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54–554 PDF 2009

THE AMERICAN RECOVERY AND REINVESTMENT

ACT OF 2009: THE ROLE OF STATE AND LOCAL

GOVERNMENTS

HEARING

BEFORE THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED ELEVENTH CONGRESS

FIRST SESSION

APRIL 21, 2009

Serial No. 111–34

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

JIM COOPER, Tennessee

GERALD E. CONNOLLY, Virginia

ELEANOR HOLMES NORTON, District of

Columbia

PATRICK J. KENNEDY, Rhode Island

DANNY K. DAVIS, Illinois

CHRIS VAN HOLLEN, Maryland

HENRY CUELLAR, Texas

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

BILL FOSTER, Illinois

JACKIE SPEIER, California

STEVE DRIEHAUS, Ohio

——— ———

——— ———

——— ———

DARRELL E. ISSA, California

DAN BURTON, Indiana

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

BRIAN P. BILBRAY, California

JIM JORDAN, Ohio

JEFF FLAKE, Arizona

JEFF FORTENBERRY, Nebraska

JASON CHAFFETZ, Utah

AARON SCHOCK, Illinois

RON STROMAN, Staff Director

MICHAEL MCCARTHY, Deputy Staff Director

CARLA HULTBERG, Chief Clerk

LARRY BRADY, Minority Staff Director

(III)

C O N T E N T S

Page

Hearing held on April 21, 2009 .............................................................................. 1

Statement of:

Gilchrist, Timothy, senior advisor for infrastructure and transportation,

Office of Governor David A. Paterson ......................................................... 19

Grannum, Colvin W., president, Bedford-Stuyvesant Restoration Corp. .... 53

Robinson, David G., associate director, Center for Information Technology

Policy, Princeton University ......................................................................... 64

Skyler, Edward, deputy mayor of operations for the city of New York ....... 29

Thompson, William C., comptroller, city of New York .................................. 72

Letters, statements, etc., submitted for the record by:

Gilchrist, Timothy, senior advisor for infrastructure and transportation,

Office of Governor David A. Paterson, prepared statement of .................. 22

Grannum, Colvin W., president, Bedford-Stuyvesant Restoration Corp.,

prepared statement of ................................................................................... 56

Issa, Hon. Darrell E., a Representative in Congress from the State of

California, prepared statement of ................................................................ 14

Robinson, David G., associate director, Center for Information Technology

Policy, Princeton University, prepared statement of ................................. 66

Skyler, Edward, deputy mayor of operations for the city of New York,

prepared statement of ................................................................................... 31

Towns, Hon. Edolphus, a Representative in Congress from the State

of New York, prepared statement of ........................................................... 5

Watson, Hon. Diane E., a Representative in Congress from the State

of California, prepared statement of ........................................................... 81

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THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009: THE ROLE OF STATE

AND LOCAL GOVERNMENTS

TUESDAY, APRIL 21, 2009

HOUSE OF REPRESENTATIVES,

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM,

Brooklyn, NY.

The committee met, pursuant to notice, at 10:10 a.m., at Brooklyn Borough Hall, 209 Joralemon Street, Brooklyn, NY, Hon.

Edolphus Towns (chairman of the committee) presiding.

Present: Representatives Towns, Kucinich, Welch, Issa and

Platts.

Staff present: Katherine Graham, investigator; Mike McCarthy,

deputy staff director; Jesse McCollum, senior advisor; Jenny Rosenberg, director of communications; Christopher Staszak, senior investigative counsel; Lawrence Brady, minority staff director; Frederick Hill, minority director of communications; Adam Fromm, minority chief clerk and Member liaison; Seamus Draft, minority deputy press secretary; and Christopher Hixon, minority senior counsel.

Chairman TOWNS. We come to order. We’re delighted this morning to be at Borough Hall, and of course the borough president of

Brooklyn is here. And we would like for him to have an opportunity

to welcome the Members to the great Borough of Brooklyn. Those

of you that reside in our city do know his name. I don’t have to

introduce him in any way. All you have to do is just go someplace

and say ‘‘Marty Markowitz.’’ [Laughter.]

Mr. MARKOWITZ. Thank you. Thank you very, very much. Of

course, welcome to—right now we’re called the Republic of Brooklyn.

Actually, my name is Marty Towns Markowitz. [Laughter.]

Your colleagues should know, for us in public service here in

Brooklyn, we all wish we were related to Ed; and I have to tell you

that perhaps he’s truly the gold standard in our Borough. So,

thank you, Ed, Congressman, very, very much.

And certainly, I want to welcome Deputy Mayor Edward Skyler.

Many people say that he bears an uncanny resemblance to me, I

have to tell you. And let me tell you a part of it is his height. If

I was his height, I’d definitely be his weight, am I right?

Also, New York City Comptroller Bill Thompson and Timothy

Gilchrist, a senior advisor to Governor Paterson in construction

and transportation. And Colvin Grannum, it’s good to see you are

here as well, president of the Bedford Stuyvesant Restoration Corp.

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And David Robinson, associate director of the Center for Information Technology Policy at Princeton University.

I can’t think of a better person than Ed—Congressman Towns—

to chair the House Committee on Oversight on Government Reform. I think you can all agree that this is one of the most important jobs in Congress at this moment.

In this day and age when every dollar counts, and you all know

that, we need someone like Congressman Towns to make sure that

the government spends our money wisely, along with your colleagues.

And if there’s one thing that we all agree on, the American Recovery and Reinvestment Act, it is that this money needs to be

spent now to give to our community a jump-start, no doubt about

it. But it also needs to be spent well, so that we can get our economy back on the right track once and for all, and make sure that

every penny allocated is used for the stated purpose.

We go in uneasy and unsettling times but, please rest assured,

in my opinion of course, that after a long 8 years of George W.

Bush, we finally have in the White House a President who understands that our Nation exists on the engines of economic development of all nations.

And we are fortunate that President Obama has sent Congressman Towns to make sure that fiscal responsibility returns in our

Federal spending policy process.

So now, Congressman Ed Towns, thank you for inviting me and

your fellow congressional Members to this event. Thanks.

Chairman TOWNS. Thank you. And thank you for welcoming us

to Borough Hall. Thank you. Thank you so much.

[Applause.]

Chairman TOWNS. Today’s hearing is the first in a series of field

hearings that will be held in various locations throughout the country. The purpose of these hearings is to examine the crucial role

that the State and local government will play in the administration

of the American Recovery and Reinvestment Act of 2009, also

known as the Stimulus Program or the Recovery Act.

The American Recovery and Reinvestment Act of 2009 is a historic piece of legislation, which I was proud to be one of the nine

co-sponsors of the legislation. The stimulus program had already

been and will continue to be a powerful force for getting the American economy back on track.

As we face the greatest economic crisis since the Great Depression, I’m especially proud to be here today in my district, in my

home, the borough of Brooklyn. New York is the financial capital

of the world. It is home to millions of these hardworking and dedicated people from all backgrounds who stand ready to help turn

the American economy in the right direction.

I’m also happy to have my friend and colleague from the State

of California, the ranking member, Congressman Issa, here with

me today, to get a look at how we do things in the borough of

Brooklyn, and today we’ll talk with people from the borough of

Brooklyn.

Just a few weeks ago, several hundred residents of Brooklyn attended a town hall meeting on a Saturday morning that Congresswoman Yvette Clark and I held to talk about President Obama’s

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stimulus program. That is a simple but telling example of the commitments the American people have to overcome in these economic

challenges that we all are facing together. And I emphasize the

word ‘‘together.’’

New Yorkers are a unique source of strength for America. And

I know it will play a unique role in putting our economy back on

the right track.

In Washington, this committee has been working hard to make

certain that Federal agencies do everything possible to protect your

hard-earned tax dollars and see to it that they are spent wisely.

Every dollar that we can stop from being wasted is a dollar that

is put to good use on a school improvement project for our children,

a job training program for those who want to work but need new

skills, or construction projects resulting in something as simple but

as important as a safer road or cleaner drinking water.

For the Recovery Act to be effective, the Federal, State and local

governments must coordinate, cooperate and communicate. As

President Obama stated recently, ‘‘This plan cannot and will not be

an excuse for waste and abuse.’’

To fight fraud, the Recovery Act provides for an unprecedented

degree of oversight and accountability. For that, the Recovery Act

established the Recovery Accountability and Transparency Board

[Recovery Act Board]. Some people refer to it as RAT. [Laughter.]

Which is designed to provide transparency on how Federal recovery money is to be spent. The act also included significant increases in funding for the Office of the Inspector General, whose

job is to root out waste, fraud and abuse in Federal programs.

I applaud President Obama for his support of these measures.

But I must admit that I have concerns, and let me tell you why.

I’m concerned that a heavy burden is being placed on the State

auditors who are responsible for monitoring the accounts for the

stimulus funds they receive.

This concern was raised at the committee’s hearing last month

and it needs to be addressed. Accordingly, I plan to introduce legislation that will provide increased funding for State audits so they

will be able to meet the demands placed on them by the Recovery

Act.

With individual States receiving billions in stimulus funding, it

makes sense that the States also be fully equipped to closely monitor those taxpayer’s dollars.

Not initially providing funds for State auditors under the Recovery Act was an omission, an omission that should be rectified as

soon as possible.

I’m also concerned that States have already started spending

funds from the Recovery Act, but they have not yet been given complete guidelines from the Federal Government in terms of how the

money is to be tracked and how they are required to report spending of stimulus funds.

Further, I have major concerns about the administration of a primary transparency tool, Recovery.gov. The fact of the matter is

that Recovery.gov is currently not usable. So, it’s not a usable data

base where citizens can go to see how their money is being spent.

I expressed this concern to the chairman of the Recovery Act

Board when he testified before this committee in Washington last

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month. It is my hope that he takes the concerns of Congress to

heart and transforms Recovery.gov into a comprehensive, useful

and easy to understand data base that will bring about true transparency.

If he fails in this regard, you can be certain that the members

of this committee will exercise their full oversight authority to ensure that he honors his commitment.

Today, we will hear from people who have been and will continue

to be at the forefront of the effort to ensure that the Recovery Act

is administered at an efficient and fair manner at the State and

the local level. We want to learn more from our witnesses about

how the Federal Government is doing so far in administering the

stimulus program, where and how can the Federal Government do

better, and to ensure that the Federal Government is doing everything it can to help State and local governments to successfully administer the Stimulus Program.

I want to thank all of our witnesses for appearing here today and

I look forward to hearing their testimony. I will now yield to our

ranking member, Mr. Darrell Issa, from the great State of California, for his opening statement.

[The prepared statement of Hon. Edolphus Towns follows:]

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Mr. ISSA. Thank you, Mr. Chairman. It truly is a pleasure to be

here in the great borough of Brooklyn. I’m also, as you know, a

Clevelander. So, we’ve had sort of a path of knowledge of things

that have come out of this part of the world long before I went to

California or to Washington.

I want everyone to understand that one of the reasons that this

makes today so special is that this committee is supposed to be

about waste, fraud, abuse and is supposed to work in a bipartisan

fashion.

Under your leadership, it’s very clear it is doing just that. For

the chairman, obviously, and the majority of the party of the President to start shedding light on failures that we make in Congress,

this stimulus bill of $787 billion; failures oversights, things which

we were not consulted in advance, but in fact now, after the fact

that Chairman Towns and this committee are seeking to make sure

we can rectify.

As the chairman so rightly mentioned, there was no funding in

order to do oversight by the States in this legislation. And I join

the chairman in making sure that we do find a way, either with

the existing funds or the new funds, to provide that material to the

States.

Additionally, nothing in this legislation provides accountability

below the first recipient; meaning, when Albany receives the funds,

much of what we’re talking about today, they could distribute it,

meeting every requirement. But we had no way of a guarantee,

transparency below that.

So that if they were not doing their job to ensure that once the

check is written, it was used properly, there was no oversight. We

are going to work together on a bipartisan basis to change that.

Additionally, as you undoubtedly will hear repeatedly today,

there’s a little bait and switch that goes on between the time the

money leaves Washington and the time it does seem to arrive at

hospitals and other areas of need here in the borough. And that’s

understandable.

Both my State of California, which had a $45 billion deficit at

one point, and a slightly smaller deficit here in New York, were

partially wiped out by the stimulus funding; meaning, they didn’t

apply the money that we sent from Washington to additional

projects, but rather simply pulled back their dollars, pushed forward Federal dollars.

And as a result, when you thought you were getting more, at

best, you may be getting what you originally were promised, or

less.

As we all know, we have lost millions of jobs in the stimulus

package. At best, if used properly, it’s estimated to save about 31⁄2

million jobs. If we allow the moving around of the dollars in a way

that diminishes the intent, we obviously will diminish the outcome.

We cannot afford to have one of those 31⁄2 million jobs we hoped

to save lost. And clearly today, we will hear that is happening.

The President, in fact, has made this one of the hallmarks of his

administration early on. He did so with good intent and I join him

in the belief that we needed something that is timely, targeted and

temporary.

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But as we would have begun to see, the targets are often poorly

defined. The temporary, as some States who were pushed back on

the funding, is questionable because of little nuances pushed into

the bill that are affecting the ability of States and localities to use

the money in a temporary basis, and in some cases, require that

the program may begin, which will only be funded for 18 months

and thereafter would fall to your community.

