prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 1.



Report 2: The Clean Water Act (CWA) authorizes the principal federal program to aid municipal wastewater treatment plant construction and related eligible activities  Congress established this program in the Federal Water Pollution Control Act Amendments of 1972 (P L  92-500) (although prior versions of the act had authorized less ambitious grants assistance since 1956)  Title II of P L  92-500 authorized grants to states for wastewater treatment plant construction under a program administered by the Environmental Protection Agency (EPA)  Federal funds were provided through annual appropriations under a state-by-state allocation formula contained in the act itself  States used their allotments to make grants to cities to build or upgrade wastewater treatment plants, supporting the overall objectives of the act: restoring and maintaining the chemical, physical, and biological integrity of the nation's waters  The federal share of project costs, originally 75% under P L  92-500, was reduced to 55% in 1981  By the mid-1980s, there was considerable policy debate between Congress and the Administration over the future of the act's construction grants program and, in particular, the appropriate federal role in funding municipal water infrastructure projects  Through FY1984, Congress had appropriated nearly $41 billion under this program, representing the largest nonmilitary public works programs since the Interstate Highway System  The grants program was a target of budget cuts in the Reagan Administration, which sought to redirect budgetary priorities in part to sort out the appropriate roles of federal, state, and local governments in a number of domestic policy areas, including water pollution control  The Administration's rationale included several points: The original intent of the program to address the backlog of sewage treatment needs had been virtually eliminated by the mid-1980s  Most remaining projects (such as small, rural systems) were believed to pose little environmental threat and were not appropriate federal responsibilities  State and local governments, in the Administration's view, were fully capable of running construction programs and have a clear responsibility to construct treatment capacity to meet environmental objectives that were primarily established by states  Thus, the Reagan Administration sought a phaseout of the act's construction grants program by 1990  Many states and localities supported the idea of phasing out the grants program, since many were critical of what they viewed as burdensome rules and regulations that accompanied the federal grant money  However, they sought a longer transition and ample flexibility to set up long-term financing to promote state and local self-sufficiency  Congress's response to this debate was contained in 1987 amendments to the act ( P L  100-4 , the Water Quality Act of 1987)  It authorized $18 billion over nine years for sewage treatment plant construction, through a combination of the Title II grants program and a new State Water Pollution Control Revolving Funds program—hereinafter the clean water state revolving fund (CWSRF) program  Under the new program, in CWA Title VI, federal grants would be provided as seed money for state-administered loans to build sewage treatment plants and, eventually, other water quality projects  Cities, in turn, would repay loans to the state, enabling a phaseout of federal involvement while the state built up a source of capital for future investments  Under the amendments, the CWSRF program was phased in beginning in FY1989 (in FY1989 and FY1990, appropriations were split equally between Title II and Title VI grants) and entirely replaced the previous Title II program in FY1991  The intention was that states would have flexibility to set priorities and administer funding, while federal aid would end after FY1994  The CWSRF authorizations for appropriations provided in the 1987 amendments expired in FY1994, but pressure to extend federal funding has continued, in part because, although Congress has appropriated $98 billion in CWA Title II and Title VI wastewater infrastructure assistance since 1972, funding needs remain high: According to the most recent formal estimate by EPA and states (prepared in 2016), an additional $271 billion nationwide is needed over the next 20 years for all types of projects eligible for funding under the act  Congress has continued to appropriate funds, and continued to assist states and localities in meeting wastewater infrastructure needs and complying with CWA requirements  In 1996, Congress established a parallel program under the Safe Drinking Water Act (SDWA) to help communities finance projects needed to comply with federal drinking water regulations  Funding support for drinking water occurred for several reasons  First, until the 1980s, the number of drinking water regulations was fairly small, and public water systems often did not need to make large investments in treatment technologies to meet those regulations  Second, good quality drinking water traditionally has been available to many communities at relatively low cost  By comparison, essentially all communities have had to construct or upgrade sewage treatment facilities to meet the requirements of the CWA  Over time, drinking water circumstances changed, as communities grew, and commercial, industrial, agricultural, and residential land-uses became more concentrated, thus resulting in more contaminants reaching drinking water sources  Moreover, as the number of federal drinking water standards has increased, many communities have found that their water may not be as good as once thought and that additional treatment technologies are required to meet the new standards and protect public health  Between 1986 and 1996, for example, the number of regulated drinking water contaminants grew from 23 to 83, and EPA and the states expressed concern that many of the nation's 52,000 small community water systems were likely to lack the financial capacity to meet the rising costs of SDWA compliance  According to the most recent EPA-state survey (issued in 2018), future funding needs for projects to treat and deliver public drinking water supplies in the United States are $473 billion over the next 20 years  Congress responded to these concerns by enacting the 1996 SDWA Amendments ( P L  104-182 ), which authorized a drinking water state revolving loan fund (DWSRF) program to help systems finance projects needed to comply with SDWA regulations and to protect public health  This program, fashioned after the CWSRF program, authorizes EPA to make grants to states to capitalize DWSRFs which states then use to make loans to public water systems  Appropriations for the program were authorized at $599 million for FY1994 and $1 billion annually for FY1995 through FY2003  Capitalization grants for DWSRF programs were provided for the first time in FY1997  Although the authorizations for appropriations expired in FY2003, Congress continued to provide funding for the program in annual appropriations, totaling $23 billion through FY2019  America's Water Infrastructure Act of 2018 (AWIA; P L  115-270 ), enacted on October 23, 2018, reauthorized appropriations for the DWSRF at $1 17 billion in FY2019, $1 30 billion in FY2020, and $1 95 billion in FY2021  The first section of this report includes a table that summarizes the history of appropriations for both wastewater and drinking water infrastructure programs  The next section discusses several historical developments in water infrastructure funding  The last section contains a detailed chronology of congressional activity regarding wastewater and drinking water infrastructure funding for each fiscal year since the 1987 CWA amendments  Table 1 summarizes funding for the wastewater and drinking infrastructure programs since enactment of the 1987 CWA amendments ( P L  100-4 )  Funding for these EPA programs is contained in the appropriations act providing funds for the Department of the Interior, Environment, and Related Agencies  Within the portion of the bill that funds EPA, wastewater treatment assistance was first specified in an account called Construction Grants, which was subsequently renamed State Revolving Funds/Construction Grants, and then renamed Water Infrastructure  Since FY1996, this account has been titled State and Tribal Assistance Grants (STAG)  The STAG account now includes all water infrastructure funds and management grants provided to assist states in implementing air quality, water quality, and other media-specific environmental programs  The FY1996 appropriation was the first to include both water infrastructure and other state environmental grants; the latter previously were included in EPA's general program management account  Amounts shown in Table 1 include funds for CWA Title II grants, CWSRF grants, drinking water SRF grants, special project grants (discussed below), and the Water Infrastructure Finance and Innovation Act (WIFIA) program  Congress first provided appropriations to cover the subsidy costs of this program in FY2017, as discussed in the detailed chronology section below  Table 1 does not include funds for consolidated state environmental management grants  These grants include funding for a wide range of environmental programs, which have changed over time  In recent years, the categorical grants have included funding for water, air, and waste programs  The categorical grant programs most closely related to water infrastructure issues include grants for states' nonpoint source management programs (CWA Section 319) and states' pollution control programs (CWA Section 106)  Funding levels for the environmental management state grants are discussed below in the appropriations chronology section  As an additional comparison, Figure 1 illustrates the total EPA water infrastructure appropriations (for clean water and drinking water assistance combined) between FY1986 and FY2019 in both nominal dollars (i e , not adjusted for inflation) and constant (2018) dollars (i e , adjusted for inflation)  This section discusses several historical developments of note regarding appropriations for EPA's water infrastructure programs  The practice of earmarking a portion of the construction grants/SRF account for specific wastewater treatment and other water quality projects began with the FY1989 appropriations  The practice increased to the point of representing a significant portion of appropriated funds (31% of the total water infrastructure appropriation in FY1994, for example, but less in subsequent years: 2 5% in FY2009 and 5% in FY2010)  The number of projects receiving these earmarked funds also increased: from 4 in FY1989 to 319 in FY2010  Beginning in FY2000, the larger total number of earmarked projects resulted in more communities receiving such grants, but at the same time receiving smaller amounts of funds  Thus, while a few communities received individual earmarked awards of $1 million or more, the average size of earmarked grants shrank: $18 1 million in FY1995, $4 9 million in FY1999, $1 08 million in FY2006, and $586,000 in FY2010  (Conference reports on the individual appropriations bills, noted in the later discussion in this report, provide some detail on projects funded in this manner ) The effective result of earmarking was to reduce the amount of funds provided to states to capitalize their SRF programs  Between FY1989 and FY2010, approximately 10% of the total water infrastructure appropriations ($7 4 billion) went to earmarked project grants  Interest groups representing state water quality program managers and administrators of infrastructure financing programs criticized the practice of earmarked appropriations  They contended that earmarking undermined the intended purpose of the state funds—promoting water quality improvements nationwide  Many state officials preferred funds to be allocated more equitably, not based on what they viewed largely as political considerations, and they preferred for state environmental and financing officials to retain responsibility to set actual spending priorities  Further, they argued that the special projects funding would diminish the level of seed funding to SRFs, delaying the time when SRFs would be financially self-sufficient  The practice of earmarking was criticized because designated projects were arguably receiving more favorable treatment than other communities' projects: They were generally eligible for 55% federal grants (and were not required to repay 100% of the funded project cost, as is the case with a loan through an SRF), and the practice circumvented the standard process of states determining the priority by which projects will receive funding  It also meant that the projects were generally not reviewed by the CWA authorizing committees  This was especially true after FY1992, when special purpose grant funding was designated for types of projects not authorized in the Clean Water Act or the Safe Drinking Water Act  Members of Congress intervened for a specific community for a number of reasons  In some cases, the communities may have been unsuccessful in seeking state approval to fund the project under an SRF loan or other program  For some, the cost of a project financed through a state loan was deemed unacceptably high, because repaying the loan would result in increased user fees that ratepayers felt would have been unduly burdensome  In the early years of this congressional practice, special purpose grant funding originated in the House version of the EPA appropriations bill, while the Senate, for the most part, resisted earmarking by rejecting or reducing amounts and projects included in House-passed legislation  Therefore, special purpose grant funding on several occasions was an issue during the House-Senate conference on the appropriations bill  Beginning in FY1999, however, both the House and Senate proposed earmarked projects in their respective versions of the EPA appropriations bill, with the final total number of projects and dollar amounts determined by conferees  The Clean Water Act Title II grants program effectively ended when authorizations for it expired after FY1990  One result of earmarking special purpose grants in appropriations bills was to continue grants as a method of funding wastewater treatment construction long after FY1990  This practice led Congress to provide EPA grants for drinking water system projects, which had not previously been available  However, as discussed in the next section, general opposition to congressional earmarking stopped the practice after FY2011  The federal percentage share and local match required on special purpose grants varied depending on the project and the year of funding  For example, in the early projects (FY1989), the 1987 CWA amendments specified the federal cost shares, which ranged from 75% to 85%  In FY1992 and FY1993, the appropriations acts specified that funds were provided "as grants under title II," resulting in a requirement for local communities to provide a 45% share of project costs  After FY1993, the appropriations acts themselves were the authority for the special purpose projects grants  In the FY1995 appropriation bill, which also directed allocation of funds appropriated in FY1994 to several needy cities, Congress addressed the issue of federal and local cost shares in report language accompanying the bill, but not in the appropriation act itself  The conferees are in agreement that the agency should work with the grant recipients on appropriate cost-share arrangements  It is the conferees' expectation that the agency will apply the 45% local cost share requirement under Title II of the Clean Water Act in most cases  In the FY1996 appropriations, both the act and accompanying reports were silent on federal/local cost share and applicability of Title II requirements  Because of that, EPA officials planned to require only a 5% local match for most of the special purpose grants in that bill, which is the standard matching requirement for other EPA noninfrastructure grants  Under the agency's rules, the local match could include in-kind services, as well as funding toward the project  In the FY1997 appropriations, Congress included report language as it had in FY1995 concerning federal and local cost share requirements  The conferees are in agreement that the Agency should work with the grant recipients on appropriate cost-share agreements and to that end the conferees direct the Agency to develop a standard cost-share consistent with fiscal year 1995  The FY1998 and FY1999 appropriations included neither bill nor report language on this point  However, language in the House and Senate Appropriations Committees' reports on the FY1998 and FY1999 bills directed EPA to work with grant recipients on appropriate cost-share arrangements  For FY2000, Congress included explicit report language concerning the local match  The conferees agree that the $331,650,000 provided to communities or other entities for construction of water and wastewater treatment facilities and for groundwater protection infrastructure shall be accompanied by a cost-share requirement whereby 45 percent of a project's cost is to be the responsibility of the community or entity consistent with long-standing guidelines for the Agency  These guidelines also offer flexibility in the application of the cost-share requirement for those few circumstances when meeting the 45 percent requirement is not possible  Similar report language concerning local cost-share requirements accompanied the conference reports on the appropriations bills from FY2001 through FY2005  Beginning with FY2004, Congress specified in the appropriations legislation that the local share of project costs shall be not less than 45%  Similarly, beginning with the FY2003 appropriations legislation, Congress also specified that, except for those limited instances in which an applicant meets the criteria for a waiver of the cost-share requirement, the earmarked grant shall provide no more than 55% of an individual project's cost, regardless of the amount appropriated  The practice of earmarking special project water infrastructure grants continued to change  First, in FY2007, Congress applied a one-year moratorium on earmarks in all appropriations bills  For the next three years, special project grants were allowed in appropriations bills—including EPA's—but again in FY2011, no special project funding was provided for congressional projects  Following the 2010 midterm election and during subsequent months while FY2011 appropriations were under consideration (discussed below), the general issue of congressional earmarks of specific projects had become highly controversial because of the overall growing number of them, concern over the influence of special interests on spending decisions, and lack of congressional oversight  In response, President Obama said he would veto any legislation containing earmarks, the House extended the ban on earmarks under the Republican Conferences rules, and the chairman of the Senate Appropriations Committee announced a moratorium on earmarks for FY2011 and FY2012  Thus, the FY2011 full-year appropriations measure contained no congressionally directed special project funds for water infrastructure projects in the EPA STAG account  However, it did include funds requested by the President: $10 million for Alaska Native Villages and $10 million for U S -Mexico border projects  The FY2012 full-year appropriations measure also contained no special project funding in the EPA STAG account  The FY2012 bill did include funds for Alaska Native and Rural Villages ($10 million) and for U S -Mexico border projects ($5 million)  The moratorium on congressional earmarks has continued  The FY2013 full-year appropriations measure ( P L  113-6 ) contained no special project funding in the STAG account  As with other recent bills, however, it did include funds for Alaska Native and Rural Villages ($9 5 million) and for U S -Mexico border projects ($4 7 million)  Similarly, the moratorium on earmarks continued in FY2014 and FY2015; P L  113-76 contained no special project funding in the STAG account for FY2014, but did include funds for Alaska Native and Rural Villages ($10 million) and for U S -Mexico border projects ($5 million)  The FY2015 funding bill, P L  113-235 , was the same as FY2014  The FY2016, FY2017, and FY2018 appropriations acts ( P L  114-113 , P L  115-31 , and P L  115-141 , respectively) included $20 million for Alaska Native and Rural Villages and $10 million for U S -Mexico border projects  The FY2019 appropriations act provided $25 million for Alaska Native and Rural Villages and $15 million for U S -Mexico border projects  President Trump's FY2020 budget request proposes to eliminate funding for the U S -Mexico border program and decrease funding for the Alaska Native and Rural Villages to $3 million  Although the CWSRF and DWSRF have largely functioned as loan programs, both allow the implementing state agency to provide "additional subsidization" under certain conditions  Since its amendments in 1996, the SDWA has authorized states to use up to 30% of their DWSRF capitalization grants to provide additional assistance, such as forgiveness of loan principal or negative interest rate loans, to help disadvantaged communities (as determined by the state)  In 2018, AWIA increased that percentage to 35% and conditionally required states to provide at least 6% of their annual grants as additional subsidization  Congress amended the CWA in 2014, adding similar provisions to the CWSRF program  In addition, appropriations acts in recent years have required states to use minimum percentages of their allotted funds to provide additional subsidization  This trend began with the American Recovery and Reinvestment Act of 2009 ( P L  111-5 ), which required states to use at least 50% of their funds to "provide additional subsidization to eligible recipients in the form of forgiveness of principal, negative interest loans or grants or any combination of these " Subsequent appropriation acts have included similar conditions, with varying percentages of subsidization  The FY2016, FY2017, FY2018, and FY2019 appropriations acts included an identical condition, requiring 10% of the CWSRF grants and 20% of the DWSRF grants to be used "to provide additional subsidy to eligible recipients in the form of forgiveness of principal, negative interest loans, or grants (or any combination of these) " The 1987 CWA amendments authorized federal grants to assist states in implementing programs to manage water pollution from nonpoint sources such as farm and urban areas, construction, forestry, and mining sites  Because of competing demands for funding, it was difficult for Congress to fund this grant program and other water quality initiatives in the 1987 act  Appropriators did fund Section 319 grants in EPA's general program management account (abatement, control, and compliance) in FY1990, FY1991, and FY1992 but well below authorized levels  In the FY1993 act, appropriators moved funding into the SRF/construction grants account, thereby providing a degree of protection from competing priorities  In FY1996, Congress included all state grants for management of environmental programs in a single consolidated grants appropriation  In doing so, Congress endorsed a Clinton Administration proposal for a more flexible approach to state grants, a key element of EPA's efforts to improve the federal-state partnership in environmental programs  In more recent years, Congress has provided specific funding amounts for certain programs within the categorical grants appropriation  This section summarizes, in chronological order, congressional activity to fund items in the STAG account since the 1987 CWA amendments  The authorization period covered by P L  100-4 was FY1986-FY1994  By the time the amendments were enacted, FY1986 was over, as was a portion of FY1987  Thus, appropriations for those two years only indirectly reflected the policy and program changes for later years that were contained in P L  100-4   For FY1986, Congress appropriated a total of $1 8 billion, consisting of $600 million approved in December 1985 (while Congress was beginning to debate reauthorization legislation that eventually was enacted as P L  100-4 in January 1987) and $1 2 billion more in July 1986  For FY1987, while debate on CWA reauthorization continued, President Reagan requested $2 0 billion, consistent with his legislative proposal to terminate the grants program by FY1990  In October 1986, Congress appropriated $2 4 billion ( P L  99-500 / P L  99-591 )  However, only $1 2 billion of that amount was released immediately, pending enactment of a reauthorization bill, which was then in conference  Following enactment of the Water Quality Act of 1987, remaining FY1987 funds were released as part of a supplemental appropriations bill ( P L  100-71 )  Conferees on that measure agreed, however, to shift $39 million of the remaining unreleased grant funds to other priority water quality activities authorized in P L  100-4   The final total of construction grant monies was $2 361 billion  For FY1988 the President again requested $2 0 billion  In December 1987, Congress approved legislation providing FY1988 appropriations ( P L  100-202 , the omnibus continuing resolution to fund EPA and other federal agencies)  In it, Congress appropriated $2 304 billion for construction grants  Final action on the EPA budget and other funding bills had been delayed by budget-cutting talks between Congress and the White House  Reduced construction grants funding was one of many spending cuts required to implement a congressional-White House "summit agreement" on the budget  The final construction grants appropriation was less than funding levels that had been included in separate versions of a bill passed by the House and Senate before the budget summit, $2 4 billion  For FY1989, President Reagan requested $1 5 billion, or 35% below FY1988 appropriations and 37 5% less than the authorized level of $2 4 billion for FY1989  In separate versions of an EPA appropriations bill, the House and Senate voted to provide $1 95 billion and $2 1 billion respectively  The final figure, in P L  100-404 , was $1 95 billion, which included $68 million for special projects in four states  Thus, the actual amount provided for grants was $1 882 billion  That total was divided equally between the previous Title II grants program and new Title VI SRF program, as provided in the authorizing language of P L  100-4   The FY1989 legislation was the first to include earmarking of funds for specified projects or grants in EPA's construction grants account, an action that continued in subsequent years, as discussed above  All of the projects funded in the 1989 legislation were ones that had been authorized in provisions of the Water Quality Act of 1987 (WQA, P L  100-4 )  The designated projects were in Boston (authorized in Section 513 of the WQA, to fund the Boston Harbor wastewater treatment project), San Diego/Tijuana (Section 510, to fund an international sewage treatment project needed because of the flow of raw sewage from Tijuana, Mexico, across the border), Des Moines, IA (Section 515, for sewage treatment plant construction), and Oakwood Beach/Redhook, NY (Section 512 of the WQA, to relocate natural gas distribution facilities that were near