GAO

United States General Accounting Office

Report to Congressional Requesters

August 2000 DRINKING WATER

Spending Constraints 

Could Affect States’ 

Ability to Implement 

Increasing Program 

Requirements

GAO/RCED-00-199

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Contents

Letter 3

Appendixes Appendix I: Highlights of the Safe Drinking Water Act Amendments 

of 1996 36

Appendix II: Association of State Drinking Water Administrators’ 

Estimates of State Resource Needs 39

Appendix III: Summary of States’ Responses to GAO’s Questionnaire 41

Tables Table 1: Authorized Funds and EPA Budget Requests for the States’ 

Implementation of Their Drinking Water Programs, Fiscal 

Years 1998 Through 2000 11

Table 2: Amounts Potentially Available to the States from EPA’s 

Budget Requests, Including the Minimum State Match,

Compared to Estimated Needs, Fiscal Years 1999 and 2000 13

Table 3: Sources and Amounts of States’ Expenditures for Drinking

Water Program Implementation, Fiscal Years 1997 Through

1999 16

Table 4: Availability and Use of Drinking Water State Revolving Fund 

Set-Asides, Fiscal Years 1997 Through 1999 17

Table 5: States’ Use of Set-Asides From the Drinking Water State 

Revolving Fund, Fiscal Years 1997 and 1998 19

Table 6: Resource Needs for Implementing the States’ Drinking Water 

Programs, Fiscal Years 1999 Through 2005 20

Abbreviations

ASDWA Association of State Drinking Water Administrators

EPA Environmental Protection Agency
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United States General Accounting Office

Washington, D.C. 20548

Resources, Community, and

Economic Development Division

B-285172 Letr

August 31, 2000

The Honorable Thomas J. Bliley, Jr.

Chairman, Committee on Commerce

House of Representatives

The Honorable Michael Bilirakis

Chairman, Subcommittee on Health and Environment

Committee on Commerce

House of Representatives

The Honorable Brian P. Bilbray

House of Representatives

The Honorable Rick Lazio

House of Representatives

Ensuring an adequate supply of safe drinking water requires investing not 

only in physical infrastructure, such as water treatment and distribution 

systems, but also in essential activities, such as training water system 

operators and monitoring compliance with standards. In the Safe Drinking 

Water Act Amendments of 1996, the Congress enacted new programs to 

better protect drinking water supplies and public health. Under the act, the 

states are responsible for implementing a number of programs, including 

those to help ensure that the nation’s thousands of drinking water systems 

have the financial, technical, and managerial ability to comply with 

regulations and protect sources of drinking water from contamination. In 

addition, the states must oversee water systems’ compliance with complex 

new regulations on specific contaminants. (App. I provides an overview of 

some of the key requirements of the 1996 amendments.)

To help states meet these responsibilities, the Congress, through the 1996 

amendments, substantially increased the amount of funding authorized to 

support drinking water programs. First, the amendments authorized an 

increase in the funding for Public Water System Supervision grants from 

$70 million to $100 million annually through fiscal year 2003. These 

supervision grants to the states are directed at program implementation 

activities, such as providing technical assistance to local water systems, 

conducting inspections, and overseeing water systems’ compliance with 

requirements for testing and treating water quality. Second, the 
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amendments authorized $9.6 billion, to be appropriated through 2003, to 

establish the Drinking Water State Revolving Fund. In its annual budgets, 

the Environmental Protection Agency (EPA) requests appropriations to 

capitalize the states’ funds and makes specific allotments to each state for 

that purpose. (The states, in turn, lend money from the funds to their local 

water systems for improvements that are needed to comply with federal 

drinking water regulations and protect public health. As loans are repaid, 

the states’ funds are replenished, enabling them to make loans for other 

eligible drinking water projects.) While the state revolving funds are 

primarily directed at financing local infrastructure, the states, at their 

option, may reserve or “set aside” up to 31 percent of their annual allotment 

to help implement their drinking water programs and to perform related 

activities, such as training water system operators. The states must match a 

portion of both the supervision grants and the revolving fund set-asides. 

Despite the significant increases in the amount of funding the Congress has 

authorized to help the states implement their programs, state 

representatives have expressed concerns about whether the states have 

sufficient resources to fulfill their responsibilities under the act.

In recognition of the key role that the states play in ensuring compliance 

with the requirements of the Safe Drinking Water Act, you asked us to 

assess the amounts of funding available and expended for implementing 

the states’ drinking water programs. As agreed with your offices, this report 

provides information on (1) how EPA’s budget requests for the states’ 

implementation of their drinking water programs compare with the 

amounts authorized and estimated to be needed; (2) how much the states 

have spent since the passage of the 1996 amendments to implement these 

programs and how the expenditures compare with the estimated needs; (3) 

what effects federal funding levels have had, and may have in the future, on 

the states’ ability to implement their programs; and (4) what existing 

practices have the potential to help the states implement their drinking 

water programs more effectively and efficiently.
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As a measure of the amount of funding states need to implement their 

drinking water programs, we used estimates developed for fiscal years 

1999 through 2005 by the Association of State Drinking Water 

Administrators (ASDWA) with the support and participation of EPA.1

 To 

obtain a nationwide perspective on the states’ spending, we mailed a 

questionnaire to survey 49 state drinking water agencies on their 

expenditures for implementing their drinking water programs since the 

1996 amendments (that is, for fiscal years 1997 through 1999).2

 To obtain 

information on the effects of federal funding levels on the states’ ability to 

implement their programs and the practices or programs that might help 

them implement their programs, we conducted detailed discussions with 

officials in eight states—Arkansas, Florida, Indiana, Maine, Massachusetts, 

Ohio, Oregon, and Utah. Criteria for selecting these states included the size 

of the state’s drinking water program, the program’s current staffing level, 

and the state’s use of management strategies to implement its program 

more efficiently or effectively. A detailed discussion of our scope and 

methodology appears at the end of the report.

Results in Brief In its budget requests for fiscal years 1998 through 2000, EPA requested 

about 94 percent of the $100 million authorized annually by the Safe 

Drinking Water Act Amendments of 1996 for supervision grants to the 

states and tribes. For the same fiscal years, EPA requested, on average, 80 

percent of the amounts authorized to capitalize the states’ revolving loan 

fund for drinking water. If the states had made maximum use of set-asides 

from the revolving fund, EPA’s requested appropriations would have 

provided a total of $308 million in fiscal year 1999 and $318 million in fiscal 

year 2000 to help the states meet their responsibilities under the drinking 

water program, which include overseeing water systems’ compliance with 

treatment and testing requirements, conducting inspections, and taking 

enforcement action, when necessary. These amounts, when combined with 

1

EPA does not routinely estimate the total amounts needed by the states. ASDWA is the 

professional association serving state drinking water programs; its members are generally 

the administrators of drinking water programs in the 50 states.

2

We did not include Wyoming and the District of Columbia in the survey because they do not 

implement their own drinking water programs; instead, EPA directly oversees their 

programs. We also did not include Puerto Rico, the U.S. Virgin Islands, American Samoa, 

Guam, and the Commonwealth of the Northern Mariana Islands. All 49 state agencies 

responded to our survey. For the purposes of this report, “all states” refers to these 49 

states.
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required matching funds from the states, would have exceeded the annual 

needs estimated by ASDWA.

However, information provided by EPA shows that the states generally 

have not set aside nearly as much money from the revolving loan fund for 

program implementation as they could have, in part because doing so 

would have diverted funds from needed infrastructure improvements. 

According to our nationwide survey of state drinking water agencies, for 

fiscal years 1997 through 1999, the states’ actual expenditures for 

implementing their drinking water programs—including expenditures of 

both federal and state funds—were $214 million, $237 million, and $276 

million, respectively. About 53 percent of these expenditures was funded 

from state sources, and, collectively, the states’ contributions exceeded the 

statutory matching requirements. In fiscal year 1999, the only year for 

which our data permit such a comparison, the states’ total expenditures fell 

short of ASDWA’s estimate of the amount needed for program 

implementation nationwide by about 20 percent.