Mr. Chairman, I’m deeply concerned about the waste that will

come if cities which were already stretched to the limit find themselves, when the money runs out, forced to continue with programs

that may or may not suit their particular municipal area. Here in

Brooklyn, you are an older city; so new construction and many of

those items is not nearly as important as repair and reconstruction.

One size does not fit all. I’m hoping today that our working in

a bipartisan basis, the solidarity and the additional committee

under your leadership has begun to have will show, and show it

to the people here that this committee will not allow this fine city

to be shortchanged between the time the money leaves Washington

and the time it was supposed to arrive here.

With that, I look forward to all the testimony that we will have,

Mr. Chairman.

Thank you very much.

Chairman TOWNS. Thank you very much for your statement.

[The prepared statement of Hon. Darrell E. Issa follows:]

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Chairman TOWNS. At this time, one of the hardest working gentlemen in the United States, the gentleman from Ohio, Mr. Dennis

Kucinich. We yield to him 5 minutes for an opening statement.

Mr. KUCINICH. Mr. Chairman and my colleagues on the committee and the people of Brooklyn, I’m here to support our chairman,

and also because I understand the concerns that Brooklyn has related to the concerns of the people all over the country now.

Are we going to see a recovery? What will that recovery look like,

will it provide more jobs, will it rebuild America’s infrastructure?

All across this country, there are people who are worried about

losing their homes, their jobs, their health care, their retirement,

their security and their investments. And this committee has the

responsibility of being the watchdog to make sure that all Federal

programs find their way through to the beneficiaries.

And when you’re talking about trillions of dollars, the money

from the recovery program, money in the troubled asset relief program, we know that any time we’re talking about spending on that

level, it is inevitable that there is going to be problems with the

way the money is distributed and problems with the dollars spent.

You are fortunate in Brooklyn that your Congressman, Ed

Towns, ascended to be the chairman of the Oversight Committee,

because this committee has the ability to be able to make sure that

we hold all of those who are entrusted with these funds to the

highest level of accountability.

And the only way that can be done is to make sure that you have

people representing you who have the kind of experience that can

see if something looks like it’s going on that is not right.

And because of Ed Towns’ experience in rising to Congress from

this borough, you can be sure that his eyes, his ears, are going to

be essential in making sure that these programs find the way in

helping people who were the intended. And also, if there’s any mismanagement involved, that would be brought to the public’s attention.

Let’s go back to where we are as a Nation. The Obama administration understands that this American Recovery Act is only the

first step. A hundred million dollars out of the initial $787 billion

will go toward infrastructure and improvement.

And yet, Mr. Chairman, the American Institute of Architects

says there’s over $2 trillion in infrastructure needs, to rebuild our

bridges, water systems, to rebuild our roads, schools, hospitals.

America needs to be rebuilt, meaning that those people are back

to work doing that. But we will not have the confidence, the Members of the Congress here to vote for more programs, unless we conclude that these programs are being set up, are going to be operated in a way where there’s integrity and where there is a commitment to making sure that the program that we say that we want

money for, that’s what happened and that they’re done in a way

that’s honest and efficient.

I’m a person who believes the government can work, but it only

works if we have the people watching to make sure it works. And

so that’s what this committee is about.

And I am proud to be here with my chairman and with the ranking member, Mr. Issa, Congressman Platt and Congressman Welch,

so that we can hear from the people of Brooklyn about what their

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dreams and hopes and expectations are and what you’re concerned

about.

And we can take that information back to Washington and share

it with our colleagues. This is a great community. I am glad to be

here at this moment to be a part of this hearing and I look forward

to hearing your testimony.

And thanks again, Mr. Towns, for giving us the opportunity to

come to Brooklyn so that we can hear from your constituents whose

concerns expressed are the concerns of all Americans. Thank you

very much. Great to be here.

Chairman TOWNS. Thank you very much. Thank you for your

kind words, as well.

Also, I’d like to recognize a person that I’ve had an opportunity

to serve with as the ranking member, who was the chair of a subcommittee and who—I had enjoyed working with you. And he said

that if you give him an opportunity to give you input, I expect your

output. And I want you to know that I had enjoyed working with

you and that it was an arrangement. I want you to know that the

deal still is an offer. [Laughter.]

Mr. PLATTS. Thank you, Mr. Chairman. It’s great to be with you.

It is great to be with my colleagues here. First, it is wonderful to

be back in the city of New York and the borough of Brooklyn.

I know we’ve called up hearings here at Borough Hall in the past

as well as at the Brooklyn School of Law, close by, and it is just

a wonderful opportunity to visit a great city. I want to add my

words of thanks to my colleagues, to you for holding this important

oversight hearing.

One of the most important responsibilities we have as public officials, as elected Members of the Congress, is to ensure that we are

good stewards of the American people’s funds, and that is what this

hearing is all about. It is ensuring that the funds they have sent

to Washington and entrusted us to oversee are then returned to

our communities, including here in New York, in the most efficient,

effective and accountable way possible.

And this oversight hearing is all about ensuring that we achieve

that very important fiscal rule. So, thank you for your leadership

as chair of the oversight committee and also to those witnesses who

are here with us today, who have been—the State and the local

level will give us a good insight as to how fast and more effectively

we perform our oversight responsibilities. With that, I will go back

to the chairman.

Thank you.

Chairman TOWNS. Thank you very much.

Now, I’d like to yield 5 minutes to Congressman Welch from Vermont, one of the very thoughtful members of this committee, who

makes sure that we do our research and homework before moving

forward.

Congressman Welch, of the great State of Vermont.

Mr. WELCH. Thank you very much, Mr. Chairman. I’ll be brief.

It is thrilling to hear from our distinguished witnesses. You know

what? In government we do two things. One, we set a policy, and

we did that by passing this stimulus, which after a vigorous debate, the policy direction has been set. And No. 2, we implement

a policy. And usually we don’t—oftentimes we don’t do this as well

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as we need to, remember to achieve the goals. Mr. Issa outlined all

of the challenges that we face. And with $787 billion of our money, your money at stake, and

also the ability to make the economy stop its free fall and hopefully

begin a recovery, every single dollar, every single job is absolutely

important.

And Mr. Chairman, what I appreciate of your work on this committee is that you are getting started before the reports of mismanagement or fraud come in, not waiting until after. Oftentimes,

with this amount of money it is inevitable. There will be outright

fraud, and that creates not only a waste of money but bitterness

in the minds and hearts of the taxpayers who paid for it.

And oftentimes even more money is wasted because of poor management and getting behind the curves on making certain things,

and we’re doing well, we need more of it, and if things aren’t working, we stop.

So, having this hearing, Mr. Chairman, at the beginning and

working so cooperatively with Mr. Issa to get us focused at the outset on finding the critical contribution we can make; and what is

tremendous is that we are going to start by hearing the people on

the front lines of implementing the policy.

Because in Congress we set a policy that oftentimes the harder

work is the work that you do back home to implement that policy.

So, I am very eager to hear from the folks on the front line.

And I wanted to thank you, Mr. Chairman, for welcoming Vermont to this important country. [Laughter.]

And I feel pretty safe so far. And Mr. Issa, it is good to be here

with you, and my colleagues, as well.

Chairman TOWNS. Thank you very much for everything, all of

you for your statements.

At this time, I would like to ask our panelists to come forward.

Mr. Gilchrist, Deputy Mayor Skyler, please stand.

Chairman TOWNS. Longstanding tradition, I will swear all of our

witnesses in. Please raise your right hands.

[Witnesses sworn.]

Chairman TOWNS. Let the record reflect that they both answered

in the affirmative.

Just before we introduce our panelists, let me introduce to you

the United Talmudical Academy of Satmar. They appear in the

room from the school. Let’s give them a big round of applause.

[Applause.]

Chairman TOWNS. United Talmudical Academy of Satmar, I am

always happy to have our young people to come in to see the government in action. Let me introduce our witnesses.

Mr. Timothy Gilchrist is a senior advisor to Governor Paterson,

Department of Infrastructure and Transportation. Serving in this

role, Mr. Gilchrist leads the New York State Recovery and Reinvestment Act with Governor Paterson, which informs and oversees

the distribution of Federal Recovery Act funds throughout the

State.

In his current position, Mr. Gilchrist served as a deputy secretary to the Governor for economic development infrastructure,

overseeing the major economic development infrastructures and

transportation agencies and authorities in the State. Before he

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joined the executive chamber, Mr. Gilchrist served for over 26

years at the New York State Department of Transportation in a variety of management roles, including the director of strategic planning. He is a graduate of the State University of New York at

Oswego and Harvard University, as well.

Deputy Mayor Skyler is the deputy mayor of operations for the

city of New York. Mr. Skyler has been asked by Mayor Bloomberg

to coordinate New York City’s stimulus spending. In addition, Mr.

Skyler has a broad range of responsibilities through assisting the

mayor, Mayor Bloomberg.

He manages the Police Department, Fire Department, Office of

Emergency Management, Office of Management and Budget, and

the Office of Labor Relations.

Mr. Skyler also directly oversees several city agencies and departments, which includes the New York City Department of

Transportation, the Department of Environmental Protection and

the Department of Sanitation.

Prior to his employment as a deputy mayor of operations, Mr.

Skyler served as deputy mayor for administration and as the mayor’s communications director and press secretary. He is a graduate

of the University of Pennsylvania and Fordham Law School.

Let me say to you, I welcome both of you. Gentlemen, the rule

is that we have 5 minutes to present. And then after your presentation, then we have a question-and-answer period. Now, the light

that we start out, the light is on green. When it tells you that you

should be conscious of the fact that your time is about to end, it

goes to yellow. And then when your time ends, it goes to red. And

it is very clear. If there is any question about that, let me know.

[Laughter.]

So, we will start with you there.

STATEMENT OF TIMOTHY GILCHRIST, SENIOR ADVISOR FOR

INFRASTRUCTURE AND TRANSPORTATION, OFFICE OF GOVERNOR DAVID A. PATERSON

Mr. GILCHRIST. Thank you very much Chairman Towns and all

the members of the committee. And I hope my transportation background will help me work through the light system. [Laughter.]

On behalf of Governor Paterson, who is in Albany trying to deal

with the MTA crisis, I’m very pleased to be here this morning and

hope we can help assist the committee in considering its role for

State and local governments in regard to the implementation of the

American Recovery Investment Act.

I’ve provided written testimony to the committee and I’ll provide

a summary of that, and we’re welcoming any questions after my

colleague, Deputy Mayor Skyler.

My name is Timothy Gilchrist. I serve as Governor Paterson’s

senior advisor for infrastructure and transportation, and serve as

the lead for the implementation of the American Recovery and Reinvestment Act.

Our latest estimate is that New York State will receive over

$26.7 billion in funds from the American Recovery and Reinvestment Act, in addition to the funding that will be provided for the

local governments organizing discretionary funding that we will be

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aggressively seeking, including an FMAP increase of $1.1 billion

and State fiscal stabilization funds of over $3 billion.

And we also currently estimate that we would receive over $4 billion for infrastructure and energy programs, $5.9 billion to help in

the services programs, $2.3 billion for education programs, and

$124 million for public safety programs.

Of all these funds, over $1.8 billion have been expended, mostly

FMAP funds, with additional funds pending disbursement.

In addition, the Governor certified over $200 million worth of

highway transportation projects that are currently out to bid.

In anticipation of the American Recovery and Reinvestment Act,

Governor Paterson established at that time a recovery and reinvestment cabinet on February 10th, ahead of the legislation in

order to coordinate the State’s economic development.

The cabinet of which I serve as chair has representatives from

over 30 of our State agencies and authorities; and there’s a dedicated staff working in the agencies and in the Governor’s office to

support the activities.

Within the cabinet, we have several work groups, and we are

constantly re-aligning these groups to meet the ongoing challenges

of moving forward. But I’m going to touch on some of those highlights that we’re doing to oversee the disbursement of the funds

and to ensure transparency in the accountability and to root out

waste and fraud.

One of the important working groups in the reinvestment cabinet

is the internal control working group, which is made up of the

State agencies, internal audit or internal control officers in the Office of the State Comptroller, which is a separately elected position

within the State of New York.

This group is meeting on a regular basis to help agencies review

their internal control processes, look at their contracting process,

their contract disbursement process, their contractual award process, to insure that the funds are spent within all of the current

guidelines.

What I’d like to point out is that New York State has a very robust internal control procurement process to limit waste, fraud and

abuse. The State has a strong due process that lines out the funding that needs to be spent in the budget that was passed in the

first week of April. All of the American Recovery and Reinvestment

Act funds that were appropriated have been separately flagged in

the appropriations so that they can be tracked.

The Office of the State Comptroller, Central Accounting System,

has set up a special accounting code to track all of the funding that

is being spent on ARRA funds. And because a certain amount of

the funding flows directly from the Federal Government to State

authorities outside of the State budget process, the enacted State

budget requires regular reporting by those authorities.

In addition, we have an MBE/WBE office that reports directly to

the Governor’s office and has an active role as part of the committee. We have an independent inspector general that roots out fraud

and abuse; and a separately elected comptroller and attorney general that need to sign off on all of the contracts that the agency

allows through the competitive processes.