wastewater treatment works in New York City)  For FY1990, President Reagan's budget requested $1 2 billion in wastewater treatment assistance, or 50% less than the authorized level and 38 5% less than the FY1989 enacted amount of $1 95 billion  Further, the Reagan budget proposed that the $1 2 billion consist of $800 million in Title VI monies and $400 million in Title II grants, contrary to provisions of the CWA directing that appropriations be equally divided between the two grant programs, as in FY1989  President Bush's revised FY1990 budget, presented in March 1989, made no changes from the Reagan budget in this area  In acting on this request, Congress agreed to provide $2 05 billion, including $46 million for three special projects (Boston, San Diego/Tijuana, and Des Moines), leaving a total of $1 002 billion each for Titles II and VI ( P L  101-144 )  Title II funds were reduced by $6 8 million, however, due to funds earmarked for a specific project in South Carolina  Although these amounts were appropriated, all funds in the bill were reduced by 1 55% (or, a $31 8 million reduction from the construction grants account) to provide funds for the federal government's antidrug program  Final FY1990 appropriations were altered again by passage of the FY1990 Budget Reconciliation measure and implementation of the Balanced Budget and Emergency Deficit Control Act (the Gramm-Rudman-Hollings Act), which established procedures to reduce budget deficits annually, resulting in a zero deficit by 1993  For each fiscal year that the deficit was estimated to exceed maximum targets established in law, an automatic spending reduction procedure was triggered to eliminate deficits in excess of the targets through "sequestration," or permanent cancellation of budgetary resources  Thus, to meet budget reduction mandates and, in particular, deficit reduction targets under the Balanced Budget and Emergency Deficit Control Act (the Gramm-Rudman-Hollings Act), additional funding cuts were included in P L  101-239 , the Budget Reconciliation Act of 1989, affecting construction grants funding and all other accounts not exempted from Gramm-Rudman procedures  P L  101-239 provided that the "sequestration" procedures under the Gramm-Rudman-Hollings Act would be allowed to apply for a portion of FY1990 (for 130 days, or 35 6% of the year), providing an additional automatic spending reduction in EPA and other agencies' programs subject to the act  As a result of these reductions, funding for wastewater treatment aid in FY1990 totaled $1 98 billion, or $30 million more than in FY1989  The total included $53 million for special projects in San Diego, Boston, Des Moines, and Honea Path/Ware Shoals, SC, $960 million for Title II grants, and $967 million for Title VI grants  The combined reductions amounted to 3 4% less than the amount agreed to by conferees on P L  101-144 (i e , $2 05 billion), before subtracting funds for antidrug programs and accounting for effects of the Gramm-Rudman partial-year sequester  For FY1991, President Bush requested $1 6 billion in funding for wastewater treatment assistance  This total included $15 4 million for the San Diego project authorized in Section 510 of the Water Quality Act of 1987, to fund construction of an international sewage treatment project  The remainder, $1 584 billion, would be only for capitalization grants under Title VI of the act, as the 1987 legislation provides for no new Title II grants after FY1990  In acting on EPA's appropriations for FY1991 ( P L  101-507 ), Congress agreed to provide $2 1 billion in wastewater treatment assistance  Beginning in FY1991, all appropriated funds are utilized for capitalization grants under Title VI of the act (as provided in the Water Quality Act of 1987); funding for the traditional Title II grants program was no longer available  The enacted level included several earmarkings: $15 7 million for San Diego (Section 510 of the WQA), $20 million for Boston Harbor (Section 513 of the WQA), and $16 5 million for a new Water Quality Cooperative Agreement Program under Section 104(b)(3) of the act  The President's budget had requested $16 5 million to support state permitting, enforcement, and water quality management activities, especially to offset the reductions in aid to states due to elimination of state management setasides from the previous Title II construction grants program  Congress agreed to the level requested, but provided it as a portion of the wastewater treatment appropriation, rather than as part of EPA's general program management appropriation, as in the President's request  As a result of these earmarkings, $2 048 billion was provided for Title VI grants  For FY1992, President Bush requested $1 9 billion in wastewater treatment funds, or $100 million more than authorized under the Water Quality Act of 1987 for Title VI grants in FY1992  However, out of the $1 9 billion total, the President's request sought $1 5 billion for Title VI SRF grants and $400 million as grants under the expired Title II construction grants program for the following coastal cities: Boston, San Diego, New York, Los Angeles, and Seattle  Two of the five designated projects had been authorized in the 1987 CWA amendments; the other three did not have explicit statutory authorization  Also, $16 5 million was requested for Water Quality Cooperative Agreement grants to the states  In acting on the request in November 1991, Congress provided total wastewater funds of $2 4 billion ( P L  102-139 )  The total was allocated as follows: $1,948 5 million for SRF capitalization grants, $16 5 million for Section 104(b)(3) grants, $49 million for the special project in San Diego-Tijuana (Section 510 of the Water Quality Act), $46 million to the Rouge River (MI) National Wet Weather Demonstration Project, and $340 million as construction grants under title II of the Clean Water Act for several other special projects—the Back River Wastewater Treatment Plant (Baltimore), Maryland, the Boston Harbor project, New York City, Los Angeles, San Diego (a wastewater reclamation project), and Seattle  This appropriation bill was the first to include special purpose grant funding for several projects not specifically authorized in the Clean Water Act or amendments to that law  For FY1993, President Bush requested $2 484 billion for state revolving funds/construction grants (now called the water infrastructure account)  The requested total included $340 million to be targeted for 55% construction grants to six communities: Boston, New York, Los Angeles, San Diego, Seattle, and Baltimore  In addition, the President requested that $130 million be directed toward a Mexican Border Initiative, consisting of $65 million for construction of the international treatment plant at San Diego (to address the Tijuana sewage problem), $15 million for projects at Nogales, AZ, and New River, CA, and $50 million as 50% grants for colonias in Texas  The President also requested $16 5 million for Section 104(b)(3) grants  Along with these special project and grant amounts, the request sought $2 014 billion for SRF assistance  Final action on FY1993 funding occurred on September 25, 1992 ( P L  102-389 )  It provided an appropriation of $2 55 billion, but $622 5 million of this amount was reserved for special projects and other grants  The bill provided $50 million in CWA Section 319 grants and $16 5 million in Section 104(b)(3) grants out of the SRF amount  It included $556 million for the following special purpose grants: the international treatment plant at San Diego (Tijuana—Section 510 of the WQA, with bill language capping funding for that project at $239 4 million), plus projects in Boston; New York; Los Angeles; San Diego; Seattle; Rouge River, MI; Baltimore; Ocean County, NJ; Atlanta; and for colonias in Texas, Arizona, and New Mexico  The final SRF grant amount under the bill was $1 928 billion  Early in 1993, President Clinton requested that Congress approve "economic stimulus and investment" spending, in the form of supplemental FY1993 appropriations  Both his original proposal and a subsequent modified proposal included additional SRF grant funds, but neither of the bills enacted by Congress in response to these requests ( P L  103-24 , P L  103-50 ) provided additional SRF funds  For FY1994, the Clinton Administration requested $2 047 billion for water infrastructure  The funds in this request were $1 198 billion to capitalize State Revolving Funds, $150 million for Mexican border project grants, and $100 million for a single hardship community (Boston)  The request also included $599 million to capitalize new state drinking water revolving funds  The final version of the FY1994 legislation ( P L  103-124 ) provided $2 477 billion for water infrastructure/state revolving funds  Of this total amount, $599 million was to be reserved for drinking water SRFs, if authorization legislation were enacted; $80 million was for Section 319 grants; $22 million was for Section 104(b)(3) grants; and $58 million was for Tijuana/San Diego—Section 510 of the WQA  This resulted in an appropriation of $1 718 billion for clean water SRFs  In addition, the final bill provided that $500 million be used to support water infrastructure financing in economically distressed/hardship communities  Under the bill, these funds were not available for spending until May 31, 1994, and were set aside until projects were authorized in the CWA for this purpose  Thus, the bill as enacted provided $1 218 billion immediately for clean water SRFs, with the expectation that $500 million more would be available for financing hardship community projects after May 31, 1994  For FY1995, President Clinton requested $2 65 billion for water infrastructure consisting of $1 6 billion for CWA SRFs, $100 million for Section 319 nonpoint source management grants to states, $52 5 million for a grant to San Diego for a wastewater project pursuant to Section 510 of the WQA, $47 5 million for other Mexican border projects, $50 million to the state of Texas for colonias projects, and $100 million for grants under Title II for needy cities (intended for Boston)  The request included $700 million for drinking water SRFs, pending enactment of authorizing legislation  The President's budget also requested $21 5 million for Section 104(b)(3) grants/cooperative agreements  Final agreement on FY1995 funding was contained in P L  103-327 , enacted in September 1994, which provided a total of $2 962 billion for water infrastructure financing  Of the total, $22 5 million was for grants under Section 104(b), $100 million for Section 319 grants, $70 million for Public Water System Supervision program grants (grants to states under the Safe Drinking Water Act to support state implementation of delegated drinking water programs), $52 5 million for the Section 510 project in San Diego, and $700 million for drinking water SRFs (contingent upon enactment of authorization legislation)  The remaining $2 017 billion was for CWA projects  Of this amount, $1 235 billion was for clean water SRF grants to states under Title VI of the CWA  The remaining $781 8 million (39% of this amount, 26% of the total appropriation) was designated for 45 specific, named projects in 22 states  The earmarked amounts ranged in size from $200,000 for Southern Fulton County, PA, to $100 million for the city of Boston  Finally, the conferees included bill language concerning release of the $500 million in FY1994 needy cities money (because the authorizing committees of Congress had not acted on legislation to authorize specific projects, as had been intended in P L  103-124 ) as follows: $150 million to Boston, $50 million for colonias in Texas, $10 million for colonias in New Mexico, $70 million for a New York City wastewater reclamation facility, $85 million for the Rouge River project, $50 million for the city of Los Angeles, $50 million for the county of Los Angeles, and $35 million for Seattle, WA  In February 1995, President Clinton submitted the Administration's budget request for FY1996  It requested $2 365 billion for water infrastructure funding consisting of $1 6 billion for clean water state revolving funds, $500 million for drinking water state revolving funds, $150 million to support Mexico border projects under the U S -Mexican Border Environmental Initiative and NAFTA, and $100 million for special need/economically distressed communities (not specified in the request, but presumed to be intended for Boston), plus $15 million for water infrastructure needs in Alaska Native Villages  In February 1995, congressional appropriations committees began considering legislation to rescind previously appropriated FY1995 funds, as part of overall efforts by the 104 th Congress to shape the budget and federal spending  These efforts resulted in passage in July 1995 of P L  104-19 , which rescinded $16 5 billion in total funds from a number of departments, agencies, and programs  In the water infrastructure area, it rescinded $1,077,200,000 from prior year appropriations including the $3 2 million for a project in New Jersey (it had mistakenly been funded twice in P L  103-327 ) and $1,074,000,000 in other water infrastructure appropriations  Although not contained in bill language, it was understood that the larger rescinded amount consisted solely of drinking water SRF funds (leaving $1 235 billion for FY1995 clean water SRF funds, $778 6 million for earmarked wastewater projects—both amounts as originally appropriated—and $225 million in FY1994-FY1995 drinking water SRF funds that had not yet been authorized)  It took until April 1996 for Congress and the Administration to reach agreement on FY1996 appropriations for EPA as part of omnibus legislation ( P L  104-134 ) that consolidated five appropriations bills not yet enacted due to disagreements over funding levels and policy  Agreement came as the fiscal year was more than one-half over  Before that, however, congressional conferees reached agreement in November 1995 on FY1996 legislation for EPA ( H R  2099 , H Rept  104-353 )  Conferees agreed to provide $2 323 billion for a new account titled State and Tribal Assistance Grants (STAG), consisting of infrastructure assistance and state environmental management grants for 16 categorical programs that had previously been funded in a separate appropriations account  The total included $1 125 billion for clean water SRF grants, $275 million in new appropriations for drinking water SRF grants, and $265 million for special purpose project grants  Report language provided that the drinking water SRF money also included $225 million from FY1995 appropriations rescinded in P L  104-19   The drinking water SRF money would be available upon enactment of SDWA reauthorization legislation that would authorize a drinking water SRF program; otherwise, it would revert to clean water SRF grants if the SDWA were not reauthorized by June 30, 1996  This made the total potentially available for drinking water SRF grants $500 million  The November 1995 agreement on H R  2099 included $658 million for consolidated state environmental grants  In doing so, Congress endorsed an Administration proposal for a more flexible approach to state grants, a key element of EPA's efforts to improve the federal-state partnership in environmental programs  In lieu of traditional grants provided separately to support state air, water, hazardous waste, and other programs, consolidated grants are intended to reduce administrative burdens and improve environmental performance by allowing states and tribes to target funds to meet their specific needs and integrate their environmental programs, as appropriate  Congress's support was described in accompanying report language  The conferees agree that Performance Partnership Grants are an important step to reducing the burden and increasing the flexibility that state and tribal governments need to manage and implement their environmental protection programs  This is an opportunity to use limited resources in the most effective manner, yet at the same time, produce the results-oriented environmental performance necessary to address the most pressing concerns while still achieving a clean environment  Including state environmental grants in the same account with water infrastructure assistance reflected Congress's support for enhancing the ability of states and localities to implement environmental programs flexibly and support for EPA's ability to provide block grants to states and Indian tribes  The H R  2099 conference agreement also included legislative riders intended to limit or prohibit EPA from spending money to implement several environmental programs  The Administration opposed the riders  The House and Senate approved this bill in December, but President Clinton vetoed it, because of objections to spending and policy aspects of the legislation  With no full-year funding in place from October 1995 to April 1996, EPA and the programs it administers (along with agencies and departments covered by four other appropriations bills not yet enacted) were subject to a series of short-term continuing resolutions, some lasting only a day, some lasting several weeks  In March 1996, the House and Senate began consideration of an omnibus appropriations bill to fund EPA and other agencies for the remainder of FY1996, finally reaching agreement in April on a bill ( H R  3019 ) enacted as P L  104-134   Congress agreed to provide $2 813 billion for a new account titled STAG, consisting of state grants and infrastructure assistance, as in H R  2099 , the vetoed measure  The total was divided as follows: $1 3485 billion for clean water SRF grants (including $50 million for impoverished communities), $500 million in new appropriations for drinking water SRF grants, $150 million for Mexico-border project grants and Texas colonias , as requested, $15 million for Alaska Native Villages, as requested, $141 5 million for 17 special purpose project grants, and $658 million for consolidated state environmental grants, which states could use to administer a range of delegated environmental programs  Report language provided that the drinking water SRF money also included $225 million from FY1995 appropriations that remained available after the rescissions in P L  104-19 , for a total of $725 million  The drinking water SRF money was contingent upon enactment of legislation authorizing an SRF program under the Safe Drinking Water Act by August 1, 1996; otherwise, it would revert to clean water SRF grants  The final agreement ( P L  104-134 ) included several of the legislative riders from previous versions of the legislation, including riders related to drinking water and clean air, but dropped others strongly opposed by the Administration  Funds within the STAG account were redistributed after Congress passed Safe Drinking Water Act amendments in August 1996  Enactment of the amendments ( P L  104-182 ) occurred on August 6—after the August 1 deadline in P L  104-134 that would have made $725 million available for drinking water SRF grants in FY1996  Thus, the previously appropriated $725 million reverted to clean water SRF grants, making the FY1996 total for those grants $2 0735 billion  While debate over the FY1996 appropriations was continuing, in March 1996, President Clinton submitted the details of a FY1997 budget  For water infrastructure and state and tribal assistance, the request totaled $2 852 billion consisting of $1 35 billion for clean water SRF grants (the request included language that would authorize states the discretion to use this SRF money either for clean water or drinking water projects), $165 million for U S -Mexico border projects, Texas colonias , and Alaska Native Village projects, $113 million for needy cities projects, $550 million for drinking water infrastructure SRF funding, contingent upon enactment of authorizing legislation, and $674 million for state performance partnership consolidated management grants, which could address a range of environmental programs  In response to the Administration's request, in June 1996 the House approved legislation ( H R  3666 ) providing FY1997 funding for EPA  In the STAG account, the House approved $2 768 billion, $84 million less than requested but on the whole endorsing the budget request  The total provided the following: $1 35 billion for clean water SRF grants, as requested; $165 million, as requested, for U S -Mexico Border projects, Texas colonias , and Alaska Native Village projects; $450 million for drinking water SRF funding, contingent upon authorization; $674 million for state performance partnership consolidated management grants; and $129 million for seven special purpose grants  In July, the Senate Appropriations Committee reported its version of H R  3666   The committee approved $2 815 billion for this account, consisting of $1 426 billion for clean water SRF grants; $550 million for drinking water SRF grants, contingent upon authorization; $165 million, as requested, for U S -Mexico border projects, Texas colonias , and Alaska Native Village projects; and $674 million for consolidated state grants  The committee rejected the provision of the House-passed bill providing $129 million for special purpose grants, including funds for Boston and New Orleans requested by the Administration, saying in report language that earmarking is provided at the expense of state revolving funds and does not represent an equitable distribution of grant funds ( S Rept  104-318 )  During debate on H R  3666 in September, the Senate adopted an amendment to reduce the FY1997 appropriation for clean water SRF grants by $725 million in order to fund the new drinking water SRF program  This action was intended to restore funds to the drinking water program which had been lost when Safe Drinking Water Act amendments were not enacted by August 1, 1996  Thus, the Senate-passed bill provided $701 million for clean water SRF grants and $1 275 billion for drinking water SRF grants for FY1997  Other amounts in the account were unchanged  The conference report on H R  3666 ( H Rept  104-812 ) was approved by the House and Senate on September 24, 1996  President Clinton signed the bill September 26 ( P L  104-204 )  It reflected compromise of the House- and Senate-passed bills, providing the following amounts within the STAG account ($2 875 billion total): $625 million for clean water SRF grants, $1 275 billion for drinking water SRF grants, $165 million, as requested, for U S -Mexico border projects, Texas colonias , and Alaska Native Village projects, $136 million for 18 specific wastewater, water, and groundwater project grants (the 7 specified in House-passed H R  3666 , plus 11 more; the bill provided funds for each of the needy cities projects requested by the Administration, but in lesser amounts), and $674 million for consolidated state grants, which could support implementation of a range of environmental programs  The allocation of clean water and drinking water SRF grants was consistent with the Senate's action to restore funds to the drinking water program after enactment of the Safe Drinking Water Act amendments in early August  Subsequently, Congress passed a FY1997 Omnibus Consolidated Appropriations bill to cover agencies and departments for which full-year funding had not been enacted by October 1, 1996 ( P L  104-208 )  It included additional funding for several EPA programs, as well as $35 million (on top of $40 million provided in P L  104-204 ) for the Boston Harbor cleanup project  President Clinton presented the Administration's budget request for FY1998 in February 1997  For water infrastructure and state and tribal assistance, the request totaled $2 793 billion, consisting of $1 075 billion for clean water SRF grants, $725 million for drinking water SRF grants, $715 million for consolidated state environmental grants, and $278 million for special project grants  House and Senate committees began activities on FY1998 funding bills somewhat late in 1997, due to prolonged negotiations between Congress and the President over a five-year budget plan to achieve a balanced budget by 2002  After appropriators took up the FY1998 funding bills in June, the House passed EPA's appropriation in H R  2158 ( H Rept  105-175 ) on July 15  In the STAG account, the House approved $3 019 billion, consisting of $1 25 billion for clean water SRF grants ($600 million more than FY1997 levels and $175 million more than requested by the President), $750 million for drinking water SRF grants ($425 million less than FY1997 levels, but $25 million more than the request), $750 million for state environmental assistance grants, and $269 million for special projects  The latter included funds for the special projects requested by the Administration but at reduced levels ($149 million total for these projects), plus $120 million in special project grants for 21 other communities  The Senate passed a separate version of an FY1998 appropriations bill on July 22, 1997 ( S  1034 , S Rept  105-53 )  It provided $3 047 billion for the STAG account, consisting of $1 35 billion for clean water SRF grants, $725 million for drinking water SRF grants, $725 million for state environmental assistance grants, and $247 million for special project grants  The Senate bill provided the amounts requested by the Administration for U S -Mexico border projects, Texas colonias , and Alaska Native Village projects (but no special funds for others requested by the President), plus $82 million for 18 special project grants for other communities identified in report language  Conferees reached agreement on FY1998 funding in early October 1997 ( H R  2158 , H Rept  105-297 )  The final version passed the House on October 8 and passed the Senate on October 9  President Clinton signed the bill October 27 ( P L  105-65 )  As enacted, it provided $3 213 billion for the STAG account, consisting of $1 35 billion for clean water SRF grants, $725 million for drinking water SRF grants, $745 million for consolidated state environmental assistance grants (which could address a range of environmental programs), and $393 million for 42 special purpose project and special community need grants for construction of wastewater, water treatment and drinking water facilities, and groundwater protection infrastructure  It included the following amounts for grants requested by the Administration: $75 million for U S -Mexico border projects, $50 million for Texas colonias , $50 million for Boston Harbor wastewater needs, $10 million for New Orleans, $3 million for Bristol County, MA, and $15 million for Alaska Native Village projects  The final bill also provided funds for all of the special purpose projects included in the separate House and Senate versions of the legislation, plus three projects not included in either earlier version  Bill language was included in P L  105-65 to allow states to cross-collateralize clean water and drinking water SRF funds, that is, to use the combined assets of amounts appropriated to State Revolving Funds as common security for both SRFs, which conferees said is intended to ensure maximum opportunity for states to leverage these funds  Senate committee report language also said that the conference report on the 1996 Safe Drinking Water Act Amendments had stated that bond pooling and similar arrangements were not precluded under that legislation  The appropriations bill language was intended to ensure that EPA