According to our survey, the amounts of federal funding available for fiscal 

years 1997 through 1999 had less of an impact on the states’ ability to 

implement their drinking water programs than did the effects of stateimposed spending constraints. Over 75 percent of the states reported that 

their staffing levels in fiscal year 1999 were inadequate to meet the act’s 

requirements in effect through that year. The following reasons were most 

frequently cited: (1) the states’ authorized staffing and authorized funding 

levels were too low, (2) hiring freezes prevented the states from filling 

authorized positions, and (3) inadequate state salaries made it difficult to 

attract and retain qualified staff. In addition, about 40 percent of these 

respondents indicated a reluctance to use revolving fund set-asides to 

address inadequate staffing levels, citing concerns about diverting funds 

from infrastructure projects and the continued availability of the set-asides 

in the long term. Our discussions with drinking water program officials 

from eight states disclosed that they have been able to meet most 

requirements in effect through fiscal year 1999, generally by scaling back 

their programs or doing the minimum amount necessary to meet the 

requirements. According to state program managers, if this situation 

continues, it could eventually lead to more compliance problems and a 

larger enforcement workload, especially among small water systems, 

which make up the overwhelming majority of water systems. Over 90 

percent of the surveyed states predicted that their staffing levels would be 

less than adequate in the future as a number of new program requirements 

and complex contaminant regulations take effect.
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Program officials in the eight states we contacted cited some management 

practices that could increase the efficiency of program implementation. 

For example, some states are taking advantage of the expertise in other 

state and federal agencies or associations. The states also reported the 

increased use of the Internet to obtain and disseminate information. EPA 

officials pointed to new requirements that may increase efficiency, 

including those designed to assess water sources for contamination and 

improve the ability of water systems to comply with drinking water 

regulations, but it could take years to realize the benefits.

We provided EPA with a draft of this report for its review and comment. 

EPA officials, including the Acting Chief of the Protection Branch of EPA’s 

Office of Ground Water and Drinking Water, generally agreed with the 

information presented. However, EPA officials had concerns in two areas. 

First, the officials said that the draft report did not sufficiently emphasize 

the impact of increasing program requirements on the states’ future 

resource needs. We modified the report to highlight existing material 

concerning the impact of increasing program requirements. Second, the 

officials noted that our comparison of the funds potentially available to the 

states, with the needs estimated by ASDWA, could be misleading. We 

clarified our presentation of this comparison. EPA officials also provided 

technical clarifications, which we incorporated as appropriate.

Background The Congress enacted the Safe Drinking Water Act in 1974 to protect the 

public from the risks of contaminated drinking water. The act required, 

among other things, that EPA establish (1) drinking water standards or 

treatment techniques for contaminants that adversely affect human health 

and (2) requirements for monitoring the quality of drinking water supplies 

and ensuring the proper operation and maintenance of public water 

systems. The act also authorized EPA to give the primary enforcement 

authority for the drinking water program—commonly referred to as 

“primacy”—to the states that meet certain requirements. Among the key 

requirements are that the states (1) adopt drinking water regulations that 

are no less stringent than EPA’s national primary drinking water regulations 

and (2) adopt and implement adequate procedures to carry out the 

program’s requirements and enforce the regulations. All states except 

Wyoming have assumed primacy for managing their drinking water 

programs.

To assist the states in developing and implementing their own drinking 

water programs, the 1974 act authorized EPA to award them program 
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supervision grants and provided that the federal funds would constitute not 

more than 75 percent of the cost of implementing state programs. 

Historically, the federal share of the states’ program costs has averaged 

about 45 percent, with the states providing the remaining funds. 

In 1986, the Congress amended the act to significantly increase the number 

of contaminants to be regulated, strengthen EPA’s enforcement authority, 

and establish various other requirements. In the years after these 

amendments were enacted, the states experienced great difficulty in 

meeting increasingly complex and demanding requirements while fulfilling 

their basic responsibilities. Among other things, the states’ drinking water 

program staffs were typically responsible for performing physical 

inspections of drinking water facilities (called sanitary surveys), providing 

technical assistance, ensuring the water systems’ compliance with 

contaminant limits and other program requirements, and taking 

enforcement action against violators. Funding shortages at the state level 

were a major reason why the states were having difficulties fulfilling their 

responsibilities. 

The 1996 amendments addressed the states’ financial resource problems by 

increasing the authorized funding for the supervision grants, which totaled 

$70 million in fiscal year 1995, to $100 million annually through fiscal year 

2003, and authorizing a total of $9.6 billion through 2003 to establish the 

Drinking Water State Revolving Fund for infrastructure improvements at 

local water systems. The states use their entire supervision grants for 

implementation activities, such as monitoring a water system’s compliance 

with requirements and providing technical assistance, and are required to 

provide matching funds equal to one third of the grant’s amount. To give the 

states more flexibility in operating their drinking water programs, the 

Congress gave them the option of setting aside up to 31 percent of their 

annual revolving fund allotments for certain designated activities, most of 

which are related to program implementation. The states may set aside up 

to

• 2 percent to provide technical assistance to small water systems for 

such purposes as selecting an appropriate treatment technology;

• 4 percent to administer their revolving fund programs;

• 10 percent of their annual revolving fund allotments for a combination 

of the following: supervision of public water systems; technical 

assistance through programs designed to protect sources of drinking 

water; strategies to help ensure the financial, technical, and managerial 
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capacity of water systems to provide safe drinking water; and programs 

to certify water system operators; and

• 15 percent for several other categories of activities, such as establishing 

and implementing wellhead protection programs to protect 

groundwater sources of drinking water. 

The states must match the 10-percent set-aside on a dollar-for-dollar basis,3

but they are not required to provide matching funds for the other setasides.

In addition to providing more funding to the states, the 1996 amendments 

added a number of new responsibilities. For example, the amendments 

established new programs for protecting drinking water sources and 

helping to ensure the financial, technical, and managerial viability of water 

systems. As these new programs are being implemented, the states will also 

be overseeing water systems’ compliance with complex new regulations on 

specific contaminants. For example, conventional water treatment 

practices require the addition of disinfectant chemicals to the water that, 

while effective in controlling many harmful microorganisms, can combine 

with organic and inorganic compounds in the water and form potentially 

harmful disinfection by-products. The Disinfectants/Disinfection ByProducts Rule attempts to minimize risks from these by-products and still 

control microbial contaminants.

Although EPA does not routinely estimate the states’ resource needs for 

implementing the requirements of the Safe Drinking Water Act, ASDWA has 

periodically developed such estimates with the support and participation of 

EPA. As the professional association serving state drinking water 

programs, ASDWA is a key stakeholder in EPA’s development of regulations 

and guidance and periodically prepares reports on various aspects of the 

drinking water program as a service to its members and EPA. Since 1988, 

ASDWA has prepared three estimates of the resources the states need to 

fulfill their responsibilities under the Safe Drinking Water Act. The most 

recent estimate incorporated the requirements of the 1996 amendments 

and covers fiscal years 1999 through 2005.

3

Up to 50 percent of the required matching funds for the 10-percent set-aside may consist of 

the state’s match to the supervision grant in 1993. Therefore, some states are only required 

to provide half of the match in “new” money.
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EPA’s Budget Requests 

Have Been Less Than 

Amounts Authorized 

but Sufficient to Cover 

the States’ Estimated 

Needs

For fiscal years 1998 through 2000, EPA annually requested less than the 

amounts that the Congress had authorized for the implementation of the 

states’ drinking water programs. However, if all of the states had chosen to 

set aside the maximum allowable portion of their allotments from the 

revolving fund, then EPA’s budget requests would have provided them with 

funding levels that—combined with their required matching 

contributions—exceeded the aggregate amount ASDWA estimated the 

states would need. The amount would have exceeded ASDWA’s total 

estimate by $27 million in fiscal year 1999 and $44 million in fiscal year 

2000. (ASDWA did not estimate needs for fiscal year 1998.)

EPA’s Budget Requests Have 

Been Less Than the 

Authorized Funds

According to EPA officials, the agency’s annual budget request, as reflected 

in the President’s Budget, indicates (1) the level of resources that agency 

officials believe is needed to fulfill EPA’s mission and program 

responsibilities, including funding for the states’ drinking water programs, 

and (2) the planning ceilings and policy directives provided by the Office of 

Management and Budget. Consequently, as is the case with other EPA 

programs, the amounts requested by EPA may fall below the amounts 

authorized by the Congress.

The two primary sources of federal funding for the states’ implementation 

of their drinking water programs are the supervision grants and the setasides from the revolving fund. Table 1 shows the differences between the 

amounts authorized and requested for fiscal years 1998 through 2000 for 

the states’ implementation of their drinking water programs. For the 

purpose of this analysis, we (1) adjusted the amounts for the supervision 

grants and the revolving fund to include all states except Wyoming and (2) 

computed the amount of the revolving fund allotment available for setasides at 31 percent—the maximum amount allowed.4

4

We did not include Wyoming in the analysis because it does not have primacy for the 

drinking water program. In addition, we did not include the District of Columbia, Puerto 

Rico, the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern 

Mariana Islands, and the Indian Tribes. The former Trust Territories were also excluded 

from the supervision grants.
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Table 1: Authorized Funds and EPA Budget Requests for the States’ Implementation of Their Drinking Water Programs, Fiscal 

Years 1998 Through 2000

a

Amounts refer to authorized appropriations under the Safe Drinking Water Act Amendments of 1996. 

b

EPA did not expressly request these amounts in its annual budgets. The amounts shown here 

represent 31 percent of EPA’s budget request for the revolving fund, adjusted to show what would be 

available to the 49 states included in our analysis.