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We are not only going to administer all of our own funding, but

we’re putting programs in place to help localities that are not always as sophisticated as the State of New York. We report on their

funds and follow tracking programs, and have continued outreach

to with Members of Congress and members of our State delegation

to give information to not-for-profits and elected local officials’

funds.

I look forward to your questions.

Chairman TOWNS. Thank you very much for your testimony, Mr.

Gilchrist.

[The prepared statement of Mr. Gilchrist follows:]

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Chairman TOWNS. Now, we call upon you, Deputy Mayor Skyler.

STATEMENT OF EDWARD SKYLER, DEPUTY MAYOR OF

OPERATIONS FOR THE CITY OF NEW YORK

Mr. SKYLER. Good morning, Chairman Towns, Representative

Issa, and other members of the committee. Thank you for the opportunity here today. I’m here on behalf of Mayor Bloomberg, who

is actually in Washington with some of your colleagues for that bill

to be signed by President Obama later in the afternoon.

I’m here to testify on the measures the city has in place to ensure that all stimulus funds allocated to the city are spent appropriately and the steps the Federal Government is taking to assist

us in this endeavor.

In total, the city and citywide entities are expected to receive

about $4 billion in expenses and $1 billion in capital funds for the

next 2 years. For the stimulus funds, we want the city to be a national paragon of transparency and accountability. We intend to

not only use our existing systems, but take additional steps to ensure that our share of funds are spent properly. This increased

transparency will enable you and the public to hold us accountable

on many levels.

First, when we discuss New York City’s robust fraud and waste

prevention measures; the Mayor’s Office of Contract Services oversees all procurements throughout the city. City agencies must conduct background checks on all potential vendors, checking for compliance regarding the worker filing and licensing rules, as well as

the means for passing a company or its principles; and then make

the responsibility determination for every contract awarded.

In addition, vendors who have received contractors or subcontractors that meet certain financial thresholds must submit detailed

questionnaires with the companies and its top principal officers,

which are entered into the city’s Vendex system to inform the agency decisions regarding vendor responsibility.

For awards greater than $100,000, the city’s Department of Investigation also conducts a vendor name check, checking every entity in person names on the Vendex questionnaire against their

data base to see if they’ve been subject to any criminal investigations and if there is any other relevant information that should be

provided to the contracting agency to aid in the responsibility determination.

Next, all contracts must be certified by the relevant agency’s

chief contracting officer. We’ve assigned specific point people to

take responsibility with the integrity of our contracts, including

compliance with the city, Federal minority and woman-owned business participation requirements.

For every contract, other than those obtained by competitive bidding, the mayor’s office will certify that the city has complied with

all applicable laws and rules, and the corporation counsel will certify the legal authority of the contracting agency to proceed with

the award.

In addition to the mayoral oversight, the Department of Investigation and the Comptroller, people we will hear from later, we

also closely monitor contract work going in.

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On top of these checks we already have in place and prior to the

enactment of the stimulus bill, we created a government structure

known as the Stimulus Oversight Group, through which all stimulus funds are overseen by the mayor’s office and the appropriate

oversight agencies.

We’ve assigned every funding stream for which the city is eligible

to working groups: infrastructure and energy efficiency, social safety net, economic and work force development, public safety and fiscal assistance.

These working groups review allocations, applications and documentation for all funding streams. Adjustments are based on the

following criteria: ability to deliver program results, job creation,

economic stimulus impact, the speed at which spending could

occur, long-term public benefit, integrity and fraud prevention.

All working groups are represented under the oversight group,

the deputy mayor, and the oversight agencies; and this level of involvement has brought unparalleled scrutiny to each funding decision.

In addition to these steps, we’re also implementing an additional

way of public transparency. We launched an interactive Web site

called the Systems Tracker, available through New York City with

the government. This will track all dollars on the way from districts, city programs and projects through the step of contracting,

financial processing and payment for project work.

So, the ultimate impact of each fund is shown on the lives of the

New Yorkers. These features are set to be fully operational by the

end this month. In addition, we obtained an additional level of

scrutiny provided by KPMD, whose services were obtained to help

guide New York City’s stimulus reporting process.

By obtaining experts in the accounting field, we will start to

meet and exceed the Federal and State reporting requirements for

these stimulus funds.

Taken together, these measures will provide an unprecedented

level of oversight in funding additional contracts that allows us to

verify that we are spending our stimulus moneys as efficiently and

effectively as possible.

As you know, New York State is 1 of 16 States that’s to be audited by the Government Accountability Office. Our staff recently

met with GAO, and we did indicate to GAO we have specific information of those hired by the Federal Government, but we are challenged to account for the impact of our funds in a manner consistent with the government expectations.

For example, we strongly recommend the creation of standardized job creation methodology that accounts for regional differences.

With the new Federal guidelines, we would ask that local governments be allowed to ask the Governors to use stimulus dollars to

meet enhanced reporting requirements. We encourage Congress

and Federal agencies to issue additional guidelines as soon as possible.

Thank you very much for the privilege to testify this morning.

I’m happy to take any questions you may have.

Chairman TOWNS. Thank you very much.

[The prepared statement of Mr. Skyler follows:]

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Chairman TOWNS. I want to thank both of you for your testimony.

Now, we would like to start the question and answer period.

There was an article in the Wall Street Journal yesterday entitled,

‘‘Stimulus Confusion Frustrates Business.’’

Have either of you heard about any widespread confusion that

businesses have about the timing or details of the stimulus program?

Mr. GILCHRIST. Yes. Certainly, in our conversations around the

State, in the forum such as in Brooklyn a few weeks ago and in

other forums throughout the State, I believe that there’s not an understanding in a lot of the business community as to the availability of the funding.

And that often they’re looking for funding for programs that were

not authorized within the bill. We have received over 16,000

projects worth over $100 billion in our request for projects, many

of which are not really eligible for the program.

And that’s part of the education that we are working to carry forward as the Federal Government comes out with information to put

on our Web site, Recovery.ny.gov, information on those programs

for New York businesses.

Chairman TOWNS. Thank you.

Mr. SKYLER. Our concern has been reaching out to Federal agencies as to the questions from the private and not-for-profit sector

to get a better understanding of the guidelines that are coming out.

We calculate that about 50 percent of the individual programs included in the stimulus bill have yet to—that there’s not guidelines

distributed for them, including deadlines for application submission. So, there’s still a great deal of information that needs to be

distributed by Federal agencies charged in distributing funds. And

as soon as we get that information, we pass that on to the stakeholders in the private and not-for-profit sectors.

Chairman TOWNS. Thank you.

Let me say that just a few weeks ago we met with Mr. Devaney,

who is the inspector general and a superstar among inspector generals, who is in charge of the board. And he indicated that without

very aggressive—because we’re very aggressive—leadership from

this committee and others in terms of—what’s involved with the

stimulus package, that out of the $787 billion that’s being allocated

throughout this fashion, $55 billion would go to waste, fraud and

abuse.

Can any of you help us out? Do you have any ideas or suggestions on how we can cut down? Because that to me seems to be a

lot of money that can do a lot of good things for a lot of areas in

this Nation. But $55 billion, that’s a lot of money.

So, do you have any ideas what we might be able to do as a committee to bring about some changes, to be able to prevent this from

happening?

Mr. GILCHRIST. One thing, Mr. Chairman, you and other Members, one of the things that you’ve done today is an example of

what can happen; and also what’s going on with the GAO and the

accountability of the board, is paying attention to issues such as

waste, fraud, abuse up front.

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Often, hearings like this were reviewed by an IG, and done well

after a contractor is close in the implementing process, and the

agency doesn’t have time to make a course correction. So, constant

reviews that we often see as burdensome by the implementing

agencies do give us the opportunity to make sure that we move forward and still prevent waste and fraud abuse.

And then your opening remarks also made a very important

point. The act provides for a lot of funding, Federal agencies and

Federal IGs for oversight. While they’re not a direct allocation to

State auditors or State Governor’s offices, who are all under very

tight fiscal control—so are the mayor’s offices—under tight fiscal

situations, to hire contractors or additional staff to help us.

So, the city is going to bring in independent outside consultant

firms or auditors to help us. We are scraping within our funding

to provide that, while on the Federal level, the moneys that are

provided out of the Recovery Act to the agencies.

Mr. SKYLER. First, let me say that Mayor Bloomberg’s intention

and the government’s intention is to make sure this is the case and

that not one penny of stimulus dollars of New York City is wasted.

The mayor is very appreciative of the funds that are going to New

York City because of this legislation, and he is doing everything in

his power to ensure the trust being placed in New York City is not

undermined.

We believe in New York to that end; and to that end what we

have done voluntarily, and continue to do as programs are funded,

is put as much information on the Internet as possible. We already

started our public announcements to try to put out as much information about the grants as we can. We announced $260 million in transportation funds for streets

and bridges in New York City, and a press release of around 30

pages, talking about how much each project was, explaining when

ground would be broken. So, we’re going to put out as much information and we will be judged by the public, by the Congress, by

the media, and that is one of the things we’ve voluntarily done in

going at the Federal requirements.

We’ve also spent non-stimulus dollars for our accounting office,

so that we have somebody on our behalf independent scrubbing our

books to make sure we’re not accumulating inappropriately and

every dollar is accounted for. We do not want to embarrass the

Congress or the President by allowing fraud or misuse of funds to

take place.

So, we would certainly provide more information about those two

steps, but also encourage this panel to make sure that others take

similarly transparent steps.

Chairman TOWNS. Thank you very much.

Now, the ranking member from California, Mr. Issa.

Mr. ISSA. Thank you, Mr. Chairman.

Mr. Gilchrist, when you said, rightfully so, that there was no

money in the stimulus bill for your portion of the oversight, I had

to muse a little bit. Because you said there’s a lot of money for

oversight on the government side. Now, I’m just an old fashioned

businessman, so bear with me for a moment. If you took $1 billion

out of the $787 billion, and put it into a very conservative T-bill,

maybe for California’ tax freeze, it would make 5 percent a year.

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One billion would give you $50 million of income a year, if you

factor $1 billion. The total allocation for oversight of GAO is $25

million, so you wouldn’t get half of what you’d get on $1 billion in

the bank for a year. It’s a very, very small amount, and the attorney general has authorization for, I think, for 30 staff people, and

doesn’t have them yet.

So, I’m very concerned that although it seems generous from

those of us who earn a little bit of money; looking up, it is really

very little relative to the size that we’re going to be asked to oversee.

I think a couple of questions are particularly germane here and

I’m glad that the State and the city are represented.

Mr. Gilchrist, have you ever been in a meeting in which there

is a discussion, or have you heard of a meeting in which there is

a discussion, about how Federal stimulus dollars could be used for

already budgeted projects which would then free up those dollars

to be used elsewhere? State dollars to be used elsewhere by putting, plugging the Federal dollars stimulus into that use?

Mr. GILCHRIST. Well, I think there’s a multiple part to that question, Congressman, because as we move forward with, for example,

transportation programs, in order to meet the Federal requirements and to meet with timeframes, we have taken projects that

were in the original programs that we’ve created in the State Department of Transportation or the Metropolitan Transportation Authority, that could not be funded because of cost overruns from the

last several years.

Mr. ISSA. I appreciate that. I’ll narrow the question. Let’s look at

transportation. Were there on-budgets—at the time that Albany

was viewing the Governor’s budgets, were there projects in the

budget which are now in shovel-ready projects being allocated Federal funds to do them?

Mr. GILCHRIST. Yes; and the State funds and the government——

Mr. ISSA. And then the State funds were used elsewhere.

Mr. GILCHRIST. No, no. The State funds were reprogrammed to

presentation projects and the Governor has signed the required

maintenance of effort requirement for the next year’s budgets; and

these are the requirements for the Accountability Act.

Mr. ISSA. So, following up with this——

Mr. GILCHRIST. There was a slowdown in the fall of State spending on all areas.

Mr. ISSA. I understand. And I understand that. The reason I

asked that because—I happen to have my wife’s first cousin living

here, three blocks away; and she’s watching your hospitals, not yet

well-funded and finding themselves being closed even though stimulus dollars are being allocated. And what she is seeing is the total

dollars——

[Applause.]

Chairman TOWNS. This is a Federal hearing, not a town hall

meeting. [Laughter.]

Mr. ISSA. It is important to me because what I see from the oversight standpoint is very clear to my home State of California, the

State of New York, cities within the States have budget deficits.

We filled some of those budget deficits. No matter how much we

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said is allocated in a certain way, the truth is where it is being allocated is not a net increase.

And isn’t it true that many of these programs were obligations?

So you couldn’t have not funded them if nothing came from us; and

yet they didn’t get flushed up even when they’re using the Federal

funds. Isn’t that a reasonably fair statement, yes or no? Please, followed by a comment.

Mr. GILCHRIST. You have a yes and no; because you need to work

through each one of the different programs. And the State had a

very difficult challenge, in that we’re one of the first States that

had to implement our budget 6 weeks after the Recovery Act was

passed.

