned to
correct the types of discrepancies in the future. In light of this new
information, we revised our recommendation to acknowledge that OMB
should provide additional support to Census in notifying agencies that
do not report or significantly misreport their FAADS obligation data.
In addition to the comments we obtained from OMB and Commerce, we also
obtained technical comments from most of the other agencies and
commissions included in our review. We incorporated the comments in the
report as appropriate.
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from its issuance date. At that time we will send copies of the report
to interested members of Congress and congressional committees. We will
also send copies of this report to the Secretary of the Department of
Commerce and the Director of the Office of Management and Budget and we
will make copies available to others upon request. In addition,
detailed information about the share of federal economic development
funding by program, agency, state, and county will be available at no
charge on the GAO website at http://www.gao.gov/cgi-bin/getrpt?GAO-06-
436sp.
If you or your staff have any questions concerning this report, please
contact me at (202) 512-4325 or at [Hyperlink, shearw@gao.gov]. Contact
points for our Offices of Congressional Relations and Public Affairs
may be found on the last page of this report. Key contributors to this
report are listed in Appendix IV.
Signed by:
William B. Shear:
Director, Financial Markets and Community Investment:
[End of section]
Appendixes:
Appendix I: Scope and Methodology:
To examine the share of federal economic development funds that support
rural areas today, we (1) developed a framework for identifying federal
economic development funding; (2) determined the most informative
classification system for differentiating between rural and urban
areas; (3) used the economic development framework and classification
system to identify rural areas and report the amount and share of
economic development funding these areas have received; and (4)
examined federal agencies' reporting of economic development funds. We
interviewed officials from the U.S. Departments of Agriculture (USDA),
Commerce (Commerce), Defense (DOD), Housing and Urban Development
(HUD), Labor (DOL), Health and Human Services (HHS), Interior
(Interior), and Transportation (DOT). We also interviewed officials
from the Small Business Administration (SBA), Environmental Protection
Agency (EPA), Appalachian Regional Commission, Denali Commission, and
Delta Regional Authority.
Because there is no commonly accepted definition of what constitutes
federal economic development, we developed a framework for discussing
economic development using our prior reports and research studies by
the National Council for Urban Economic Development, the Progressive
Policy Institute, the Cornell Community and Rural Development
Institute, and the Northeast-Midwest Institute's Center for Regional
Policy. We also used information provided by federal program officials
and external rural development groups, including the Aspen Institute
Community Strategies Group, the Sonoran Institute, the Southern Rural
Development Initiative, and the Progressive Policy Institute. We then
used the framework to define activities that were generally accepted as
being related to economic development and reviewed program descriptions
from the Catalog of Federal Domestic Assistance (CFDA) to assess which
programs fostered or assisted with economic development. We originally
identified about 135 programs and held discussions with the
administering agencies, regional commissions, and authorities on our
framework and the programs selected. Based on those discussions we
modified our framework and eliminated programs that did not meet the
modified framework. In some cases we obtained more detailed information
on programs beyond that in the CFDA program descriptions. We settled on
86 programs to include in our analysis.
In finalizing the framework, we focused on economic development
activities that directly affect the overall development of an area--
particularly saving or creating jobs--rather than on activities that
improve individuals' quality of life, such as housing or general
education. For example, we did include job training that had a direct
impact on economic development in an area by, for example, preparing
employees for a specific industry or business located in a particular
area. However, we did not include general educational programs, housing
loan programs, research and development programs, or other programs
that do not directly impact the economic development of an area.
To examine federal agencies' reporting of economic development funds,
we reviewed the extent to which agencies reported information to the
Federal Assistance Award Data System (FAADS) for the 86 programs we
selected for review during fiscal years 2002 through 2004. FAADS
produces a quarterly file of standardized records on financial
assistance awards made by federal agencies. Each transaction record
identifies, by CFDA program code number, the type and amount of
financial assistance, the type and location of the recipient, and the
geographic place of performance. We assessed the reliability of the
FAADS data by (1) performing electronic testing of the required data
elements for obvious errors in accuracy and completeness, (2) comparing
program totals by fiscal year to similar data from the Consolidated
Federal Funds Report (CFFR) database, (3) reviewing related
documentation, and (4) interviewing the Census Bureau official
knowledgeable about the data.
For those programs for which information had been submitted to FAADS,
we checked the amounts against agency obligation data provided by the
agency or the CFDA record. When there were significant discrepancies,
we contacted the agencies to determine the reasons for the
discrepancies. If the FAADS data were deemed incorrect, in most cases
we obtained the corrected information from the agencies and replaced
the FAADS information for our analysis. In cases where the discrepancy
could not be resolved, we used the agency obligations data provided to
us by the agency. Because HUD had submitted expenditure data instead of
obligation information as required by FAADS, we obtained obligation
information from HUD on each of the programs included in our analysis.