Source: GAO’s analysis of data from EPA.

For fiscal years 1998 through 2000, on average, EPA requested about 94 

percent of the funding authorized for supervision grants and 80 percent of 

the funding authorized for the revolving fund, from which the set-asides are 

available. As shown in table 1, EPA’s requests for the supervision grants 

remained constant at about $85 million during this period, while its 

requests for the revolving fund allotments have increased, making more 

funds available for set-aside use each year, from $212 million in fiscal year 

1998 to $233 million in fiscal year 2000. (During this period, EPA received 

the amounts it requested for the supervision grants and the revolving fund, 

except for fiscal year 2000, when the appropriation for the revolving fund 

was $5 million less than requested.)

Dollars in millions

Fiscal year Authorized fundsa Budget request

Difference between

authorized funds

and budget request

Budget request as a

percentage of

authorized funds

1998

Public Water System Supervision grants $90.5 $84.9 $5.6 93.8

Drinking Water State Revolving Fund 

allotments available for set-asides

280.6 212.4b 68.2 75.7

Total $371.1 $297.3 $73.8 80.1

1999

Public Water System Supervision grants $90.6 $85.0 $5.6 93.8

Drinking Water State Revolving Fund 

allotments available for set-asides

280.0 222.7b 57.3 79.5

Total $370.6 $307.7 $62.9 83.0

2000

Public Water System Supervision grants $90.6 $85.0 $5.6 93.8

Drinking Water State Revolving Fund 

allotments available for set-asides

279.4 232.9b 46.5 83.4

Total $370.0 $317.9 $52.1 85.9
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In addition to the supervision grants and the revolving fund, the 1996 

amendments authorize other appropriations for specific activities, which 

could provide additional funding to the states. These include $30 million in 

authorizations for grants to establish wellhead protection areas, $5 million 

to establish a source water petition program,5

 and $30 million to provide 

the states with funding for training and certifying water system operators.6

Of these activities, EPA has only reserved funds in fiscal years 1999 and 

2000 to provide the states with funds for the costs of training water system 

operators. According to EPA’s Chief, Budget and Accountability, Office of 

Ground Water and Drinking Water, the agency did not request funds for 

wellhead protection because almost all of the states already had wellhead 

protection programs or for a source water petition program because of 

higher priorities in the drinking water program. She explained that EPA did 

not reserve funds for training water system operators in fiscal year 1998 

because the final guidelines on operator certification training were not 

issued until February 1999.

EPA’s Budget Requests, 

Combined With Required 

Matching Contributions 

From the States, Were 

Adequate for Estimated 

Needs

According to ASDWA, the total estimated needs for the states’ programs in 

fiscal years 1999 and 2000 were $345 million and $339 million, respectively.7

The amounts EPA requested during those years would have been more than 

enough to meet the states’ annual needs as estimated by ASDWA if 

• the states took full advantage of the available set-asides—that is, if each 

state set aside the maximum 31 percent for state implementation 

activities and provided the required matching funds—and 

• the supervision grants and the minimum required matching 

contributions were included in the total.

5

Sections 1452 and 1453 of the Safe Drinking Water Act authorize funding for state programs 

that establish local voluntary incentive-based partnerships for source water protection and 

remediation.

6

The 1996 amendments allow EPA to reserve funds from the overall appropriation for the 

revolving fund for several purposes, including $30 million for reimbursement for operator 

training and certification costs, $10 million for health effects studies, $2 million for the costs 

of monitoring for unregulated contaminants, and $15 million for technical assistance to 

small water systems. To the extent EPA opts to take these set-asides, the amount of funds 

available for allotments to the states is reduced.

7

ASDWA’s estimates exclude Wyoming, the District of Columbia, Puerto Rico, the U.S. Virgin 

Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and 

the Indian Tribes. ASDWA did not estimate the needs for fiscal year 1998.
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As indicated in table 2, the funds potentially available to the states from 

EPA’s budget requests, when combined with the states’ required matching 

contributions, would have exceeded the states’ collective estimated needs 

for fiscal years 1999 and 2000 by about $27 million and $44 million, 

respectively. The matching contributions potentially add a significant 

amount of funds to the total amount available for state implementation—

about $65 million or more per year.

Table 2: Amounts Potentially Available to the States from EPA’s Budget Requests, 

Including the Minimum State Match, Compared to Estimated Needs, Fiscal Years 

1999 and 2000 

a

We did not include the amounts allocated for Wyoming, the District of Columbia, Puerto Rico, the U.S. 

Virgin Islands, Guam, American Samoa, the Commonwealth of the Northern Mariana Islands, and the 

Indian Tribes. In addition, the supervision grant funds do not include amounts allocated for the former 

Trust Territories.

b

Amounts are equal to one-third of the supervision grants, the minimum state match.

c

States are actually setting aside much less than the maximum 31 percent allowed.

d

We estimated the match as 5 percent of the total revolving fund allotments to the 49 states. The state 

program management set-aside of 10 percent requires a dollar-for-dollar match but allows 50 percent 

of the match to come from a state’s 1993 match to the supervision grant. Consequently, we assumed 

that a state would only have to provide 50 percent of the required match.

Source: GAO’s analysis of data from EPA and ASDWA.

ASDWA developed an aggregate national needs estimate; it did not estimate 

each individual state’s needs. The Association developed a model that 

outlined the activities required to implement each regulation or program 

Dollars in millions 

Source of funds Fiscal year 1999 Fiscal year 2000

Public Water System 

Supervision Grantsa

$85.0 $85.0

Minimum state match to Public 

Water System Supervision 

Grantsb

28.3 28.3

Drinking Water State Revolving 

Fund allotments available for 

set-asidesa, c

222.7 232.9

State match to state program 

management set-asidesd

35.9 37.6

Total funds potentially 

available

$371.9 $383.8

Estimated needs $345.1 $339.4

Amount above needs $26.8 $44.4
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and estimated the cost of these activities for fiscal years 1999 through 2005. 

The activities were identified by state, ASDWA, and EPA officials, and the 

state representatives developed the average costs for the program activities 

identified in the model. Nine states tested the model, which was then 

revised and used to project a national total. The estimated costs varied, 

depending on the size of a state’s program, with each state categorized as 

small, medium, or large on the basis of its full-time equivalent staff levels 

and other considerations. See appendix II for more information on 

ASDWA’s estimates.

We asked the drinking water program officials in our eight case study states 

to review ASDWA’s model and comment on the reasonableness of the 

values used for estimating costs. These officials said that, overall, the cost 

and staff estimates used in the model were “somewhat reasonable” (seven 

states) or “very reasonable” (one state), although some questioned specific 

elements of the estimates. For example, some officials commented that the 

cost estimates for technical or clerical staff were either too high or too low, 

especially for technical staff. The director of the drinking water program in 

Massachusetts remarked that, because of the higher cost of living in that 

state, the average cost for a technical staff year is $80,000—much higher 

than the $50,000 technical staff year estimated by the model.8

 Some 

officials also noted that, due to unique features within their programs or 

their states, the model did not exactly fit their situation. For example, the 

director of the drinking water program in Arkansas commented that his 

state has an extensive program for collecting and analyzing drinking water 

samples for compliance with standards, whereas most other states rely 

upon the water systems to do this. Officials in Arkansas, Florida, Ohio, and 

Utah noted that there were some discrepancies between elements of the 

model and their particular situations, but these discrepancies seemed to 

balance each other out, so that the overall estimates were acceptable. In 

two states, the model’s projected staff needs were considered high. In 

Maine, for example, the program director believed that the state could have 

operated with 8 to 13 fewer staff years to implement the program in 1999 

than the model projected. Indiana’s program director believed that the 

model’s staff year estimates were overstated by about 10 percent.

ASDWA officials acknowledge that the model might not be reflective of the 

needs of individual states or specific aspects of their programs. The 

officials explained that the model was designed to develop a national 

8

Staff-year costs include salary and benefits.
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projection of resource needs, based on a composite model of small, 

medium, and large states’ needs. Because the model was developed and 

tested by almost 25 percent of the states, ASDWA officials believe that the 

projected national need is reasonable. Our review of the methods used to 

develop the model indicates that the Association took reasonable measures 

to derive and validate its cost estimates and confirms its contention that 

the model could be used to develop national estimates. Thus, we believe 

that using ASDWA’s estimates as an approximation of future costs is 

reasonable.