And to be fair, the issue in the report, some of the questions had

been, how the money was allocated in your budget——

Mr. ISSA. One final question, and I’ll let you answer both together. For both of you, since it’s very clear that there is money

shifting in order to meet these requirements, isn’t it fair for the

Federal Government, particularly this committee, to demand not

just a recognition of where the dollars went, but a detailed analysis

of the shifting that went on? So that, as we see dollars at a par

level to hospitals and we see dollars moved elsewhere, isn’t it fair

for us to know, was it stated in the health care system, or the

shortages, and are you prepared to deliver us that kind of explanation over and above the initial requirement? Where you spend it,

can you tell us all the shifting of the sand that is going on with

the other money?

Mr. GILCHRIST. Yes.

Mr. ISSA. Will you——

Mr. GILCHRIST. Yes. On Friday or early next week we’ll be sending out the fiscal report early required for the implementation of

the State budget; and that will detail how recovery funds were

used.

It is interesting to be answering your questions about whether or

not the money is used to offset other things, while we’ve been widely criticized since April 1st since the size of the increase in our

overall State budget, which is because the recovery funds were listed over and above the normal spending. So, we will be issuing a

report on our State budget. We will make sure that the committee

has that report.

Mr. SKYLER. We not only believe it’s fair for you to get that,

we’ve voluntarily started to do that. So, $260 million in transportation money directly received by the city funded eight projects

that were already funded by city dollars.

So, what we did is, we programmed the Federal money, stimulus

money, to those eight projects. And the $260 million that was freed

up by the stimulus and was allocated toward 25 other projects that

didn’t have funding to go forward; and also didn’t meet the criteria

of the time deadlines being shovel ready, etc., to be part of the

stimulus program.

Sometimes with the Federal reviews, and environmental reviews,

there was an 180 degree window. So, prior to falling out of that

window, there was still time to get Federal funding; and we will

do that with every other program.

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For example, we were able to work out of the State an arrangement to save 14,000 teaching positions in our city school system

with stimulus money. And that money will stay within the school

system. So, in short, we think it’s fair that we will work with you

to do that, so there is no three card monte with the funding.

Chairman TOWNS. Thank you very much.

Five minutes from the gentleman from Ohio, Mr. Kucinich.

Mr. KUCINICH. Mr. Skyler, how long will it take you to spend $4

billion?

Mr. SKYLER. We believe we’ll spend the $4 billion over 2 years;

2 fiscal years, on the spend side. On the capital side, we have about

$1 billion. There is $250 million for transportation, as I’ve mentioned; about $250 million in clean water, and about $426 million

or so for the Housing Authority. So, in addition to $1 billion the

MTA will receive.

For those, we hope to be breaking ground on the majority of

these projects this calendar year. Some of those projects, such as

bridges, are multi-year projects. Some of those capital projects actually stretch over possibly a 2 or 3 or 4 year window.

The expense funding, as soon as we get the money here, we’re

putting it right to the budget. For example, we’ve already put in

about $250 million of the FMAP money. And we have an allocation

for funding that we expect to put into our next police classes, funded by the Department of Justice.

So, we’re not going to waste any time. We’re not going to save

for later use. As soon as the money is received by the city, we will

pump it right into the programs it is intended for.

Mr. KUCINICH. In your program response, when you say you’ll

spend it over 2 years, after 2 years, what happens to the programs

that received the money?

Mr. SKYLER. It’s an excellent point, sir. We’re not able to use our

financial situation to baseline any of these programs.

Mr. KUCINICH. Can you explain that?

Mr. SKYLER. The city operates on a financial plan, which means

match our revenues with our expenses on a year-to-year basis. And

we put forward tax projections over the 4-year window. And we can

only afford programs that we knew we have revenues identified to

fund them.

So, stimulus funding which is over and above those tax revenues,

we can only provide for a year or 2-year duration. So, after that

time period closes, we will not have all of the other funding available. And we will not have the resources to continue them.

Mr. KUCINICH. So, these stimulus funds, and this goes into a

question, and I’m sure it’s raised—they’re being used to supplement additional spending—you’re not substituting for city spending? You’re not swapping the funds and using the funds for anything else? Using your funds from the city budget for something

else?

Mr. SKYLER. What we are doing is, using the stimulus funds, essentially gap closers, to continue extension services that we otherwise did. It provides, for example, without the use of the stimulus

funds, we would be forced to reduce the work force of the Department of Education, a work force of 14,000 teachers.

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So, even though we’re in an economic downturn, we intended to

continue with those positions. We did not have the funds to do so

until the full stimulus money came through.

Mr. KUCINICH. Let me ask you about this. The stimulus money

is plugging a $4 billion downturn gap or helping you address $4

billion in needs. You are the person that goes over all of these

numbers. What are the needs? Are they more than $4 billion? Are

they $6 billion, are they $8, $10, $12? What are they? What are

your capital needs? Are they $1 billion, are they $10, are they $20?

What are they?

Mr. SKYLER. I can’t give you an answer on what our needs are,

because we do try to spend within our means. We have a capital

plan, which the mayor will announce later next week, for $70 billion. That is an enormous amount of money, but it will be cut, like

30 percent, when we present it.

So, we try to fill what the pressing needs are and match up the

resources to it. Program stimulus—the Mayor presented his budget

in January, a $4 billion budget deficit. With the stimulus funding

available this fiscal year, about $1 billion of it was in the form of

gap closing through money which is being used to keep existing

programs afloat, or to do additional work force training or other

services that the city wouldn’t have the money to do or weren’t contained in the financial plan.

Mr. KUCINICH. Mr. Chairman, I think one of the things that we

will be doing with this committee is that we really analyze how

much of a stimulus this stimulus package is for the economy. We’re

talking about a couple years. The implication is and, I think, the

expectation throughout the country is that it stimulates something.

The stimulus is something that happens over a couple of years.

That’s No. 1.

No. 2, there’s no doubt that New York and other cities across the

country are experiencing severe declines in their tax revenues,

which is creating huge needs and demands. It may be that this

stimulus program is just beginning to set the stage for a necessity

in going forward with its general revenue shares.

The third thing I want to point out is that, according to the revenue architects, we need over $2 trillion in repairs for infrastructure. It’s something that local communities aren’t going to be able

to support. So that might be an opening for some later spending

that may keep the stimulus going if they find some way to get the

shovel-ready projects going to really move the economy, like FDR

did in the 1930’s when we had the New Deal that rebuilt a lot of

this community.

Thank you.

Chairman TOWNS. Point well taken.

At this point, I yield 5 minutes to Congressman Platts from

Pennsylvania.

Mr. PLATTS. Thank you, Mr. Chairman. I thank both of our witnesses for their testimony.

And as I said in my opening statement, one of the most important responsibilities that we have as officials is being good stewards of the funds. Each of you in your respective rules, city level

and State level, play a critically important role in that sense.

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I want to, first of all, question my colleagues on the use of the

funds to supplement and not replace State levels, so that it truly

benefits the increase in the enhancement, if not status quo.

Mr. Skyler, you laid out pretty well what the city is doing with

its transportation money, 260 funded shovel-ready projects; and to

the city’s 260 move an 25 additional projects.

So, is it fair to say that you will see that same approach statewide, Mr. Gilchrist, that at the end of the day, we’re going to see

any of these projects with Federal money in and X number of additional projects are added?

Mr. GILCHRIST. Yes. But on the transportation side, we operate

on a 5-year program. One of the things we’re tracking are all of the

projects that are selected, whether or not they were part of the

original 5-year program. And if they were, then how the funds are

reprogrammed, similarly the way the city has come forward.

It’s a little more cumbersome for us to move forward, through the

13 plans and organizations that are doing the same thing as the

city. That’s part of our tracking.

Mr. PLATTS. I think I’m the only Member in Congress who actually was a member of the NGO, my local community, from my

State house days; and I actually enjoyed transportation issues immensely and I’m glad to be part of that effort.

One of the concerns—and I hadn’t seen it in my region, but I

have seen it in Pennsylvania, that some of the projects that we’re

working for, bridges, because of the timeframe restraints, that

we’re moving projects that are not the substantive type of infrastructure projects that ultimately are going to have a long-term

benefit—but because of the short timeframe.

Is that a concern you have in New York?

Mr. GILCHRIST. Well, one of the concerns that they expressed

about the projects that are in there, many of them are projects

such as bridge painting, culvert repair, minor paving and minor

bridge repair.

But let’s point out two things. One is, all of those are transportation issues. So, all of those are very important things that any

kind of asset management system can tell you are investments;

that they should be made.

The second note is, the stimulus portion of the program, they are

all very labor-intensive jobs. It can get people to work. There’s not

much individual support, labor-intensive; they’re replacing the culverts or painting a bridge or fixing cracks on the highway.

And that puts people to work. There’s $2 billion that New York

State got for transportation, not taking care of our backlog, that

would allow to get projects out there and get people to work.

Mr. PLATTS. And I share the opinion that these maintenance

projects for the long-term will prevent further or more substantive

work having to be done because you do it now.

You kind of touched on my next point, both of your testimonies.

You touched on the issue of a common methodology being important when it comes to job creation and job retention numbers; because our goal here is 31⁄2 million jobs created or obtained.

You both touched on that testimony. The way it was touched on

is, that you get to see firm guidance from GAO on how to establish

those job numbers. And, in fact, I think one of you said that perVerDate 11-MAY-2000 10:55 Feb 18, 2010 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 U:\DOCS\54554.TXT KATIE PsN: KATIE
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haps the approach is that you provide all your data and let this be

successful for your job creation numbers, very essential jobs.

Can you expand on that and what, if any, additional guidelines

have been given by GAO?

Mr. SKYLER. I believe we are in discussion with the individual

agencies. For example, on the transportation side, we use the Federal transportation formula to calculate about 25,000 jobs be created by the transportation problems the city is going to do, for construction jobs.

On the Housing Authority, we are owed money which is about $430 million or so. We do not have comparable guidelines from

HUD on how many jobs that we could create. So, we’re trying to

do different types of work to make those calculations.

And on our Web site, we have tracked how many jobs we created.

And we want to make sure that those numbers are accurate. Some

of these are easier to measure. For example, COP funds, which is

we’re going to fund the police officers straight toward these accounts; education money that we got through the Governor’s help

to save 14,000 teacher positions that we can have.

Construction jobs are a little more subjective. So, we would like

to get it from a centralized source; it would be incredibly helpful.

Mr. PLATTS. And I agree with what you said where the Federal

Government could be very helpful for providing that, as well as direct and indirect jobs that you created.

It gives you an ongoing dialog with GAO at the State level, specifically, that have guidelines with OMB and the guidance of the

agencies. One of our recommendations would be that, something

that OMB will be taking control of, and not necessarily the administration agencies.

Thank you, Mr. Chairman.

Chairman TOWNS. Thank you.

At this time, I will yield to the gentleman from Vermont, Mr.

Welch.

Mr. WELCH. Thank you very much, and I appreciate your testimony.

Now, there are three issues that keep coming up about stimulus.

One is the confusion, Mr. Chairman, that so many people have

about whether the money is there for their particular program.

And then after all the testimony, it’s best to explain what the limitations are and it sounds like an infinitely funding bill.

Second, to stop fraud, and both of you outlined your good procedures to try to stop it, and be on top of it.

And the third issue that we’re starting to talk about, the most

challenging, is how do you make it effective? And once you go beyond the categorical programs, how do you make it effective?

And I guess that I’ll ask each of you—there’s two questions. One

is, how do you make it effective? What are the points that each of

you focuses on in the implementation?

When you started mentioning maintenance projects, I happen to

agree with it. It’s visible, labor-intensive and consistent with the

goal. But do each of you have some comments about that?

And then second, how do we measure effectiveness so that you

can strategically make mid-course corrections? It’s got to be done

at the delivery level, not the Washington level.

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Mr. Gilchrist, can you answer this?

Mr. GILCHRIST. On the State level, what we’re trying to do is

take a look by program to go through what our measures are, the

objectives of spending the money on. We talk a lot about transportation money that had the earliest deadlines.

But for the water and sewer funding or any of the other funding

that comes through by formula, we are asking each agency to make

sure that they articulate and have a Web site for public comment;

what their criteria are. What are the types of water systems that

are funded sooner? How much attention they pay to energy conservation plus other issues and job creation issues.

We’re also asking the New York State Energy Research Development Authority about our energy program, putting together the

plans to outline ahead of time what their objectives are.

The last point you hit on is public policy. One of the more difficult ones is finding those effective formulas that were used to go

through that. But we are all going through our cabinet structure

or agencies to go back south in the system and what their measures would be beyond the job creation or the job retention program.

Chairman TOWNS. Thank you.

Mr. Skyler.

Mr. SKYLER. I think for us, that starts at the inception, which

is in our oversight; where every deputy mayor with a stimulus

funding for a program to present to the working group and justify

the funding.

We haven’t carved up the pie and given it to our colleagues,

‘‘This is your amount, this is your amount, do with it what you

wish.’’ Externally, there’s oversight to make sure that the needs are

real.

Some of the programs lend themselves to efficiency issues that are managed better than others. For example, $80 million in energy efficiency.

We have auditors in place; the city verifies energy efficiency al- ready, so that we can tell what the payback is for $80 million

worth of project. We’ll be able to measure them as time goes by;

where they are relating projects or generation projects, hybrid vehicles. How much money the city had saved from other places, such

as the work force. The Investment Act and job training will be able

to measure how many people were trained.