In addition to the more than 20 programs for which we identified
discrepancies, we also identified another 20 programs for which the
agencies had not submitted any information to FAADS for one or more of
fiscal years 2002 through 2004. For each of these programs, we
contacted agency staff to determine why no information had been
submitted to FAADS and what the obligation information amounts were for
each of the fiscal years. Also, because the FAADS data provides
detailed information on program recipients, such as zip codes, we
requested that each agency provide us with similar information on
program recipients so that we could geocode the information.
Once we created the final database of spending for the 86 programs, we
used the information in the file to identify the locality that received
the funds. However, for approximately 50 percent of the funding, we
could not identify a recipient below the county level. Based on this
finding and consultations with USDA's Economic Research Service, we
decided to analyze the dollars flowing to rural areas using the
dominant Rural-Urban Commuting Area (RUCA) approach. RUCA data is based
on census tracts, but the State of Washington's Office of Community and
Rural Health has developed a system to classify counties based on their
dominant RUCA code if census tract data is not available. In order to
produce county-level RUCA estimates, we applied this approach to the
entire country by assigning dominant RUCA categories to every county.
These analyses allowed us to classify every county as urban or rural.
Using the county-level RUCA file, we were able to assign a dominant
RUCA code to over 99 percent of the program dollars. We also classified
every county as urban or rural using ERS's rural-urban continuum
system, including those counties considered completely rural or that
contained urban populations of less than 20,000 as rural counties, and
other counties as urban counties.
Another data issue involved pass-through programs, or programs for
which the data showed the recipient to be the state government. For
most of these programs, state governments subsequently passed these
funds through to counties or local governments. However, we could not
identify the subsequent recipients. Using the CFDA program
descriptions, we determined that 12 of 86 programs appeared to meet
this criterion, along with the portion of the highway spending program
that went to state governments. For example, both DOT's Formula Grants
Program for Other than Urbanized Areas and HUD's Community Development
Block Grant/State's program showed no funding going to rural areas.
Both these programs pass through funding to rural areas, but the data
only coded the funding to the state capitals. If we had geocoded
funding for such pass-through programs, the share of spending
associated with urban areas, where state capitals are typically
located, would have been overstated. Excluding the pass-through funding
reduced the total spending we analyzed from about $200 billion to about
$150 billion.
Significant noncompliance by a number of agencies that had failed to
submit obligation information for one or more programs, restricted our
ability to use the CFFR database to identify how all economic
development program funds were dispersed. While the reliability of the
databases used by Census to prepare the CFFR has been tested, we did
not know the extent to which agency data we obtained and analyzed
directly from the agencies were reliable. As a result, we contacted
agency officials to determine the controls used to ensure that the data
they provided to us were reliable and accurate. Specifically, we
requested information concerning the accuracy and completeness of the
data, the use of the data in developing financial statements about the
programs, and any reviews or audits of the quality of the data. The
respondents indicated that the data were correct and told us why they
believed the information was accurate. In addition, we questioned
whether agency staff was aware of the FAADS reporting requirements and
in some cases requested data directly from agencies. While the data we
received directly from agencies were generally not as comprehensive as
the CFFR requires, we found that the information was sufficient for our
purposes.
We conducted our review from January 2005 through December 2005 in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Funding Data for Selected Federal Programs That Fund
Economic Development Activities:
The following table lists each agency program by CFDA number and
program objective, the source we used to obtain fiscal year 2002-2004
funding data, and whether or not missing or corrected data was obtained
from the agency.
USDA:
CFDA number: 10.064;
Agency program: Forestry Incentives;
Objectives: To bring private non-industrial forest land under
intensified management; to increase timber production; to assure
adequate supplies of timber; and to enhance other forest resources
through a combination of public and private investments on the most
productive sites on eligible individual or consolidated ownership of
efficient size and operation;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.212;
Agency program: Small Business Innovation Research;
Objectives: To stimulate technological innovation in the private
sector, strengthen the role of small businesses in meeting Federal
research and development needs, increase private sector
commercialization of innovations derived from USDA supported research
and development efforts, and foster and encourage participation, by
women-owned and socially disadvantaged small business firms in
technological innovation;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.353;
Agency program: National Rural Development Partnership;
Objectives: To improve the quality of life in rural America by
supporting and maintaining a network of State Rural Development
Councils that create and facilitate cross-program collaborations;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.411;
Agency program: Rural Housing Site Loans and Self-Help Housing Land
Development Loans;
Objectives: To assist public or private nonprofit organizations
interested in providing sites for housing; to acquire and develop land
in rural areas to be subdivided as adequate building sites and sold on
a cost-development basis to families eligible for low-and very-low-
income loans, cooperatives, and broadly based nonprofit rural rental
housing applicants;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.446;
Agency program: Rural Community Development Initiative;
Objectives: To develop the capacity and ability of private, nonprofit
community-based housing and community development organizations, and
low income rural communities to improve housing, community facilities,
community and economic development projects in rural areas;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.603;
Agency program: Emerging Markets;
Objectives: A foreign market access program that provides funding for
generic technical assistance activities which take place abroad.