States’ Contributions 

Have Exceeded 

Statutory Matching 

Requirements, But 

Overall Spending Has 

Fallen Short of 

Estimated Needs

A significant share of the states’ collective expenditures to implement their 

drinking water programs has been funded from state sources. In the 

aggregate, this state funding has exceeded the statutory matching 

requirements for (1) supervision grants and (2) the revolving loan fund setasides. However, some states have not set aside all of the revolving loan 

funds that they could have, at least in part because doing so would have 

diminished the amount of funds available to lend to water systems for 

infrastructure improvements. The states’ collective spending has fallen 

short of the needs estimated by ASDWA.

States’ Share of Total 

Expenditures Has Generally 

Exceeded Statutory 

Matching Requirements

States are required to match funds equal to one-third of their supervision 

grants and to match dollar-for-dollar any funds obtained under the 10-

percent set-aside for managing various program activities. According to the 

results of our nationwide survey, the states are contributing a significant 

share of the funding for their programs and are contributing more funding 

than required to meet these statutory matching provisions. During fiscal 

years 1997, 1998, and 1999, state funds were the source of 53 percent, on 

average, of the states’ total expenditures for implementing their drinking 

water programs. Of the expenditures that came from the states’ funding, 30 

percent was provided to match federal funds, and 70 percent consisted of 

other state funds for implementing state drinking water programs. Table 3 

provides a breakdown of the funding sources for the states’ spending and 

shows that the states contributed about half of the total expenditures, on 

average, over this 3-year period.
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Table 3: Sources and Amounts of States’ Expenditures for Drinking Water Program Implementation, Fiscal Years 1997 Through 

1999 

a

The majority of states (57 percent) reported that less than 10 percent of their funding from other state 

sources, if any, was used to implement activities that are in addition to those required under federal 

drinking water regulations.

Note: Some totals do not add due to rounding.

Source: GAO’s survey of 49 state drinking water programs.

Dollars in millions

Funding source

Federal funds State funds

Amount and 

percentage of 

total 

expenditures by 

year

Public Water

System

Supervision

grants

Drinking

Water State

Revolving

Fund setasidesTotal federal

funds

Required

matching

contributions

Funding

from other

state

sourcesa

Total state

funds Grand total

1997

Expenditures $82 $8 $90 $35 $89 $123 $214

Percentage of 

total 

expenditures

38.4 3.9 42.3 16.2 41.4 57.7 100.0

1998

Expenditures $82 $26 $108 $37 $92 $129 $237

Percentage of 

total 

expenditures

34.6 11.2 45.8 15.4 38.8 54.2 100.0

1999

Expenditures $84 $57 $141 $43 $91 $134 $276

Percentage of 

total 

expenditures

30.5 20.8 51.2 15.8 33.0 48.8 100.0

3-year average

Expenditures $83 $31 $113 $38 $91 $129 $242

Percentage of 

total 

expenditures

34.2 12.7 46.8 15.8 37.4 53.2 100.0
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Some States Did Not Take 

Full Advantage of Revolving 

Fund Set-Asides

Set-aside activity varied significantly from fiscal years 1997 through 1998, 

the only years for which complete information on set-asides is available.9

Table 4 shows how much of the available set-asides the states reserved and 

expended during those years and provides partial data for fiscal year 1999.

Table 4: Availability and Use of Drinking Water State Revolving Fund Set-Asides, 

Fiscal Years 1997 Through 1999 

a

Amount includes fiscal year 1997 budget request of $151.6 million plus 31 percent of the funds 

appropriated for the revolving fund in fiscal years 1995 and 1996 of $225 and $500 million, 

respectively.

b

Amount includes set-asides available from the fiscal year 1995 and 1996 appropriations of $225 

million and $500 million, respectively, because these funds were not available to the states until the 

revolving fund was established in fiscal year 1997.

c

States have 2 years, or until September 30, 2000, to reserve the fiscal year 1999 set-asides. Amount 

shown represents the total set-asides reserved as of August 2000.

Source: GAO’s analysis of data from EPA and GAO’s survey of state drinking water programs.

9

Grants to the states are available for obligation in the fiscal year for which the funds are 

authorized and the following fiscal year. This means that states have until September 30, 

2000 to obligate their fiscal year 1999 grants. 

Dollars in millions 

Set-asides

Fiscal year

1997

Fiscal year

1998

Fiscal year

1999

Authorized by the 1996 

amendments 

$274.1 $280.6 $280.0

Requested in EPA’s budget 

(amount potentially available)

376.3a 212.4 222.7

Reserved by states from 

amount potentially available

238.4b 95.7 83.8c

Expended by states $8.0 $26.0 $57.0
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During fiscal year 1997, the states had a one-time opportunity to set aside 

up to 10 percent of their revolving fund allotments for source water 

delineation and assessment activities,10 and every state took advantage of 

this opportunity to some extent. Although this set-aside was available only 

in fiscal year 1997, the states have up to 4 years to obligate these funds. In 

fiscal year 1998, however, the states set aside, on average, less than half of 

the revolving fund allotments they could have for program implementation, 

in part, because doing so would have diverted funds from needed 

infrastructure improvements. According to EPA’s most recent survey of 

drinking water infrastructure needs, for the 20-year period from 1995 

through 2014, a total of $138.4 billion (in 1995 dollars) will be needed to 

build new, and upgrade the existing, infrastructure of the nation’s water 

systems.11 The states spent considerably less than the amounts they 

reserved from the available set-asides because it took some time for them 

to get new activities, such as the revolving loan fund, underway. In 

addition, the states can spend the funds they have reserved over a number 

of years, in accordance with work plans approved by EPA.

While set-aside usage varied by state, most states did not take full 

advantage of the allowable set-asides. During fiscal years 1997 and 1998, 11 

and 8 states, respectively, used the full 31 percent set-aside allowed by law. 

The most frequently used set-asides were the 4-percent administrative setaside and the 2-percent set-aside for technical assistance to small public 

water systems. Table 5 shows the extent to which the states used each type 

of set-aside.

10Section 1453 of the Safe Drinking Water Act, as amended, requires that the states delineate 

the boundaries of areas from which public water systems receive supplies of drinking water 

and within each delineated area determine the susceptibility of the public water system(s) 

to contamination.

11Drinking Water Infrastructure Needs Survey: First Report to Congress, EPA 812-R-97-001, 

Office of Water (Jan. 1997).
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Table 5: States’ Use of Set-Asides From the Drinking Water State Revolving Fund, 

Fiscal Years 1997 and 1998 

Source: GAO’s analysis of data from EPA.

States’ Collective Spending 

Is Less Than ASDWA’s 

Estimated Needs

Although they have contributed more funds than required by the federal 

matching provisions, according to the state expenditure data obtained in 

our survey, the states collectively may be spending less than the nationwide 

amounts that ASDWA estimates are needed. For example, in fiscal year 

1999—the only year for which our data permit a direct comparison—

collective state expenditures, including funds from both state and federal 

sources, were about 80 percent of the amount estimated to be needed for 

program implementation.12 If recent trends continue over the next several 

years—that is, if EPA’s appropriations for supervision grants and the state 

revolving fund remain at about their existing levels relative to the amounts 

authorized and the states collectively continue to make use of only about 

half of the available set-asides—then the gap between the amounts 

Set-aside category

States taking

maximum setaside

States taking

less than the

maximum setasideStates taking

no set-aside

1997

4-percent administrative 47 2 0

2-percent technical assistance 37 9 3

10-percent state program 

management

14 22 13

15-percent local assistance 17 32 0

Full 31 percent 11 38 0

1998

4-percent administrative 46 2 1

2-percent technical assistance 41 2 6

10-percent state program 

management

16 21 12

15-percent local assistance 10 21 18

Full 31 percent 8 41 0

12We collected data on how much the states spent to implement their drinking water 

programs for fiscal years 1997 through 1999 only; ASDWA estimated the amount of funding 

the states would need to implement their programs for fiscal years 1999 through 2005 only.
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expended and estimated to be needed could grow larger. According to 

ASDWA, by fiscal year 2005, the states will need an estimated $449 million 

to implement their drinking water programs, an increase of about 30 

percent from fiscal year 1999. Table 6 shows the projected resource needs 

for implementing the states’ oversight programs, by year, from fiscal years 

1999 through 2005.

Table 6: Resource Needs for Implementing the States’ Drinking Water Programs, 

Fiscal Years 1999 Through 2005 

Note: The estimates do not include Wyoming or the District of Columbia. In addition, we adjusted 

ASDWA’s estimates to exclude Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and the 

Commonwealth of the Northern Mariana Islands. 

Source: GAO’s presentation of data from ASDWA.