does not take an unduly narrow interpretation of this point which would restrict the states' use of SRF funds  On November 1, 1997, President Clinton used his authority under the Line Item Veto Act ( P L  104-130 ) to cancel six items of discretionary budget authority provided in P L  105-65   The President's authority under this act took effect in the 105 th Congress; thus, this was the first EPA appropriations bill affected by it  The cancelled items included funding for one of the special purpose grants in the bill, $500,000 for new water and sewer lines in an industrial park in McConnellsburg, PA  Reasons for the cancellation, according to the President, were that the project had not been requested by the Administration; it would primarily benefit a private entity and is outside the scope of EPA's usual mission; it is a low priority use of environmental funds; and it would provide funding outside the normal process of allocating funds according to state environmental priorities  However, in June 1998, the Supreme Court struck down the Line Item Veto Act as unconstitutional, and in July the Office of Management and Budget announced that funding would be released for 40-plus cancellations made in 1997 under that act (including those cancelled in P L  105-65 ) that Congress had not previously overturned  (For additional information, see CRS Report RL33635, Item Veto and Expanded Impoundment Proposals: History and Current Status , by Virginia A  McMurtry ) President Clinton's budget request for FY1999, presented to Congress in February 1998, requested $2 9 billion for the STAG account, representing 37% of the $7 9 billion total requested for EPA programs  The total included $1 075 billion for clean water SRF grants, $775 million for drinking water SRF grants, $115 million for water infrastructure projects along the U S -Mexico border projects and in Alaska Native Villages, $78 million for needy cities projects, and $875 million for consolidated state environmental grants (which could address a range of environmental programs)  Legislative action on the budget request occurred in mid-1998  Both houses of Congress increased amounts for water infrastructure financing, finding the Administration's request for clean water and drinking water SRF grants, as well as special project funding, not adequate  First, the Senate Appropriations Committee reported its version of an EPA spending bill in June 1998 ( S  2168 , S Rept  105-216 )  This bill, passed by the Senate July 17, provided $3 2 billion for the STAG account, consisting of $1 4 billion for clean water SRF grants, $800 million for drinking water SRF grants, $105 million for U S -Mexico and Alaska Native Village projects, $100 million for 39 other special needs infrastructure grants, and $850 million for state performance partnership/categorical grants  As in FY1998, the committee included bill language allowing states to cross-collateralize their clean water and drinking water state revolving funds, making the language explicit for FY1999 and thereafter  Second, the House passed its version of EPA's funding bill ( H R  4194 , H Rept  105-610 ) on July 29  This bill provided $3 2 billion for the STAG account, consisting of $1 25 billion for clean water SRF grants, $775 million for drinking water SRF grants, $70 million for U S -Mexico and Alaska Native Village projects, $253 5 million for 49 other special needs infrastructure grants (including nine projects also funded in the Senate bill), and $885 million for state environmental management grants (a 20% increase above FY1998 amounts for these state grants)  Conferees resolved differences between the two versions in October 1998 ( H R  4194 , H Rept  105-769 )  The conference agreement provided $3 4 billion for the STAG account, consisting of $1 35 billion for clean water SRF grants, $775 million for drinking water SRF grants, $80 million for U S -Mexico and Alaska Native and Rural Village projects, $301 8 million for 80 other special needs project grants, and $880 million for state and tribal environmental program grants (which could address a range of environmental programs)  The House and Senate approved the agreement on October 7 and 8, respectively, and President Clinton signed the bill into law on October 21 ( P L  105-276 )  Additional funding was provided in the Omnibus Consolidated and Supplemental Appropriations Act, FY1999 ( P L  105-277 )  This bill, which provided full-year funding for agencies and departments covered by seven separate appropriations measures, directed $20 million more in special needs grants for the Boston Harbor wastewater infrastructure project, on top of $30 million that was included in P L  105-276   For FY2000, beginning on October 1, 1999, the Administration requested $2 638 billion for water infrastructure assistance and state environmental grants  The total, $370 million less than the FY1999 appropriation for this account, consisted of $800 million for clean water SRF grants, $825 million for drinking water SRF grants, $128 million for Mexican border and special project grants, and $885 million for consolidated state environmental grants (which could address a range of environmental programs)  The request included one SRF policy issue  The Administration asked the appropriators to grant states the permission to set aside up to 20% of FY2000 clean water SRF monies in the form of grants for local communities to implement nonpoint source pollution and estuary management projects  Under the Clean Water Act, SRFs may only be used to provide loans  Some have argued that some types of water pollution projects which are eligible for SRF funding may not be suitable for loans, as they may not generate revenues which can be used to repay the loan to a state  This new authority, the Administration said, would allow states greater flexibility to address nonpoint pollution problems  Critics of the proposal said that making grants from an SRF would reduce the long-term integrity of a state's fund, since grants would not be repaid  Some Members of Congress and stakeholder groups were particularly critical of the budget request for clean water SRF grants, $550 million (40%) less than the FY1999 level  Critics said the request was insufficient to meet the needs of states and localities for clean water infrastructure  In response, EPA acknowledged that several years prior the Clinton Administration had made a commitment to states that the clean water SRF would revolve at $2 billion annually in the year 2005  Because of loan repayments and other factors, EPA said, the overall fund will be revolve at $2 billion per year in the year 2002, even with the 20% grant setaside included in the FY2000 request  According to EPA, the $550 million decrease from 1999 would have only a limited impact on SRFs and would still allow the agency to meet its long-term capitalization goal of providing an average amount of $2 billion in annual assistance  The House and Senate passed their respective versions of an EPA appropriations bill ( H R  2684 ) in September 1999  The conference committee report resolving differences between the two versions ( H Rept  106-379 ) was passed by the House on October 14 and the Senate on October 15 and was signed by the President on October 20 ( P L  106-74 )  The final bill provided $7 6 billion overall for EPA programs, including $3 47 billion for the STAG account  Within that account, the bill included $1 35 billion for clean water SRF grants, $820 million for drinking water SRF grants, $885 million for categorical state grants (which generally support state and tribal implementation and could address a range of environmental programs), $80 million for U S -Mexico border and Alaska Rural and Native Village projects, and $331 6 million for 141 other special needs water and wastewater grants specified in report language  The final bill did not approve the Administration's request to allow states to use up to 20% of clean water SRF monies as grants for nonpoint pollution and estuary management projects  Subsequent to enactment of the EPA funding bill, Congress passed the Consolidated Appropriations Act for FY2000 with funding for five other agencies ( P L  106-113 ), which included provisions requiring a government-wide cut of 0 38% in discretionary appropriations  The bill gave the President some flexibility in applying this across-the-board reduction  Details of the reduction were announced at the time of the release of the FY2001 budget  EPA's distribution of the rescission resulted in a total reduction of $16 3 million for 139 of the special needs water and wastewater projects identified in P L  106-74   These projects were reduced 4 9% below enacted levels  The agency did not reduce funds for the two projects that had been included in the President's FY2000 budget request (Bristol County, MA, and New Orleans, LA) or for the United States-Mexico border and the Alaska Rural and Native Villages programs  EPA also reduced funds for the clean water SRF (enacted at $1 35 billion) by 0 3%, for a final funding level of $1 345 billion  The appropriation level was not reduced for the drinking water SRF or consolidated state grants  The President's budget for FY2001 requested a total of $2 9 billion for water infrastructure assistance and state environmental grants  For the second year in a row, President Clinton requested $800 million for the clean water SRF program, a $545 million reduction from the FY2000 level  The request included $825 million for the drinking water SRF program, $100 million for U S -Mexico border project grants, $15 million for Alaska Native Villages projects, two needy cities grants totaling $13 million (Bristol County, MA, and New Orleans, LA), plus $1 069 billion for consolidated state environmental grants (which could address a range of environmental programs)  The budget included a policy request similar to one in the FY2000 budget, which Congress rejected  The FY2001 budget sought flexibility for states to set aside up to 19% of clean water SRF monies in the form of grants for local communities to implement nonpoint source pollution and estuary management projects  The House approved its version of EPA's funding bill ( H R  4635 , H Rept  106-674 ) on June 21, 2000  For the STAG account, H R  4635 provided $3 2 billion ($273 million more than requested, but $288 million below the FY2000 level)  The total in the STAG account consisted of $1 2 billion for clean water SRF grants, $825 million for drinking water SRF grants, $1 068 billion (the budget request) for categorical state grants, and $85 million for U S -Mexico border and Alaska Rural and Native Villages projects  Beyond these, however, the House-passed bill included no funds for other special needs grants  The Senate approved its version of the funding bill ( S Rept  106-410 ) on October 12, 2000  For the STAG account, the Senate-passed bill provided $3 3 billion, consisting of $1 35 billion for clean water SRF grants, $820 million for drinking water SRF grants, $955 million for categorical state grants, $85 million for U S -Mexico border and Alaska Rural and Native Village projects, and $110 million for special needs water and wastewater grants  In October, the House and Senate approved EPA's funding bill for FY2001 ( H Rept  106-988 ), providing $1 35 billion for clean water SRF grants (the same level enacted for FY2000) and $825 million for drinking water SRF grants  The enacted bill included $110 million in grants for water infrastructure projects in Alaska Rural and Native Villages and U S -Mexico border projects and an additional $336 million for 237 other specified project grants throughout the country  The bill also provided $1,008 million for state categorical program grants ($60 million less in total than requested), which states could use to address a range of environmental programs  Total funding for the STAG account was $3 6 billion  Congress disapproved the Administration's policy request concerning use of clean water SRF monies for nonpoint source project grants  President Clinton signed the bill October 27, 2000 ( P L  106-377 )  Subsequently, in December, Congress provided $21 million more for five more special project water infrastructure grants (in addition to the $336 million in P L  106-377 ) as a provision of H R  4577 , the FY2001 Consolidated Appropriations Act ( P L  106-554 )  Also in that legislation, Congress enacted the Wet Weather Water Quality Act, authorizing a two-year, $1 5 billion grants program to reduce wet weather flows from municipal sewer systems  The provision was included in Section 112, Division B, of P L  106-554   In April 2001, the Bush Administration presented its budget request for FY2002  The Administration requested a total of $2 1 billion for clean water infrastructure funds, consisting of $823 million for drinking water SRF grants, $850 million for clean water SRF grants (compared with $1 35 billion appropriated for FY2001), and $450 million for the new program of municipal sewer overflow grants under legislation enacted in December, the Wet Weather Water Quality Act  However, that act provided that sewer overflow grants are only available in years when at least $1 35 billion in clean water SRF grants is appropriated  Subsequently, Administration officials said they would request that Congress modify the provision linking new grant funds to at least $1 35 billion in clean water SRF grants  The Bush budget requested no funds for special earmarked grants, except for $75 million to fund projects along the U S -Mexico border and $35 million for projects in Alaska Native Villages (both are the same amounts provided in FY2001)  In response, some Members of Congress and outside groups criticized the budget request, saying that it did not provide enough support for water infrastructure programs  The President's budget also requested $1 06 billion for state categorical program grants, which generally support state and tribal administration of a range of environmental programs  The House passed its version of FY2002 funding for EPA on July 30 ( H R  2620 , H Rept  107-159 )  The House-passed bill provided a total of $2 4 billion for water infrastructure funds, consisting of $1 2 billion for clean water SRF grants, $850 million for drinking water SRF grants, $200 million for special project grants (individual projects were unspecified in the report accompanying H R  2620 ), $75 million for U S -Mexico border projects, and $30 million for Alaska Rural and Native Villages  The House bill provided no separate funds for the new wet weather overflow grant program, which the Administration had requested  Including $1 08 billion for state categorical program grants, total STAG account funding in the bill was $3 44 billion, about $150 million higher than the President's request  The Senate passed its version of this appropriations bill on August 2 ( S  1216 , S Rept  107-43 )  Like the House, the Senate rejected separate funding for wet weather overflow grants, and the Senate increased clean water SRF grant funding to the FY2001 level  The Senate-passed total for the STAG account was $3 49 billion, including $1 35 billion for clean water SRF grants, $850 million for drinking water SRF grants, $140 million for special needs infrastructure grants specified in accompanying report language, $75 million for U S -Mexico border projects, $30 million for Alaska Rural and Native Villages, and $1 03 billion for state categorical program grants  Resolution of this and other appropriations bills in fall 2001 was complicated by congressional attention to general economic conditions and responses to the September 11 terrorist attacks on the World Trade Center and the Pentagon  Nevertheless, the House and Senate gave final approval to legislation providing EPA's FY2002 funding ( H R  2620 , H Rept  107-272 ) on November 8, and President Bush signed the bill on November 26 ( P L  107-73 )  The final bill did not include separate funds for the new sewer overflow grant program requested by the Administration, which both the House and Senate had rejected, but it did include $1 35 billion for clean water SRF grants, $850 million for drinking water SRF grants, $344 million for 337 earmarked water infrastructure project grants specified in report language, and the requested $75 million for U S -Mexico border projects and $30 million for Alaska Rural and Native Villages  The bill included total STAG funding of $3 7 billion  President Bush presented the Administration's FY2003 budget request in February 2002, asking Congress to appropriate $2 185 billion for EPA's water infrastructure programs (compared with $2 659 billion appropriated for FY2002)  The FY2003 request sought $1 212 billion for clean water SRF grants, $850 million for drinking water SRF grants, and $123 million for a limited number of special projects (especially in Alaska Native Villages and in communities on the U S -Mexico border)  The Administration proposed to eliminate funds for unrequested infrastructure project spending that Congress had earmarked in the FY2002 law, which totaled $344 million  Also, the Administration requested no funds for the municipal sewer overflow grants program enacted in 2000  Some Members of Congress criticized the request level for clean water SRF capitalization grants, which was $138 million below the FY2002 enacted amount  In August 2002, the Senate Appropriations Committee approved an FY2003 funding bill for EPA that would provide $1 45 billion for clean water SRF grants, $100 million more than the FY2002 level ( S  2797 , S Rept  107-222 )  In addition, the Senate committee bill included $875 million for drinking water SRF grants, $140 million for special needs infrastructure grants specified in report language, $45 million for Alaska Rural and Native Village project grants, $75 million for U S -Mexico border projects, and $1 134 billion for state categorical program grants, which could address a range of environmental programs  The House Appropriations Committee approved its version of an FY2003 funding bill with $1 3 billion for the clean water SRF program ( H R  5605 , H Rept  107-740 ) in October  This bill also included $850 million for drinking water SRF grants, $227 6 million for special needs infrastructure grants enumerated in report language, $35 million for Alaska Rural and Native Village project grants, $75 million for U S -Mexico border projects, and $1 173 billion for state categorical program grants, which could address a range of environmental programs  Neither appropriations committee included funds for the sewer overflow grant program authorized in 2000 (the Administration did not request FY2003 funds for these grants)  Due to complex budgetary disputes during the year, final action did not occur before the 107 th Congress adjourned in November 2002, and it extended into 2003, more than five months after the start of the fiscal year  Congress and the President reached agreement on funding levels for EPA and other nondefense agencies in an omnibus appropriations act ( P L  108-7 ; H J Res  2 , H Rept  108-10 ), which the President signed on February 20  The EPA portion of the enacted bill included $1 34 billion for clean water SRF grants, $844 million for drinking water SRF grants, and $413 million more for 489 special water infrastructure project grants to individual cities specified in conference report language, plus projects in Alaska Native Villages and communities on the U S -Mexico border  It also provided a total of $1 14 billion for categorical state grants, which generally support states and tribal implementation of a range of environmental programs  On February 3, 2003, before completion of the FY2003 appropriations, President Bush submitted his budget request for FY2004  It requested a total of $1 798 billion for water infrastructure funds, consisting of $850 million for clean water SRF grants, $850 million for drinking water SRF grants, and $98 million for priority projects (especially in Alaska Native Villages and in communities on the U S -Mexico border)  As in previous years, the Administration requested no funds for congressionally earmarked project grants for individual communities  Some Members of Congress and interest groups criticized the request for clean water SRF grants ($490 million below the FY2003 enacted level), but Administration officials responded by saying that the request reflected a commitment to fund this program at the $850 million level through FY2011  Funding at that level and over that long-term period, plus repayments of previous SRF loans made by states, would be expected to increase the revolving levels of the overall program from $2 0 billion to $2 8 billion per year, the Administration said  The President's budget also requested $1 2 billion for categorical state grants, which could address a range of environmental programs  On July 25, the House approved H R  2861 ( H Rept  108-235 ), providing FY2004 appropriations for EPA  As passed, the bill included $1 2 billion for clean water SRF grants, $850 million for drinking water SRF grants, $203 million for earmarked water infrastructure project grants, and $75 million in grants for high-priority projects in Alaska Native Villages and along the U S -Mexico border  Senate action on its version of a funding bill for EPA ( S Rept  108-143 ) occurred on November 18  The Senate-passed bill provided $1 35 billion for clean water SRF grants, $850 million for drinking water SRF grants, $130 million for targeted infrastructure project grants, plus $95 million in grants for projects in Alaska Native Villages and along the U S -Mexico border  As with the previous year's appropriations, Congress did not enact legislation providing FY2004 funds for EPA before the beginning of the new fiscal year; thus EPA programs were covered by a series of continuing resolutions (CRs)  The last of these CRs ( P L  108-135 ) extended FY2003 funding levels through January 31, 2004  On December 8, 2003, the House passed legislation providing full-year funding for EPA and other agencies that lacked enacted appropriations ( H R  2673 )  The conference report on this bill ( H Rept  108-401 ) provided $1 34 billion for clean water SRF grants, $845 million for drinking water SRF grants, and $425 million in grants for 520 earmarked grants in listed communities, Alaska Native Villages, and U S -Mexico border projects  The Senate approved the conference report on January 22, 2004, and President Bush signed the legislation January 23 ( P L  108-199 )  The FY2005 EPA appropriation for water infrastructure funds was the lowest total for these programs since FY1997 (the first year in which Congress provided both clean water and drinking water SRF capitalization grants, as well as earmarked project grants)  The decline was due primarily to a reduction in funding for the clean water SRF program from an average of $1 35 billion since FY1998 to $1 09 billion  President Bush's FY2005 budget, presented February 2, 2004, requested a total of $3 0 billion for water infrastructure assistance and state environmental program grants  It included $850 million for clean water SRF grants, $850 million for drinking water SRF grants, $94 million for priority projects (primarily in Alaska Native Villages and along the U S -Mexico border), and $1 25 billion for categorical grants, which could address a range of environmental programs  As in recent budgets, the Administration requested no funds for congressionally earmarked project grants  Anticipating that critics likely would focus on the clean water SRF request ($492 million below the FY2004 level), in its budget documents the Administration said that the request included funding for the clean water SRF at $850 million annually through 2011, which, together with loan repayments, state matches, and other funding sources, would result in a long-term average revolving level of $3 4 billion  Likewise, the budget anticipated funding the drinking water SRF program at the same $850 million annually through 2011, resulting in a long-term average revolving level of $1 2 billion  House and Senate Appropriations committees began review of the EPA budget request in March  On September 9, 2004, the House Appropriations Committee reported FY2005 funding for EPA in a bill that included the Administration's requested level of $850 million for clean water SRF grants, $850 million for drinking water SRF grants, and earmarked grants for priority water infrastructure projects totaling $393 4 million ( H R  5041 , H Rept  108-674 )  On September 21, the Senate Appropriations Committee reported its version of this bill ( S  2825 , S Rept  108-353 ), which included $1 35 billion for clean water SRF grants, $850 million for drinking water SRF grants, and $217 million for earmarked project grants  Final action on the FY2005 appropriation did not occur before the start of the fiscal year  On November 20, the House and Senate passed H R  4818 ( H Rept  108-792 ), the Consolidated Appropriations Act, 2005, an omnibus appropriations bill comprising nine appropriations measures, including funding for EPA  The bill provided total funding for EPA of $8 1 billion, a decrease from the $8 4 billion approved in FY2004, but $340 million more than was requested by the President in February  One of the most controversial items in the final bill was a $251 million decrease for clean water SRF grants from the FY2004 level, although the $1 09 billion total was $241 million more than in the President's budget  The final measure also included $843 million for drinking water SRF capitalization grants; $401 7 million for 669 earmarked grants in listed communities, Alaska Native Villages, and U S -Mexico border projects; and $1 14 billion for categorical state grants, which generally support state and tribal administration of a range of environmental programs  The $2 34 billion total for water infrastructure programs and projects was $542 million more than was requested by the President, but $276 million less than Congress appropriated for FY2004  President Bush signed the legislation December 8, 2004 ( P L  108-447 )  The FY2006 appropriation for water infrastructure funds marked the second consecutive year in which Congress appropriated less funding for these programs, providing lower levels both for clean water SRF capitalization grants and for earmarked project grants than in FY2005  President Bush presented the FY2006 budget request in February 2005  Overall for EPA, it sought 5 6% less than Congress had appropriated for FY2005  The Administration's deepest cuts affecting EPA were proposed for the STAG account  The budget requested $730 million for clean water SRF grants (33% below FY2005 appropriated funding and 45 6% below the FY2004 level), $850 million for drinking water SRF grants (a slight increase from the FY2005 level), $69 million for priority projects (primarily in Alaska Native Villages and along the U S -Mexico border), and $1 2 billion for state categorical grants, which could address a range of environmental programs  As in previous years, the Administration requested no funds for congressionally earmarked water infrastructure projects  Advocates for the SRF programs (especially state and local government officials) contended that cuts to the clean water program would impair their ability to carry out needed municipal wastewater treatment plant improvement projects  Administration officials responded that the proposed SRF reductions for FY2006 were because Congress had