The program provides cost-share assistance to small-and medium-sized
U.S. agriculture and agribusiness organizations that desire to promote,
enhance or expand the exports of U.S. agricultural commodities and
products into eligible low-and middle-income foreign countries;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.664;
Agency program: Cooperative Forestry Assistance;
Objectives: With respect to nonfederal forest and other rural lands, to
assist in the advancement of forest resources management; the
encouragement of the production of timber; the control of insects and
diseases affecting trees and forests; the control of rural fires; the
efficient utilization of wood and wood residues, including the
recycling of wood fiber; the improvement and maintenance of fish and
wildlife habitat; and the planning and conduct of urban and community
forestry programs;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.665;
Agency program: Schools and Roads/Grants to States;
Objectives: To share receipts from the national forests with the states
in which the national forests are located;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.666;
Agency program: Schools and Roads/Grants to Counties;
Objectives: To share receipts from national grasslands and land
utilization projects with the counties in which the national grasslands
and land utilization projects are located;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.670;
Agency program: National Forest/Dependent Rural Communities;
Objectives: Provide accelerated assistance to rural communities faced
with acute economic problems associated with federal, state, or private
sector resource management decisions and policies that are located in
or near a national forest and are economically dependent upon forest
resources. Aid is extended to these rural communities to help them
develop strategic action plans to diversify their economic base and to
improve the economic, social, and environmental well-being of rural
areas;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.672;
Agency program: Rural Development, Forestry, and Communities;
Objectives: To help rural areas analyze and assess forest resource
opportunities, maximize local economic potential through market
development and expansion, and diversify communities' economic base;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.673;
Agency program: Wood In Transportation;
Objectives: To provide funds, on a cost-share basis, for the
construction of demonstration modern timber bridges and modern timber
bridge technology transfer projects. Primary focus is to assist in the
development and commercialization of new technologies that incorporate
underutilize timber and related resources to the extent that is
economically feasible;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.674;
Agency program: Forest Products Lab: Technology Marketing Unit;
Objectives: To assist small forest products businesses, community
leaders, entrepreneurs, non-profits, and others turn small diameter and
underutilized wood species into marketable forest products, including
biomass energy. Programs may include: (1) technical assistance for
processing and manufacturing of small diameter or low value hardwoods
and softwoods; (2) prototype development of potential new products; (3)
demonstration projects that showcase innovative uses for small diameter
and low-value hardwoods and softwoods; (4)economic feasibility
assessments related to using small diameter and low-valued hardwoods
and softwoods; and (5) market assessments for using small diameter and
low-valued hardwoods and softwoods;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.760;
Agency program: Water and Waste Disposal Systems for Rural Communities;
Objectives: To provide basic human amenities, alleviate health hazards,
and promote the orderly growth of the rural areas of the nation by
meeting the need for new and improved rural water and waste disposal
facilities;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.763;
Agency program: Emergency Community Water Assistance Grants;
Objectives: Through the Emergency Community Water Assistance Grant
program, the Rural Utility Service (RUS) is authorized to help rural
residents who have experienced a significant decline in quantity or
quality of water to obtain adequate quantities of water that meet the
standards of the Safe Drinking Water Act;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.766;
Agency program: Community Facilities Loans and Grants;
Objectives: To construct, enlarge, extend, or otherwise improve
community facilities providing essential services to rural residents;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.767;
Agency program: Intermediary Re-lending;
Objectives: To finance business facilities and community development;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.768;
Agency program: Business and Industry Loans;
Objectives: To assist public, private, or cooperative organizations
(profit or nonprofit), Indian tribes or individuals in rural areas to
obtain quality loans for the purpose of improving, developing or
financing business, industry, and employment and improving the economic
and environmental climate in rural communities including pollution
abatement and control;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.769;
Agency program: Rural Business Enterprise Grants;
Objectives: To facilitate the development of small and emerging private
business, industry, and related employment for improving the economy in
rural communities;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.770;
Agency program: Water and Waste Disposal Loans and Grants (Section
306C);
Objectives: To provide water and waste disposal facilities and services
to low-income rural communities whose residents face significant health
risks;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.771;
Agency program: Rural Cooperative Development Grants;
Objectives: To establish and operate centers for rural cooperative
development to improve economic conditions in rural areas by promoting
the development of new cooperatives and/or the improvement of existing
cooperatives;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.772;
Agency program: Empowerment Zones;
Objectives: To provide for the establishment of empowerment zones and
enterprise communities in rural areas to stimulate the creation of new
jobs, particularly for the disadvantaged and long-term unemployed, and
to promote the revitalization of economically distressed areas;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.773;
Agency program: Rural Business Opportunity Grants;
Objectives: To promote sustainable economic development in rural
communities with exceptional needs;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.850;
Agency program: Rural Electrification Loans and Loan Guarantees;
Objectives: To assure that people in eligible rural areas have access
to electric services comparable in reliability and quality to the rest
of the nation;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.851;
Agency program: Rural Telephone Loans and Loan Guarantees;
Objectives: To assure that people in eligible rural areas have access
to telecommunications services comparable in reliability and quality to
the rest of the nation;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.852;
Agency program: Rural Telephone Bank Loans;
Objectives: To provide supplemental financing to extend and improve
telecommunications services in rural areas;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.854;
Agency program: Rural Economic Development Loans and Grants;
Objectives: To promote rural economic development and job creation
projects, including funding for project feasibility studies, start-up
costs, incubator projects, and other reasonable expenses for the
purpose of fostering rural development;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 10.855;
Agency program: Distance Learning and Telemedicine Loans and Grants;
Objectives: To encourage and improve the use of telemedicine,
telecommunications, computer networks, and related advanced
technologies to provide educational and medical benefits through
distance learning and telemedicine projects to people living in rural
areas and to improve rural opportunities;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 10.859;
Agency program: Assistance to High Energy Cost/Rural Communities;
Objectives: To provide assistance to rural communities with extremely
high energy costs;
Source of funding data: Agency;
Provided missing or corrected data.