Factors Other Than 

Federal Funding Levels 

Affected Most States’ 

Ability to Implement 

Their Drinking Water 

Programs

According to our nationwide survey and more detailed discussions with 

drinking water officials in eight states, for fiscal years 1997 through 1999, 

factors other than federal funding levels affected their ability to implement 

their drinking water programs. These factors include less than adequate 

authorized staffing and funding at the state level (while exceeding statutory 

matching requirements, the states spent less than the amount ASDWA had 

estimated was needed), state-imposed hiring freezes, and inadequate state 

salaries, which made it difficult to attract and retain qualified staff. Other 

factors, such as concerns about using revolving fund money for program 

implementation instead of infrastructure projects, made it difficult for 

some states to use all of the available federal funding. Despite these 

factors, program officials from all eight states told us they were able to 

meet most program requirements in effect through fiscal year 1999, largely 

by scaling back their programs and doing the minimum amount of work to 

Dollars in millions

Year

Full-time equivalent

staff Funding

1999 4,911 $345

2000 5,020 339

2001 5,190 362

2002 5,208 374

2003 5,588 414

2004 5,755 439

2005 5,252 $449
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meet requirements. As program responsibilities increase over the next 5 

years, the state program officials indicated that these factors will likely 

play a greater role in their ability to implement their programs.

Most State Programs 

Reported Inadequate 

Staffing Levels Because of 

State-Imposed Spending 

Constraints

In responding to our nationwide survey, 76 percent of the states reported 

that their current staffing levels were less than adequate, or much less than 

adequate, to implement their programs. Among these states, the most 

frequently cited “major” or “moderate” reasons for not having an adequate 

staffing level were inadequate authorized state staffing levels (76 percent), 

inadequate authorized state funding levels (60 percent), state-imposed 

hiring freezes that prevented program offices from filling authorized 

positions (41 percent), and inadequate state salary structures, which made 

it difficult to attract and retain qualified staff (49 percent).

To obtain more detailed information on factors that affected the states’ 

ability to implement their programs, we conducted in-depth interviews 

with drinking water program officials from eight states. In general, we were 

told that state legislatures authorize the number of staff that state drinking 

water programs can hire and/or the amount of state funding the programs 

can receive. This can create situations in which some states have adequate 

authorized staffing levels to carry out program responsibilities but not 

enough funding to hire all of the authorized staff. Other states may have 

adequate funding but cannot hire anyone because they have inadequate 

authorized staffing levels or because there is a hiring freeze in effect. 

Program officials from five of the eight states that we contacted raised 

concerns about the impact of inadequate state staffing and funding or 

hiring freezes. For example:

• Officials from Maine said that they do not currently have adequate 

authorized staffing or funding levels and they have an informal hiring 

freeze in effect. They commented that, even if they did receive 

additional federal funds, unless the authorized state staffing level is 

increased, they would not be able to hire new permanent staff and 

would have to use contractors to perform program responsibilities.

• An official from Indiana said that the state’s drinking water program has 

a serious funding shortage and estimated that it needs to increase its 

total resource level by at least 50 percent. This official explained that the 

authorized state funding level for the program is only enough to meet 

the match required to obtain federal funds.
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In addition to the factors mentioned above, program officials from two of 

the eight states that we contacted partly attributed inadequate staffing 

levels to an inability to pay staff competitive salaries. These officials 

explained that inadequate salaries have made it difficult to attract and 

retain qualified staff. For example, Arkansas officials told us that the state’s 

program had several vacancies because the low salaries it must offer 

prospective employees made it noncompetitive in the labor market. They 

explained that, even for entry-level positions, the applicants expected 

salaries much higher than the state could offer; moreover, many of the staff 

that they hired have used the state as a training ground and often take 

positions in private consulting firms. The officials said that they simply 

cannot retain qualified staff for the long term.

Recently, an ASDWA representative raised concerns during a congressional 

hearing about the effects of hiring freezes and inadequate staffing on the 

states’ ability to implement their programs. During a March 1999 hearing 

before the Senate Committee on Environment and Public Works, 

Subcommittee on Fisheries, Wildlife, and Drinking Water, an ASDWA 

representative said a number of states were facing the challenge of trying 

to implement their programs with limited personnel because of hiring 

freezes and staff ceilings at the state level. The representative said that the 

states were being asked to do more and more with no new staff or limited 

staff. This official acknowledged that additional federal funding would not 

necessarily help those states that have been experiencing these challenges.

After the Safe Drinking Water Act was amended in 1986, the states’ overall 

fiscal conditions were not favorable and funding shortages affected their 

ability to implement their programs.13 However, the states’ fiscal conditions 

have improved considerably since then. According to the National 

Conference of State Legislatures, in fiscal year 2000, the states were 

generally in their best financial condition in decades. Furthermore, in fiscal 

year 2000, favorable fiscal conditions prompted 31 percent of the states to 

cut taxes specifically to reduce excess revenues.14

13See Drinking Water: Widening Gap Between Needs and Available Resources Threatens 

Vital EPA Program (GAO/RCED-92-184, July 6, 1992).

14State Budget and Tax Actions 2000, Preliminary Report: Executive Summary, National 

Conference of State Legislatures. This information is based on 49 states. Massachusetts 

had not passed its budget by the time this report was issued.
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The Director of EPA’s Drinking Water Protection Division does not believe 

that the Congress intended that the federal government would provide all 

the funding for state drinking water programs. He pointed out that, over 

time, the amount of federal funding has increased, particularly in recent 

years, with the authority for the states to use set-asides from the revolving 

fund to implement their programs. The Director acknowledged that many 

state drinking water programs are facing challenges, including stateimposed staffing limitations and opposition from state governors and 

legislatures to diverting too much funding from needed infrastructure 

projects. Nevertheless, he believes that when the states assume primacy for 

their drinking water programs, it is their responsibility to ensure that they 

spend the amounts necessary to adequately implement them.

Certain Factors Have 

Limited Some States’ Use of 

Revolving Fund Set-Asides

Several of the states that did not have adequate staffing levels attributed 

this problem to factors that can limit their use of the revolving fund setasides to help implement their drinking water programs. About 41 percent 

of these states said that their programs’ inadequate staffing levels were due 

to concerns about using the revolving fund to implement drinking water 

programs instead of using the money to fund infrastructure projects. 

Officials from three of the eight case study states voiced similar concerns, 

for example:

• An Indiana official said that taking set-aside money from the revolving 

fund for program activities is very difficult because the attitude of the 

state budget agency is that as much of the revolving fund money as 

possible should be used to finance infrastructure projects. As a result, 

the set-asides are not as helpful as they could be.

• Αn Oregon official acknowledged that the committee that advises the 

state’s drinking water program is concerned about using set-aside 

money from the revolving fund for program implementation. According 

to this official, while supporting the use of some set-aside money for 

program implementation, the committee has made it clear that financing 

infrastructure is the main priority in Oregon. The committee is 

supportive of using set-aside money to maintain the current level of 

program services; the committee is reluctant to use the revolving fund 

money to expand the program.15

15Officials from two other states raised concerns about their legislature’s policies against 

expanding state programs as affecting the amount of resources available for their programs.
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The Safe Drinking Water Act Amendments of 1996 authorized funding for 

the revolving fund at a level of $9.6 billion through 2003. Of the states 

reporting inadequate staffing levels, approximately 43 percent cited 

concern about the continued availability of the set-aside money after the 

fund’s authorization expires as a “major” or “moderate” reason for their 

inadequate staffing levels. Program officials from four of the eight states 

that we contacted were concerned about impacts to their state’s programs 

if this fund is not reauthorized, for example:

• According to a Utah official, the key reason the state has been able to 

meet statutory requirements has been because it has taken almost all of 

the available set-aside money from the revolving fund. Thus, if set-aside 

money from the fund does not continue to be available, a major source 

of funding for Utah’s program would be eliminated.

• An Oregon official was concerned about the long-term availability of the 

set-aside money from the revolving fund. This official said he uses setaside money to replace another funding source and to help offset the 

effects of inflation. He added that if the revolving fund were not 

reauthorized, then the state might have to reduce the program’s staffing 

level.

Program managers from both Ohio and Utah believe that the additional 

funding the states need to meet program requirements should come from 

an increase in the general supervision grants, rather than the revolving fund 

set-asides, so the states would not be forced to make a choice between 

program implementation and infrastructure construction. Four of the eight 

states we contacted said that an increase in federal supervision grant 

funding might prompt their legislatures to approve additional state funding 

since a small increase in state funding could be used to match a larger 

amount of federal dollars. About 30 percent of the states we surveyed said 

that an insufficient level of funding for the supervision grant contributed to 

their inadequate staffing levels.