So, we are endeavoring to create that for each category, and obviously there are dozens of categories, and some of them are more

challenging. But at the inception, what we wanted to do is make

sure that none of these are done in the back room and that every

person in administration that’s involved in the process comes to

where the money is being spent. And then we have that internal

accountability. And then when decisions are made, we’re externally

accountable.

Mr. WELCH. And the final question.

What suggestions, concrete suggestions, do you have for what we

can do in Washington and make it more likely to be successful here

in New York?

Mr. SKYLER. Keep sending it.

Mr. GILCHRIST. I think he’s saying that to try, making sure there

are some consistencies in the guidelines. Because through it, and

44

the Federal Government does what it often does, we’ll share the information across the States. So, when you go through your processing and you pick up a good idea, you can get it to us so we can

also look at it.

Mr. SKYLER. We are chomping at the bit, and not just from the

authority, but from the information from the Federal agencies on

how to spend funds. They all have rigorous guidelines attached to

them. And although we started meeting and decided where we

wanted to fund programs, we don’t know when those, for instance,

eligible agencies put out the information.

As I said before, over half the programs don’t have the guidelines, the guidance and deadlines out there for us to judge. So, we

can’t make the internal funding decisions where we manage the

money until that information comes out.

So, as far as maximizing the effectiveness of the money, stimulating the economy, if the stimulus has the intent to speed it as

part of that, as soon as these Federal agencies can get that information to us, we will take advantage of that.

Mr. WELCH. Thank you very much.

Chairman TOWNS. Thank you very much.

Let me take a moment to introduce a person that served on this

committee for 24 years, Congressman Major Owens.

[Applause.]

Chairman TOWNS. Let me start the second round of questions.

And as I move around, companies, small companies, small businesses, they have a complaint. They’re saying that we have more

opportunities. We’re left out, what do we do. When we talk about

‘‘stimulus,’’ they don’t mean us.

Now, what can we do to grow small businesses and at the same

time meet your deadlines? And I understand that there’s time differences in all of that. But what can we do to be able to let the

small businesses come in? But they are saying that they wanted to

talk about the big guys.

Mr. GILCHRIST. One of the challenges we face, Congressman, and

I think we need to work on, is getting information out into the community early about what is going on; so there will be that contracting opportunity. And so we can move as much as this through the

competitive bidding process as we can, which helps you with the

waste, fraud and use standard contractor process. We at the State

level are struggling on how to do a better job, getting out not only

to the State job bank where the jobs are, information for the small

businesses, so that they can work with the other contractors and

suppliers.

And that’s one of the challenges we’re facing as we’re moving forward. And one of the things we really need to do as we put the first

set of contracts out, there’s a lot more that we can do in that regard.

Chairman TOWNS. Mr. Skyler.

Mr. SKYLER. Thank you.

We have on the private side, the greatest opportunity for us, we

got small businesses involved in construction. Most of the expense

funding goes directly to the city agencies for public employees,

whether education money, it goes to the grants, essentially for existing city programs.

45

There are contracts, but the opportunities are not-for-profit sectors. And we have, Mayor Bloomberg announced last week, one

person in the mayor’s office who’s going to be basically the outreach

for not-for-profits. Any not-for-profits, a question on getting contractors in the city; whether it’s stimulus related or not, we’ll have

one person to call for 30 or so city agencies with different contracts.

They can get the opportunity to have, essentially, one-stop shopping.

And we’re continuing to work with the city council and their

partners in construction industry are MWBE programs, to make

sure that everybody possible benefits from at least the $1 billion

in construction funding stimulus that pumps into the economy. And

that has been a priority from the beginning and we will do that.

Chairman TOWNS. Thank you. The Recovery.gov Web site states

that, ‘‘. . . Does not plan to issue formal guidelines directly to

State or local governments. But agencies should seek to do so as

appropriate, potential infrastructure funding through their programs.’’

Does it concern you that the guidelines on stimulus funding may

come down from the individual agencies instead of one uniform

guidance document?

Mr. GILCHRIST. In certain regards, particularly toward the job

creation and the tracking and the reporting, I think the State

would prefer we had several guidelines. For certain ideas, especially job creation, the reporting requirements, some of the overall

contracting requirements, we would prefer central guidance rather

than to have to deal with multiple agency requests.

And the agencies, we believe, are best left to specific rules, such

as the authority for water, sewer funds, and those agencies with

specific responsibilities; rather than the overall reporting-type

guidance that we think should come central.

Mr. SKYLER. For us, a lot of these programs are existing programs that existed in the past. So, for example, the TARP program,

we have a relationship with their office in DC—GOJ, that administers the program.

So, their relationships from people that worked in the cities, the

administration, and people in the Federal agencies have worked

with State administration to administer certain programs so that

there is existing infrastructure to move things forward.

So, we can live with the existing system. As we mentioned before, our main priority would be the speed of the information getting out. Since the administration appears to make a decision from

a centralized warehouse of information that comes from the agency’s administrator, then we just urge them to please expedite the

issuing of the guidelines.

Chairman TOWNS. Let me ask you this. Does New York State

and offices of New York City have adequate staff to be able to deal

with the situation? I ask both of you that question.

Mr. GILCHRIST. One of the things that we are processing through

right now—we have a work force route set up to deal with every

agency, so that we can go through and measure their needs, particularly in the current budget climate, in implementing the program. And we will bring the staff in from the agencies.

46

Mr. SKYLER. Although extra resources would be helpful in administering of the stimulus funding, we will do what needs to be

done with the existing resources we have. I have redirected people

on my staff from other responsibilities to this.

It is a priority. Similarly, the economy is a priority. And all the

programs within the stimulus funding are, and the decisions we

need to make are what the priorities are. Certainly, we won’t turn

away funds that were made available, but we don’t want to be taking funds on one hand and complaining on the other hand that we

don’t have enough people to administer them. So, it will be helpful,

but we’ll do what we can with what we have.

Mr. GILCHRIST. And I’d like to clarify where we’re really looking

at positions, temporary positions such as construction, especially.

We’re not adding to the overhead of the agencies.

Chairman TOWNS. Thank you.

Mr. ISSA. Thank you, Mr. Chairman.

Mr. Skyler, I’d probably focus on you, but it is a question for both

of you. I happen to be a child of a child of the depression. My

grandfather worked on WPA projects, for carpenters and cabinet

makers. There was no work for much of those jobs. And he left behind a legacy of things that actually were built during that time

that my grandmother and my mom would tell me about, and even

go show me a museum to see a piece that he worked on.

So, I appreciate that it was a model, in the Great Depression, of

Federal money used to keep people employed, and keep their

skills—keep their work ethic. And we—it’s not a measurable item.

I’m sure there are figures of how many people were employed

under WPA and other programs, but he left a legacy.

This summer I was on the West Coast, and I drove from Seattle—I was on summer vacation, going from defense contractors,

and then drive down the coast. The drive down the coast part, I

went over bridge after bridge after bridge, all of which were built

under the WPA.

As a result, I think what differed here, $800 billion is actually

bigger than several years of WPA. Yet, if I read correctly, you talk

about how many jobs were saved and so on.

Isn’t it fair, Mr. Skyler, to say that if you move Federal dollars

into things which you can’t fund under our rules, and then you

moved dollars elsewhere, that it’s almost likely, whether you saved

14,000 jobs or in fact that money really went somewhere else and

it created 6,000 jobs?

Isn’t that an accounting nightmare to actually give us a fair assessment and—in a sense, wouldn’t you also take just the number

of, you know, X amount per million we’re going to create because—

you are in a position where the numbers you report are where you

used our money but not necessarily where you’re using the money

that’s freed up for other projects, which may or may not be laborintensive?

Mr. SKYLER. I agree with your assessment that it is very difficult

to get accurate job estimates. On the construction side, it is by far

the simplest task because we do it all the time on city projects, how

much—replacing a ramp on a bridge, how much to replace a sewer

main, how many jobs that creates.

47

Unfortunately or fortunately, depending on what your priorities

are, the vast majority of funding in the stimulus bill is actually not

for infrastructure. It is——

Mr. ISSA. We are acutely and sadly aware of the case.

Mr. SKYLER. Mayor Bloomberg met with the President along

with Governor Arnold Schwarzenegger in March to discuss reauthorization of some key legislation; but there is a huge need for infrastructure.

Mr. ISSA. Sure. And we need 5 to 10-year programs. I’ll followup

with just a couple of questions. For all those potential contractors,

for any parts of the stimulus, because in many cases here in New

York and my home State of California, really, what you have is a

group of projects you are already doing and a group of projects that

you’re able to say or do as a result of the stimulus.

In a sense, there’s really no new work for a contractor. These are

two pools which before the stimulus may or may not have been

funded. And now that they’ve got the stimulus, instead of a $10

million, $15, $20 million cut across the board of the State, you’re

cutting less.

So, from an expectation, shouldn’t the expectation of contractors

be, well, it’s not going to be as much of a down year because New

York was able to deal, at State and city-level, with its shortfalls?

So, realistically, they’ll look for new work—less reduction than they

otherwise would have had. And as a result, put your expectations

reasonable with the new opportunity. If anything, it’s going to be

a little slower this year.

Is that a fair enough way to put it?

Mr. SKYLER. I agree with you. The assessment depends on what

program you’re talking about. The city will receive in fiscal year

2010, according to our projections, $6 billion less in tax revenue, off

the basis.

Mr. ISSA. So, if you’re talking about receipt is less, the State and

the city level, from the previous year, including the stimulus, your

net output will be less, too.

Mr. SKYLER. So, what I can do is assure you that only because

of this, of the Stimulus Act, the pain that will be felt in our private

sector, in the government sector of New York City, will be considerably less than it would have been.

Mr. ISSA. I’m sure less. Let me ask you one last question. The

chairman alluded to this in the beginning, and I very much support

it.

Wouldn’t you say that one possible legacy of the stimulus, if we

are able to allow you to redirect funds or, potentially, a new fund;

would it be, if in fact the Federal Government and the States and

the major cities were able to advance the reporting systems with

computers and the ongoing oversight—this isn’t the only Federal

funding; you receive them every year—If we can get a portion of

this money allocated to be reallocated for new funds?

And I realize as—we don’t know for sure what we’re committing

to, but if we would at least create that opportunity, wouldn’t one

of the best legacies for your jobs be to really, really make a modern

leap in the ability to account and report for funding that we all do

within government?

48

Mr. SKYLER. That would absolutely be an amazing legacy. Too

often in government, projects are judged by the costs, not the outcomes. And that is the model Mayor Bloomberg is trying to get

away from: Not judging projects by how much you spend, but what

you get for the money.

Mr. GILCHRIST. And on the accountability, also, what we’re discovering is the ability to show to the taxpayers all of the sources

of funding that are going to the community, where before it was

often left to the individual agencies. So, now we are trying to line

up highway, water and sewer modernization and housing projects

all together.

Chairman TOWNS. Thank you very much.

Congressman Kucinich.

Mr. KUCINICH. Mr. Skyler, how much funds have the city of New

York received already from this program?

Mr. SKYLER. It’s $250 million.

Mr. KUCINICH. You’re expecting a total of——

Mr. SKYLER. $4 billion, sir.

Mr. KUCINICH. $4 billion.

Mr. SKYLER. In additional capital.

Mr. KUCINICH. And when will that $4 billion be finally received?

Mr. SKYLER. I believe that’s—for example, the FMAP funds goes

from three separate fiscal years. So, we expect to get installments

into, I believe, fiscal 2011. We got our first installment in the current fiscal year 2009, until—over 21⁄2 fiscal years, we’ll be getting

installments of that money.

Mr. KUCINICH. When this money comes in, where does it go? Just

walk us through it. The Federal Government sends you money;

how do they deliver it? We are doing oversight. Walk us through, how do you get $250

million from the government?

Mr. SKYLER. Essentially, the city—my understanding of the way

these are treated is that—for accounting purposes, we don’t really

exist. We are creatures of the State and our funding, our Federal

funding, actually flows through the State of New York, to a large

degree, to prevent——

Mr. KUCINICH. Through what, please.

Mr. SKYLER. Through the State of New York. And, for example,

the Medicaid funding, although we worked with our allocations——

Mr. KUCINICH. Mr. Gilchrist, how much money has the State of

New York received?

Mr. GILCHRIST. We’ve spent about $1.8 billion so far.

Mr. KUCINICH. Now, the U.S. Government gives you $1.8 billion.

What do you do with it? Where does it go, physically?

Mr. GILCHRIST. Physically, it changes by program.

Mr. KUCINICH. Where does it go? Does it go into an account?

Mr. GILCHRIST. The State treasury, an account the State treasury would hold, through the Tax Department in the State of New

York.

Mr. KUCINICH. Now, what does the State treasury do with its deposits? What happens to that money in the State treasury? Do you

invest it in various banks?

Mr. GILCHRIST. It’s invested in various securities for overnight or

daily, depending upon the State cash-flow, or it’s turned right back

49

around. A program such as FF would go back and the funding

would go from the State program and go out through the localities.

Mr. KUCINICH. So, let me ask you this.

I just want to take a few minutes to understand this involvement.

So, some of the money that’s coming from the Federal Government, in fact, is going into the Treasury and you reinvest that

money, right?