boosted funds above the FY2005 request level  These officials said that the Administration planned to invest $6 8 billion in the clean water SRF program between FY2004 and FY2011, after which federal funding was expected to end, and the state SRFs were expected to have an annual revolving level of $3 4 billion  If Congress appropriated more than requested in any given year (as occurred in FY2005), they said, that target would be met sooner, leading to reduced requests for the SRF in subsequent years until a planned phaseout in FY2011  On May 19, 2005, the House passed H R  2361 , providing FY2006 funding for EPA  As passed, it provided $850 million for clean water SRF grants ($120 million more than the President's request), $850 million for drinking water SRF grants, and $269 million for earmarked water infrastructure grants  During debate, the House rejected two amendments to increase clean water SRF funding  On June 29, the Senate passed its version of H R  2361 , providing $1 1 billion for clean water SRF grants, $850 million for drinking water SRF grants, and $290 million for earmarked project grants  The House bill required that $100 million of the SRF funding come from balances from expired contracts, grants, and interagency agreements from various EPA appropriation accounts  The Senate bill, in contrast, called for a $58 million rescission of unobligated amounts associated with grants, contracts, and interagency agreements in various accounts, but did not specify that such monies go to SRF funding  Conferees resolved differences between the bills ( H Rept  109-188 ), and the House and Senate approved the measure in July; the President signed it into law on August 2 ( P L  109-54 )  As enacted, the bill provided $900 million for clean water SRF grants; $850 million for drinking water SRF grants; $285 million for 259 earmarked grants in listed communities, Alaska Native Villages, and along the U S -Mexico border; and $1 13 billion for categorical state grants, which could address a range of environmental programs  The final bill required an $80 million rescission from expired grants, contracts, and interagency agreements in various EPA accounts (not just the STAG account) not obligated by September 1, 2006  It did not direct the rescinded funds to be applied to the clean water SRF, as proposed by the House  The $2 03 billion total in the bill for EPA water infrastructure programs and projects was $386 million more than was requested by the President, but $301 million less than Congress appropriated for FY2005  Further, the funding amounts specified in P L  109-54 were reduced slightly  First, a provision of P L  109-54 , Section 439, mandated an across-the-board rescission of 0 476% for any discretionary appropriation in that bill  Second, in December 2005 Congress enacted P L  109-148 , the FY2006 Department of Defense Appropriations Act, and Section 3801 of that bill mandated a 1% across-the-board rescission for discretionary accounts in any FY2006 appropriation act (except for discretionary authority of the Department of Veterans Affairs)  As a result of these two rescissions, the final levels for the STAG account were $887 million for clean water SRF grants; $838 million for drinking water SRF grants; $281 million for 259 earmarked grants in listed communities, Alaska Native Villages, and along the U S -Mexico border; and $1 11 billion for categorical state grants, which could address a range of environmental programs  FY2006 EPA water infrastructure programs and projects thus total $2 0 billion  On October 28, President Bush requested that Congress rescind $2 3 billion from 55 "lower-priority federal programs and excess funds," including $166 million from clean water SRF monies  In the end, Congress did not endorse the specific request to reduce clean water SRF appropriations  The two rescissions resulting from P L  109-54 and P L  109-148 totaled a $13 2 million reduction from the $900 million specified in the EPA appropriations act  President Bush presented the Administration's FY2007 budget request in February 2006, asking Congress to appropriate $1 570 billion for EPA's water infrastructure programs  The FY2007 request sought $687 6 million for clean water SRF grants, $841 5 million for drinking water SRF grants, and $40 6 million for special projects in Alaska Native Villages, Puerto Rico, and along the U S -Mexico border  When the 109 th Congress adjourned in December 2006, it had not completed action on appropriations legislation to fund EPA (or on nine other appropriations bills covering the majority of domestic discretionary agencies and departments) for the fiscal year that began October 1, 2006, thus carrying over this legislative activity into the 110 th Congress  In December 2006, Congress enacted a continuing resolution, P L  109-383 (the third such continuing resolution since the start of the fiscal year on October 1), providing funds for EPA and the other affected agencies and departments until February 15, 2007  The President's FY2007 budget request for clean water SRF capitalization grants was 22% less than the FY2006 appropriation for these grants and 37% below the FY2005 funding level  The request for drinking water SRF grants was essentially the same as in recent years ($4 million more than FY2006, $1 7 million less than FY2005)  As in recent budgets, the Administration proposed no funding for congressionally designated water infrastructure grants, but, as noted above, it did seek a total of $40 6 million for Administration priority projects  Advocates of the clean water SRF program (especially state and local government officials) again contended, as they have for several recent years, that the cuts would impair their ability to carry out needed municipal wastewater treatment plant improvement projects  Administration officials responded that cuts for the clean water SRF in FY2007 were necessary because Congress boosted funds above the requested level in FY2005 and FY2006  On May 18, 2006, the House passed H R  5386 ( H Rept  109-465 ), providing the requested level of $687 6 million for clean water SRF grants and $841 5 million for drinking water SRF grants  The Senate Appropriations Committee approved the same funding levels for these grant programs when it reported H R  5386 on June 29 ( S Rept  109-275 ), but the Senate did not act on this measure before the 109 th Congress adjourned in December  Before adjournment, Congress enacted a continuing resolution (CR), P L  109-383 (the third such CR since the start of the fiscal year on October 1), providing funds for EPA and the other affected agencies and departments until February 15, 2007  Funding levels provided under this CR followed a "lowest level" concept for individual programs; that is, programs were funded at the lowest level under either House-passed FY2007 appropriations, Senate-passed appropriations, or the FY2006 funding  For clean water SRF grants, the resulting appropriation through mid-February was $687 6 million, as in House-passed H R  5386   For drinking water SRF grants, the appropriation level through mid-February was $837 5 million, the FY2006-enacted level  The CR included funds for congressionally earmarked water infrastructure project grants totaling $200 million, as in House-passed H R  5386   Returning to these issues in 2007, in mid-February, Congress passed H J Res  20 , a continuing appropriations resolution that provides funding for EPA and the other affected agencies through the end of FY2007  As passed, this full-year resolution held most programs and activities at their FY2006 appropriated levels  However, clean water SRF capitalization grants were one of the few programs that received a funding increase under the resolution: these grants received $1 08 billion ($197 million more than in FY2006, and $396 million more than the President requested for FY2007)  The resolution further prohibited project grants for congressional earmarks, but not for special project grants requested in the President's budget  The action to ban earmarks in FY2007 occurred when leaders in the 110 th Congress sought to finish up appropriations actions that were unresolved at the end of the 109 th Congress, and at the same time the newly elected Congress moved to adopt rules and procedures to reform the congressional earmarking process for the future  (Water infrastructure project earmarks totaled $281 million in EPA's FY2006 appropriation ) President Bush signed H J Res  20 on February 15, 2007 ( P L  110-5 )  The final FY2007 amounts provided in P L  110-5 were $1 084 billion for clean water SRF capitalization grants, $837 5 million for drinking water SRF capitalization grants, $83 75 million for Alaska Native Village and U S -Mexico border project grants requested by the Administration, and $1 11 billion for categorical state grants, which could be used to administer a range of environmental programs  President Obama presented his FY2008 budget request to Congress on February 5, 2007, before finalization of the FY2007 appropriations  The budget sought $687 6 million for clean water SRF grants, the same amount requested for FY2007; $842 2 million for drinking water SRF grants; $25 5 million for special project grants for Alaska Native Villages and the U S -Mexico border region; and $1 065 billion for categorical state grants, which could address a range of environmental programs  In June 2007, the House passed H R  2643 , providing FY2008 appropriations for EPA  This bill included $1 125 billion for clean water SRF grants, $842 2 million for drinking water SRF grants, plus $175 5 million for 143 congressionally designated water infrastructure project grants  The Senate Appropriations Committee approved companion legislation ( S  1696 ) that similarly included higher funding levels for several water quality programs  The Senate committee's bill provided less funding for clean water SRF grants than the House bill ($887 million), the same amount for drinking water SRF grants, and slightly more for congressionally designated water infrastructure project grants ($180 million)  The Senate did not take up S  1696   By October 1, the start of FY2008, Congress had not enacted any appropriations bills for FY2008, and Congress enacted several short-term continuing appropriations resolutions to temporarily fund EPA and other government agencies until final agreement, which occurred in December 2007  Full-year funding for EPA's water infrastructure programs was included in the Consolidated Appropriations Act for FY2008 (Division F, Title II), signed by the President December 26, 2007 ( P L  110-161 )  The final FY2008 amounts provided in this legislation were $689 1 million for clean water SRF capitalization grants ($1 5 million more than requested by the Administration), $829 0 million for drinking water SRF capitalization grants ($13 2 million less than requested), $177 2 million for 282 earmarked grants in listed communities, Alaska Native Villages, and U S -Mexico border projects ($151 7 million more than requested), and $1 078 billion for categorical state grants ($13 3 million more than requested), which could address a range of environmental programs  President Obama presented his FY2009 budget request to Congress on February 6, 2008  The budget sought $555 million for clean water SRF grants, $134 million less than Congress appropriated for FY2008; $842 2 million for drinking water SRF grants, $13 million more than was appropriated for FY2008; $25 5 million for special project grants for Alaska Native Villages and the U S -Mexico border region, $18 8 million less than was appropriated for FY2008; and $1 057 billion for categorical state grants, which could address a range of environmental programs  As in past years, the budget requested no funds for other earmarked grants  In June 2008, a House Appropriations subcommittee approved a bill with FY2009 funding for EPA, but no further action occurred before the start of the fiscal year  At the end of September 2008, Congress and the President agreed to legislation providing partial-year funding for EPA and most other agencies and departments  This bill, the Consolidated Security, Disaster Assistance, and Continuing Resolution Act, 2009 ( P L  110-329 ), provided funding through March 6, 2009, at FY2008 funding levels  A second short-term continuing resolution was enacted on March 6 ( P L  111-6 ), while Congress was finishing consideration of a full-year omnibus FY2009 appropriations bill that the President signed on March 11 ( P L  111-8 )  The omnibus bill provided $689 million in regular appropriations for clean water SRF grants, $829 million for drinking water SRF grants—both at the same levels as were appropriated in FY2008—and $1 094 billion for categorical state grants, which support administration of a range of environmental programs  The omnibus appropriations act also includes $183 5 million for earmarked water infrastructure grants  In February 2009, Congress responded to the nation's economic crisis by enacting the American Recovery and Reinvestment Act (ARRA, P L  111-5 ), legislation providing FY2009 supplemental appropriations to a number of government programs  Part of the philosophy underlying the legislation was the concept of using federal investments to make accelerated investments in the nation's public infrastructure in order to create jobs while also meeting infrastructure needs  To that end, the legislation included $4 0 billion for clean water SRF capitalization grants (for total FY2009 funds of $4 689 billion) and $2 0 billion for drinking water SRF capitalization grants (for total FY2009 funds of $2 829 billion)  The supplemental SRF funds were available for obligation through FY2010, but under the legislation, states were to give preference when awarding funds to activities that can start and finish quickly, with a goal that at least 50% of the funds go to activities that can be initiated within 120 days of enactment  States were to give priority to wastewater projects that could proceed to construction within 12 months of enactment, and funds for projects that were not under contract or under construction by February 12, 2010, would be reallocated by EPA to other states  Further, the legislation required states to reserve at least 20% of the SRF capitalization grant funds for a Green Project Reserve, that is, projects intended to achieve improved energy or water efficiency  It also specified that all assistance agreements made in whole or in part with funds appropriated under the ARRA must comply with prevailing wage requirements of the Davis-Bacon Act  President Obama presented his Administration's FY2010 budget request on May 7, 2009  For EPA as a whole, the budget sought $10 5 billion, a 38% increase above levels enacted in EPA's regular FY2009 appropriations ( P L  111-8 )  The bulk of the increase in the President's budget was for water infrastructure assistance, which would receive 157% above FY2009 levels (excluding ARRA supplemental funds)  The request included $2 4 billion for clean water SRF capitalization grants; $1 5 billion for drinking water SRF capitalization grants; $20 million for Alaska Native Village and U S -Mexico border projects; and $1 111 billion for state categorical grants (1 5% above FY2009 levels), which generally support state administration of environmental programs  Congress provided FY2010 appropriations for EPA in P L  111-88 , passed by the House and Senate in October 2009 and signed into law on October 30  In this measure, Congress provided the following: $2 1 billion for clean water SRF capitalization grants; $1 387 billion for drinking water SRF capitalization grants; $186 7 million for 319 congressionally earmarked special project grants, including assistance for Alaska Native Villages and U S -Mexico border projects; and $1 116 billion for state categorical environmental grants, which could address a range of environmental programs  The FY2010 appropriations act included some restrictions that Congress also had specified in the American Recovery and Reinvestment Act, discussed above, namely a requirement that 20% of SRF capitalization grant assistance be used for "green" infrastructure and also that Davis-Bacon Act prevailing wage rules shall apply to construction of wastewater or drinking water projects carried out in whole or in part with assistance from the SRF  President Obama presented the FY2011 budget request in February 2010  For EPA as a whole, the budget sought $10 02 billion in discretionary budget authority, a 3% decrease from levels enacted for EPA in FY2010  The largest component of the reduced request, compared with FY2010, was $200 million less for grants to capitalize clean water and drinking water SRF programs  In explaining the request, EPA budget documents noted that even with a slight reduction, the budget "continues robust funding for the SRFs " As in past years, the President requested no funds for congressionally designated water infrastructure projects  The request included $2 0 billion for clean water SRF capitalization grants; $1 287 billion for drinking water SRF capitalization grants; $20 million for Alaska Native Village and U S -Mexico border projects; and $1 277 billion for state categorical grant programs (14% higher than the FY2010 enacted amount), which could address a range of environmental programs  Congress took only limited action on FY2011 funding for EPA before the start of the new fiscal year on October 1, 2010: a House Appropriations subcommittee approved a bill in July, but no further action followed  At the end of September, the House and Senate passed a continuing resolution to extend FY2010 funding levels for EPA and other federal agencies and departments until December 3, 2010, because no FY2011 appropriations bills had been enacted by October 1  President Obama signed the continuing resolution (CR) on September 30 ( P L  111-242 )  This bill was followed by six more short-term CRs before Congress came to final resolution of FY2011 spending on April 14, 2011, enacting a bill to provide funding for EPA and all other federal agencies and departments through September 30 ( P L  112-10 )  The final bill reduced overall funding for EPA 15% below the FY2010 level  The enacted bill included $1 522 billion for clean water SRF capitalization grants; $963 1 million for drinking water SRF capitalization grants; $19 96 million for Alaska Native Village and U S  Mexico-border projects; and $1 254 billion for state categorical grant programs, which generally support implementation of a range of environmental programs  Policymakers began to consider the budget for FY2012 before finalizing the funding levels for FY2011  The President submitted the Administration's FY2012 budget request on February 14, 2011  It sought $9 billion total for EPA, a decrease of $1 3 billion from the FY2010 enacted level, but 3% higher than the FY2011 enacted level  The President's request included $1 55 billion for clean water SRF capitalization grants, $990 million for drinking water SRF capitalization grants, $20 million for Alaska Native Village and U S -Mexico border assistance, and $1 2 billion for state categorical grants, which could address a range of environmental programs  For several days in July 2011, the House debated H R  2584 , providing FY2012 appropriations for EPA, but did not take final action on the bill before the August recess  As reported, the bill provided $7 3 billion for EPA, 17% less than FY2011 funds and 19% less than the President's FY2012 request  It reduced funds for the clean water SRF capitalization grants to $689 million and $829 million for drinking water SRF capitalization grants (the same levels provided in FY2008), while including no funds for congressionally designated special projects (i e , earmarks)  The reported bill also provided $1 002 billion for state categorical grants, which could address a range of environmental programs  There was no action on this bill in the Senate  Final congressional action on FY2012 appropriations for EPA and most other federal agencies and departments did not occur until the end of December 2011, enacted in an omnibus appropriations act, P L  112-74   The enacted bill included $1 466 billion for clean water SRF capitalization grants (3 7% below FY2011); $917 9 million for drinking water SRF capitalization grants (4 7% below FY2011); $14 976 million for Alaska Native Village and U S -Mexico border projects; and $1 089 billion for state categorical grants, which could address a range of environmental programs  President Obama presented the Administration's FY2013 budget request in February 2012  It sought $8 34 billion overall for EPA, or 4 7% below the level enacted for FY2012  The request included $1 175 billion for clean water SRF capitalization grants, $850 million for drinking water SRF capitalization grants, $20 million for Alaska Native Village and U S -Mexico border assistance, and $1 2 billion for state categorical grants, which could address a range of environmental programs  The total amount requested for SRF capitalization grants is 15% below the FY2012 enacted level, reflecting a 20% reduction for the clean water program and a 7 4% reduction for the drinking water program  The House Appropriations Committee approved legislation providing FY2013 funds for EPA in July 2012 ( H R  6091 )  As reported, the bill provided $689 million for clean water SRF capitalization grants (the same level provided in FY2008), $829 million for drinking water SRF capitalization grants, $994 million for state categorical grants, and no funds for Alaska Native Village or U S -Mexico border projects  The House did not take up H R  6091 , nor did the Senate act on an EPA appropriations bill (although the Senate Appropriations Committee released a draft bill in September 2012)  Prior to the start of FY2013 on October 1, 2012, Congress passed and the President signed a continuing resolution bill providing funding for government agencies and departments through March 27, 2013 ( P L  112-175 )  This measure funded the government generally at FY2012 levels plus a 0 6% increase  Final action on FY2013 appropriations occurred in the Further Continuing Appropriations Act, 2013 ( P L  113-6 )  Funding enacted in this bill included $1 452 billion for clean water SRF capitalization grants; $908 7 million for drinking water SRF capitalization grants; $15 million for Alaska Native Village and U S -Mexico border assistance; and $1 1 billion for state categorical grants, which generally support state and tribal implementation of a range of environmental programs  However, these amounts were reduced under the March 1, 2013, sequester order of the President, which reduced affected accounts by 5 0%, and by an across-the-board rescission of 0 2% necessary to avoid exceeding the FY2013 discretionary spending limits in law  After these reductions, available FY2013 funding was approximately $1 38 billion for the clean water SRF capitalization grants, $860 million for drinking water SRF capitalization grants, $14 million for Alaska Native Village and U S -Mexico border assistance, and $1 0 billion for state categorical grants  President Obama presented the Administration's FY2014 budget in April 2013  It sought $8 15 billion overall for EPA, including $1 095 billion for clean water SRF capitalization grants, $817 million for drinking water SRF capitalization grants, $15 million for Alaska Native Village and U S -Mexico border projects, and $1 136 billion for state categorical grants  The total amount requested for SRF capitalization grants was 19% below the FY2013 enacted level  In mid-2013, the House Appropriations Subcommittee on Interior, Environment, and Related Agencies drafted a bill (unnumbered) that would have reduced overall funding for EPA by 34% from the FY2013 enacted level, including an 83% reduction for clean water SRF capitalization grants (the bill would have provided $250 million) and a 65% reduction for drinking water SRF capitalization grants ($350 million was included in the bill)  According to subcommittee documents, the reduction was appropriate because, despite recent federal support, little progress has been made to reduce the known water infrastructure gap  The full committee did not complete markup of this bill  The Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies drafted an alternative bill that would have maintained funding for the clean water SRF program at $1 45 billion and funding for the drinking water SRF program at $907 million  There was no further action on this bill  Congress did not reach final agreement on FY2014 appropriations before the start of the fiscal year on October 1, but did agree to a short-term continuing appropriations measure ( P L  113-46 ), which provided funding through January 15, 2014  Final action on appropriations for EPA and all other federal agencies and departments occurred as part of the Consolidated Appropriations Act, 2014 ( H R  3547 , P L  113-76 ), signed by the President on January 17, 2014  This bill provides $1 45 billion for clean water SRF capitalization grants (5% more than FY2013 funds and 32% higher than the President's FY2014 budget request) and $907 million for drinking water SRF capitalization grants (5% more than FY2013 funds and 11% higher than the President's FY2014 budget request)  The bill also provides $15 million for Alaska Native Village and U S -Mexico border assistance, and $1 0 billion for state categorical grants, which generally support state and tribal implementation of a range of environmental programs  President Obama presented the Administration's FY2015 budget on March 4, 2014  It sought $7 89 billion overall for EPA, including $1 018 billion for clean water SRF capitalization grants, $757 million for drinking water SRF capitalization grants, $15 million for Alaska Native Village and U S -Mexico border projects, and $1 13 billion for state categorical grants  The total amount requested for SRF capitalization grants was 25% below the FY2014 enacted level  Final full-year appropriations were enacted as part of the Consolidated and Further Continuing Appropriations Act, 2015, enacted in December 2014 ( P L  113-235 )  The legislation provided the same water infrastructure funding levels as in FY2014: $1 45 billion for clean water SRF capitalization grants and $907 million for drinking water SRF capitalization grants  As with the FY2014 appropriations, the bill provided $15 million for Alaska Native Village and U S -Mexico border assistance and $1 0 billion for state categorical grants, which could address a range of environmental programs  The Administration's FY2016 budget requested $8 6 billion overall for EPA  The request included $1 116 billion for clean water SRF capitalization grants, $1 186 billion for drinking water SRF capitalization grants (31% higher than the FY2016 appropriation), $15 million for Alaska Native Village and U S -Mexico border projects, and $1 162 billion for state categorical grants, which generally support state and tribal implementation of a range of environmental programs  Although the House and Senate Appropriations Committees reported bills to provide FY2016 appropriations for EPA, final appropriations action for EPA and other agencies occurred as part of the Consolidated Appropriations Act, 2016, signed by the President December 18, 2015 ( P L  114-113 )  The bill provided $1 394 billion for clean water SRF capitalization grants ($55 million less than FY2015, but $278 million