Community Services Block Grant Program: HHS Should Improve Oversight by Focusing Monitoring and Assistance Efforts on Areas of High Risk
Published: 2006-06-29T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Community Services Block Grant (CSBG) provided over $600 million to states in fiscal year 2005 to support over 1,000 local antipoverty agencies. The Department of Health and Human Services's (HHS) Office of Community Services (OCS) is primarily responsible for overseeing this grant; states have oversight responsibility for local agencies. At the request of Congress, GAO is providing information on (1) HHS's compliance with federal laws and standards in overseeing states, (2) five states' efforts to monitor local agencies, and (3) federal CSBG training and technical assistance funds targeted to local agencies with problems and the results of the assistance. States were selected based on varying numbers of local agencies and grant amounts and recommendations from associations, among other criteria.
section_title: What GAO Found
paragraphs: In a February 2006 letter (GAO-06-373R), GAO notified OCS that it lacked effective policies, procedures, and controls to help ensure that it fully met legal requirements for monitoring states and internal control standards. At that time, GAO also offered recommendations for improvements. OCS has responded that it intends to take actions to address each of those recommendations. In addition, GAO found that OCS did not routinely collect key information, such as results of state monitoring reports, or systematically use available information, such as state performance data, to assess the states' CSBG management risks and target monitoring efforts to states with the highest risk. All five states we visited conducted on-site monitoring of local agencies with varying frequency and performed additional oversight efforts. Two state offices visited each local agency at least once between 2003 and 2005, while the other three states visited local agencies less frequently. State officials we visited had different views on what they must do to meet the statutory requirement to visit local agencies at least once during each 3-year period, and OCS has not issued guidance interpreting this requirement. Officials in all five states also provided oversight in addition to monitoring through such activities as reviewing reports and coordinating with other federal and state programs. OCS targeted some training and technical assistance funds to local grantees with financial or management problems, but information on the results of this assistance is limited. In fiscal years 2002 through 2005, OCS designated between $666,000 and $1 million of its annual $10 million training and technical assistance funds to local agencies with problems, but had no process for strategically allocating these funds to areas of greatest need. In addition, the final reports on awarded grants indicated that some local agencies had improved, but the reports provided no information on the outcomes of assistance for nearly half of the 46 local agencies that GAO identified as being served.

section_title: Letter
paragraphs: The Community Services Block Grant (CSBG) provided over $600 million  The Community Services Block Grant (CSBG) provided over $600 million  to states in fiscal year 2005 to support over 1,000 local antipoverty  to states in fiscal year 2005 to support over 1,000 local antipoverty  agencies. These local agencies, predominately community action agencies  agencies. These local agencies, predominately community action agencies  (CAA), often use CSBG to support their institutional frameworks for  (CAA), often use CSBG to support their institutional frameworks for  providing services, including staff and facilities. They also use CSBG  providing services, including staff and facilities. They also use CSBG  dollars to leverage other public and private resources to support a variety  dollars to leverage other public and private resources to support a variety  of activities, including Head Start programs, low-income home energy  of activities, including Head Start programs, low-income home energy  assistance programs, and low-income housing. The Office of Community  assistance programs, and low-income housing. The Office of Community  Services (OCS) within the Department of Health and Human Services  Services (OCS) within the Department of Health and Human Services  (HHS) is primarily responsible for overseeing this block grant, and the  (HHS) is primarily responsible for overseeing this block grant, and the  states are responsible for overseeing local agencies. In our February 2006  states are responsible for overseeing local agencies. In our February 2006  letter to HHS (GAO-06-373R), GAO reported several challenges that OCS  letter to HHS (GAO-06-373R), GAO reported several challenges that OCS  faced in ensuring effective oversight of CSBG funds and, at that time,  faced in ensuring effective oversight of CSBG funds and, at that time,  made recommendations for improvements.  made recommendations for improvements.
The CSBG Act requires OCS to visit several states each year to evaluate  The CSBG Act requires OCS to visit several states each year to evaluate  the states’ use of CSBG funds and report on its findings to the visited  the states’ use of CSBG funds and report on its findings to the visited  states and Congress annually. The law also requires OCS to provide  states and Congress annually. The law also requires OCS to provide  training and technical assistance funds to states in order to, among other  training and technical assistance funds to states in order to, among other  purposes, support state monitoring efforts and improve local programs’  purposes, support state monitoring efforts and improve local programs’  quality. The law requires states to visit all local agencies at least once  quality. The law requires states to visit all local agencies at least once  during each 3-year period and more often if local agencies fail to meet  during each 3-year period and more often if local agencies fail to meet  state-established goals, requirements, and standards. The Office of  Management and Budget (OMB) issued guidance to assist auditors in  determining whether states are carrying out their CSBG monitoring  responsibilities to visit each local agency once every 3 years in compliance  with the law. The law also requires states to report performance data to  OCS annually, such as data on the number of people served by different  antipoverty programs. Additionally, other federal laws and standards for  ensuring accountability, such as internal control standards and the Single  Audit Act, affect CSBG management and reporting.