Mr. GILCHRIST. Well, the bulk of it is given to us on a reimbursement basis.

Mr. KUCINICH. Meaning?

Mr. GILCHRIST. So, for example, our highway program——

Mr. KUCINICH. So, you spend it and——

Mr. GILCHRIST [continuing]. We spend, the Federal Government

reimburses us. So, we have to have——

Mr. KUCINICH. But what about the other programs we were on,

the programmatic—the highway?

Mr. GILCHRIST. Again, I believe that FMAP money that we received, was the ability to build back to last fall——

Mr. KUCINICH. So, you’re saying all the Federal dollars you received from this American Recovery and Reinvestment Act are—

you’re just getting reimbursed.

Mr. GILCHRIST. I can’t say every dollar. It depends on—each program is different.

Mr. KUCINICH. How much of the money are you not getting reimbursed for, that in effect, you are getting money and then you’re

going to spend it?

Mr. GILCHRIST. I would have to get back to you on that; I

couldn’t——

Mr. KUCINICH. Well, do you have any idea at all?

Mr. GILCHRIST. I couldn’t give you an accurate answer.

Mr. KUCINICH. Well, what I’m interested in, Mr. Chairman, is

this: I’m only interested where national stimulus funds are going

in. Are States reinvesting that money as a way to spend? Because

if they are, then that’s another way to help the banks.

And so, I’m very concerned about this. It’s not just New York or

any other State. I want to find out—let this committee know. When

the money is coming, what happens to the money? And if you’re

talking about—if your State is issuing financing, like participation

notes, OK, are you then issuing this money and then these are

helping pay off interest?

I want to find out the role of the banks in this chain of custody

of the money. And are the banks in any way—not just in New York

but across the country, are the banks in any way benefiting from

the Federal dollars that are coming in, and the money is not being

spent, is waiting to be spent?

We have heard testimony here that some of this money won’t be

spent till 2011. Now, if that’s a fact, I’m interested in knowing

where the money is, when it’s being transferred. Reimbursements

I can understand, but I want to know if any money is sitting

around waiting to find a program while there are people around

the country waiting for a job. So, if you could give us that information, we’d be——

50

Mr. GILCHRIST. We will provide that. I don’t believe we have any

money sitting around.

Mr. KUCINICH. Thank you.

Chairman TOWNS. We will hold that open to receive the information.

Congressman Platts.

Mr. PLATTS. Thank you, Mr. Chairman.

Mr. Kucinich started our followup, but first I want to commend

Mayor Bloomberg and his administration for a hands-on approach

to ensure accountability, transparency in the tracking system, the

Stimulus Tracker.

On the detail, to followup my colleague, where the money is

going to be spent, how detailed do you expect it to be in the sense

of the flow of money, all the way down to identifying subcontractors

on construction projects that actually are recipients of these funds,

or were the initial contractor and——

Mr. SKYLER. What I will do is, I will get the committee a sample

when we bid out the first construction project. I will then be able

to show you exactly what level of detail goes into it. We already

have some information on the projects, but we haven’t done the

bidding yet. We haven’t put all the—the details don’t exist yet.

What we will do is, we will get to you a sample of the level it

goes to. If there’s suggestions on going even deeper into it, we will

certainly do it. Some of the programs don’t really lend themselves

to that type of depth.

For example, we received an increase in money for food stamps.

We’ve got 1.3 million New Yorkers whose allocations have gone up

by 13 percent. So, there isn’t the same type of detail provided for

that.

But for one such as construction, we trace it from allocation to

groundbreaking. We should be able to provide any and all information.

Mr. PLATTS. And when there’s a contract for using these funds,

being different than a contract signed, subcontractor signed, and

then that would be relevant, to kind of follow the trail.

Related to that—and I do commend the mayor in his approach.

Do you have concerns from the OMB—I know they talk about the

guidance coming, leaving to a great extent right now up to the

State—and advise how extensive your reporting process is and

what detail you’re going to include?

But if these recent guidelines early this month would be left

open, then they have the authority and may require additional information. As you advise your system, that may create problems.

You don’t want to spend a lot of money on an information technology system that generates X data and then find out they want

something else.

Again, is there a dialog at your level or perhaps at the State

level that gives you some assurances that the money you’re spending on your information technology is going to be well spent? Because I’m going to have to be revising one or two down the road

because of all these changes.

Mr. SKYLER. We haven’t had any situations thus far that, where

we’ve gone for information from OMB or gotten from a Federal

agency. So, I assume part of their plan in making OMB kind of a

51

clearing house for Federal stimulus funds—to delegate that responsibility to an agency that there wouldn’t be cross information and

confusing the different municipalities or States.

The mayor did meet with Peter Orszag several weeks ago to talk

about systems accountability; and we gave them a sample of our

Web site so that they’ll be able to see it. And on my level—and I

called several officials at OMB on different issues that the FMAP

funding or other ways to budget, and they then called back within

24 hours. And so, we’re pleased with the direction and response

from the administration.

Mr. PLATTS. And that approach that you’re taking, the mayor is

very commendable.

Mr. Chairman, if I could ask one more here.

At the State level, Mr. Gilchrist, the reference to your testimony

that the inspector general had an important role at the Federal

level to play, in reference to the jurisdiction including overall private entities that receive funds for doing business with—to what

extent is that authority to go in and look at financial documents

of those recipients? How extensive is that authority? I know it’s

early in the process, 2 months in; but has there been any IG efforts

as far as early stages and saying, ‘‘Hey, this concerns us?’’

Mr. GILCHRIST. We’ve done, early on, some preventive measures.

State law requires us to select the lowest responsible bidder, which

means that these are similar to the City Vendex program, and

have the contractor go through and show us the financial capability

and relationship of those areas.

Early on in this process, what we’re doing is going back and reviewing previous findings to make sure that corrective actions have

been instituted as our first level of prevention; of broad-based prevention.

Mr. PLATTS. I’ve had the privilege of chairing, not the full committee, like Mr. Towns, but of a subcommittee; and that approach

was to have interim controls, and up front information is critical.

Mr. GILCHRIST. Dennis Whalen, who is the director of State operations, who all the State agencies report to, issued a memo last

month that requires each agency by May 1st to give Dennis and

the Division of the Budget a report on what their internal control

programs are doing, all of the programs who received ARA funds;

and what they have done to solve all of their outstanding audit

findings. And we’re also instituting a broad waste prevention training program in conjunction with the Office of the State Comptroller.

Chairman TOWNS. Thank you.

I yield to the gentleman from the State of Vermont, Mr. Welch.

Mr. WELCH. Mr. Chairman, my questions have largely been answered from the questions of my colleague, Mr. Kucinich.

Mr. KUCINICH. Mr. Skyler, in your contracting that’s going on as

a result of the money that you’re getting, what do you do to make

sure that no minority business enterprises are actually going to be

part of that?

What kind of effort is being made so that all this money that’s

coming doesn’t just go to the big name contractors who don’t necessarily find a way to link up with minority departments?

52

Mr. SKYLER. We have existing programs for minority and womenowned businesses in New York City. In all stimulus programs,

especially——

Mr. KUCINICH. I know you have programs, I’m familiar with

those programs. But what kind of effort is being made? Have you

had meetings already with minority business entrepreneurs telling

them how they become part of the program?

Mr. SKYLER. As I mentioned before, we set up a one-stop shop

or one-point contact for the nonprofit communities. A lot of the contracting that’s desired in that community is actually the not-forprofit sector.

We’ve designated a one-point person to be accessible and to have

meetings and to share information as information is made available to us so that there is transparency and there is accessibility

to the programs; so people don’t get lost.

And as I said, part of our frustration is that we haven’t gotten

guidelines of a great many programs from the Federal Government,

I think, something like 50 percent. So, we don’t necessarily have

the answers to the question being asked of us.

We do commit to share that information, whether it’s through

the Web site or whether it’s through one-point contacts, to try to

get these question answered.

Mr. KUCINICH. Thank you. One last question.

Do you deal with the MTA?

Mr. SKYLER. I do. I’m not on the board, but I’m the Mayor’s Office liaison.

Mr. KUCINICH. Could you answer this: I understand that the

MTA may be assessed billions of dollars in penalties by banks for

technical default—no insurance because of AIG. Have you heard

about that?

Mr. SKYLER. I have not, sir.

Mr. KUCINICH. OK. Maybe afterwards we can talk about it.

Thank you.

Chairman TOWNS. Thank you very much. If there are no further

questions, let me thank you, first of all. We look forward to working with you to make certain that the money is used for the purpose intended. And that is, stimulate the economy, not stimulate

the big guy’s pocket. [Laughter.]

We need to make certain that’s not the case. We will be talking

with you as we move along, because we think oversight and the responsibility is important. And for the superstar of inspector generals to say to us, even if we are aggressive, of the $787 billion,

that $55 billion will go to waste and fraud, is disturbing.

I understand that never before in all of my years I have seen this

kind of money flow out. At the same time, we have to make certain

that the money is used for the purpose; that is, to stimulate the

economy.

Thank you so much.

[Applause.]

Chairman TOWNS. Next. Mr. Colvin Grannum is the president of

the Bedford Stuyvesant Restoration Corp., one of the oldest community development organizations in the United States.

Restoration owns and manages a 300,000 square foot commercial

and cultural center in Brooklyn that provides services and proVerDate 11-MAY-2000 10:55 Feb 18, 2010 Jkt 000000 PO 00000 Frm 00056 Fmt 6633 Sfmt 6633 U:\DOCS\54554.TXT KATIE PsN: KATIE
53

grams in the areas of arts and education, youth education, work

force development and housing development.

Mr. Grannum formerly served as founding director and CEO of

Bridge Street Development Corp., a community development corporation which continues to serve the community through promoting housing development, home ownership and financial literacy.

He practiced law over 17 years before embarking on his career

in community development. He has been employed by the U.S. Department of Justice, the New York State Attorney General’s Office,

and the New York City Corporation Counsel.

Mr. Grannum was in high school right here in Brooklyn before

he headed off to the University of Pennsylvania and, of course,

Georgetown Law School. He has devoted much of his life to working for the people of Brooklyn, and we are happy to have him today

as one of our witnesses.

And let me move on to Mr. David Robinson. David Robinson is

the associate director of the Center for Information Technology Policy at Princeton University. Before accepting his current position,

he was managing editor of the American, a business magazine published by the American Enterprise Institute.

He has written about the social impacts of technology for the

American, the Wall Street Journal and Time magazine. And his

work at the center includes research and writing, strategic planning and management of the center’s operations. He’s a graduate

of Princeton University.

Mr. Robinson, we welcome you. We welcome you, Mr. Grannum,

as well. Gentlemen, I would ask you to summarize your statements

within 5 minutes, which will allow us to have a question and answer period.

If you, Mr. Grannum, would start out; and a maximum of 5 minutes. Thank you.

STATEMENT OF COLVIN W. GRANNUM, PRESIDENT, BEDFORDSTUYVESANT RESTORATION CORP.

Mr. GRANNUM. Thank you, Chairman Towns, and the other

members of the committee. I want to just thank you for the tone

you are setting through your early intervention and oversight of

this process. It really is a tremendous amount of resources that the

country is investing in the stimulus plan. And it is critically important, as you have articulated, that there be oversight. So, to ensure

not just efficiency but that the purposes of the legislation are

achieved.

I’ve been invited to speak about the impacts on the local community. A community such as Bedford-Stuyvesant, which is a very robust community, of course, has a substantial number of people who

are low income and a substantial number of people who have been

hurt by the current economic downturn. So, I want to speak to that

a little bit. I have submitted written testimony, which I’ll try to

briefly summarize.

Chairman TOWNS. Written testimony will be included in the

record.

Mr. GRANNUM. Thank you. By the summary, the way I’m looking

at it, is that it’s very clear. I believe that the stimulus package will

have some very concrete benefits for a community like BedfordVerDate 11-MAY-2000 10:55 Feb 18, 2010 Jkt 000000 PO 00000 Frm 00057 Fmt 6633 Sfmt 6633 U:\DOCS\54554.TXT KATIE PsN: KATIE
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Stuyvesant, which has very high unemployment rates, very high

mortgage foreclosure rates.

As you know, the high school graduation rates lag behind the

city and statewide averages. And very high, relatively high poverty

rates; despite the fact, as I’ve mentioned earlier, that it has a robust community with a range of incomes—people with a range of

household incomes.

And the community just before the economic downturn had been

experiencing a very significant growth. But the act will have benefits clearly, I think in the area of infrastructure development, energy efficiency, education, job training and social safety net. And

those benefits will improve the conditions in the community, particularly physical conditions. And I speak a little about that in the

testimony.

I think what’s less clear is, despite the significant benefits, is

whether residents of communities like Bedford-Stuyvesant residents who are low-skilled and chronically unemployed will directly

receive employment opportunities as a result of the act.

And the second consideration would be whether minority and

women-owned businesses will directly receive business opportunities as a result of the act.

These are serious concerns, but I don’t want to downplay the

benefits because they are real. For example, in places like BedfordStuyvesant, as mentioned, because of the substantial number of

people who are living in poverty or who are working poor, in that

poverty number, a fair number of people are working poor. The fact

that we’re going to have extended unemployment insurance benefits, the Social Security one time payment, the enhanced food

stamp benefits and the lower payroll taxes are all going to have a

significant positive impact for residents and local businesses.