States Are Using Different 

Strategies to Deal With 

Inadequate Resources

Program officials in all eight states we contacted maintain that they have 

been able to meet most of the program requirements in effect through fiscal 

year 1999, despite seven of the eight states having less than adequate 

resources. The states used a variety of strategies to compensate, including 

scaling back their programs, doing the minimum necessary to meet 

requirements, and setting formal or informal priorities among their 

responsibilities.
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Six of the eight states said they have had to scale back their programs by 

providing less technical assistance to water systems, particularly small 

water systems, which make up the overwhelming majority of all public 

water systems. According to EPA, small systems often lack sufficient 

resources and expertise to comply with complex regulations and many are 

not financially healthy. As a result, these systems often need help to comply 

with the regulations. Drinking water officials in both Oregon and Ohio told 

us that they have less time and resources to devote individual attention to 

small water systems and still meet their responsibilities under the 1996 

amendments. Ohio officials commented that ultimately, this will have an 

impact on compliance. They said that investing resources in technical 

assistance initially is much more effective than having to pay for increased 

enforcement activity later. In addition to cutting back on technical 

assistance, states have scaled back their programs in other ways. For 

example, Florida officials said they have reduced their permitting activities, 

and the state no longer regularly analyzes follow-up checks on water 

samples to determine the quality of water analyses performed at the 200 

laboratories in the state.

Officials from most of the eight states we contacted acknowledged doing 

the minimum amount necessary to meet program requirements. For 

example, officials from four states told us that they have reduced the 

frequency with which they conduct comprehensive inspections of water 

systems, called sanitary surveys.16 Among other things, the surveys are 

intended to help ensure compliance and correct problems before they 

become serious. Maine officials said they have cut back on sanitary surveys 

to the minimum levels required by EPA and have reduced bacteriological 

sampling at transient noncommunity systems. Although normally required 

on a quarterly basis, the sampling may be done annually if a noncommunity 

water system is free of sanitary defects, which, for Maine’s transient 

noncommunity systems, means having three consecutive good samples. 

However, program officials said that they have been performing annual 

coliform sampling at the state’s 900 transient systems even though the three 

‘good’ samples were taken 10 to 20 years ago.17 The officials acknowledged 

16Only one of the four was not meeting EPA’s minimum requirements for conducting sanitary 

surveys, in particular, the requirement to perform sanitary surveys at transient 

noncommunity systems every 5 years. Transient noncommunity water systems cater to 

transitory customers in nonresidential areas such as campgrounds, motels, and gas stations.

17Coliform is a group of related bacteria whose presence in drinking water may indicate 

contamination by disease-causing microorganisms.
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that they should take the samples for these systems quarterly but said that 

the workload associated with this would be overwhelming. 

Officials from six of the eight case study states said they currently engage 

in some form of priority-setting. For example, an Oregon official said that 

the state’s program activities have been divided into two groups—those 

that are considered critical tasks and those that are considered important, 

but less critical. The other five states currently set priorities in a less formal 

fashion on the basis of such criteria as the size of the water system, the size 

of the population at risk, the potential health effects of a violation, and the 

potential loss of federal funding if the state does not perform an activity. 

For example, Indiana officials said they do not have the resources to take 

enforcement actions against all violations and consider such factors in 

deciding which violations to pursue. Several state officials told us transient 

noncommunity water systems—such as systems at rest areas or 

campgrounds that cater to tourists or other short-term visitors—are most 

likely to get the least attention. Officials from EPA’s Office of Ground Water 

and Drinking Water acknowledged that some states are struggling to meet 

the requirements of the 1996 amendments, but the agency’s position is that 

the requirements are congressional mandates and it is not appropriate for 

EPA to set priorities among them. 

States Expect the Staffing 

Situation to Worsen as 

Program Responsibilities 

Expand Through 2005

The results of our nationwide survey indicate that 94 percent of the states 

expect that their staffing levels will be less than adequate or much less than 

adequate as new program requirements and complex contaminant 

regulations take effect over the next 5 years. Program officials from seven 

of the eight states indicated that the state-imposed constraints that 

currently affect their ability to implement their programs—such as 

inadequate state staffing and funding levels, hiring freezes, and inadequate 

state salary levels—will continue to compromise their programs if not 

addressed. In light of ASDWA’s estimate that the states’ resource needs will 

increase by about 30 percent between fiscal years 1999 and 2005, the 

effects that the states have experienced thus far could be exacerbated in 

the future. 

Program officials from six of the eight states that we contacted said that 

increasing federal funding to the authorized levels (i.e., an increase of 

about 7 percent for the supervision grants and 20 percent for the state 

revolving funds) would make very little difference in their ability to 

implement program requirements. Some of these officials also said that 

even if federal funds were increased, it would be difficult to obtain 
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additional state funding to match the federal funds. Moreover, some of 

them pointed out that the increase in the supervision grants would be 

cancelled out by inflation in just a couple of years. For example, Ohio 

officials said that funding increases would just help maintain the status 

quo, which does not include the cost of implementing new rules.

In six of the eight states, program officials indicated that the same factors 

that have made it difficult to use set-aside money from the revolving fund 

could hinder their use of these funds in the future. In addition, officials 

from five of the eight states said they would find it very difficult to get their 

legislatures to provide more matching funds to obtain additional set-aside 

money. In Ohio, for example, a program official said the state’s program has 

gone as far as it can in using the set-asides because local infrastructure 

needs far exceed the current resources. According to a program official 

from Indiana, even if the political sensitivities associated with using 

revolving fund money for program implementation—and concerns about 

the continued availability of this money—did not exist, inadequate state 

funding would make it difficult for Indiana to provide the additional 

matching funds. 

Officials from five of the eight states also reported that determining the 

extent to which future funding levels would affect their programs is 

difficult because the details of certain rules, and hence the resulting 

workload on their programs, are unclear. For example, the Ohio official 

pointed out that the cost of implementing the arsenic rule depends on 

where EPA sets the standard for this contaminant. This official said that 

225 public water systems in Ohio would be affected by this rule if the 

arsenic standard were set at 10 milligrams per liter, while 500 systems 

would be affected if the standard were set at 5 milligrams per liter. 

Similarly, a Florida official said if the limit for the acceptable amount of 

radon in drinking water were set at 300 picocuries, about 40 to 50 percent 

of the systems in Florida would fail.18 If the standard were lowered to 1,000 

picocuries, about 1 percent would fail.

18A picocurie is the standard measurement of radioactivity.
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Management Practices 

and New Requirements 

Could Increase the 

Efficiency and the 

Effectiveness of States’ 

Drinking Water 

Programs 

Beyond adding more funding, one potential solution to the states’ 

increasing responsibilities under the Safe Drinking Water Act is the 

adoption of management practices that improve efficiency or otherwise 

enhance the states’ ability to implement their programs. Officials in the 

eight case study states cited efforts to improve program efficiency by 

adopting new management practices. Also, the EPA officials we 

interviewed emphasized that new requirements to develop statewide 

programs for assessing source waters and to improve the water systems’ 

ability to comply with drinking water regulations, which were mandated in 

the Safe Drinking Water Act Amendments of 1996, would likely increase the 

efficiency of state programs over the long term. 

States Cited Some 

Management Practices That 

Could Increase Their 

Programs’ Efficiency and 

Effectiveness

Although no one reported any substantively new initiatives, officials from 

all eight case study states cited some management practices they are using 

that could increase the efficiency and effectiveness of their drinking water 

programs. These officials told us that their states are taking advantage of 

the expertise in other state and federal agencies or associations through 

contracts, interagency agreements, and partnerships. For example, 

according to Massachusetts officials, the state program contracts with a 

consortium of four organizations that provide technical assistance for 

small water systems to improve their level of compliance with federal 

requirements.19 Arkansas has a formal cooperative agreement with the U.S. 

Geological Survey to conduct source water assessment activities. Program 

officials in both Utah and Oregon reported that partnerships with other 

agencies and organizations have assisted them in implementing their 

programs. When initiating their capacity development activities, officials in 

both states found partnerships with the Environmental Finance Center at 

Boise State University to be very helpful.

19These include the New England Water Works Association, the New England Rural Water 

Association, the Rural Community Assistance Program, and the Massachusetts Water Works 

Association.
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Nationwide, more than 70 percent of the states we surveyed reported using 

third-party assistance.20 Of the states that used third-party assistance and 

reported inadequate staffing levels, 20 percent also reported that using 

contractors allowed them to meet half or more of their programs’ needs. 

The eight states that we contacted all used contractors to some extent, and 

four said contractors allowed them to meet half or more of their program 

needs. However, in Oregon, where contractors meet about half of the 

program’s needs, an official explained that he does not hire contractors to 

supplement state staff. Instead, Oregon chooses to contract out services 

that can be performed more efficiently by another organization. Arkansas 

officials also explained that even if the state’s drinking water program were 

operating at its fully authorized staff level, the state would, for the sake of 

efficiency, continue to contract with third parties that have specialized 

expertise.21

Most of the officials we contacted also reported an increased use of 

technology. They mentioned using the Internet and developing or 

improving electronic records management systems as efficient practices. 