Department of Commerce:
CFDA number: 11.300;
Agency program: Grants for Public Works and Economic Development
Facilities;
Objectives: To promote long-term economic development in areas
experiencing substantial economic distress and investments to support
the construction of rehabilitation of essential public infrastructure
and develop facilities necessary to generate high-skill, higher-wage
jobs and private investment;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 11.302;
Agency program: Economic Development/Support for Planning
Organizations;
Objectives: To help states, sub-state planning units, Indian Tribes,
and/or local governments strengthen economic development planning
capability and formulate and establish comprehensive economic
development, process and strategies designed to reduce unemployment and
increase incomes;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 11.303;
Agency program: Economic Development/Technical Assistance;
Objectives: To promote economic development and alleviate
underemployment and unemployment in distressed areas by (1) enlisting
the resources of designated university centers in promoting economic
development, (2) supporting innovative economic development projects,
(3) disseminating information and studies of economic development
issues of national significance, and (4) financing feasibility studies
and other projects leading to local economic development;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 11.307;
Agency program: Economic Adjustment Assistance;
Objectives: To assist state and local interests design and implement
strategies to adjust or bring about change to an economy. Program
focuses on areas that have experienced or are under threat of serious
structural damage to the underlying economic base. Such economic change
may occur suddenly or over time, and generally results from industrial
or corporate restructuring, new federal laws or requirements, reduction
in defense expenditures, depletion of natural resources, or natural
disaster. Aids the long-range economic development of areas with severe
unemployment and low-family-income problems; aids in the development of
public facilities and private enterprises to help create new, permanent
jobs;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 11.313;
Agency program: Trade Adjustment Assistance;
Objectives: To provide trade adjustment assistance for firms and
industries adversely affected by increased imports;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 11.611;
Agency program: Manufacturing Extension Partnership;
Objectives: To establish, maintain, and support manufacturing extension
centers and services that improve the competitiveness of firms by
accelerating the usage of appropriate manufacturing technology by
smaller U.S.-based manufacturing companies. To also partner with states
to develop such technical assistance programs and services;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 11.617;
Agency program: Congressionally-Identified Projects;
Objectives: To assist various organizations identified by Congress to
achieve objectives specified by Congress;
Source of funding data: CFFR;
Met Census reporting requirements.
Department of Defense:
CFDA number: 12.002;
Agency program: Procurement Technical Assistance For Business Firms;
Objectives: To increase assistance by the DOD for eligible entities by
furnishing Procurement Technical Assistance to business entities, and
to assist eligible entities in the payment of the costs of establishing
and carrying out new programs and maintaining existing programs;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 12.607;
Agency program: Community Economic Adjustment Planning Assistance;
Objectives: To assist local governments or states, on behalf of local
governments, to undertake community economic adjustment-planning
activities to respond to military base closures and realignments;
Source of funding data: Agency;
Provided missing or corrected data.
Department Housing and Urban Development:
CFDA number: 14.219;
Agency program: Community Development Block Grants/Small Cities;
Objectives: To develop viable urban communities by providing decent
housing; a suitable living environment; and expanding economic
opportunities, principally for persons of low and moderate income;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 14.228;
Agency program: Community Development Block Grants/State's;
Objectives: To develop viable urban communities by providing decent
housing; a suitable living environment and expanding economic
opportunities, principally for persons of low and moderate income;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 14.244;
Agency program: Empowerment Zones;
Objectives: To provide for the establishment of Empowerment Zones,
Enterprise Communities and Renewal Communities in urban and rural
areas, to stimulate the creation of new jobs empowering low- income
persons and families receiving public assistance to become economically
self-sufficient, particularly for the disadvantaged and long-term
unemployed and to promote revitalization of economically distressed
areas;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 14.246;
Agency program: Community Development Block Grants/Brownfields Economic
Development Initiative;
Objectives: To return brownfields to productive use by assisting public
entities eligible under the Section 108 Loan Guarantees program to
carry out qualified economic development projects. Grant assistance
must enhance the security of loans guaranteed under the Section 108
program or improve the viability of projects financed with loans
guaranteed under the Section 108 program;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 14.248;
Agency program: Community Development Block Grants/Section 108 Loan
Guarantees;
Objectives: To provide communities with a source of financing for
economic development, housing rehabilitation, public facilities, and
large-scale physical development projects;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 14.250;
Agency program: Rural Housing and Economic Development;
Objectives: To expand the supply of affordable housing and access to
economic opportunities in rural areas;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 14.862;
Agency program: Indian Community Development Block Grant;
Objectives: To assist Indian tribes and Alaska Native villages in the
development of viable Indian communities;
Source of funding data: Agency;
Provided missing or corrected data.