above the President's request), $863 million for drinking water SRF capitalization grants ($44 million below the FY2015 level, and $323 million less than the President's request), and $30 million for Alaska Native Village and U S -Mexico border water infrastructure projects  It also provided $1 06 billion for state categorical grants  President Obama presented the Administration's FY2017 budget in February 2016, requesting $8 3 billion in total for EPA ($127 million above the FY2016 enacted budget)  The request for EPA included $979 5 million for clean water SRF capitalization grants ($424 million less than the FY2016 enacted level), $1 02 billion for drinking water SRF capitalization grants ($157 million above the FY2016 amount), $22 million for Alaska Native Village and U S -Mexico border projects, and $1 158 billion for state categorical grants, which generally support state and tribal implementation of environmental programs  During congressional hearings on the EPA request, many Members criticized the requested 30% decrease in funds for clean water SRF capitalization grants  This criticism was reflected to some degree in appropriations bills the Appropriations Committees subsequently approved that include EPA funding  In July 2016, the House passed H R  5538 , FY2017 Interior and Environment Appropriations Act; it included $1 0 billion for clean water SRF grants, $1 07 billion for drinking water SRF grants, and $1 06 billion for state categorical grants  The Senate Appropriations Committee reported a companion bill, S  3068 , in June  It included $1 35 billion for clean water SRF grants, $1 02 billion for drinking water SRF grants, and $1 09 billion for state categorical grants  The Senate did not take up this bill  Congress did not reach final agreement on an EPA funding bill before the start of FY2017  However, on September 28, the House and Senate passed a 10-week continuing resolution that extended FY2016 funding levels, minus a 0 496% across-the-board reduction, through December 9, 2016 ( P L  114-223 )  A second continuing resolution, passed in December 2014, extended FY2016 funding levels, minus a 0 1901% across-the-board reduction, from December 10, 2016, through April 28, 2017 ( P L  114-254 )  The Obama Administration's FY2017 budget submission also included a $15 million request to allow EPA to begin making water infrastructure project loans under a program that Congress enacted in 2014, the Water Infrastructure Financing and Investment Act, or WIFIA  P L  114-254 included the first appropriation, $20 million, for EPA to do so  The FY2017 final appropriations act (discussed below) provided an additional $8 million for EPA's WIFIA program (and $2 million for EPA to administer the program)  Final full-year appropriations were enacted as part of the Consolidated and Further Continuing Appropriations Act, 2017, signed by President Trump on May 5, 2017 ( P L  115-31 )  The act provided the same level of funding for water infrastructure as FY2016: $1 394 billion for clean water SRF capitalization grants ($414 million above President Obama's request), $863 million for drinking water SRF capitalization grants ($158 million less than President Obama's request), and $30 million for Alaska Native Village and U S -Mexico border water infrastructure projects  It also provided $1 07 billion for state categorical grants, which support a range of environmental programs  The Continuing and Security Assistance Appropriations Act, 2017 ( P L  114-254 ), included an additional $100 million in DWSRF funding to assist Flint, MI, as authorized in the Water Infrastructure Improvements for the Nation (WIIN) Act ( P L  114-322 )  The Trump Administration's FY2018 budget request proposed $8 6 billion overall for EPA  The request included $1 394 billion for clean water SRF capitalization grants and $863 million for drinking water SRF capitalization grants (the same amounts as the FY2017 appropriation)  The request proposed $597 million for state categorical grants, a 44% reduction compared to FY2017 levels  Much of this reduction came from the elimination of funding for nonpoint source grants (CWA Section 319) and reduction of grant funding for water pollution control (CWA Section 106)  In addition, the President's budget request proposed to eliminate funding for Alaska Native Village and U S -Mexico border projects  Similar to the previous fiscal year, Congress did not reach final agreement on an EPA funding bill before the start of FY2018  EPA and other federal departments and agencies operated under multiple continuing resolutions generally at FY2017 enacted levels (minus across-the-board rescissions)  Final full-year appropriations were enacted as part of the Consolidated Appropriations Act, 2018, signed by President Trump on March 23, 2018 ( P L  115-141 )  EPA's STAG account (Division G, Title II) included $1 394 billion for the clean water SRF and $863 million for the drinking water SRF program (the same amounts appropriated for FY2017, less $100 million for the DWSRF provided to assist Flint, MI)  Division G, Title IV (General Provisions), Section 430, included an additional $600 million ($300 0 million each) within the STAG account for both SRF programs  P L  115-141 also provided $63 million for the WIFIA program, more than doubling the FY2017 appropriation  The act provided $20 million for Alaska Native Village projects and $10 million U S -Mexico border projects  It also provided $1 08 billion for state categorical grants, which support a range of environmental programs  In addition, the act provided the first appropriations for three programs authorized in the WIIN Act ( P L  114-322 , Title II, the Water and Waste Act of 2016): $10 million to help public water systems serving small or disadvantaged communities meet SDWA requirements; $20 million to support lead reduction projects, including lead service line replacement; and $20 million to establish a voluntary program for testing for lead in drinking water at schools and child care programs  The Trump Administration's FY2019 budget request proposed $6 15 billion overall for EPA  The request included $1 394 billion for clean water SRF capitalization grants and $863 million for drinking water SRF capitalization grants (the same amounts requested in FY2018)  The request included $20 million for the WIFIA program: $17 million to cover subsidy costs, which EPA estimated would allow the agency to lend approximately $2 billion (EPA Budget Justification), and $3 million for administrative costs  In addition, the request proposed $597 million for state categorical grants and $3 million for Alaska Native Village projects  The request proposed to eliminate funding for nonpoint source grants (CWA Section 319), reduce grant funding for water pollution control (CWA Section 106), and eliminate funding for U S -Mexico border water infrastructure projects  At the beginning of FY2019, EPA operated under the terms and conditions of multiple continuing resolutions (Division C of P L  115-245 ; P L  115-298 ; and P L  116-5 )  A "partial government shutdown" began on December 22, 2018, during which EPA operated under its shutdown contingency plans  Final full-year appropriations were enacted as part of the Consolidated Appropriations Act, FY2019 ( P L  116-6 ), signed by President Trump on February 15, 2019  FY2019 appropriations were provided in two titles of P L  116-6   Title II included $1 394 billion for the CWSRF, $864 0 million for the DWSRF, and $10 0 million for WIFIA  Title IV included an additional $600 0 million ($300 0 million each) for both SRF programs and an additional $58 0 million for WIFIA  Title IV of P L  116-6 included $65 0 million within the EPA STAG account for grants authorized in the WIIN Act ( P L  114-322 ): $25 million to help public water systems serving small or disadvantaged communities meet SDWA requirements, $15 million to support lead reduction projects (including lead service line replacement), and $25 million to establish a voluntary program for testing for lead in drinking water at schools and child care programs  In addition, the act provided $25 million for Alaska Native Village projects and $15 million U S -Mexico border projects  It also provided $1 08 billion for state categorical grants, which support a range of environmental programs  The Trump Administration's FY2020 budget request proposed $6 07 billion overall for EPA  The request included $1 120 billion for CWSRF capitalization grants; $863 million for drinking water SRF capitalization grants; $25 million for the WIFIA program: $20 million to cover subsidy costs, which EPA estimated would allow the agency to lend over $2 billion (EPA Budget Justification), and $5 million for administrative costs; $3 million for Alaska Native Village projects; $10 million for testing for lead in drinking water at schools and child care programs; $61 million for sewer overflow control grants; $154 million for water pollution control grants (CWA Section 106); and $580 million for state categorical grants, which support a range of environmental programs  The Administration's request proposed to eliminate funding for the following: nonpoint source grants, U S -Mexico border water infrastructure projects, drinking water grants for small and disadvantage communities, and lead reduction project grants 
Report 2:  For example, one plan sponsor approved a hardship withdrawal to help a participant pay expenses related to a divorce settlement  Another plan sponsor developed an expanded list of qualifying hardships, including past-due car, mortgage, or rent payments; and payday loan obligations  Some plan sponsors implemented loan programs outside their plan, contracting with third-party vendors to provide short-term loans to employees  For example, one plan sponsor instituted a loan program that allowed employees to borrow up to $5,000 from a third-party vendor that would be repaid through payroll deduction  This plan sponsor said the loan program featured an 8 to 12 percent interest rate, and approval was not based on a participant’s credit history  The plan sponsor also observed that they had fewer 401(k) loan applications since the third- party loan program was implemented  A second plan sponsor instituted a similar loan program that allowed employees to borrow up to $500 interest free from a third-party vendor  According to this sponsor, to qualify for a loan, an employee must demonstrate financial hardship and have no outstanding plan loans, and is required to attend a financial counseling course if their loans are approved  Some plan sponsors said they have provided workplace-based financial wellness resources for their participants to improve their financial literacy  Some implemented optional financial wellness programs that covered topics such as investment education, how plan loans work, and the importance of saving for emergencies  These plan sponsors told us they offered on-site financial counseling with representatives of the plan administrator to help provide guidance on financial decision-making; however, other plan sponsors said that—despite their investment in participant-specific financial education—participation in these programs was low  Stakeholders suggested strategies that they believed could help mitigate the long-term effects of early withdrawals of retirement savings on IRA owners and plan participants  They noted that any of these proposed strategies, if implemented, could (1) increase the costs of administering IRAs and plans, (2) require changes to federal law or regulations, and (3) involve tradeoffs between providing access to retirement savings and preserving savings for retirement  Stakeholders suggested several strategies that, if implemented, could help reduce early withdrawals from IRAs  These strategies centered on modifying existing rules to reduce early withdrawals from IRAs (and subsequently the amount paid as a result of the additional 10 percent tax for early distributions)  Specifically, stakeholders suggested: Raising the age at which the additional 10 percent tax applies: Some stakeholders noted that raising the age at which the additional 10 percent tax for early distributions applies from 59½ to 62 would align it with the earliest age of eligibility to claim Social Security and may encourage individuals to consider a more comprehensive retirement distribution strategy  However, other stakeholders cautioned that it could have drawbacks for employees in certain situations  For example, individuals who lose a job late in their careers could face additional tax consequences for accessing an IRA before reaching the age 62  In addition, one stakeholder said some individuals may shift to a part-time work schedule later in their careers as they transition to retirement and plan on taking IRA withdrawals to compensate for their lower wages  Allowing individuals to roll existing plan loans into an IRA: Some stakeholders said that allowing individuals to include an existing plan loan as part of a rollover into an IRA, although currently not allowed, would likely reduce plan loan defaults by giving individuals a way to continue repaying the loan balance  One stakeholder suggested that rolling an existing plan loan into an IRA could be administratively challenging for IRA providers, but doing so to repay the loan may ultimately preserve retirement savings  Allowing IRA loans: While currently a prohibited transaction that could lead to the cessation of an IRA, some stakeholders suggested that IRA loans could theoretically reduce the amounts being permanently removed from the retirement system through early IRA withdrawals  One stakeholder said an IRA loan would present a good alternative to an early withdrawal from an IRA account because it would give the account holder access to the balance, defer any tax implications, and improve the likelihood the loaned amount would ultimately be repaid  However, another stakeholder said that allowing IRA loans could increase early withdrawals, given the limited oversight of IRAs, as well as additional administrative costs and challenges for IRA providers  Stakeholders suggested several strategies that, if implemented, could reduce the effect of cashouts at job separation from 401(k) plans  Simplifying the rollover process: Stakeholders proposed two modifications to the current rollover process that they believe could make the process more seamless and reduce the incidence of cashouts  First, stakeholders suggested that a third-party entity tasked with facilitating rollovers between employer plans for a separating participant would likely reduce the incidence of cashouts at job separation  Such an entity could automatically route a participant’s account balance from the former plan to a new one  One stakeholder said having a third-party entity facilitate the rollover would eliminate the need for a plan participant to negotiate the process  Such a service, however, would likely come at cost that may likely be passed onto participants  Stakeholders also suggested direct rollovers of account balances between plans could further reduce the incidence of cashouts  One stakeholder, however, cautioned that direct rollovers could have downsides for some participants  For example, participants who prefer to keep their balance in their former employer’s plan but provide no direction to the plan sponsor may inadvertently find their account balance rolled into a new employer’s plan  Restricting cashouts to participant contributions only: Some stakeholders suggested limiting the assets a participant may access at job separation  For example, some stakeholders said that participants should not be allowed to cash out vested plan sponsor contributions, thus preserving those contributions and their earnings for retirement  However, this strategy could result in participants overseeing and monitoring several retirement accounts  Stakeholders suggested several strategies that, if implemented, could limit the adverse effect of hardship withdrawals on retirement savings  Narrowing the IRS safe harbor: Although some plan sponsors are expanding the reasons for a hardship to align with perceived employee needs, some stakeholders said narrowing the IRS safe harbor would likely reduce the incidence of early withdrawals  For example, some stakeholders suggested narrowing the definition of a hardship to exclude the purchase of a primary residence or for postsecondary education costs  In addition, one stakeholder said alternatives exist to finance home purchases (mortgages) and postsecondary education (student loans)  Stakeholders noted that eliminating the purchase of a primary residence and postsecondary education costs from the IRS safe harbor would make hardship withdrawals a tool more strictly used to avoid sudden and unforeseen economic shocks  In combination with the two exclusions, one stakeholder suggested consideration be given to either reducing or eliminating the additional 10 percent tax for early distributions that may apply to hardship withdrawals  Replacing hardship withdrawals with hardship loans: Stakeholders said replacing a hardship withdrawal, which permanently removes money from the retirement system, with a no-interest hardship loan, which would be repaid to the account, would reduce early withdrawals  Under this suggestion, if the loan were not repaid within this predetermined time frame, the remaining loan balance could be considered a deemed distribution and treated as income (similar to the way a hardship withdrawal is treated now)  Incorporating emergency savings features into 401(k) plans: Stakeholders said incorporating an emergency savings account into the 401(k) plan structure may help participants absorb economic shocks and better prepare for both short-term financial needs and long-term retirement planning  (See fig  3 ) In addition, stakeholders said participants with emergency savings accounts could be better prepared to avoid high interest rate credit options, such as credit cards or payday loans, in the event of an economic shock  Stakeholders had several ideas for implementing emergency savings accounts  For example, one stakeholder suggested that, were it allowed, plan sponsors could revise automatic account features to include automatic contributions to an emergency savings account  Some stakeholders also said emergency savings accounts could be funded with after-tax participant contributions to eliminate the tax implications when withdrawing money from the account  However, another stakeholder said emergency savings contributions could reduce contributions to a 401(k) plan  In the United States, the amount of aggregate savings in retirement accounts continues to grow, with nearly $17 trillion invested in 401(k) plans and IRAs  Early access to retirement savings in these plans may incentivize plan participation, increase participant contributions, and provide participants with a way to address their financial needs  However, billions of dollars continue to leave the retirement system early  Although these withdrawals represent a small percentage of overall assets in these accounts, they can erode or even deplete an individual’s retirement savings, especially if the retirement account represents their sole source of savings  Employers have implemented plan policies that seek to balance the short- term benefits of providing participants early access to their accounts with the long-term need to build retirement savings  However, the way plan sponsors treat outstanding loans after a participant separates from employment has the potential to adversely affect retirement savings  In the event of unexpected job loss or separation, plan loans can leave participants liable for additional taxes  Currently, the incidence and amount of loan offsets in 401(k) plans cannot be determined due to the way DOL collects data from plan sponsors  Additional information on loan offsets would provide insight into how plan loan features might affect long-term retirement savings  Without clear data on the incidence of these loan offsets, which plan sponsors are generally required to include, (but not itemize) on the Form 5500, the overall extent of unrepaid plan loans in 401(k) plans cannot be known  To better identify the incidence and amount of loan offsets in 401(k) plans nationwide, we recommend that the Secretary of Labor direct the Assistant Secretary for EBSA, in coordination with IRS, to revise the Form 5500 to require plan sponsors to report qualified plan loan offsets as a separate line item distinct from other types of distributions  (Recommendation 1) We provided a draft of this product to the Department of Labor, the Department of the Treasury, and the Internal Revenue Service for review and comment  In its written comments, reproduced in appendixes IV and V, respectively, DOL and IRS generally agreed with our findings, but neither agreed nor disagreed with our recommendation  DOL said it would consider our recommendation as part of its overall evaluation of the Form 5500, and IRS said it would work with DOL as it responds to our recommendation  The Department of Treasury provided no formal written comments  In addition, DOL, IRS, Treasury and two third-party subject matter experts provided technical comments, which we incorporated in the report, as appropriate As agreed with your staff, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the Secretary of Labor, Secretary of the Treasury, Commissioner of Internal Revenue, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-7215 or jeszeckc@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff making key contributions to this report are listed in appendix VI  The objectives of this study were to determine: (1) what are the incidence and amount of retirement savings being withdrawn early; (2) what is known about the factors that might lead individuals to access their retirement savings early; and (3) what strategies or policies, if any, might reduce the incidence and amount of early withdrawals of retirement savings  To examine the incidence and amount of early withdrawals from individual retirement accounts (IRA) and 401(k) plans, we analyzed the most recent nationally representative data available in three relevant federal data sources, focusing our analysis on individuals in their prime working years (ages 25 to 55), when possible  For consistency, we analyzed data from 2013 from each data source because it was the most recent year that data were available for all types of early withdrawals we examined  We adjusted all dollar-value estimates derived from each data source for inflation and reported them in constant 2017 dollars  We determined that the data from these sources were sufficiently reliable for the purposes of our report  First, to examine recent incidence and amount of early withdrawals from IRAs and the associated tax consequences for individuals ages 25 to 55, we analyzed IRS estimates based on tax returns as filed by taxpayers before enforcement activity published by the Internal Revenue Service’s (IRS) Statistics of Income Division for tax year 2013  Specifically, we analyzed the number of taxpayers reporting early withdrawals from their IRAs in 2013 and the aggregate amount of these withdrawals  To provide additional context on the scope of these early withdrawals, we analyzed the age cohort’s total IRA contributions and the end-of-year fair market value of the IRAs, and compared these amounts to the aggregate amount withdrawn  To examine the incidence and amount of taxes paid as a result of the additional 10 percent tax for early distributions, we analyzed estimates on the additional 10 percent tax paid on qualified retirement plans in 2013  Although IRS did not delineate these data by age, we used these data as proxy because IRS assesses the additional 10 percent tax on distributions to taxpayers who have not reached age 59½  Given the delay between a withdrawal date and the date of the tax filing, it is possible that some of the taxes were paid in the year following the withdrawal  We reviewed technical documentation and developed the 95 percent confidence intervals that correspond to these estimates  Second, to examine the incidence and amount of early withdrawals from 401(k) plans, we analyzed data included in the 2014 panel of the U S  Census Bureau’s Survey of Income and Program Participation (SIPP)—a nationally representative survey of household income, finances, and use of federal social safety net programs—along with retirement account contribution and withdrawal data included in the SIPP’s Social Security Administration (SSA) Supplement on Retirement, Pensions, and Related Content  Specifically, we developed percentage and dollar-value estimates of the incidence and amount of lump sum payments received and hardship withdrawals taken by participants in 401(k) plans in 2013  Because the SIPP is based upon a complex probability sample, we used Balanced Repeated Replication methods with a Fay adjustment to derive all percentage, dollar-total, and dollar-ratio estimates and their 95 percent confidence intervals  To better understand the characteristics of individuals who received a lump sum and/or took a hardship withdrawal in 2013, we analyzed a range of selected individual and household demographic variables and identified characteristics associated with a higher incidence of withdrawals  We applied domain estimation methods to make estimates for these subpopulations  (For a list of variables used and the results of our analysis, please see appendix III ) We attempted to develop a multiple regression model to estimate the unique association between each characteristic and withdrawals, but determined that the SIPP did not measure key variables in enough detail to develop persuasive causal explanations  The sample size of respondents receiving lump sums was too small to precisely estimate the partial correlations of many demographic variables at once  Even with adequate sample sizes, associations between broad demographic variables, such as age and income, likely reflected underlying causes, such as retirement and financial planning strategies, which SIPP did not measure in detail  Third, to examine the incidence and amount of unrepaid plan loans from 401(k) plans, we analyzed the latest filing of annual plan data that plan sponsors reported on the Form 5500 to the Department of Labor (DOL) for the 2013 plan year  We looked at unrepaid plan loans reported by sponsors of large plans (Schedule H) and small plans (Schedule I)  For each schedule, we analyzed two variables related to unrepaid plan loans: (1) deemed distributions of participant loans (which captures the amount of loan defaults by active participants) and (2) benefits distributed directly to participants (which includes plan loan offsets for a variety of reasons, including plan loans that remain unpaid after a participant separates from a plan)  Because plan sponsors report data in aggregate and do not differentiate by participant age, we calculated and reported the aggregate of loan defaults identified as deemed distributions in both schedules  We could not determine the amount of plan loan offsets based on the way that plan sponsors are required to report them  Specifically, plan sponsors are required to treat unrepaid loans occurring after a participant separates from a plan as reductions or offsets in plan assets, and are required to report them as part of a larger commingled category of offsets that also includes large-dollar items like rollovers of