For example, in Indiana, some laboratories submit data electronically, 

which, according to state officials, allows program staff to react quickly 

when contaminants are present in water samples. Officials in half of our 

case study states specifically reported using the Internet as a means of 

readily obtaining and disseminating information. 

New Requirements Are 

Intended to Increase 

Efficiency and 

Effectiveness, But It May 

Take Years to Realize 

Benefits

The Safe Drinking Water Act Amendments of 1996 included requirements 

for state programs to assess drinking water sources for vulnerability to 

contamination and improve water systems’ capacity to comply with federal 

drinking water regulations. Although these new requirements necessitate 

the states’ investing substantial resources in the short term, according to 

EPA officials, they will eventually improve both the efficiency and 

effectiveness of the states’ programs.

20Thirty-seven percent of the states using third-party assistance reported contracting for at 

least 5 full-time staff years.

21For example, Arkansas uses money set-aside from the state’s drinking water revolving fund 

to contract with the Arkansas Rural Water Association and the Community Resource Group, 

Inc. (the Southern Rural Community Assistance Program affiliate) to provide technical 

assistance for water systems.
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An assistant branch chief in EPA’s Office of Ground Water and Drinking 

Water noted that the requirement to assess drinking water sources 

challenges the states to enhance their programs’ long-term effectiveness by 

investing in increased public involvement, concentrating financial 

resources in identified drinking water protection areas, and emphasizing 

environmental threats requiring protective measures. By incorporating a 

public review of the assessment program’s design and results, as the statute 

requires, the states are more likely to raise the public’s interest so that the 

information will be used to improve the quality of drinking water, the 

official noted. In addition, that official noted that the amendments’ 

requirement for designating drinking water protection areas encourages 

the states to maximize resources by focusing their efforts intensively 

within those areas most influential to the quality of water at wells and 

intake locations. Finally, the assessment requirement emphasizes the 

identification of contamination threats to all sources of public drinking 

water. Ultimately, this requirement might reduce the need to monitor and 

treat supplies, and it is widely recognized as the most cost-effective 

approach to protecting drinking water. 

The Small Systems Coordinator in EPA’s Office of Ground Water and 

Drinking Water anticipates that the requirement to improve local water 

systems’ capacity will also help the states incur long-term benefits while 

improving public health by reducing the amount of resources they spend on 

oversight, assistance, and enforcement. Among the amendments’ 

requirements addressing issues associated with small systems’ capacity 

were provisions to help ensure that drinking water systems meet federal 

regulations. Specifically, the amendments require the states to help existing 

water systems become more efficient and effective and to ensure that new 

systems demonstrate the financial, technical, and managerial capability to 

comply with drinking water regulations. As a result, systems will eventually 

require less attention from the states, which will free their resources to 

address other needs. An official we interviewed in Utah provided an 

example of how a state might address the regulatory compliance needs of 

existing systems. Utah has developed an Improvement Priority System to 

evaluate and score each water system in several areas relating to condition 

and performance. This allows water systems to address and resolve 

existing or potential problems in order of their significance and helps the 

state concentrate its resources on those systems that need the most 

assistance. 
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Observations Our survey of officials from state drinking water programs shows that in 

implementing these programs, the states have funded a significant portion 

of their expenditures from their own sources. Nevertheless, the states’ 

collective expenditures have fallen short of the needs estimated by 

ASDWA. Furthermore, our survey suggests that a number of state-level 

spending constraints, including inadequate state staffing and funding 

levels, state-imposed hiring freezes, and inadequate state salaries, could 

impair the states’ ability to meet future program requirements. An 

important factor affecting the level of funding used to implement the states’ 

program is their decision regarding the use of their revolving fund 

allotments. A decision to use a portion of this money to help pay for 

program implementation can be difficult because the states’ needs for 

infrastructure are very high.

The eight states we contacted maintain that they have been able to 

implement almost all statutory program requirements in effect through 

fiscal year 1999, although only by scaling back their drinking water 

programs and doing the minimum amount of work necessary. Among other 

things, the states are cutting back on the technical assistance they provide 

to local water systems and reducing the frequency of sanitary surveys. 

However, state officials point out that decreasing the technical assistance 

and the frequency of sanitary surveys could lead to increased compliance 

problems in the future, especially among small water systems. As the needs 

of these programs increase along with the growth in their responsibilities, 

it will become imperative to address the factors that have thus far affected 

the states’ ability to implement their programs.

Agency Comments We provided EPA with a draft of this report for its review and comment. We 

met with EPA officials, including the Acting Chief of the Protection Branch 

from EPA’s Office of Ground Water and Drinking Water. The officials 

generally agreed with the information presented in our draft report; 

however, they expressed concerns in two areas. First, the officials said that 

the draft report did not sufficiently emphasize the impact of the increasing 

program requirements on the states’ future resource needs. We made 

several changes to highlight material already in the report concerning the 

impact of potential state resource shortfalls on their future program 

implementation. Second, the EPA officials noted that our comparison of 

the funds potentially available to the states with the needs estimated by 

ASDWA could be misleading because, as our draft report indicated, most 

states (1) do not take the maximum amount allowed for the revolving fund 
B-285172

Page 32 GAO/RCED-00-199 Drinking Water

set-asides and (2) actually have contributed much more than the minimum 

amounts required for matching the EPA-provided funds. We clarified our 

presentation of this comparison. The EPA officials also provided technical 

clarifications, which we incorporated into the report as appropriate.

Scope and 

Methodology

To conduct our work, we interviewed officials in EPA’s Office of Ground 

Water and Drinking Water and obtained and reviewed related legislation 

and program regulations, guidance, and reports. We also interviewed 

drinking water officials in each of the 10 EPA regional offices and managers 

of drinking water programs in eight states—Arkansas, Florida, Indiana, 

Maine, Massachusetts, Ohio, Oregon, and Utah. Criteria for selecting these 

states included the size of their drinking water programs, current staffing 

levels, and their use of management strategies to implement their programs 

more efficiently and effectively. We also obtained information on our 

objectives from officials of key environmental, trade, and state associations 

involved in drinking water issues. These groups included ASDWA, the 

American Water Works Association, the Association of Metropolitan 

Sewerage Agencies, the Association of Metropolitan Water Agencies, the 

Council on Infrastructure Financing Authorities, the Council of State 

Governments, the Environmental Council of the States, the National 

Conference of State Legislatures, the National Drinking Water Advisory 

Council, the National Rural Water Association, the Rural Community 

Assistance Program, and the Natural Resources Defense Council.

To provide information on how EPA’s budget requests for program 

implementation compare with the amounts authorized and estimated to be 

needed, we obtained information on EPA’s budget requests by statutory 

authorization from officials in the Budget and Accountability section of 

EPA’s Office of Ground Water and Drinking Water. We compared these 

amounts with the amounts authorized for the states’ implementation of 

drinking water programs, including the amounts authorized for the Public 

Water System Supervision grants and the Drinking Water State Revolving 

Fund. We were unable to obtain from EPA an overall estimate of the 

resources the states need to implement their drinking water programs. EPA 

does not have, and does not routinely prepare, such estimates. However, in 

fiscal year 1999, ASDWA, with the support and participation of EPA, 

estimated the resources needed by the states to implement the 

requirements of the Safe Drinking Water Act Amendments of 1996 from 

fiscal years 1999 through 2005. We discussed the methodology used in this 

analysis for estimating state needs with officials from EPA, ASDWA, and 

the contractor who helped prepare the needs analysis for ASDWA. We 
B-285172

Page 33 GAO/RCED-00-199 Drinking Water

interviewed EPA officials from the Office of Ground Water and Drinking 

Water and program officials from the eight states that we contacted on the 

reasonableness of these estimates.

To provide information on how much the states have spent since the 1996 

amendments to implement their drinking water programs, we surveyed 

program administrators in 49 states. We did not include Wyoming and the 

District of Columbia in the survey because they do not have primacy for 

their drinking water programs; instead, EPA directly implements their 

programs. We also did not include Puerto Rico, the U.S. Virgin Islands, 

American Samoa, Guam, and the Commonwealth of the Northern Mariana 

Islands in the survey. We pretested our questionnaire with officials in 

California, Ohio, and Oregon and obtained comments from ASDWA. We 

received survey responses from all 49 states (a 100-percent response rate). 

The survey, with summary responses, appears in appendix III.

To address the effects federal funding levels have had, and will have, on the 

states’ ability to implement their drinking water programs and to obtain 

information on practices that might help states implement their programs, 

we relied on in-depth interviews with program officials in the eight states.