To better understand the efforts that OCS and states have undertaken to  oversee the use of CSBG funds, we agreed to examine (1) the extent to  which HHS’s oversight of state efforts to monitor local agencies complied  with federal laws and standards, (2) the efforts selected states have made  to monitor local agencies’ compliance with fiscal requirements and  performance standards, and (3) the extent to which HHS targeted federal  CSBG training and technical assistance funds to efforts to assist local  agencies with financial or management problems and what is known about  the results of the assistance.
To address the first objective, we reviewed federal laws and standards to  obtain information on OCS’s requirements for providing oversight to  states, interviewed federal officials on their efforts, and obtained available  documentation on these efforts from fiscal year 2003 through fiscal year  2005. To assess state monitoring efforts, we reviewed federal laws and  standards to obtain information on states’ CSBG oversight responsibilities  and interviewed and collected documentation from state and local officials  in Illinois, Pennsylvania, Missouri, Texas, and Washington on state  oversight efforts from fiscal year 2003 through fiscal year 2005. We  selected states that had, among other characteristics, varying grant  amounts and numbers of local agencies, state administrative structures  that may have allowed for collaboration with other programs that provide  funds to CAAs, varying Single Audit results among their local agencies,  and recommendations from CSBG associations for promising oversight  practices. We also obtained information on state CSBG audit findings from  auditors in the five states. In addition, we interviewed federal and state  officials in Head Start, the Low-Income Home Energy Assistance Program  (LIHEAP), and the Community Development Block Grant Program  (CDBG)—three programs from which CAAs often receive funds—to  obtain information on the degree to which those officials collaborate with  federal and state CSBG officials with regard to oversight. Our results on  selected state monitoring efforts are not generalizable to all states. For the  third objective, we interviewed federal officials and their contractors that  provide training and technical assistance to obtain information on whether  OCS grants were targeted and how they determined that the grant- supported efforts were effective. We also obtained and reviewed training  and technical assistance grant applications and reports for the two  programs that support efforts to assist local agencies for fiscal year 2002  through fiscal year 2005 to assess these efforts and their results.  Furthermore, we reviewed Single Audit data to assess the extent to which  states had local agencies with findings reported in fiscal years 2002 and  2003, the most recent information available. All 50 states, the District of  Columbia, and Puerto Rico were included in our review of Single Audit  findings. We assessed the reliability of Single Audit and programmatic data  by conducting electronic and manual data testing and interviewing  officials knowledgeable about the data. We determined that the data were  sufficiently reliable for the purposes of this report. (See app. I for a more  detailed description of the scope and methodology of our review.) We  performed our work between July 2005 and May 2006 in accordance with  generally accepted government auditing standards.
subsections: section_title: Background
paragraphs: The CSBG program provides funds to state and local agencies to support  efforts that reduce poverty, revitalize low-income communities, and lead  to self-sufficiency among low-income families and individuals. CSBG  dates back to the War on Poverty of the 1960s and 1970s, which  established the Community Action program, under which the nationwide  network of local community action agencies was developed. A key feature  of Community Action was the direct involvement of low-income people in  the design and administration of antipoverty activities through mandatory  representation on local agency governing boards. The federal government  had direct oversight of local agencies until 1981, when Congress created  CSBG and designated states as the primary recipients. States subgrant  funds to over 1,000 eligible local agencies that are primarily community  action agencies.
In order to ensure accountability, both federal and state program offices  have oversight responsibilities, including on-site monitoring of grantees  and subgrantees, following-up on monitoring findings, and providing  technical assistance.
subsections: section_title: Federal Role
paragraphs: OCS administers CSBG and is required by law to conduct on-site  compliance evaluations of several states in each fiscal year, report to  states on the results of these evaluations, and make recommendations for  improvements. Upon receiving an evaluation report, states must submit a  plan of action that addresses recommendations. In addition, OCS is  required to annually report to Congress on the performance of the CSBG  program, including the results of state compliance evaluations. For states  to receive CSBG funding, they must submit, at least every 2 years, an  application and plan to OCS stating their intention that funds will be used  to, among other things, support activities to help families and individuals  with the following: achieve self-sufficiency, find and retain meaningful  employment, attain an adequate education, make better use of available  income, obtain adequate housing, and achieve greater participation in  community affairs.
The CSBG Act requires OCS to reserve 1.5 percent of annual  appropriations (about $10 million in fiscal year 2005) for training and  technical assistance for state and local agencies; planning, evaluation, and  performance measurement; assisting states with carrying out corrective  action activities; and monitoring, reporting, and data collection activities.  The fiscal year 2005 Consolidated Appropriations Act conference report  directed OCS to develop a 3-year strategic plan to guide its training and  technical assistance efforts. OCS has provided assistance to local agencies  with problems primarily through two grant programs: Special State  Technical Assistance (SSTA) Grants and the Peer-to-Peer Technical  Assistance and Crisis Aversion Intervention (Peer-to-Peer) Grants. OCS  generally awarded Special State Technical Assistance Grants to states or  state associations of community action agencies to provide support to  local agencies that have problems. Since 2001, OCS has awarded the Peer- to-Peer Grant solely to Mid-Iowa Community Action (MICA), a community  action agency, to offer problem assessment, interim management, and  other technical assistance services to local agencies with problems.