account balances to another qualified plan or IRA  As a result, we were unable to isolate and report the amount of this category of unrepaid plan loans  To identify what is known about the factors that might lead individuals to access their 401(k) plans and IRAs and what strategies or policies might reduce the early withdrawal of retirement savings, we performed a literature search using multiple databases to locate documents regarding early withdrawals of retirement savings published since 2008 and to identify experts for interviews  The search yielded a wide variety of scholarly articles, published articles from various think tank organizations, congressional testimonies, and news reports  We reviewed these studies and identified factors that lead individuals to withdraw retirement savings early, as well as potential strategies or policies that might reduce this behavior  The search also helped us identify additional potential interviewees  To answer our second and third objectives, we visited four metropolitan areas and conducted 51 interviews with a wide range of stakeholders that we identified in the literature  In some cases, to accommodate stakeholder schedules, we conducted phone interviews or accepted written responses  Specifically, we interviewed human resource professionals from 22 private-sector companies (including 4 written responses), representatives from 8 plan administrators, 13 retirement research experts (including 1 written response), representatives from 4 industry associations, representatives from 2 participant advocacy organizations, and representatives from 2 financial technology companies  We conducted in-person interviews at four sites to collect information from three different groups: (1) human resource officials in private-sector companies, (2) top 20 plan administrators or recordkeepers, and (3) retirement research experts  We selected site visit locations in four metropolitan locations that were home to representatives of each group  To select companies for potential interviews, we reached out to a broad sample of Fortune 500 companies that offered a 401(k) plan to employees and varied by geographic location, industry, and number of employees  We selected plan administrators based on Pensions and Investments rankings for assets under management and number of individual accounts  We selected retirement research experts who had published research on early withdrawals from retirement savings, as well as experts that we had interviewed in our prior work  Based on these criteria, we conducted site visits in Boston, Massachusetts; Chicago, Illinois; the San Francisco Bay Area, California; and Seattle, Washington  We held interviews with parties in each category who responded affirmatively to our request  In each interview, we solicited names of additional stakeholders to interview  We also interviewed representatives of organizations, such as financial technology companies, participant advocacy organizations, industry associations, and plan administrators focused on small businesses, whose work we deemed relevant to our study  We developed a common question set for each stakeholder category that we interviewed  We based our interview questions on our literature review, research objectives, and the kind of information we were soliciting from each stakeholder category  In each interview, we asked follow-up questions based on the specific responses provided by interviewees  In our company interviews, we asked how companies administered retirement benefits for employees; company policies and procedures regarding separating employees and the disposition of their retirement accounts; company policies regarding plan loans, hardship withdrawals, and rollovers from other 401(k) plans; and company strategies to reduce early withdrawals from retirement savings  In our interviews with plan administrators, we asked about factors that led individuals to access their retirement savings early, how plan providers interacted with companies and separating employees, available data on loans and hardship withdrawals from client retirement plans, and potential strategies to reduce the incidence and amount of early withdrawals  In our interviews with retirement research experts, financial technology companies, participant advocacy organizations, and industry associations we asked about factors that led individuals to make early withdrawals from their retirement savings and any potential strategies that may reduce the incidence and amount of early withdrawals  In our interviews with plan administrators and retirement research experts, we also provided a supplementary table outlining 37 potential strategies to reduce early withdrawals from retirement savings  We asked interviewees to comment on the strengths and weaknesses of each strategy in terms of its potential to reduce early withdrawals, and gave them opportunity to provide other potential strategies not listed in the tables  We developed the list of strategies based on the results of our literature review  Some interviewees also provided us with additional data and documents to assist our research  For example, some companies and plan administrators we interviewed provided quantitative data on the number of plan participants, the average cashout or rollover amounts, the percentage of participants who took loans or hardship withdrawals from their retirement accounts, and known reasons for these withdrawals  Some research experts also provided us with documentation, including published articles and white papers that supplemented our interviews and literature review  All data collected through these methods are nongeneralizable and reflect the views and experiences of the respondents and not the entire population of their respective constituent groups  To answer our second and third objectives, we analyzed the content of our stakeholder interview responses and corroborated our analysis with information obtained from our literature review and quantitative information provided by our interviewees  To examine what is known about the factors leading individuals to access retirement savings early, we catalogued common factors that stakeholders identified as contributing to early withdrawals from retirement savings  We also collected information on plan rules governing early participant withdrawals of retirement savings  To identify potential strategies or policies that might reduce the incidence and amount of early withdrawals, we analyzed interview responses and catalogued (1) company practices that employers identified as having an effect in reducing early withdrawals and (2) strategies that stakeholders suggested that could achieve a similar outcome  GAO is not endorsing or recommending any strategy in this report, and has not evaluated these strategies for their behavioral or other effects on retirement savings or on tax revenues  Appendix II: Selected Provisions Related to Early Withdrawals from 401(k) Plans and Individual Retirement Accounts (IRAs) Requirements Provides an exception for distributions for qualified higher education expenses and for qualified “first-time” home purchases made before age 59½ from the additional 10 percent tax for early distributions Defines “qualified first-time homebuyer distribution” and “first-time homebuyer,” and prescribes the lifetime dollar limit on such distributions, among other things  Allows eligible individuals to make tax-deductible contributions to individual retirement accounts, subject to limits based, for example, on income and pension coverage  Provides for the loss of exemption for an IRA if the IRA owner engages in a prohibited transaction, which results in the IRA being treated as distributing all of its assets to the IRA owner at the fair market value on the first day of the year in which the transaction occurred  Defines a prohibited transaction to include the lending of money or other extension of credit between a plan and a disqualified person  Requirements Allows eligible individuals to make contributions to a Roth IRA that are not tax- deductible  Distributions from the account can generally be treated as a qualified distribution if a distribution is made on or after the Roth IRA owner reaches age 59½ and the distributions is made after the 5-taxable year period beginning when the account was initially opened  Defines a prohibited transaction to include the lending of money or other extension of credit between a plan and a disqualified person  Appendix III: Estimated Incidence of Certain Early Withdrawals of Retirement Savings 401(k) plans 401(k) plans ($1000 or more) 401(k) plans 401(k) plans ($1000 or more) 401(k) plans 401(k) plans ($1000 or more) Legend: * Sampling error was too large to report an estimate  In addition to the contact named above, Dave Lehrer (Assistant Director); Jonathan S  McMurray (Analyst-in-Charge); Gustavo O  Fernandez; Sean Miskell; Jeff Tessin; and Adam Wendel made key contributions to this report  James Bennett, Holly Dye, Sara Edmondson, Sarah Gilliland, Sheila R  McCoy, Ed Nannenhorn, Katya Rodriguez, MaryLynn Sergent, Linda Siegel, Rachel Stoiko, Frank Todisco, and Sonya Vartivarian also provided support  The Nation’s Fiscal Health: Action Is Needed to Address the Federal Government’s Future  GAO-18-299SP  Washington, D C : June 21, 2018  The Nation’s Retirement System: A Comprehensive Re-evaluation is Needed to Better Promote Future Retirement Security  GAO-18-111SP  Washington, D C : October 18, 2017  Retirement Security: Improved Guidance Could Help Account Owners Understand the Risks of Investing in Unconventional Assets  GAO-17-102  Washington, D C : December 8, 2016  401K Plans: Effects of Eligibility and Vesting Policies on Workers’ Retirement Savings  GAO-17-69  Washington, D C : October 21, 2016  Retirement Security: Low Defined Contribution Savings May Pose Challenges  GAO-16-408  Washington, D C : May 5, 2016  Retirement Security: Shorter Life Expectancy Reduces Projected Lifetime Benefits for Lower Earners  GAO-16-354  Washington, D C : March 25, 2016  Social Security’s Future: Answers to Key Questions  GAO-16-75SP  Washington, D C : October 27, 2015  Retirement Security: Federal Action Could Help State Efforts to Expand Private Sector Coverage  GAO-15-556  Washington, D C : September 10, 2015  Highlights of a Forum: Financial Literacy: The Role of the Workplace  GAO-15-639SP  Washington, D C : July 7, 2015  401(K) Plans: Greater Protections Needed for Forced Transfers and Inactive Accounts  GAO-15-73  Washington, D C : November 21, 2014  Older Americans: Inability to Repay Student Loans May Affect Financial Security of a Small Percentage of Retirees  GAO-14-866T  Washington, D C : September 10, 2014  Financial Literacy: Overview of Federal Activities, Programs, and Challenges  GAO-14-556T  Washington, D C : April 30, 2014  Retirement Security: Trends in Marriage and Work Patterns May Increase Economic Vulnerability for Some Retirees  GAO-14-33  Washington, D C : January 15, 2014  401(K) Plans: Labor and IRS Could Improve the Rollover Process for Participants  GAO-13-30  Washington, D C : March 7, 2013  Retirement Security: Women Still Face Challenges  GAO-12-699  Washington, D C : July 19, 2012  401(K) Plans: Policy Changes Could Reduce the Long-term Effects of Leakage on Workers’ Retirement Savings  GAO-09-715  Washington, D C: August 28, 2009 

ground_truth: The United States is a member of the OAS, PAHO, IICA, and PAIGH, which promote democracy, health care, agricultural development, and scientific exchange. GAO was asked to review U.S. assistance to these four organizations. In this report, GAO (1) assesses the extent to which the organizations' strategic goals align with those of U.S. agencies; (2) examines how the organizations oversee the use of their funds and the extent to which U.S. agencies have supported those efforts; (3) assesses the extent to which U.S. agencies included key monitoring provisions as part of assistance agreements; and (4) assesses the extent to which U.S. agencies had documentation of monitoring activities, including those called for by these provisions. GAO analyzed documents and interviewed officials from State, USAID, HHS, USDA, and the organizations. GAO also analyzed a nongeneralizable sample of 12 of the 60 assistance agreements that were awarded by State, USAID, HHS, and USDA to OAS, PAHO, and IICA and were active during calendar years 2014 through 2016. For each agency, GAO selected three agreements with the lowest, median, and highest dollar value. GAO found that strategic goals of the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH) are predominantly aligned with the strategic goals of the Department of State (State), the U.S. Agency for International Development (USAID), the Department of Health and Human Services (HHS), and the U.S. Department of Agriculture (USDA). For example, IICA's strategic goals of a productive agricultural sector, enhancing agricultural development, and food security are aligned with USDA's foreign assistance goals. State, USAID, HHS, and USDA fund activities in the form of assistance agreements (e.g., grants and cooperative agreements) with OAS, PAHO, and IICA, which in 2016 totaled $32 million. According to agency officials, the agencies employ mechanisms to ensure that these agreements align with U.S. strategic goals. OAS, PAHO, IICA, and PAIGH have established mechanisms for overseeing their use of funds, such as external auditors, internal audit boards, and anti-fraud and ethics policies. State and USDA have directly supported these mechanisms. For example, State engaged in the selection process for OAS's Inspector General. GAO's review of 12 selected assistance agreements found that USDA included no financial or performance monitoring provisions in one of its agreements and that State did not include two key monitoring provisions in one of its agreements, called for by applicable guidance. GAO found that the remaining 10 agreements it reviewed contained all key monitoring provisions and that State has since taken corrective action. GAO found that U.S. agencies did not have full documentation of 18 of the 42 monitoring activities required by the 12 assistance agreements GAO reviewed (see table). For example, USDA did not have full documentation, such as for financial reports, of any of its 10 required monitoring activities and USDA officials did not explain their lack of documentation. USAID officials explained that their lack of full documentation was due, in part, to grant officers not always following their document management policies. State and HHS have since taken corrective action. If an agency does not have full documentation of monitoring activities, it may lack information needed to make appropriate budgetary and programmatic decisions. GAO recommends that (1) USDA ensure inclusion of all monitoring provisions as part of agreements and (2) USAID and USDA ensure full documentation of monitoring activities. USDA and USAID concurred with GAO's recommendations.

prompt_front: You are given two reports by the government agency.



Question: Write a one-page summary of the report 2.

Report 1: The U S  government engages with the governments of other countries in the Western Hemisphere through various inter-American organizations including the OAS, PAHO, IICA, and PAIGH  According to State, the OAS is the primary inter-American political forum through which the United States engages with other countries in the Western Hemisphere to promote democracy, human rights, security, and development  PAHO serves as the Regional Office for the Americas of the World Health Organization, the United Nations agency on health  IICA supports agricultural development and rural well-being through technical cooperation and the execution of agricultural projects throughout the hemisphere  PAIGH specializes in regional cartography, geography, history, and geophysics and has facilitated the settlement of regional border disputes  According to U S  agency officials, the organizations’ regional knowledge and technical expertise make them effective implementing partners for projects serving U S  national interests and priorities throughout the hemisphere  Member states collectively finance these organizations by providing assessed and voluntary contributions (see table 1)  For each organization, its member states’ assessed contributions are intended to finance the organization’s regular budgets, which generally cover the organization’s day-to-day operating expenses, such as facilities and salaries  Member states also finance certain OAS, PAHO, and IICA activities and projects through voluntary contributions  According to U S  officials, the United States provides voluntary contributions to the OAS, PAHO, and IICA primarily through assistance agreements for specific projects from State, USAID, HHS, and USDA  The Institute of Internal Auditors (IIA) provides the framework for international organizations to oversee funds such as the assessed contributions provided by member states to OAS, PAHO, IICA, and PAIGH  The institute’s authoritative guidance, International Standards for the Professional Practice of Internal Auditing, includes mandatory performance standards that describe the nature of internal audit activities and provide criteria for evaluating these activities  Organizations are required to subscribe to these IIA standards, according to PAIGH officials and OAS, PAHO, and IICA documents  Assistance agreements are a critical tool the U S  government uses to achieve important national objectives  As we have previously reported, effective oversight and internal control are important to provide reasonable assurance to federal managers and taxpayers that assistance agreements are awarded properly, recipients are eligible, and federal funds are used as intended and in accordance with applicable laws and regulations  State, USAID, HHS, and USDA oversee funds provided to OAS, PAHO, and IICA through assistance agreements using monitoring activities such as financial and performance reports  Within each of these agencies, various bureaus and offices are responsible for awarding and managing assistance agreements to these inter-American organizations, including State’s Office of Weapons Removal and Abatement in the Bureau of Political-Military Affairs, USAID’s Office of U S  Foreign Disaster Assistance, HHS’s Centers for Disease Control and Prevention and its Food and Drug Administration, and USDA’s Animal and Plant Health Inspection Service  The documentation of these monitoring activities as called for by federal standards for internal control enables the agencies to determine the effectiveness of the agreement activity  We found that the strategic goals of the four inter-American organizations are predominantly aligned with the high-level strategic goals for the Western Hemisphere documented by State, USAID, HHS, and USDA  According to officials, the agencies all consider U S  strategic goals when deciding which projects to fund at OAS, PAHO, and IICA  State, USAID, HHS, and USDA have goals for foreign assistance to the Western Hemisphere, as shown in table 2  For example, four of the five goals in State and USAID’s Joint Strategy correspond with goals at the OAS, IICA, and PAIGH  U S  agencies, on an ongoing basis, evaluate each inter- American organization to ensure U S  and organization goals are aligned  Officials from all four agencies provided examples of how they help to ensure alignment of U S  strategic goals when funding projects at OAS, PAHO, and IICA  State: According to State officials, State created an Annual Performance and Budget Review process in 2014 specifically to review entities, such as the OAS, that receive voluntary contributions funded through the International Organization and Programs account  This process examines performance of State-funded activities relative to those activities from the previous year and the extent to which the activities advance U S  priorities and objectives  State officials further noted that the Annual Performance and Budget Review helps inform State’s decision-making on what to include in the following year’s budget request  For example, during the 2016 review for the OAS Development Assistance Program, State reported the program’s significant activities, funds expended, and achievements such as training government officials on successful small business policies in the United States  USAID: According to USAID officials, USAID’s project design and approval policies and procedures ensure that all USAID-funded activities are linked to applicable U S  and USAID strategies  USAID’s agency guidance requires, at a minimum, that each project or activity must be formally approved in writing by the relevant Mission Director or Principal Officer for a given program  Officials stated that this approval memo and supporting documentation address a number of planning considerations, including how the proposed activity aligns with broader strategies  Furthermore, officials stated that USAID’s lawyers review project approval documentation prior to final approval and verify that the activity complies with all applicable statutes, regulations, and policies  HHS: According to HHS officials, HHS engages with PAHO on its Biennial Work Plans, which are operational planning instruments that PAHO uses to identify activities that it can implement within each of its member states  HHS officials noted that they use PAHO’s Biennial Work Plan to strengthen U S  approaches on issues of common concern and to advance U S  priorities within the region  According to HHS officials, proposals for technical cooperation projects are required to correspond to one of the technical priorities in PAHO’s strategic plan for 2014–2019 and to be aligned with the HHS global strategy and U S  priorities  USDA: USDA officials said that they compare the U S  strategic goals with IICA’s goals and objectives when they formulate project proposals with IICA to ensure that the projects are aligned with U S  priorities for the region  Additionally, USDA officials told us that USDA helped shape and influence IICA’s recent 10-year strategic plan, ensuring that IICA’s strategic objectives were closely aligned with U S  strategic goals  OAS, PAHO, IICA, and PAIGH have established mechanisms for overseeing their use of assessed and voluntary contributions, such as external auditors and internal audit boards as required by IIA standards  State and USDA have directly supported these oversight mechanisms  OAS, PAHO, IICA, and PAIGH have oversight mechanisms, as shown in table 3  The four organizations follow the internal control standards of the IIA, codified in the International Standards for the Professional Practice of Internal Auditing, according to PAIGH officials and OAS, PAHO, and IICA documents  All four organizations have internal and external auditors, as required by these standards  Furthermore, OAS, PAHO, and IICA have additional oversight mechanisms, such as anti-fraud policies and program evaluation processes  The officials we interviewed from State, USAID, HHS, and USDA expressed confidence in the four organizations’ management of their assessed and voluntary contributions  All four organizations document the status of their financial and internal control activities in audit reports posted on their public websites  For example, the OAS Office of the Inspector General’s April 2017 Annual Report included an update on its five ongoing audits and investigations  The report also outlined progress made against prior recommendations  U S  agency officials support budget and administrative subcommittees in three of the four organizations and promote the participation of U S  experts on independent audit committees, as shown in table 4  For example, according to officials, State plays a significant role in promoting policies on oversight and accountability at the four organizations through formal engagement in deliberations and decision-making of each organization’s governing body and through informal engagement with other member states and the secretariat by recommending best practices in governance, management, and oversight  State and USDA are also directly involved in implementing some of the additional oversight mechanisms at the organizations  For example, a USDA official serves as a member of IICA’s Audit Review Committee  Additionally, an IICA official told us the United States was involved in defining IICA’s Convention and Rules of Procedure for its governing bodies, which established the requirement for internal and external auditing  According to State officials, the United States led efforts to strengthen oversight at several of the organizations under review in recent years, such as advocating for the creation of an ethics officer position at PAHO, proposing language to strengthen the authority and independence of the OAS’s Office of the Inspector General, and encouraging the creation of audit committees at both organizations  In addition, State has played a lead role in supporting the ongoing reform of the OAS administration, which includes improved oversight and accountability, according to officials from the OAS and the U S  Mission to the OAS  We reviewed 12 selected assistance agreements that the four U S  agencies awarded to OAS, PAHO, and IICA that were active during calendar years 2014 through 2016, and found that two agencies did not consistently include all key monitoring provisions in their agreements  While HHS and USAID implemented applicable guidance by including all key monitoring provisions in their agreements, USDA and State did not do so  USDA and State agency officials did not explain why USDA and State did not include these monitoring provisions in their agreements  However, State has since taken corrective action to ensure that they are included in future agreements, according to State officials  Applicable agency guidance calls for agencies to conduct monitoring activities as part of their oversight of their agreements  Each of the four agencies has established agency-specific guidance that outlines the monitoring activities for assistance agreements  In some cases, the agency-specific guidance may mandate additional monitoring activities beyond those called for in applicable federal regulations, such as risk assessments  For example, State’s guidance calls for the creation of a monitoring plan  Federal standards for internal control require that agencies include in agreements all key provisions delineating the parties’ responsibilities  For the 12 agreements we reviewed, the number of total key monitoring provisions per agreement varied—including within one agency—depending on when the agency issued and updated its guidance relative to when the agreements were approved  Federal standards for internal control call for agencies to document internal controls, transactions, and significant events  Specifically, internal control standards state that agency management should include internal control activities (e g , monitoring activities) in policies or directives for transactions such as assistance agreements  For the 12 assistance agreements we reviewed, USDA and State did not include provisions implementing 6 of the 55 total (11 percent) applicable monitoring activities required by applicable guidance to carry out required monitoring activities (see table 5)  State took corrective action in 2015 by issuing a standard operating procedure  USDA: USDA did not include 4 of the 13 key monitoring provisions implementing