Department of the Interior:
CFDA number: 15.033;
Agency program: Road Maintenance/Indian Roads;
Objectives: To provide limited routine maintenance on paved, gravel,
earth, and unimproved roads, bridges, and airstrips;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 15.038;
Agency program: Minerals and Mining on Indian Lands;
Objectives: To assist and support the inventory and prudent development
of energy and mineral resources on Indian lands;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 15.039;
Agency program: Fish, Wildlife, and Parks Programs on Indian Lands;
Objectives: To promote conserving, developing, and using fish,
wildlife, and recreational resources for the sustenance, cultural
enrichment, economic support, and maximum benefit of Indians;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 15.048;
Agency program: Bureau of Indian Affairs Facilities/Operations and
Maintenance;
Objectives: To provide funds for basic operating and maintenance
services of non-education facilities that are owned or operated by the
Bureau of Indian Affairs and located on reservations;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 15.063;
Agency program: Improvement and Repair of Indian Detention Facilities;
Objectives: To provide safe, functional, code-and-standards compliant,
economical, and energy- efficient adult and/or juvenile detention
facilities;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 15.124;
Agency program: Indian Loans/Economic Development;
Objectives: To assist federally recognized Indian tribal governments,
Native American organizations, and individual American Indians in
obtaining financing from private sources to promote business
development initiatives on or near federally recognized Indian
reservations;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 15.225;
Agency program: Recreation Resource Management;
Objectives: To manage recreational resource values on the public lands
administered by the Bureau of Land Management and to increase public
awareness and appreciation of those values;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 15.228;
Agency program: National Fire Plan - Wildland Urban Interface Community
Fire Assistance;
Objectives: To implement the National Fire Plan and assist communities
at risk from catastrophic wildland fires by providing assistance in the
following areas: provide community programs that develop local
capability including: assessment and planning, mitigation activities,
and community and homeowner education and action; plan and implement
hazardous fuels reduction activities on federal land or on adjacent
nonfederal land that mitigate the threat of catastrophic fire to
communities and natural resources in high risk area; enhance local and
small business employment opportunities for rural communities; enhance
the knowledge and fire protection capability of rural fire districts by
providing assistance in education and training, protective clothing and
equipment purchase, and mitigation methods on a cost -hare basis;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 15.916;
Agency program: Outdoor Recreation/Acquisition, Development, and
Planning;
Objectives: To provide financial assistance to the states and their
political subdivisions for the preparation of Statewide Comprehensive
Outdoor Recreation Plans and acquisition and development of outdoor
recreation areas and facilities for the general public, to meet current
and future needs;
Source of funding data: Agency;
Provided missing or corrected data.
Department of Labor:
CFDA number: 17.207;
Agency program: Employment Service;
Objectives: To assist persons to secure employment and labor market
information by providing a variety of job search assistance and labor
market information services without charge to job seekers and to
employers seeking qualified individuals to fill job openings;
Source of funding data: CFFR;
Met Census reporting requirements.
Department of Transportation:
CFDA number: 20.106;
Agency program: Airport Improvement;
Objectives: To assist sponsors, owners, or operators of public- use
airports in developing a nationwide system of airports adequate to meet
the needs of civil aeronautics;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.205;
Agency program: Highway Planning and Construction;
Objectives: To assist state transportation agencies in planning and
developing an integrated, interconnected transportation system by
constructing and rehabilitating the National Highway System, including
the Interstate System; and for transportation improvements to all
public roads except those functionally classified as local; to provide
aid for the repair of federal-aid roads following disasters; to foster
safe highway design; to replace or rehabilitate deficient or obsolete
bridges; and to provide for other special purposes;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 20.219;
Agency program: Recreational Trails;
Objectives: To provide funds to the States to develop and maintain
recreational trails and trail-related facilities for both non-
motorized and motorized recreational trail use;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.509;
Agency program: Formula Grants for Other than Urbanized Areas;
Objectives: To improve, initiate, or continue public transportation
service in non-urbanized areas and to provide technical assistance for
rural transportation providers;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.514;
Agency program: Transit Planning and Research;
Objectives: To foster innovation in public transit systems, through
local demonstrations of promising, but risky, new technologies and
service or operational concepts; to address economic and social issues
resulting from human impacts on the environment and develop risk
assessment methodologies, integrated assessments, and other analytical
tools for effective policy formulation; to develop practical know-how
for solving fundamental industry-wide problems, such as how to
accommodate the travel needs of persons with disabilities, how to
finance transit infrastructure construction, and how to meet the
requirements of the Clean Air Act; and to support developing
information and technical assistance to convey the results of research,
technology development, and innovative demonstrations for adaptation
and local implementation;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.516;
Agency program: Job Access/Reverse Commute;
Objectives: To provide competitive grants to local governments,
nonprofit organizations, and designated recipients of Federal transit
funding to develop transportation services to connect welfare
recipients and low-income persons to employment and support services.