Our work was conducted from November 1999 through August 2000 in 

accordance with generally accepted government auditing standards.

As arranged with your offices, unless you announce its contents earlier, we 

plan no further distribution of this report until 30 days after the date of this 

letter. At that time, we will make copies available to interested 

congressional committees; the Honorable Carol M. Browner, 

Administrator, Environmental Protection Agency; and the Honorable Jacob 

J. Lew, Director, Office of Management and Budget. We will also make 

copies available to others on request.
B-285172

Page 34 GAO/RCED-00-199 Drinking Water

If you have any questions regarding this report, please contact me at (202) 

512-6878. Key contributors to this report were Ellen Crocker, Terri Dee, 

Carolyn Hall, Luann Moy, and Lisa Pittelkau.

David G. Wood 

Associate Director, Environmental

Protection Issues
Page 35 GAO/RCED-00-199 Drinking Water
Page 36 GAO/RCED-00-199 Drinking Water

Appendix I

Highlights of the Safe Drinking Water Act Apendxies

Amendments of 1996 ApendxiI

Under the Safe Drinking Water Act, EPA is authorized to grant primary 

enforcement responsibility, commonly referred to as “primacy,” for the 

drinking water program, to the states that meet certain requirements. 

Among the key requirements, the states must

• adopt drinking water regulations that are no less stringent than EPA’s 

national primary drinking water regulations and

• adopt and implement adequate procedures to carry out the program’s 

requirements and enforce the regulations.

The 1996 amendments include a number of key provisions.

Drinking Water State 

Revolving Fund

All states (and Puerto Rico) can establish Drinking Water State Revolving 

Funds, using federal capitalization grant money, to make loans to public 

water systems to finance projects needed to comply with drinking water 

regulations. Loan repayments to states are deposited in this fund for future 

loans. The program also allows states to reserve a portion of their grant to 

fund activities needed to protect source waters and enhance water system 

management.

Implementation of 

Drinking Water Rules

As EPA promulgates drinking water contaminant rules, states educate 

water system operators about the new requirements and ensure that water 

quality testing, treatment, and reporting requirements are met. The new 

rules include the following:

• Arsenic Rule −EPA must revise the existing arsenic standard and 

promulgate a national primary drinking water regulation by January 1, 

2001. EPA is proposing to reduce the current arsenic standard from 50 

parts per billion to 5 parts per billion. 

• Consumer Confidence Report Rule − Community water systems must 

prepare annual water quality reports (consumer confidence reports) for 

their customers. The reports include information on the source of the 

drinking water, violations of any federal drinking water standards, and 

contaminants that were detected and their related health effects.

• Regulations on Microbial Contaminants, Disinfectants, and Disinfection 

By-Products − EPA must promulgate several regulations concerning 

microbial contaminants, disinfectants, and disinfection by-products. For 

example, EPA was required to (and did) promulgate a stage 1 

disinfectants and disinfection by-products rule, which establishes 
Appendix I

Highlights of the Safe Drinking Water Act 

Amendments of 1996

Page 37 GAO/RCED-00-199 Drinking Water

maximum residual disinfectant goals and levels for three chemical 

disinfectants. According to an official with the Association of State 

Drinking Water Administrators, these regulations will require 

monitoring and adjustments of the treatment process to balance the 

control of microbial contaminants and the disinfection by-products, and 

thus, states will have to work closely with water systems and provide 

more technical assistance. 

• Monitoring for Unregulated Contaminants − Starting in 1999, and every 5 

years thereafter, EPA must issue a list of no more than 30 unregulated 

contaminants that public water systems must monitor. The frequency 

and the schedule of these monitoring requirements will vary according 

to the number of persons served by the system, the source of supply, and 

the contaminants likely to be found, ensuring that only a representative 

sample of small systems are required to monitor.

• Radon Rule − EPA must withdraw the regulations previously proposed 

for radon and promulgate new regulations by August 6, 2000. Under the 

new proposed regulations, states have the option of developing 

enhanced state programs to address the health risks from radon in 

indoor air (called Multimedia Mitigation Programs) as an alternative to 

requiring individual water systems to meet a more stringent standard for 

radon in drinking water. States choosing this option would be required 

to develop programs that include public involvement in the 

development of the mitigation plan, quantitative goals for reducing 

radon in new and existing homes, strategies for achieving these goals, 

and a plan for tracking and reporting results.

Operator Certification To receive the full allotment of funds for the Drinking Water State 

Revolving Fund to which states are entitled, states must implement 

programs to certify operators of drinking water systems. This requirement 

includes specifying standards for the certification and the recertification of 

operators of community and nontransient noncommunity water systems in 

accordance with EPA’s guidelines.

Small System and 

Capacity Development

To receive the full allotment of funds for the Drinking Water State 

Revolving Fund to which states are entitled, among other things, states 

must (1) prepare, periodically update, and submit to the EPA Administrator 

a list of water systems with histories of significant noncompliance; (2) have 

the legal authorities and other means to ensure that new water systems 

have the technical, financial, and managerial capability to comply with 
Appendix I

Highlights of the Safe Drinking Water Act 

Amendments of 1996

Page 38 GAO/RCED-00-199 Drinking Water

drinking water regulations; and (3) develop and implement a strategy for 

capacity development to assist existing systems in acquiring and 

maintaining capacity. 

Source Water 

Assessment Programs

States must assess their sources of drinking water (rivers, lakes, reservoirs, 

springs, and groundwater wells) to identify significant potential sources of 

contamination and to determine how susceptible the sources of drinking 

water are to these threats. Thus, at the nation’s more than 170,000 water 

systems, the states must inventory the contaminants and prepare 

“susceptibility determinations” that evaluate and rank the threats that the 

inventoried contaminants pose to the water sources.
Page 39 GAO/RCED-00-199 Drinking Water

Appendix II

Association of State Drinking Water 

Administrators’ Estimates of State Resource 

Needs ApendxiI

To estimate the resources the states need to fulfill their responsibilities in 

the nation’s drinking water program in 1999, the Association of State 

Drinking Water Administrators (ASDWA) developed a model detailing the 

activities required by both existing and anticipated regulations and 

estimated future program costs for fiscal years 1999 through 2005. The 

activities were identified by a group of state, association, and EPA officials 

and the state representatives developed the average costs for the program 

activities identified in the model. These costs were based on the size of a 

state’s program, with all the states grouped into the categories of small, 

medium, or large according to their full-time equivalent staff levels as well 

the amount of their supervision grant and the number of water systems in 

the state. The state members of the work group included a representative 

from each size category.

After the ASDWA model was developed, nine pilot states (three in each size 

category) reviewed and validated the model and its assumptions. Each 

pilot state had an opportunity to either accept the default values or enter an 

alternate value in the model for each program activity. The model was 

modified in response to the comments from the pilot states and then used 

to project the total costs for fiscal years 1999 through 2005 for all states 

(excluding Wyoming), Puerto Rico, the U.S. Virgin Islands, American 

Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. 

ASDWA’s estimates of available financial resources consist of both federal 

and state funds and include Public Water System Supervision grants, funds 

available from allotments to the Drinking Water State Revolving Fund for 

set-asides, and state funding through appropriations from tax revenues or 

fee programs. The estimates of available resources are based on the 

following assumptions:

• a 1-percent per year increase from fiscal years 1999 through 2005 for the 

Public Water System Supervision grants,

• a 3-percent per year increase from fiscal years 1999 through 2005 for the 

allotments for the Drinking Water State Revolving Fund,

• an 8.6-percent set-aside for fiscal years 1999 through 2005 from the 

Drinking Water State Revolving Fund,

• equal expenditures of the $110.8 million set-aside funds taken in fiscal 

year 1997 for source water protection expended in equal amounts over a 

5-year period from fiscal years 1998 through 2002, and

• a 1-percent per year increase in the states’ 1999 aggregate contribution 

of $99 million. ASDWA developed the $99 million estimate by collecting 
Appendix II

Association of State Drinking Water 

Administrators’ Estimates of State Resource 

Needs

Page 40 GAO/RCED-00-199 Drinking Water

data from the states for program activities in fiscal year 1997 and 

adjusting it for inflation.
Page 41 GAO/RCED-00-199 Drinking Water

Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire ApendxiI
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

Page 42 GAO/RCED-00-199 Drinking Water
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

Page 43 GAO/RCED-00-199 Drinking Water
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

Page 44 GAO/RCED-00-199 Drinking Water
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

Page 45 GAO/RCED-00-199 Drinking Water
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

Page 46 GAO/RCED-00-199 Drinking Water
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

Page 47 GAO/RCED-00-199 Drinking Water
Appendix III

Summary of States’ Responses to GAO’s 

Questionnaire

(160510) Letr Page 48 GAO/RCED-00-199 Drinking Water
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