the applicable guidance for the three USDA agreements we reviewed (see table 6)  Two of the agreements and supporting documentation each included all four key applicable monitoring provisions  However, Agreement 2 in the table did not include 4 of the 5 monitoring provisions in the agreement or work plan, which documents the monitoring provisions  The agreement partially included performance goals, because it included objectives for the agreement’s activities, but did not include time frames to complete all of the activities  The USDA grant official did not explain why the work plan did not adhere to applicable federal regulations when it was drafted and approved  State: State did not include 2 of the 21 key monitoring provisions implementing the applicable guidance for the three State agreements we reviewed (see table 7)  Two of the agreements and supporting documentation we reviewed included the 7 monitoring provisions implementing the requirements in the applicable agency guidance  However, one agreement awarded in 2012 did not include 2 of the provisions: a risk assessment and a monitoring plan  That office that awarded this agreement took corrective action in 2015 by issuing a standard operating procedure requiring that risk assessments and monitoring plans accompany its grants and cooperative agreements  USAID: USAID included both key monitoring provisions implementing the applicable guidance for the three USAID agreements we reviewed (see table 8)  USAID’s Automated Directives System 308, Standard Provisions for Cost-Type Awards to Public International Organizations contains two key monitoring provisions for agreements  USAID incorporated the monitoring provisions nearly verbatim into the agreements we reviewed, using templates from this guidance for required terms and conditions  HHS: HHS included the 15 monitoring provisions implementing the applicable guidance for the three HHS agreements we reviewed (see table 9)  None of the agencies provided us with full documentation to demonstrate their adherence to the required monitoring activities called for in all of their agreements that we reviewed, including the previously mentioned key monitoring provisions that we reviewed  State and HHS have taken corrective actions to address the gaps we found in documentation for the agreements we reviewed  Agency officials told us that they use these monitoring documents, such as financial and progress reports, to inform future budgetary and programmatic decisions  Therefore, they may lack information needed to make such decisions if they do not have access to complete monitoring documentation  According to federal standards for internal control, each agency is to include key monitoring provisions as part of its agreements  In the individual assistance agreements, the agencies specify the requirements to fulfill these activities, such as requiring financial reports on a quarterly basis or including specific information in performance reports  Grants officers at times, if they deem it necessary or appropriate, include additional monitoring provisions requiring activities beyond those required by the applicable guidance, such as site visits  Federal standards for internal control call for agency management to design monitoring activities, such as financial and performance reporting, so that all transactions are completely and accurately recorded  Recording these activities maintains their relevance and value to management in controlling operations and making decisions  Without access to complete monitoring documentation, the agencies risk weakening the effectiveness of these controls  None of the four U S  agencies had full documentation of all of the monitoring activities required by their agreements we reviewed (see table 10)  The agencies did not have full documentation of monitoring activities for 9 of the 12 agreements we reviewed  For the 42 monitoring activities identified across all of the individual agreements, the four agencies did not have full documentation of 18 of the activities (43 percent)  However, State took corrective action in May 2017 to address its gaps in documentation, and according to HHS officials, the Food and Drug Administration addressed its gap in documentation by implementing its agreement monitoring program in fiscal year 2018  USDA did not have full documentation of any of the 10 monitoring activities we identified (see table 11)  USDA demonstrated that it had partially documented 2 of the 10 monitoring activities (20 percent) by providing us with some, but not all, quarterly performance reports  For one of the agreements, USDA had no documentation of the monitoring activities for that agreement  For its other two agreements, USDA did not have full documentation of the required monitoring activities  USDA officials did not explain why they did not have full documentation  Without full documentation of the required monitoring activities, USDA may not have the information it needs to make appropriate budgetary and programmatic decisions  USAID did not have full documentation of 2 of the 11 total monitoring activities (18 percent) we identified across the three agreements we reviewed (see table 12)  USAID had partial documentation of those 2 monitoring activities  For example, USAID provided us with some, but not all, records such as financial reports required by the terms of the monitoring activities in the agreements  According to USAID officials, the agencies’ lack of complete monitoring documentation was in part due to agency officials not following some of their agency’s requirements for managing agreement documents, such as placing all documents in a shared document management system  For example, for one of the agreements we reviewed, USAID officials stated that they stored some agreement documentation electronically—such as modifications, correspondence with the agreement recipient, and quarterly financial reports—but primarily maintained paper files  USAID officials told us they use the monitoring documents of these agreements, such as financial and progress reports, to inform future budgetary and programmatic decisions  For example, according to USAID officials, USAID uses monitoring documents to identify and address potential project delays or other “red flags ” For one of the agreements we reviewed, USAID officials stated these monitoring reports also assist them in determining whether to award additional funds and establish new indicators in subsequent agreements  Without full documentation of the required monitoring activities, USAID may not have the information it needs to make appropriate budgetary and programmatic decisions  State did not have full documentation for 5 of the 16 monitoring activities (31 percent) we identified across the three agreements we reviewed (see table 13)  However, State had partial documentation of 4 of those 5 monitoring activities  For example, State had some, but not all, records such as standard reporting metrics, required by the terms of the monitoring activities in one of the agreements  State did not have documentation of one of the monitoring activities (site visits)  According to State officials, the agency’s lack of complete monitoring documentation was in part due to agency officials not following some of the agency’s requirements for managing agreement documents, such as placing all documents in a shared document management system  For example, according to State officials, for one of the agreements we reviewed, the grants officer mistakenly had saved site visit reports and similar documents to personal folders because the officer did not know how to use State’s grant document storage system  As a result, neither the current grants officer nor other State officials could retrieve these documents  In May 2017, after awarding the agreements we reviewed, State took corrective action by issuing the Federal Assistance Directive to establish internal guidance, policies, and procedures for all domestic and overseas grant-making bureaus, offices, and posts within the department when administering federal financial assistance  The directive notes that State implemented a grant management system for domestic and overseas grants to resolve its “significant deficiency in the management of Federal financial assistance ” In addition, the directive indicates that officials from State’s Bureau of Administration, Office of the Procurement Executive, Federal Assistance Division will evaluate compliance with risk assessment requirements and review documentation for selected agreements each fiscal year  One of the stated purposes of these reviews is to mitigate risk by strengthening management and oversight of awards, including grants  According to a State Office of Inspector General report, State should complete the full deployment of this system for overseas grants in fiscal year 2019  HHS did not have full documentation of 1 of the 5 applicable monitoring activities (20 percent) we identified across the three agreements we reviewed (see table 14)  HHS had partial documentation of the semiannual progress report activity for one of its agreements, required by the terms of its agreement  HHS officials did not explain why they did not have full documentation for this monitoring activity  HHS had full documentation of all applicable monitoring activities for the other two agreements we reviewed  According to agency officials, the Food and Drug Administration, which administered one of the HHS agreements we reviewed, has taken corrective action to evaluate its agreement documentation and address deficiencies  According to HHS officials, the Food and Drug Administration developed a pilot program intended to provide an additional layer of oversight to ensure adherence to the terms of each agreement  Under the pilot, officials said, a grant monitoring specialist reviews the agreement documentation and monitoring reports to identify agreements that need additional assistance  According to HHS officials, the Food and Drug Administration implemented this program in fiscal year 2018 and will eventually include all Food and Drug Administration agreements  U S  assistance agreements for projects with inter-American organizations further U S  strategic goals in the Western Hemisphere, but State, HHS, USAID, and USDA did not consistently include all key monitoring provisions as part of their assistance agreements or demonstrate that they had full documentation of monitoring activities for the agreements we reviewed  Of these four agencies, USAID and USDA have not taken corrective actions  Monitoring the implementation of U S  assistance agreements and fully documenting the results of such monitoring are key management controls to help ensure that U S  agreement recipients use federal funds appropriately and effectively  The agencies risk weakening the effectiveness of these controls by not including all key monitoring provisions called for by applicable agency guidance  Further, if the agencies do not have full documentation of the agreements’ required monitoring activities, they may not be able to effectively manage federally funded projects that support U S  strategic goals  In addition, agencies may not have all the information they need to make budgetary and programmatic decisions  We are making a total of three recommendations: one to USAID and two to USDA  The USAID Administrator should ensure that USAID officials have full documentation of required monitoring activities in agreements with inter- American organizations  (Recommendation 1) The Secretary of Agriculture should ensure that USDA includes all key monitoring provisions specified by applicable guidance as part of agreements with inter-American organizations  (Recommendation 2) The Secretary of Agriculture should ensure that USDA officials have full documentation of required monitoring activities in agreements with inter- American organizations  (Recommendation 3) We provided a draft of this report for comment to State, USAID, HHS, and USDA  USDA concurred with our recommendations in an e-mail  In its written comments, reproduced in appendix IV, USAID stated that it has policies, procedures, and training in place for the officials who manage these agreements  In response to our recommendations, USAID stated that it will issue an agency notice to remind all such officials of these responsibilities, including the requirement to maintain complete files for each agreement  State and HHS did not provide formal comments  They did provide technical comments, which we incorporated as appropriate  As agreed with your offices, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies of this report to the appropriate congressional committees, the Secretary of State, the Administrator of the U S  Agency for International Development, the Secretary of Health and Human Services, and the Secretary of Agriculture  In addition, the report is available at no charge on the GAO website at http://www gao gov  If you or your staff have questions about this report, please contact me at (202) 512-9601, or melitot@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff who made key contributions to this report are listed in appendix V  Congressional requesters asked us to review several issues related to the Organization of American States (OAS), the Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute of Geography and History (PAIGH)  In this report, we (1) assess the extent to which the organizations’ strategic goals align with those of U S  agencies; (2) examine how the organizations oversee the use of their funds and the extent to which U S  agencies have supported those efforts; (3) assess the extent to which U S  agencies included key monitoring provisions as part of their assistance agreements; and (4) assess the extent to which U S  agencies had documentation of monitoring activities, including those called for by these provisions  To address the first objective, we gathered documentation and interviewed officials from the four U S  agencies and the four organizations to determine the U S  strategic goals for foreign assistance to the Western Hemisphere and the goals of the four organizations  According to Department of State (State) and U S  Agency for International Development (USAID) officials, the strategic document that underpins their foreign assistance priorities for the region is The Department of State’s Bureau of Western Hemisphere Affairs’ and USAID’s Bureau for Latin American and Caribbean Affairs’ Joint Regional Strategy  Department of Health and Human Services (HHS) officials said that HHS’s relevant strategic document is The Global Strategy of the U S  Department of Health and Human Services  U S  Department of Agriculture’s (USDA) strategic goals for foreign assistance, according to officials, are outlined in the United States Department of Agriculture Strategic Plan FY2015–2018  The OAS outlined its strategic goals in the Comprehensive Strategic Plan of the Organization, adopted on October 31, 2016  PAHO’s goals are laid out in Strategic Plan of the Pan American Health Organization 2014–2019  IICA’s strategic document is the IICA 2010–2020 Strategic Plan, which took effect in October 2010  PAIGH’s strategic document is the Declaration and Guide for the Pan American Agenda 2010-2020  We compared the strategic goals articulated by the four organizations against U S  strategic goals to assess the extent to which the organizations’ goals contribute to U S  interests in the region  We then interviewed officials from the four agencies and reviewed relevant documentation on efforts they undertake to ensure that U S -funded activities align with U S  strategic goals  To address the second objective, we reviewed documentation of the organizations’ internal control mechanisms and confirmed our findings with the organizations  We identified mechanisms to include policies, directives, rules, practices, and organizational structures that can have an oversight role in the use of the organizations’ funds  We also interviewed officials from State, USAID, HHS, and USDA to discuss their support of these mechanisms  To address the third objective, we identified 60 active assistance agreements that these agencies oversaw with OAS, PAHO, and IICA during calendar years 2014 through 2016 and selected a nongeneralizable sample of 12 agreements, three each from State, USAID, HHS, and USDA  To determine which agreements we would review for each agency, we selected the three agreements with the lowest, median, and highest dollar value  If any of an agency’s agreements supported the same country or activity or were for one-time projects such as seminars, we selected the next appropriate agreement based on dollar value  For these selected agreements, we then identified the applicable agency guidance for monitoring activities in the agreements, which we define as all documents related to each agreement provided to us by the agencies, such as monitoring reports  The number of key monitoring provisions varied—even within each agency—depending on when agency guidance was issued and updated relative to when the agreements were approved  USDA did not have applicable internal agency-specific guidance for monitoring of assistance agreements at the time it awarded the agreements we reviewed; thus, with USDA’s input, we used the applicable sections of the Code of Federal Regulations, which together have five key monitoring provisions for agreements  However, USDA approved two of the agreements in 2012 and the third agreement in 2016, and this third agreement was subject to an amended version of the Code of Federal Regulations, which added an additional provision for performance goals  State’s four applicable grants policy directives have seven key monitoring provisions for agreements that were applicable at the time the agreements we reviewed were approved  USAID’s Standard Provisions for Cost-Type Awards to Public International Organizations (PIOs): A Mandatory Reference to ADS Chapter 308 has two key monitoring provisions for agreements: audits and records, and the organization’s adherence to their rules  HHS’s grants policy has five key monitoring provisions for grant documentation  We identified key monitoring provisions for agencies to include as part of agreements to ensure oversight of the use of funds, such as financial and progress reports  For the 12 agreements in our sample, we analyzed the assistance agreements from the four agencies, and then determined the extent to which the agencies’ agreements included key monitoring provisions implementing monitoring activities called for by applicable agency guidance  We did not include subsequent amendments to these 12 agreements in our review of key monitoring provisions  We interviewed officials from State, USAID, HHS, and USDA (1) to confirm we were applying the appropriate federal or agency guidance and (2) to discuss instances in which the agreements did not include key monitoring provisions  To address the fourth objective, we reviewed the 12 selected assistance agreements and guidance to identify specific required monitoring activities, such as financial and program reports, site visits, and other forms of oversight  The agreements specify the requirements for these activities such as requiring financial reports on a quarterly basis  For these 12 agreements, we reviewed all the documentation provided to us by the agencies, then determined the extent to which the agencies had full documentation of key monitoring activities as specified in the assistance agreements, including those called for by key monitoring provisions, as well as those called for by guidance when the monitoring provisions were absent  We did not include subsequent amendments to these 12 agreements in our review of monitoring activities  We interviewed officials from State, USAID, HHS, and USDA to discuss instances in which the agency did not have full documentation of key monitoring activities  We also discussed how State, USAID, and HHS agency officials manage their agreement documentation and use the information in the agreements’ required monitoring documentation  We conducted this performance audit from July 2016 to December 2017 in accordance with generally accepted government auditing standards  Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives  We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives  The Organization of American States (OAS), Pan American Health Organization (PAHO), the Inter-American Institute for Cooperation on Agriculture (IICA), and the Pan-American Institute on Geography and History (PAIGH) have established mechanisms for overseeing their use of funds  Tables 15–18 show the mechanisms (oversight policies and oversight committees and organizations) for each of these inter-American organizations, as confirmed by the organizations’ officials  To oversee the execution of their agreements, the Department of State (State), the U S  Agency for International Development (USAID), the Department of Health and Human Services (HHS), and U S  Department of Agriculture (USDA) are to conduct monitoring activities called for by applicable federal regulations or agency guidance and document these provisions in assistance agreements as called for by federal standards for internal control  We identified key monitoring provisions implementing the applicable agency guidance for State, USAID, HHS, and the applicable regulations for USDA, as shown in table 19  For both the agency guidance and the federal regulations, those listed are the ones that were in effect when the agreements in our sample were approved  Some of the agency guidance and regulations have since been amended or superseded  In addition to the contact named above, Pierre Toureille (Assistant Director), Julia Jebo Grant (Analyst-in-Charge), Leslie Stubbs, and Paul Sturm, Alana Miller, and Shirley Min made key contributions to this report  In addition, David Dayton, Martin de Alteriis, Neil Doherty, Jeff Isaacs, and Alex Welsh provided technical assistance 


Report 2:  For example, one plan sponsor approved a hardship withdrawal to help a participant pay expenses related to a divorce settlement  Another plan sponsor developed an expanded list of qualifying hardships, including past-due car, mortgage, or rent payments; and payday loan obligations  Some plan sponsors implemented loan programs outside their plan, contracting with third-party vendors to provide short-term loans to employees  For example, one plan sponsor instituted a loan program that allowed employees to borrow up to $5,000 from a third-party vendor that would be repaid through payroll deduction  This plan sponsor said the loan program featured an 8 to 12 percent interest rate, and approval was not based on a participant’s credit history  The plan sponsor also observed that they had fewer 401(k) loan applications since the third- party loan program was implemented  A second plan sponsor instituted a similar loan program that allowed employees to borrow up to $500 interest free from a third-party vendor  According to this sponsor, to qualify for a loan, an employee must demonstrate financial hardship and have no outstanding plan loans, and is required to attend a financial counseling course if their loans are approved  Some plan sponsors said they have provided workplace-based financial wellness resources for their participants to improve their financial literacy  Some implemented optional financial wellness programs that covered topics such as investment education, how plan loans work, and the importance of saving for emergencies  These plan sponsors told us they offered on-site financial counseling with representatives of the plan administrator to help provide guidance on financial decision-making; however, other plan sponsors said that—despite their investment in participant-specific financial education—participation in these programs was low  Stakeholders suggested strategies that they believed could help mitigate the long-term effects of early withdrawals of retirement savings on IRA owners and plan participants  They noted that any of these proposed strategies, if implemented, could (1) increase the costs of administering IRAs and plans, (2) require changes to federal law or regulations, and (3) involve tradeoffs between providing access to retirement savings and preserving savings for retirement  Stakeholders suggested several strategies that, if implemented, could help reduce early withdrawals from IRAs  These strategies centered on modifying existing rules to reduce early withdrawals from IRAs (and subsequently the amount paid as a result of the additional 10 percent tax for early distributions)  Specifically, stakeholders suggested: Raising the age at which the additional 10 percent tax applies: Some stakeholders noted that raising the age at which the additional 10 percent tax for early distributions applies from 59½ to 62 would align it with the earliest age of eligibility to claim Social Security and may encourage individuals to consider a more comprehensive retirement distribution strategy  However, other stakeholders cautioned that it could have drawbacks for employees in certain situations  For example, individuals who lose a job late in their careers could face additional tax consequences for accessing an IRA before reaching the age 62  In addition, one stakeholder said some individuals may shift to a part-time work schedule later in their careers as they transition to retirement and plan on taking IRA withdrawals to compensate for their lower wages  Allowing individuals to roll existing plan loans into an IRA: Some stakeholders said that allowing individuals to include an existing plan loan as part of a rollover into an IRA, although currently not allowed, would likely reduce plan loan defaults by giving individuals a way to continue repaying the loan balance  One stakeholder suggested that rolling an existing plan loan into an IRA could be administratively challenging for IRA providers, but doing so to repay the loan may ultimately preserve retirement savings  Allowing IRA loans: While currently a prohibited transaction that could lead to the cessation of an IRA, some stakeholders suggested that IRA loans could theoretically reduce the amounts being permanently removed from the retirement system through early IRA withdrawals  One stakeholder said an IRA loan would present a good alternative to an early withdrawal from an IRA account because it would give the account holder access to the balance, defer any tax implications, and improve the likelihood the loaned amount would ultimately be repaid  However, another stakeholder said that allowing IRA loans could increase early withdrawals, given the limited oversight of IRAs, as well as additional administrative costs and challenges for IRA providers  Stakeholders suggested several strategies that, if implemented, could reduce the effect of cashouts at job separation from 401(k) plans  Simplifying the rollover process: Stakeholders proposed two modifications to the current rollover process that they believe could make the process more seamless and reduce the incidence of cashouts  First, stakeholders suggested that a third-party entity tasked with facilitating rollovers between employer plans for a separating participant would likely reduce the incidence of cashouts at job separation  Such an entity could automatically route a participant’s account balance from the former plan to a new one  One stakeholder said having a third-party entity facilitate