Job Access grants will be for capital projects to finance operating
costs of equipment, facilities and associated support costs related to
providing access to jobs. The Reverse Commute grants will assist in
funding the costs associated with adding reverse commute bus, train,
carpool or service from urban areas, urbanized areas, and other than
urbanized areas to suburban work places;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.901;
Agency program: Payments for Essential Air Services;
Objectives: To assure that air transportation is provided to eligible
communities by subsidizing air carriers when necessary to provide
service;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.907;
Agency program: Minority Institutions;
Objectives: To increase the participation of minority institutions in
federally funded programs. Also, to use the resources of minority
institutions to develop training and technical assistance programs to
enhance small women-owned and disadvantaged business enterprises to
successfully compete for Department of Transportation contracts and
projects. The program is also geared to attracting young talent to
transportation-related careers;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 20.930;
Agency program: Payments For Small Community Air Service Development;
Objectives: To help smaller communities enhance air service and
increase access to the national transportation system;
Source of funding data: Agency;
Provided missing or corrected data.
Appalachian Regional Commission:
CFDA number: 23.002;
Agency program: Appalachian Area Development;
Objectives: To create opportunities for self- sustaining economic
development and improved quality of life in the Appalachian region;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 23.003;
Agency program: Appalachian Development Highway System;
Objectives: To provide a highway system which, in conjunction with
other federally-aided highways, will open up areas with development
potential within Appalachia where access to commerce and communication
have been inhibited;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 23.009;
Agency program: Appalachian Local Development District Assistance;
Objectives: To provide planning and development resources in multi-
county areas, to help develop the technical competence essential to
sound development assistance, and to meet the objectives stated under
the Appalachian Regional Development program;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 23.011;
Agency program: Appalachian State Research, Technical Assistance, and
Demonstration Projects;
Objectives: To assist the Appalachian Regional Commission in
accomplishing its objectives by expanding the knowledge of the region
through state- sponsored research;
Source of funding data: Agency;
Provided missing or corrected data.
Small Business Administration:
CFDA number: 59.007;
Agency program: 7(j) Technical Assistance;
Objectives: To provide business development assistance to socially and
economically disadvantaged businesses by contracting with qualified
service providers who have the capacity to provide business development
assistance to these businesses or individuals;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 59.011;
Agency program: Small Business Investment Companies;
Objectives: To establish privately owned and managed investment
companies to provide equity capital and long term loans to small
businesses, and to provide advisory services to small businesses;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 59.012;
Agency program: Small Business Loans;
Objectives: To provide guaranteed loans for small businesses that are
unable to obtain financing in the private credit marketplace but can
demonstrate an ability to repay loans;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 59.041;
Agency program: Certified Development Company Loans (504 Loans);
Objectives: To assist small businesses by providing long-term, fixed-
rate financing for fixed assets through the sale of debentures to
private investors;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 59.046;
Agency program: Microloan program;
Objectives: To assist women, low-income, and minority entrepreneurs,
business owners, and other individuals possessing the capability to
operate successful business concerns and to assist small businesses in
areas experiencing lack of credit due to economic downturns;
Source of funding data: CFFR;
Met Census reporting requirements.
Environmental Protection Agency:
CFDA number: 66.458;
Agency program: Capitalization Grants for Clean Water State Revolving
Funds;
Objectives: To create state revolving funds that will provide a long-
term source of financing for constructing wastewater treatment
facilities and implementing other water quality management activities;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 66.468;
Agency program: Capitalization Grants for Drinking Water State
Revolving Funds;
Objectives: To create state revolving funds that will provide a long-
term source of financing for the costs of infrastructure needed to
achieve or maintain compliance with requirements of the Safe Drinking
Water Act and to protect public health;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 66.814;
Agency program: Brownfields Training, Research, and Technical
Assistance Grants and Cooperative Agreements;
Objectives: To support Brownfields training, research, and technical
assistance related to the following categories: (1) community
involvement, (2) health impacts of Brownfields sites, (3) science and
technology relating to Brownfields assessment, remediation, and site
preparation, (4) integrated approaches to Brownfields cleanup and
redevelopment, (5) economics of Brownfields cleanup and redevelopment,
(6) results analysis, and (7) state, local and tribal government
Brownfields programs;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 66.815;
Agency program: Brownfields Job Training Cooperative Agreement;
Objectives: To provide training to facilitate assessment, remediation,
or preparation of Brownfield sites;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 66.817;
Agency program: State and Tribal Response Program Grants;
Objectives: To establish or enhance the capacity for state and tribal
response programs and to capitalize revolving loan funds and support
insurance mechanisms for Brownfields Cleanup;
Source of funding data: CFFR;
Met Census reporting requirements.