That’s clear.

I think in addition to that, the city of New York, I think—I’m in

favor of what the city of New York did with the money, to use the

lion’s share of it for youth employment. Because I think this summer, they have young people working, acquiring skills, being able

to supplement the household income, that’s going to be very important. Of course, that was a given also, in part, because these funds

have to be spent in 2 years.

And of course, there is going to be substantially more work force

development funds available to assist residents, particularly in the

job training area; and other benefits as they relate to the physical

conditions in the community.

For example, one of the projects being funded by the city of New

York, one of the transportation projects is the improvement of the

commercial corridor in central Brooklyn along Fulton Street, where

Your Honor’s offices were previously located.

And that’s going to result in new sidewalks, new signage, new

street furnishings, new streets. This is important for that particular corridor because it will assist the local businesses in creating

a safe and attractive environment that will facilitate the improvement of their business operations.

Another area that there’s going to be some concrete benefits that

will assist local income residents is—my 5 minutes are up? [Laughter.]

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Quickly, that was a quick 5 minutes.

Well, let me just say that my concerns have to do with 2-year

spending. Obviously, it’s reasonable given the intended purpose,

which is to jump-start the economy. But the concern is that, as

agency heads thought about how to spend funds in 2 years, they

have been inclined to think about using the existing contractual relationships, which frequently don’t include small minority-owned

businesses.

And the difficulty is trying to figure out processes that incorporate them quickly. And the other thing is the prevailing wage requirement, which is also relatively reasonable when you look at it

on paper. But again, that has the possibility of limiting the incorporation of low skilled workers.

[The prepared statement of Mr. Grannum follows:]

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Chairman TOWNS. Mr. Robinson.

STATEMENT OF DAVID G. ROBINSON, ASSOCIATE DIRECTOR,

CENTER FOR INFORMATION TECHNOLOGY POLICY, PRINCETON UNIVERSITY

Mr. ROBINSON. Chairman Towns, members of the committee,

thank you very much for your invitation to me and holding this important hearing. I suppose I’m here to help you if I can, to bring

some of the important questions that have already come up about

Recovery.gov and use of the Internet to make the stimulus as

transparent as possible.

Information technology can make recovery activities more transparent than any government project has ever been. Government

transparency means making all public information available in a

way that is useful for citizens. Because we are starting fresh with

Recovery.com, there’s a rare opportunity here to get this right.

What might it mean in practice? First, obviously, transparency

can help government institutions to become more effective. Where

there is broader abuse, public attention gets problems solved.

Where government is working well, that same attention can build

trust and confidence in public actions.

Second, transparency lets people as individuals to put pieces together in new and unexpected ways. For example, Vivek Kundra

ran a contest while he was serving as Washington, DC’s, technology officer that encouraged people to take advantage of data

being published by the city.

Inspired citizens responded by building a dashboard and map

that shows local demographic, transit, business and crime information, all in an integrated Web site.

If the same approach were used to publish recovery related information, sites might emerge to highlight the benefits stimulus funding brings to specific communities; and by extension, the good work

of State and local officials across America.

Third, transparency can let individuals and businesses spot the

economic opportunities that are available to them, helping not only

themselves but also the economy as a whole. The Recovery Act creates so many possible grants, contracts and loans that it’s tough to

match each opportunity to really make the most of it.

There is a competition among different ways of finding out about

these stimulus opportunities. In each case, reuse is the key. Whatever public data is reported by States or agencies, we need to make

it easy for innovators to get their own complete copy of that data

in a computer-friendly way so that innovators can develop new

tools.

An increasing number of experts and groups have highlighted

the importance of data reuse. The Association for Computing Machinery is one example. But a public policy committee that I served

on recently issued consent recommendations for the government,

which I’ve included with my written testimony.

The most recent, as has been discussed, detailed information we

have about transparency for the stimulus is in this April 3rd memo

from OMB. There are some good signs, but also concern about the

hundreds of billions of dollars that will be spent by States.

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They report that, at least initially, the Recovery Act will be able

to tell people if that money was sent to a certain State and then

to a locality, but not what ultimately became of the funds. The

States will decide how much detail to reveal.

The longer-term picture, though, is less clear. OMB reserves the

right to require reporting on ‘‘all levels of sub awards.’’ How will

they use that power? An uncertainty about OMB’s intentions leaves

States with tough choices. That’s what the Federal Government is

doing. State governments may wish to create new infrastructure to

expose the details of their recovery extending to public view.

But any new systems being deployed today could turn out to be

a risky investment. It could become redundant or even obsolete if

OMB later decides to centralize and standardize the nationwide reporting of the same information.

Ideally, OMB would either collect detailed information about

State stimulus spending itself, or else set a clear and public minimum standard of disclosure for each State to follow. How far will

OMB’s plan extend its reporting requirements for States? Will it

collect all of the data that we need for real transparency, or will

it cede responsibility for States to collect and manage the most detailed information?

Either way, OMB should lose no time in reaching a decision, and

clearly and publicly communicating its intention.

Thanks for the chance to appear. I look forward to your questions.

[The prepared statement of Mr. Robinson follows:]

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Chairman TOWNS. Thank you very much, Mr. Robinson.

We are joined by the comptroller of the city of New York. We

swear all of our witnesses in. If you would stand and raise your

right hand.

[Witness sworn.]

Chairman TOWNS. Let the record show the comptroller has been

sworn.

Be seated.

Mr. Comptroller, you are allowed 5 minutes to give a statement;

and then, of course, your entire statement will be included in the

record. And then we’ll have questions to ask.

You may begin.

STATEMENT OF WILLIAM C. THOMPSON, COMPTROLLER, CITY

OF NEW YORK

Mr. THOMPSON. Thank you, Mr. Chairman. It is a pleasure seeing you this afternoon.

Ranking Member Issa, members of the committee, observers,

again, good afternoon.

I’d like to thank you for holding this hearing and inviting me to

discuss implementation of the economic stimulus package, the

American Recovery and Reinvestment Act of 2009.

As many of you know, New York City is set to receive more than $4.5 billion under President Obama’s economic stimulus package,

and these funds could not be more necessary.

Our city today is facing an economic crisis unlike any we’ve seen

since the Second World War. And people need help. We’ve lost over

100,000 jobs since August. Millions of New Yorkers are worried

about skyrocketing transit and water rates, and families across our

city are struggling just to make ends meet.

Yet while the stimulus package should certainly be seen as a tremendous opportunity to create jobs both for our struggling economy

and provide relief to our city’s many forgotten New Yorkers, we

should also look at the distribution of these funds as another kind

of opportunity as well, the opportunity to put in place a blueprint

for much-needed transparency and accountability reforms in city

government.

These reforms are long overdue. In fact, in the almost 8 years

now during my tenure as city comptroller, I repeatedly called on

city agencies to improve the all-too-often opaque process by which

taxpayer funds are disbursed. In January 2008, for example, I

called on the administration to immediately implement transparency reforms at the City Industrial Development Agency, an

agency that promotes economic development through disbursement

of taxpayer funds to small businesses.

As an IDA board member, I saw firsthand the need to shine a

bright light on the selection process of IDA beneficiaries. I sent a

letter to Deputy Mayor Lieber. I made 10 detailed recommendations toward that goal. Two months ago—let’s skip over that.

We must avoid these pitfalls for the stimulus moneys, and ensure that job creation and salary criteria are clearly laid out before

funds are disbursed. We also sought to infuse good-governance

principles like openness, transparency and accountability through

all my work as city comptroller.

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Last year my office introduced a new online application that for

the first time allows vendors to track online the real-time payments or real time status of their payments from the city.

When I took office in 2002, I insisted that every audit conducted be posted on my Web site. And to date, we’ve saved over $248 million in savings.

In keeping with the principles of good governance, I believe that

before a single stimulus dollar is disbursed, we must first and foremost ensure that these funds are actively accounted for and that

outcomes are carefully measured and monitored. This is a job that

will, in part, be undertaken by the authority of my office. The charter-mandated role of the Comptroller’s Office is to ensure that all

funds are tracked accurately and transparently. And this is a responsibility I take seriously.

As many of you know, I also am responsible for approving all

contracts and agreements between the city and its many vendors.

As a comptroller, a close inspection of these contracts is a priority.

This focus has saved our city millions.

Rest assured, I’ll bring this same vigilance and attention to detail to my work overseeing the contracts and contract amendments

that result from stimulus spending. Through your registration

process, my office will continue to ensure the integrity of vendors

and the bidding process. We’re already moving forward on many

fronts to ensure the smooth transition of stimulus money to job-creating, shovel-ready projects in our city.

Two weeks ago my staff and the mayor met with the Government

Accountability Office to discuss its needs, as we work to design a

system that will track and display stimulus funds in real time. One

potential difficulty in monitoring stimulus funds would likely be

the need to differentiate stimulus moneys spent under preexisting

contracts.

For example, before stimulus funds are used to add jobs or benefits to existing contracts, we must first put in place a system that

allows for the separate tracking and outcome monitoring of stimulus funds and funds spent under that preexisting contract. This

will surely be a challenge. Fortunately, however, the city already

has in place strict contractor integrity reviews and detailed procurement rules.

In the end, we have to move quickly. New Yorkers deserve, above

all, a transparent system that will by its very nature help ensure

the taxpayer moneys are spent responsibly. Under my watch, New

Yorkers will be afforded this right, will be able to see exactly how,

why, when and where their hard-earned tax dollars are being

spent.

Thank you, Mr. Chairman.

Chairman TOWNS. Thank you very much for your testimony.

I thank all of you for your testimony.

We move to the question and answer period. Let me begin with

you, Mr. Robinson.

In a recent article, you suggested that regulatory monitoring

rules and regulations impedes modernization of government Web

sites.

What regulations will need to be changed to eliminate this problem? How should we change those regulations?

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Mr. ROBINSON. That is an excellent question, Mr. Chairman. And

as I’m sure you can imagine, the answer would call for a great deal

of detail about particular ones. But I think the bird’s eye view—

which I would be pleased to provide and to consult with, and I’m

sure my colleagues would as well—the bird’s eye view is that many

laws that were passed before the Internet have unintended implications that are impeding the use of the Web by government.

So, for example, if a group of citizens collaborated on a Web site,

are they identical to an advisory committee? Or if people are filling

out an online poll, does that raise paperwork-reduction issues?

So, I would say there are probably two levels on which this can

be addressed. One is the administration doing what it can through

executive action or intends to do what it can. But I think that Congress should look at the list—the long list of more than 20 different

regimes that current Federal Web masters have to comply with;

and think about laws that would sweep those, maybe in the case

of the Web, aside, in favor of clear guidance of designs for the

Internet.

Chairman TOWNS. Thank you very much. I really hope that you

would submit some additional information in terms of the specifics.

We’ll keep talking about this for quite some time.

Mr. ROBINSON. Yes, sir.

Chairman TOWNS. Mr. Grannum, based on your experience, do

you think that community organizations in general currently have

the ability to track and audit stimulus funds for the city?

Mr. GRANNUM. I think it depends. I think with respect to existing programs—for example, weatherization is an existing program

where community-based organizations have been involved, in some

cases, more than two decades, sometimes almost three. And the

prophecies are longstanding and well monitored by the State.

I think in some additional areas, it may be questionable. And I

think one of the concerns is whether and how much administrative

burden you put on not-for-profits in this process as well. Obviously,

it’s a balance. We need to be able to account for the funds, but at

the same time, some of the administrative burdens that are imposed by the government make it very difficult for organizations to

participate, not just not-for-profits, but small businesses.

Chairman TOWNS. Let me ask you, Mr. Thompson. Based on the

fact that this has never happened before, not in my lifetime, that

$787 billion is given as an opportunity for the country; and then

they are called upon to monitor this. Do you have the staff to make

that possible, to do it within the present structure?

Mr. THOMPSON. I believe that we have the staff in this current

environment to be able to monitor and oversee this; yes, I do. I

think that the changes that have been made over the last 7 or 8

years, the growth of use of technology, some of these are the foundation that we have established already, as well as new data bases

will allow us to be able to do that. Again, obviously, it will take

not just my office but working in conjunction with the mayor’s office and others, the ability to get that done.

I believe that we should be able to track this money, follow it,

and make sure that we can account for every dollar. And that is

the mandate. I think that is something that we should be able to

do. Obviously, if this were 10 years ago, I wouldn’t be able to make

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that representation. But I think that now, given the use of technology and other things, we should be able to do that.

Chairman TOWNS. The reason I raised that question with you is

that Mr. Delaney, who is the superstar inspector general, has indicated to us that even if we are aggressive, out of the $787 billion,

$55 billion would go to waste, fraud and abuse.

So that’s the reason why I raise the question. To me that’s a

shocking number. I think that’s a lot of money that can be used

to really turn things around in a positive way. And it will end up

in somebody’s pocket in the wrong way.

Mr. THOMPSON. Mr. Chairman, I couldn’t agree with you more.

I think in this current economic environment that we are in, every

dollar needs to be well spent; and to go over the purposes of the

vendors that the Houses, as well as the President, has determined

what it should be used for.