the rollover would eliminate the need for a plan participant to negotiate the process  Such a service, however, would likely come at cost that may likely be passed onto participants  Stakeholders also suggested direct rollovers of account balances between plans could further reduce the incidence of cashouts  One stakeholder, however, cautioned that direct rollovers could have downsides for some participants  For example, participants who prefer to keep their balance in their former employer’s plan but provide no direction to the plan sponsor may inadvertently find their account balance rolled into a new employer’s plan  Restricting cashouts to participant contributions only: Some stakeholders suggested limiting the assets a participant may access at job separation  For example, some stakeholders said that participants should not be allowed to cash out vested plan sponsor contributions, thus preserving those contributions and their earnings for retirement  However, this strategy could result in participants overseeing and monitoring several retirement accounts  Stakeholders suggested several strategies that, if implemented, could limit the adverse effect of hardship withdrawals on retirement savings  Narrowing the IRS safe harbor: Although some plan sponsors are expanding the reasons for a hardship to align with perceived employee needs, some stakeholders said narrowing the IRS safe harbor would likely reduce the incidence of early withdrawals  For example, some stakeholders suggested narrowing the definition of a hardship to exclude the purchase of a primary residence or for postsecondary education costs  In addition, one stakeholder said alternatives exist to finance home purchases (mortgages) and postsecondary education (student loans)  Stakeholders noted that eliminating the purchase of a primary residence and postsecondary education costs from the IRS safe harbor would make hardship withdrawals a tool more strictly used to avoid sudden and unforeseen economic shocks  In combination with the two exclusions, one stakeholder suggested consideration be given to either reducing or eliminating the additional 10 percent tax for early distributions that may apply to hardship withdrawals  Replacing hardship withdrawals with hardship loans: Stakeholders said replacing a hardship withdrawal, which permanently removes money from the retirement system, with a no-interest hardship loan, which would be repaid to the account, would reduce early withdrawals  Under this suggestion, if the loan were not repaid within this predetermined time frame, the remaining loan balance could be considered a deemed distribution and treated as income (similar to the way a hardship withdrawal is treated now)  Incorporating emergency savings features into 401(k) plans: Stakeholders said incorporating an emergency savings account into the 401(k) plan structure may help participants absorb economic shocks and better prepare for both short-term financial needs and long-term retirement planning  (See fig  3 ) In addition, stakeholders said participants with emergency savings accounts could be better prepared to avoid high interest rate credit options, such as credit cards or payday loans, in the event of an economic shock  Stakeholders had several ideas for implementing emergency savings accounts  For example, one stakeholder suggested that, were it allowed, plan sponsors could revise automatic account features to include automatic contributions to an emergency savings account  Some stakeholders also said emergency savings accounts could be funded with after-tax participant contributions to eliminate the tax implications when withdrawing money from the account  However, another stakeholder said emergency savings contributions could reduce contributions to a 401(k) plan  In the United States, the amount of aggregate savings in retirement accounts continues to grow, with nearly $17 trillion invested in 401(k) plans and IRAs  Early access to retirement savings in these plans may incentivize plan participation, increase participant contributions, and provide participants with a way to address their financial needs  However, billions of dollars continue to leave the retirement system early  Although these withdrawals represent a small percentage of overall assets in these accounts, they can erode or even deplete an individual’s retirement savings, especially if the retirement account represents their sole source of savings  Employers have implemented plan policies that seek to balance the short- term benefits of providing participants early access to their accounts with the long-term need to build retirement savings  However, the way plan sponsors treat outstanding loans after a participant separates from employment has the potential to adversely affect retirement savings  In the event of unexpected job loss or separation, plan loans can leave participants liable for additional taxes  Currently, the incidence and amount of loan offsets in 401(k) plans cannot be determined due to the way DOL collects data from plan sponsors  Additional information on loan offsets would provide insight into how plan loan features might affect long-term retirement savings  Without clear data on the incidence of these loan offsets, which plan sponsors are generally required to include, (but not itemize) on the Form 5500, the overall extent of unrepaid plan loans in 401(k) plans cannot be known  To better identify the incidence and amount of loan offsets in 401(k) plans nationwide, we recommend that the Secretary of Labor direct the Assistant Secretary for EBSA, in coordination with IRS, to revise the Form 5500 to require plan sponsors to report qualified plan loan offsets as a separate line item distinct from other types of distributions  (Recommendation 1) We provided a draft of this product to the Department of Labor, the Department of the Treasury, and the Internal Revenue Service for review and comment  In its written comments, reproduced in appendixes IV and V, respectively, DOL and IRS generally agreed with our findings, but neither agreed nor disagreed with our recommendation  DOL said it would consider our recommendation as part of its overall evaluation of the Form 5500, and IRS said it would work with DOL as it responds to our recommendation  The Department of Treasury provided no formal written comments  In addition, DOL, IRS, Treasury and two third-party subject matter experts provided technical comments, which we incorporated in the report, as appropriate As agreed with your staff, unless you publicly announce the contents of this report earlier, we plan no further distribution until 30 days from the report date  At that time, we will send copies to the Secretary of Labor, Secretary of the Treasury, Commissioner of Internal Revenue, and other interested parties  In addition, the report will be available at no charge on the GAO website at http://www gao gov  If you or your staff have any questions about this report, please contact me at (202) 512-7215 or jeszeckc@gao gov  Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report  GAO staff making key contributions to this report are listed in appendix VI  The objectives of this study were to determine: (1) what are the incidence and amount of retirement savings being withdrawn early; (2) what is known about the factors that might lead individuals to access their retirement savings early; and (3) what strategies or policies, if any, might reduce the incidence and amount of early withdrawals of retirement savings  To examine the incidence and amount of early withdrawals from individual retirement accounts (IRA) and 401(k) plans, we analyzed the most recent nationally representative data available in three relevant federal data sources, focusing our analysis on individuals in their prime working years (ages 25 to 55), when possible  For consistency, we analyzed data from 2013 from each data source because it was the most recent year that data were available for all types of early withdrawals we examined  We adjusted all dollar-value estimates derived from each data source for inflation and reported them in constant 2017 dollars  We determined that the data from these sources were sufficiently reliable for the purposes of our report  First, to examine recent incidence and amount of early withdrawals from IRAs and the associated tax consequences for individuals ages 25 to 55, we analyzed IRS estimates based on tax returns as filed by taxpayers before enforcement activity published by the Internal Revenue Service’s (IRS) Statistics of Income Division for tax year 2013  Specifically, we analyzed the number of taxpayers reporting early withdrawals from their IRAs in 2013 and the aggregate amount of these withdrawals  To provide additional context on the scope of these early withdrawals, we analyzed the age cohort’s total IRA contributions and the end-of-year fair market value of the IRAs, and compared these amounts to the aggregate amount withdrawn  To examine the incidence and amount of taxes paid as a result of the additional 10 percent tax for early distributions, we analyzed estimates on the additional 10 percent tax paid on qualified retirement plans in 2013  Although IRS did not delineate these data by age, we used these data as proxy because IRS assesses the additional 10 percent tax on distributions to taxpayers who have not reached age 59½  Given the delay between a withdrawal date and the date of the tax filing, it is possible that some of the taxes were paid in the year following the withdrawal  We reviewed technical documentation and developed the 95 percent confidence intervals that correspond to these estimates  Second, to examine the incidence and amount of early withdrawals from 401(k) plans, we analyzed data included in the 2014 panel of the U S  Census Bureau’s Survey of Income and Program Participation (SIPP)—a nationally representative survey of household income, finances, and use of federal social safety net programs—along with retirement account contribution and withdrawal data included in the SIPP’s Social Security Administration (SSA) Supplement on Retirement, Pensions, and Related Content  Specifically, we developed percentage and dollar-value estimates of the incidence and amount of lump sum payments received and hardship withdrawals taken by participants in 401(k) plans in 2013  Because the SIPP is based upon a complex probability sample, we used Balanced Repeated Replication methods with a Fay adjustment to derive all percentage, dollar-total, and dollar-ratio estimates and their 95 percent confidence intervals  To better understand the characteristics of individuals who received a lump sum and/or took a hardship withdrawal in 2013, we analyzed a range of selected individual and household demographic variables and identified characteristics associated with a higher incidence of withdrawals  We applied domain estimation methods to make estimates for these subpopulations  (For a list of variables used and the results of our analysis, please see appendix III ) We attempted to develop a multiple regression model to estimate the unique association between each characteristic and withdrawals, but determined that the SIPP did not measure key variables in enough detail to develop persuasive causal explanations  The sample size of respondents receiving lump sums was too small to precisely estimate the partial correlations of many demographic variables at once  Even with adequate sample sizes, associations between broad demographic variables, such as age and income, likely reflected underlying causes, such as retirement and financial planning strategies, which SIPP did not measure in detail  Third, to examine the incidence and amount of unrepaid plan loans from 401(k) plans, we analyzed the latest filing of annual plan data that plan sponsors reported on the Form 5500 to the Department of Labor (DOL) for the 2013 plan year  We looked at unrepaid plan loans reported by sponsors of large plans (Schedule H) and small plans (Schedule I)  For each schedule, we analyzed two variables related to unrepaid plan loans: (1) deemed distributions of participant loans (which captures the amount of loan defaults by active participants) and (2) benefits distributed directly to participants (which includes plan loan offsets for a variety of reasons, including plan loans that remain unpaid after a participant separates from a plan)  Because plan sponsors report data in aggregate and do not differentiate by participant age, we calculated and reported the aggregate of loan defaults identified as deemed distributions in both schedules  We could not determine the amount of plan loan offsets based on the way that plan sponsors are required to report them  Specifically, plan sponsors are required to treat unrepaid loans occurring after a participant separates from a plan as reductions or offsets in plan assets, and are required to report them as part of a larger commingled category of offsets that also includes large-dollar items like rollovers of account balances to another qualified plan or IRA  As a result, we were unable to isolate and report the amount of this category of unrepaid plan loans  To identify what is known about the factors that might lead individuals to access their 401(k) plans and IRAs and what strategies or policies might reduce the early withdrawal of retirement savings, we performed a literature search using multiple databases to locate documents regarding early withdrawals of retirement savings published since 2008 and to identify experts for interviews  The search yielded a wide variety of scholarly articles, published articles from various think tank organizations, congressional testimonies, and news reports  We reviewed these studies and identified factors that lead individuals to withdraw retirement savings early, as well as potential strategies or policies that might reduce this behavior  The search also helped us identify additional potential interviewees  To answer our second and third objectives, we visited four metropolitan areas and conducted 51 interviews with a wide range of stakeholders that we identified in the literature  In some cases, to accommodate stakeholder schedules, we conducted phone interviews or accepted written responses  Specifically, we interviewed human resource professionals from 22 private-sector companies (including 4 written responses), representatives from 8 plan administrators, 13 retirement research experts (including 1 written response), representatives from 4 industry associations, representatives from 2 participant advocacy organizations, and representatives from 2 financial technology companies  We conducted in-person interviews at four sites to collect information from three different groups: (1) human resource officials in private-sector companies, (2) top 20 plan administrators or recordkeepers, and (3) retirement research experts  We selected site visit locations in four metropolitan locations that were home to representatives of each group  To select companies for potential interviews, we reached out to a broad sample of Fortune 500 companies that offered a 401(k) plan to employees and varied by geographic location, industry, and number of employees  We selected plan administrators based on Pensions and Investments rankings for assets under management and number of individual accounts  We selected retirement research experts who had published research on early withdrawals from retirement savings, as well as experts that we had interviewed in our prior work  Based on these criteria, we conducted site visits in Boston, Massachusetts; Chicago, Illinois; the San Francisco Bay Area, California; and Seattle, Washington  We held interviews with parties in each category who responded affirmatively to our request  In each interview, we solicited names of additional stakeholders to interview  We also interviewed representatives of organizations, such as financial technology companies, participant advocacy organizations, industry associations, and plan administrators focused on small businesses, whose work we deemed relevant to our study  We developed a common question set for each stakeholder category that we interviewed  We based our interview questions on our literature review, research objectives, and the kind of information we were soliciting from each stakeholder category  In each interview, we asked follow-up questions based on the specific responses provided by interviewees  In our company interviews, we asked how companies administered retirement benefits for employees; company policies and procedures regarding separating employees and the disposition of their retirement accounts; company policies regarding plan loans, hardship withdrawals, and rollovers from other 401(k) plans; and company strategies to reduce early withdrawals from retirement savings  In our interviews with plan administrators, we asked about factors that led individuals to access their retirement savings early, how plan providers interacted with companies and separating employees, available data on loans and hardship withdrawals from client retirement plans, and potential strategies to reduce the incidence and amount of early withdrawals  In our interviews with retirement research experts, financial technology companies, participant advocacy organizations, and industry associations we asked about factors that led individuals to make early withdrawals from their retirement savings and any potential strategies that may reduce the incidence and amount of early withdrawals  In our interviews with plan administrators and retirement research experts, we also provided a supplementary table outlining 37 potential strategies to reduce early withdrawals from retirement savings  We asked interviewees to comment on the strengths and weaknesses of each strategy in terms of its potential to reduce early withdrawals, and gave them opportunity to provide other potential strategies not listed in the tables  We developed the list of strategies based on the results of our literature review  Some interviewees also provided us with additional data and documents to assist our research  For example, some companies and plan administrators we interviewed provided quantitative data on the number of plan participants, the average cashout or rollover amounts, the percentage of participants who took loans or hardship withdrawals from their retirement accounts, and known reasons for these withdrawals  Some research experts also provided us with documentation, including published articles and white papers that supplemented our interviews and literature review  All data collected through these methods are nongeneralizable and reflect the views and experiences of the respondents and not the entire population of their respective constituent groups  To answer our second and third objectives, we analyzed the content of our stakeholder interview responses and corroborated our analysis with information obtained from our literature review and quantitative information provided by our interviewees  To examine what is known about the factors leading individuals to access retirement savings early, we catalogued common factors that stakeholders identified as contributing to early withdrawals from retirement savings  We also collected information on plan rules governing early participant withdrawals of retirement savings  To identify potential strategies or policies that might reduce the incidence and amount of early withdrawals, we analyzed interview responses and catalogued (1) company practices that employers identified as having an effect in reducing early withdrawals and (2) strategies that stakeholders suggested that could achieve a similar outcome  GAO is not endorsing or recommending any strategy in this report, and has not evaluated these strategies for their behavioral or other effects on retirement savings or on tax revenues  Appendix II: Selected Provisions Related to Early Withdrawals from 401(k) Plans and Individual Retirement Accounts (IRAs) Requirements Provides an exception for distributions for qualified higher education expenses and for qualified “first-time” home purchases made before age 59½ from the additional 10 percent tax for early distributions Defines “qualified first-time homebuyer distribution” and “first-time homebuyer,” and prescribes the lifetime dollar limit on such distributions, among other things  Allows eligible individuals to make tax-deductible contributions to individual retirement accounts, subject to limits based, for example, on income and pension coverage  Provides for the loss of exemption for an IRA if the IRA owner engages in a prohibited transaction, which results in the IRA being treated as distributing all of its assets to the IRA owner at the fair market value on the first day of the year in which the transaction occurred  Defines a prohibited transaction to include the lending of money or other extension of credit between a plan and a disqualified person  Requirements Allows eligible individuals to make contributions to a Roth IRA that are not tax- deductible  Distributions from the account can generally be treated as a qualified distribution if a distribution is made on or after the Roth IRA owner reaches age 59½ and the distributions is made after the 5-taxable year period beginning when the account was initially opened  Defines a prohibited transaction to include the lending of money or other extension of credit between a plan and a disqualified person  Appendix III: Estimated Incidence of Certain Early Withdrawals of Retirement Savings 401(k) plans 401(k) plans ($1000 or more) 401(k) plans 401(k) plans ($1000 or more) 401(k) plans 401(k) plans ($1000 or more) Legend: * Sampling error was too large to report an estimate  In addition to the contact named above, Dave Lehrer (Assistant Director); Jonathan S  McMurray (Analyst-in-Charge); Gustavo O  Fernandez; Sean Miskell; Jeff Tessin; and Adam Wendel made key contributions to this report  James Bennett, Holly Dye, Sara Edmondson, Sarah Gilliland, Sheila R  McCoy, Ed Nannenhorn, Katya Rodriguez, MaryLynn Sergent, Linda Siegel, Rachel Stoiko, Frank Todisco, and Sonya Vartivarian also provided support  The Nation’s Fiscal Health: Action Is Needed to Address the Federal Government’s Future  GAO-18-299SP  Washington, D C : June 21, 2018  The Nation’s Retirement System: A Comprehensive Re-evaluation is Needed to Better Promote Future Retirement Security  GAO-18-111SP  Washington, D C : October 18, 2017  Retirement Security: Improved Guidance Could Help Account Owners Understand the Risks of Investing in Unconventional Assets  GAO-17-102  Washington, D C : December 8, 2016  401K Plans: Effects of Eligibility and Vesting Policies on Workers’ Retirement Savings  GAO-17-69  Washington, D C : October 21, 2016  Retirement Security: Low Defined Contribution Savings May Pose Challenges  GAO-16-408  Washington, D C : May 5, 2016  Retirement Security: Shorter Life Expectancy Reduces Projected Lifetime Benefits for Lower Earners  GAO-16-354  Washington, D C : March 25, 2016  Social Security’s Future: Answers to Key Questions  GAO-16-75SP  Washington, D C : October 27, 2015  Retirement Security: Federal Action Could Help State Efforts to Expand Private Sector Coverage  GAO-15-556  Washington, D C : September 10, 2015  Highlights of a Forum: Financial Literacy: The Role of the Workplace  GAO-15-639SP  Washington, D C : July 7, 2015  401(K) Plans: Greater Protections Needed for Forced Transfers and Inactive Accounts  GAO-15-73  Washington, D C : November 21, 2014  Older Americans: Inability to Repay Student Loans May Affect Financial Security of a Small Percentage of Retirees  GAO-14-866T  Washington, D C : September 10, 2014  Financial Literacy: Overview of Federal Activities, Programs, and Challenges  GAO-14-556T  Washington, D C : April 30, 2014  Retirement Security: Trends in Marriage and Work Patterns May Increase Economic Vulnerability for Some Retirees  GAO-14-33  Washington, D C : January 15, 2014  401(K) Plans: Labor and IRS Could Improve the Rollover Process for Participants  GAO-13-30  Washington, D C : March 7, 2013  Retirement Security: Women Still Face Challenges  GAO-12-699  Washington, D C : July 19, 2012  401(K) Plans: Policy Changes Could Reduce the Long-term Effects of Leakage on Workers’ Retirement Savings  GAO-09-715  Washington, D C: August 28, 2009 

ground_truth: The principal federal program to aid municipal wastewater treatment plant construction is authorized in the Clean Water Act (CWA). Established as a grant program in 1972, it now capitalizes state loan programs through the clean water state revolving loan fund (CWSRF) program. Since FY1972, appropriations have totaled $98 billion. In 1996, Congress amended the Safe Drinking Water Act (SDWA, P.L. 104-182) to authorize a similar state loan program for drinking water to help systems finance projects needed to comply with drinking water regulations and to protect public health. Since FY1997, appropriations for the drinking water state revolving loan fund (DWSRF) program have totaled $23 billion. The U.S. Environmental Protection Agency (EPA) administers both SRF programs, which annually distribute funds to the states for implementation. Funding amounts are specified in the State and Tribal Assistance Grants (STAG) account of EPA annual appropriations acts. The combined appropriations for wastewater and drinking water infrastructure assistance have represented 25%-32% of total funds appropriated to EPA in recent years. Prior to CWA amendments in 1987 (P.L. 100-4), Congress provided wastewater grant funding directly to municipalities. The federal share of project costs was generally 55%; state and local governments were responsible for the remaining 45%. The 1987 amendments replaced this grant program with the SRF program. Local communities are now often responsible for 100% of project costs, rather than 45%, as they are required to repay loans to states. The greater financial burden of the act's loan program on some cities has caused some to seek continued grant funding. Although the CWSRF and DWSRF have largely functioned as loan programs, both allow the implementing state agency to provide "additional subsidization" under certain conditions. Since its amendments in 1996, the SDWA has authorized states to use up to 30% of their DWSRF capitalization grants to provide additional assistance, such as forgiveness of loan principal or negative interest rate loans, to help disadvantaged communities. America's Water Infrastructure Act of 2018 (AWIA; P.L. 115-270) increased this proportion to 35% while conditionally requiring states to use at least 6% of their capitalization grants for these purposes. Congress amended the CWA in 2014, adding similar provisions to the CWSRF program. In addition, appropriations acts in recent years have required states to use minimum percentages of their allotted SRF grants to provide additional subsidization. Final full-year appropriations were enacted as part of the Consolidated Appropriations Act, FY2019 (P.L. 116-6), on February 15, 2019. The act provided $1.694 billion for the CWSRF and $1.163 billion for the DWSRF program, nearly identical to the FY2018 appropriations. The FY0219 act provided $68 million for the WIFIA program, a $5 million increase from the FY2018 appropriation. Compared to the FY2019 appropriation levels, the Trump Administration's FY2020 budget request proposes to decrease the appropriations for the CWSRF, DWSRF, and WIFIA programs by 34%, 26%, and 63%, respectively.