CFDA number: 66.818;
Agency program: Brownfields Assessment and cleanup Cooperative
Agreements;
Objectives: To provide funding: (1) to inventory, characterize, assess,
and conduct planning and community involvement related to Brownfield
sites; (2) to capitalize a revolving loan fund (RLF) and provide sub-
grants to carry out cleanup activities at Brownfield sites; and, (3) to
carry out cleanup activities at Brownfield sites that are owned by the
grant recipient;
Source of funding data: CFFR;
Met Census reporting requirements.
Denali Commission:
CFDA number: 90.100;
Agency program: Denali Commission;
Objectives: A Federal and State partnership designed to provide
critical utilities and infrastructure throughout Alaska, particularly
in distressed communities;
Source of funding data: Agency;
Provided missing or corrected data.
Delta Regional Authority:
CFDA number: 90.201;
Agency program: Delta Area Economic Development;
Objectives: To (1) develop the transportation infrastructure of the
region for the purpose of facilitating economic development in the
region, (2) assist the region in obtaining the job training, employment
related education, and business development (with an emphasis of
entrepreneurship) that are needed to build and maintain strong local
economies; (3) provide assistance to severely distressed and
underdeveloped areas that lack financial resources for improving basic
public services; and (4) provide assistance to severely distressed and
underdeveloped areas that lack financial resources for equipping
industrial parks and related facilities;
Source of funding data: Agency;
Provided missing or corrected data.
Department of Health and Human Services:
CFDA number: 93.570;
Agency program: Community Services Block Grant/Discretionary Awards;
Objectives: To support program activities of national or regional
significance to alleviate the causes of poverty in distressed
communities;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 93.593;
Agency program: Job Opportunities for Low-Income Individuals;
Objectives: To create new permanent employment opportunities for low-
income individuals using four project designs priority areas: (1)
expansion of existing businesses through technical and financial
assistance; (2) self-employment/microenterprise; (3) new business
ventures; and (4) non-traditional employment initiatives that lead to
economic self-sufficiency for eligible participants;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 93.612;
Agency program: Native American Programs;
Objectives: To provide financial assistance to Native American
community organizations to develop and implement social and economic
development strategies that promote self-sufficiency, improve social
and economic conditions, and increase the effectiveness of Tribes and
Native American Organizations in meeting social and economic goals;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 93.768;
Agency program: Medicaid Infrastructure Grants to Support the
Competitive Employment of People With Disabilities;
Objectives: To support State efforts to enhance employment options for
people with disabilities by building Medicaid infrastructure;
Source of funding data: Agency;
Provided missing or corrected data.
CFDA number: 93.887;
Agency program: Health Care and Other Facilities;
Objectives: To construct, renovate, expand, equip, or modernize health
care facilities and other health care related facilities;
Source of funding data: Agency.
Source: GAO and the Catalog of Federal Domestic Assistance:
[End of table]
[End of section]
Appendix III: Comments from the Department of Commerce:
THE DEPUTY SECRETARY OF COMMERCE:
Washington, D.C. 20230:
February 9, 2006:
Mr. William B. Shear:
Director, Financial Markets and Community Investment:
United States Government Accountability Office:
Washington, DC 20548:
Dear Mr. Shear:
Thank you for your letter regarding your draft report entitled Rural
Economic Development: More Assurance Is Needed That Grant Funding
Information Is Accurately Reported (GAO-06-294).
The U.S. Census Bureau has reviewed this report and generally agrees
with its conclusions and recommendations. The Government Accountability
Office (GAO) review encompassed less than one-quarter of the federal
agencies and less than 10 percent of the federal programs covered by
the Federal Assistance Award Data System (FAADS) and Consolidated
Federal Funds Report (CFFR). The difficulties GAO encountered provide
insights into the breadth and depth of the complexities involved for
our staff in collecting, analyzing, and tabulating this large Federal
Government-wide data set. We will continue to work with the Office of
Management and Budget, the program sponsor, and the FAADS/CFFR
reporting agencies to identify additional resources and streamlined
methodologies to make future data more complete and accurate.
If you have any further questions, please call me or Nat Wienecke,
Acting Assistant Secretary for Legislative and Intergovernmental
Affairs, at (202) 482-3663.
Sincerely,
Signed by:
David A. Sampson:
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
William B. Shear, (202) 512-4325, [Hyperlink, shearw@gao.gov]:
Staff Acknowledgments:
In addition to those named above, Andy Finkel, Assistant Director;
Emily Chalmers; Mark Egger; John McGrail; Rich LaMore; John Mingus;
Marc Molino; and Tom Taydus made key contributions to this report.