So I think it is important that government be pushed on to its

limit to be able to oversee, make sure every dollar is well spent and

that there is no waste. And given that, I think it is an excellent

opportunity for government in the future to make sure there is less

waste as we move forward, not just in these dollars, but all other

dollars being spent.

Chairman TOWNS. The gentleman from California.

Mr. ISSA. Thank you, Mr. Chairman. That question leads right

into my question.

You believe that you can oversee the stimulus funds in order to

minimize waste, fraud, abuse; right?

Mr. THOMPSON. Yes.

Mr. ISSA. Do you surf the Net using Google or Yahoo or any of

the other search engines?

Mr. THOMPSON. Sure.

Mr. ISSA. Can I search your data the same way by going in,

clicking on it and finding relevant information so that I can look

over your shoulder?

Mr. THOMPSON. Absolutely.

By the time we put in place, along with the mayor’s office, certain data bases, yes, you should be able to surf the Web to be able

to visit specific Web sites, whether it’s mine or others.

Mr. ISSA. No, that wasn’t my question.

I want to be able to second-guess your oversight for waste, fraud

and abuse, contract pricing, who is the sub and the sub of a sub,

and whether qualified as a minority, woman-owned or business. I

want to know how much they would disburse or what on a given

day.

Will I be able to do that?

Mr. THOMPSON. You should be. I’m not sure how many levels

down, but you should be able to do so.

Mr. ISSA. Do you have that? Is that technically public data would

be available under normal freedom of information?

Mr. THOMPSON. Yes, it is.

Mr. ISSA. OK.

Mr. THOMPSON. It is available under freedom of information.

Mr. ISSA. And I’m playing devil’s advocate for a reason: Because

the chairman and I have, on a very public joint agenda, to try to

make that possible.

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Today the Federal Government is not giving you any money for

that; is that correct?

Mr. THOMPSON. Correct.

Mr. ISSA. And according to Mr. Robinson’s testimony, today we

are not giving you standards so that searchability engines could

search more easily by having common data base rules and terms;

right?

So, that leads me to the question, and I’ll go to Mr. Robinson in

just a second; and this is from your response.

Do you believe that either with existing funds it can be redeployed or with new funds, that the Federal Government should be

tasked to nominally set those standards but then facilitate that on

an ongoing basis so that the public can in fact search any use of

Federal funds, whether directly by the Federal Government or all

the way down to this spending of it for the sub of a sub, if that

information is technically public information?

Mr. Robinson.

Mr. ROBINSON. I think that, yes, absolutely.

Mr. ISSA. And is that technology, as I used the example, technically available, but not implemented?

Mr. ROBINSON. There is a question here about how much of the

presentation of the data should be the government’s task. And I

think we would all agree that it would be ideal for Recovery.gov

that we would go out and perhaps cover the local areas to be userfriendly and to be able to be used.

But at the same time, it would ideal if the data itself that

underlies such a site were published, so that there could be many

different ways to search. So if you like to Google and have a copy,

and Yahoo can have a copy, probably it might, as well. And compete to show us the data most clearly. These are technically possible things, but I think they do require a considered commitment

to implement.

Mr. ISSA. This committee, under the chairman’s leadership, has

been quoted by Mr. Devane and rightfully so, that the expectation

is that if the government does a good a job and there is no more

waste than other comparable programs, that we will waste or lose

or misallocate at least $55 billion.

I’m going to ask each of you whether, no matter where the funds

come from, if we find a way to make available, both in Federal implementation and particularly at your levels, 2 percent—that would

be about $15 billion—to help in that implementation standard setting, modernization of equipment, so that either through your own

engines or, as Mr. Robinson said, through competition within the

search engine community, this information that you pore through

every day could also be pored through by the public who pays their

taxes; would that be a fair investment?

Mr. THOMPSON. It would be both a fair and a good investment,

yes.

Mr. ISSA. Mr. Robinson, would it be fair and good and is it

enough?

Mr. ROBINSON. It would be fair and good. Let me stop at that.

In addition to helping government, I would hope some fraction of

it could be used to incentivise the third parties who also would go

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to the work of oversight. And I think that would also be highly effective.

Chairman TOWNS. Mr. Grannum.

Mr. GRANNUM. I think that’s right. I think that there are lots of

stakeholders who are interested in the information, even from the

perspective of whether people are receiving fair treatment with respect to the allocation of funds.

Mr. ISSA. And I would assume that data base was effective and

competition was there so that searches became better and easier;

as most of us would use Google or Yahoo or MSN Search, that your

organization would then have an easier time doing its task, because that would be the resource for you.

Mr. GRANNUM. That’s correct.

Mr. ISSA. Thank you.

Mr. GRANNUM. Thank you, Mr. Chairman.

Chairman TOWNS. Thank you very much. And now we yield to

the gentleman from Ohio, Mr. Kucinich.

Mr. KUCINICH. Thank you very much, Mr. Chairman. I voted for

the stimulus in the hopes that the money is going to get to help

the people for whom it is intended. After witnessing many years of

trickle-down economics, I understood that the trickle seldom gets

down. [Laughter.]

Now, I want to find out about, does the torrent of money that is

going through this, and that’s a trickle of more than $787 billion,

how does it get down? Now, Mr. Grannum, in your work, your Bedford Stuyvesant restoration, are you concerned that this great

amount of money that you see coming is not going to get to the people who really need it?

Mr. GRANNUM. I think I have to make a distinction right there.

There are two categories. So, the social safety net money, I think

I have little concern, will get there; I believe it will.

I think that the money that could stimulate business in communities like Bedford-Stuyvesant, I have greater concern, because unless there is some intentional mechanism to open up avenues that

have been previously been closed, the money is going to flow as it

has in the past.

And so, that is a major concern. I think one of the things is that

we want to break away from having the proportion of funds that

go to communities like this be funds that are subsistence, and have

a greater amount of those funds be funds that generate enterprise

and work.

Mr. ISSA. Mr. Thompson, do you agree with that?

Mr. THOMPSON. I would say that is one of the challenges, in making sure these funds don’t necessarily just go to the same old

places.

Mr. KUCINICH. That’s the point I’m asking all around the country, because it’s like not only do we often have two classes of society in terms of where the income goes, but structure of businesses

in any community, the fact that some people are getting the money

all these years, they tend to just keep getting it; instead of the new

entrepreneurs who are in the minority and miss the opportunities.

So, what should we be doing to make sure?

Mr. GRANNUM. Well, transparency has a lot to do with it.

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Mr. KUCINICH. I will address that and I know that Mr. Robinson,

you’re from Princeton, you’re involved in information technology

and that’s very good. Now, but according to the CIA’s Factbook, it

has all kinds of information that is sometimes useful. And one of

the bits of information they say is that in America, there’s approximately 223 million users of the Internet.

Now, for those who are aware of the population statistics, the

population right now is over 300 million. So it’s quite possible that

some poor people in this country do not use the Internet.

Now, we’re talking about the trickle getting down, it is most likely—and I’m just guessing at this—but it’s most likely that people

who don’t use the Internet happen to be in neighborhoods where

there’s a lot of poverty, social disorganization and such things.

They can’t afford either the Internet connection, or they can’t afford

the terminal, whatever.

How do we make sure that people still know about these programs? If you have to go to the Web site to apply, how do you get

the information?

Mr. ROBINSON. Not only is it a good question but it is an absolutely salient question and one, in fact, that we have studied. I

would say that—the analogy I might use is the computers in the

classroom. There are some kinds of some programs for Washington,

Maryland public schools, one computer in every classroom; and it’s

just for the teacher, we thought at the time. So it will just be one,

you can’t help all the students, you think 30 students using one

computer, and that was true.

But what turned out to happen was that the teacher would use

the computer to get in the new lesson plans and other new information.

Mr. KUCINICH. How will he get the information through?

Mr. ROBINSON. And that’s a question for the rest of us. And so

what I would say about the Internet is, if the information about

what is available to disadvantaged communities is itself public instead of being buried in some file somewhere, that means that people who are engaged in the work of trying to lift up those communities, people like Mr. Grannum and his colleagues and others

around the country, are better able to assist their communities in

need, even if the people they are helping are not online, it is still

the case that the Internet could help them.

Mr. KUCINICH. Thank you.

Here is what I’m getting at. As it is apparent, I just want to conclude with this. With all this money being available, it seems to me

we should be able to hire people to knock on doors to tell people

what programs are available.

[Applause.]

Mr. KUCINICH. And that’s all I have to say.

Thanks.

Chairman TOWNS. Thank you very much. We’ll continue with the

gentleman from Pennsylvania, Mr. Platts.

Mr. PLATTS. Thank you, Mr. Chairman, and my thanks to all

three of the witnesses for your participation here today.

Mr. Grannum, I’ve more of a comment and then a thanks and

a question. And that is, just your concluding in your testimony the

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comments about the prevailing wage and the impact on job creation

and who will be able to participate.

I’m one of those who believes that, unfortunately, the prevailing

wage, which was well-intended when it was initially created, has

resulted today in negative consequences. I say that as a former

Teamsters Union member. I know there are union colleagues who

will support the minimum wage.

But you well lay out in your testimony that the prevailing wage

requirements in this bill will likely lead to fewer jobs being created

because of the inflated costs associated with the minimum wage, as

well as making it harder for small business owners and minorityowned business owners to participate in them because of the regulations that go with prevailing wage.

And so, I want to thank you for including that, as well that we

need to be aware of the fact that while that may be well-intended,

at the end of the day it may be hurting more people than helping

with their prevailing wage.

If you want to comment?

Mr. GRANNUM. I would say that it is certainly uncomfortable for

me to criticize the prevailing wage. I’m from a union family, as

well. But on the other hand, there are many projects that are getting done in communities like Bedford-Stuyvesant that would not

get done if the prevailing wage were required in all of them. It

would just not be feasible to do the projects.

Mr. PLATTS. And I think that’s the issue here, as we know. We

recognize perhaps some of the merits of that law but know that

there should be limitations in store in how we impose that law. So,

I appreciate you including that in your testimony.

Mr. Robinson, this next question is for you. What would you

identify in your written testimony to address the concerns about

the administration’s guidance thus far? I sought to raise that with

State and existing local officials in previous panels.

What do you see as the most glaring shortcomings of the administration’s guidance to State and local governments and other recipients of these funds thus far?

Mr. ROBINSON. I understood, at the earlier panel in response to

your question, Mr. Skyler had indicated that they haven’t received

contradictory guidance from these variety of sources from different

agencies of the Federal Government, the OMB and so on.

And I suppose that is a cause for comfort; but at the same time,

I think part of the reason that there haven’t been any contradictory

things is that they had just been so vague in some respects that

there hasn’t really been the kind of guidelines that really could

make things absolutely clear.

So, the guidance that was issued April 3rd says that the OMB

intends to give States the option of either reporting directly into a

Federal Web site, or else compiling reports at the State level and

submitting those. I’m not sure that having a diversity of approaches among States—I’m not sure what that would do necessarily for uniformity.

But in any case, the question of how data is submitted is only

half of the puzzle. The other half is, what data do they have to submit?

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And on that, I would submit that the guidelines that were released on April 3rd is less than totally clear. It’s clear that they

intend to require some additional information besides what is presently required in the future.

They talk about expanding the reporting model. But the question

is how far it will be extended and whether or not when they’re

done extending it, it will still be the case that we need extra information that has to come from the States because the ultimate

OMB requirements don’t include the guidelines. That remains to be

seen.

Mr. PLATTS. And the possible negative result of that is that

States may spend a lot of money on information technology in designing these reporting systems; and then months from now, 2

years from now, they will actually want it in this initial form or

initial information, not that information. And then we have a new

expenditure.

And so, that is the concern, that we need to get it right, the sooner the better, for a complete and better uniform bill.

Mr. ROBINSON. Absolutely. One concern is obsolescence. The

other is a wait-and-see attitude, where they’re saying is, ‘‘I don’t

know what the OMB is going to do so I’ll wait.’’ Meanwhile, the

money isn’t being spent.

Mr. PLATTS. Either way, there’s a risk that OMB has to make a

decision, and hopefully it’s a decision that is uniform for all agencies that are involved in disbursing the funds; rather than in a

hodgepodge approach.

Mr. Chairman, thank you; and again, my thanks to the witness.

Chairman TOWNS. Thank you. Thank you for everything that

you’ve said. And I know that talk about prevailing wages, I think

if we get rid of the waste and abuse, there will be no problem.

[Laughter.]

Let me thank all the witnesses today and the Members who attended this hearing today. Before we adjourn, let me say that

America demands that all stakeholders under the Recovery Act

work in good faith to protect the public and safeguard our unprecedented investment in America’s future.

I want to be clear, and be crystal clear, that this committee will

be watching and working furiously to ensure accountability and

transparency over the funds.

Let me also thank the ranking member, Mr. Issa, for his leadership in standing up with me to demand the strictest oversight.

Finally, please let the record demonstrate my position of abiding

with documents relating to this hearing.

And of course, I want to conclude by saying to all of you, I appreciate your coming out. You can see that we have a lot to do.

And without objection, the committee stands adjourned.

[Whereupon, at 12:39 p.m., the committee was adjourned.]

[The prepared statement of Hon. Diane E. Watson follows:]

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