(250222):
FOOTNOTES
[1] GAO, Rural Development: Federal Programs That Focus on Rural
America and Its Economic Development (GAO/RCED-89-56BR, January 19,
1989)
[2] Geocoding is the process that assigns a latitude-longitude
coordinate to an address. Once a latitude-longitude coordinate is
assigned, the address can be displayed on a map or used in a spatial
search.
[3] GAO/RCED-89-56BR; Economic Development: Multiple Federal Programs
Fund Similar Economic Development Activities (GAO/RCED/GGD-00-220,
Sept. 29, 2000).
[4] GAO/RCED/GGD-00-220.
[5] The CFDA is a governmentwide compendium of federal programs and
activities that is coordinated by the OMB and compiled by the General
Services Administration. It contains both financial and nonfinancial
information about programs administered by federal departments and
agencies. As of September 2005, the catalog lists 1,622 programs that
are administered by 59 federal agencies. Unlike federal agencies, the
regional commissions and authorities were established to help
particular areas of the United States with unique infrastructure and
business development issues. For purposes of this report, we use the
term commissions to cover both commissions and authorities.
[6] Federal agencies are required to submit to FAADS quarterly records
on financial assistance awards, including obligations made to all types
of recipients for each of their programs.
[7] GAO, Rural Housing: Changing the Definition of Rural Could Improve
Eligibility Determinations (GAO-05-110, Dec. 3, 2004).
[8] Obligations reflect the amount of orders placed, contracts awarded,
services received and similar transactions during a given period that
will require payments during the same or future period.
[9] See National Academy of Public Administration A Path to Smarter
Economic Development: Reassessing the Federal Role (Washington, D.C.,
Nov. 1996).
[10] We did not evaluate whether or not agencies used specific rural
definitions in distributing program funds.
[11] Public Law 97-326.
[12] Among the research studies we examined were the following
GAO/RCED/GGD-00-220; National Council for Urban Economic Development,
What is Economic Development? A Primer, (Washington, D.C.: Jan. 1996);
Robert D. Atkinson, "Reversing Rural America's Economic Decline: The
Case for a National Balanced Growth Strategy," PPI Policy Report
(Washington, D.C.: Progressive Policy Institute, Feb. 2004); Robert
Rich, "The Cattaraugus Partnership---Solving the Economic Development
Puzzle," Innovations in Community and Rural Development (Ithaca, N.Y.:
Cornell Community and Rural Development Institute (Sept. 1991); Matt
Kane, "Public-Sector Economic Development: Concepts and Approaches,"
Northeast-Midwest Institute, The Center for Regional Policy
(Washington, D.C., Nov. 2004). See appendix I for additional details of
our methodology.
[13] GAO/RCED/GGD-00-220.
[14] Funding for the Appalachian Regional Commission's highway program
is provided through DOT's federal aid highway program and is included
under that program for our analysis.
[15] GAO/RCED-89-56BR.
[16] John B. Cromartie and Linda L. Swanson, "Census Tracts More
Precisely Define Rural Populations and Areas," Rural Development
Perspectives, vol. 11, no. 3 (Washington, D.C.: June 1996)
[17] GAO-05-110.
[18] Washington State Department of Health, "Guidelines for Using Rural-
Urban Classification Systems for Public Health Assessment," 2001.
[19] For a limited number of programs in our analysis, not all the
funding went directly for economic development activities. However, it
was not practical to evaluate every individual program grant to
determine whether all of the funding went to activities that met our
criteria for economic development.
[20] We included DOT's Highway Planning and Construction program
because it assists in developing infrastructure by constructing and
repairing roads, which is one of the elements included in the framework
we used to identify federal economic development programs. Based on our
definition of rural, this program provided over $18 billion directly to
rural areas during fiscal years 2002 through 2004.
[21] According to an EPA staff person, while EPA can not geocode grants
provided by the Clean Water State Revolving Fund down to the community
level, nearly $3 billion has been provided during fiscal years 2002
through 2004 to communities of fewer than 10,000 people.
[22] GAO, Standards for Internal Control in the Federal Government, GAO-
AIMD-00-21.3.1 (Washington, D.C.: Nov. 1999) provides guidance to
agencies to help them assess, evaluate, and implement effective
internal controls that can improve their operational processes; GAO,
Internal Control Management and Evaluation Tool, GAO-01-1008G
(Washington, D.C., Aug. 2001) helps agencies maintain or implement
effective internal controls and, when needed, helps them determine
what, where, and how improvements can be made.
[23] Obligations reflect the amounts of orders placed, contracts
awarded, services received and similar transactions during a given
period that will require payments during the same or future period.
Expenditures, or outlays, reflect the issuance of checks, disbursements
of cash, or electronic transfers of funds made to liquidate a federal
obligation.
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