section_title: Standards for Internal Control in the Federal Government
paragraphs: In addition to the federal requirements in law, OCS, like other federal  agencies, is required to adhere to internal control standards established by  the Office of Management and Budget and GAO in order to help ensure  efficient and effective operations, reliable financial reporting, and  compliance with federal laws. Internal controls help government program  managers achieve desired results through effective stewardship of public  resources. Such interrelated controls comprise the plans, methods, and  procedures used to meet missions, goals, and objectives and, in doing so,  support performance-based management and should provide reasonable  assurance that an organization achieves its objectives of (1) effective and  efficient operations, (2) reliable reporting, and (3) compliance with  applicable laws and regulations.
The five components of internal controls are    Control environment: creating a culture of accountability within an  entire organization—program offices, financial services, and regional  offices—by establishing a positive and supportive attitude toward the  achievement of established program outcomes.
Risk assessment: identifying and analyzing relevant risks, both internal  and external, that might prevent the program from achieving  objectives, and developing processes that can be used to form a basis  for the measuring of actual or potential effects of relevant factors and  manage their risks. During such a risk assessment process, managers  should consider their reliance on other parties to perform critical  program operations.
Control activities: establishing and implementing oversight processes  to address risk areas and help ensure that management’s directives— especially about how to mitigate and manage risks—are carried out  and program objectives are met.
Information and communication: using and sharing relevant, reliable,  and timely operational and financial information to determine whether  the agency is meeting its performance and accountability goals.
Monitoring: tracking improvement initiatives over time and identifying  additional actions needed to further improve program efficiency and  effectiveness.
section_title: State Role
paragraphs: The CSBG Act requires each state to designate a lead agency to administer  CSBG funds and to provide oversight of local agencies that receive funds.  States are required to award at least 90 percent of their federal block grant  allotments to eligible local agencies, but are allowed to determine how  CSBG funds are distributed among local agencies. States may use up to  $55,000 or 5 percent of their CSBG allotment, whichever is higher, for  administrative costs. States may use remaining funds for the provision of  training and technical assistance, coordination and communication  activities, payments to ensure they target funds to areas with the greatest  need, support for innovative programs and activities conducted by local  organizations, or other activities consistent with the purposes of the CSBG  Act. In addition, state and local agencies that expend $500,000 or more  ($300,000 or more prior to 2004) in total federal awards are required under  the Single Audit Act to undergo an audit annually and submit a report to  the Federal Audit Clearinghouse. Furthermore, individual federal funding  sources may also be reviewed annually under the Single Audit, depending  on the size of these expenditures.
The CSBG Act requires states to monitor local agencies to determine  whether they meet performance goals, administrative standards and  financial management and other state requirements. States are required to  perform this monitoring through a full on-site review of each local agency  at least once during each 3-year period and to conduct follow-up reviews,  including prompt return visits, to local agencies that fail to meet the goals,  standards, and requirements established by the state. OMB has issued  Single Audit compliance review guidance for CSBG that explicitly  mentions that when auditors review state programs, they should  determine whether states are visiting each local agency once every 3 years  to assess if states comply with the law. States must also offer training and  technical assistance to failing local agencies.
Local agencies are required to submit a community action plan to states  that contains a community needs assessment, a description of the service  delivery system for services provided by or coordinated with CSBG funds,  a description of how they will partner with other local agencies to address  gaps in services they provide, a description of how funds will be  coordinated with other public and private resources, and a description of  how funds will be used to support innovative community and  neighborhood-based initiatives.
The CSBG Act requires both state and local agencies to participate in a  performance measurement system. Results Oriented Management and  Accountability (ROMA) is the OCS-sponsored performance management  system that states and local agencies use to measure their performance in  achieving their CSBG goals. State agencies report annually on ROMA using  the CSBG Information System survey, which the National Association for  State Community Services Programs (NASCSP) administers.
section_title: CSBG Network Resources
paragraphs: In fiscal year 2004, the network of local CSBG agencies received almost  $9.7 billion from all sources. About $7 billion of these funds came from  federal sources, including about $600 million from CSBG. Other federal  programs funding the CSBG network included Head Start, LIHEAP, CDBG,  Child Care and Development Fund, Temporary Assistance for Needy  Families, and the Social Services Block Grant (see fig. 1). HHS’s  Administration for Children and Families contributed 90 percent of the  $4.4 billion in funds provided to local agencies through HHS.
HHS received about $637 million in CSBG funding for fiscal year 2005 and  about $630 million for fiscal year 2006.
section_title: OCS Lacks Internal Controls and a Risk Management Framework Needed to Carry Out Effective Monitoring Efforts
paragraphs: In its efforts to oversee states, OCS did not fully comply with federal laws  related to monitoring states and internal control standards and lacked a  process to assess state CSBG management risks. OCS visited nine states in  fiscal years 2003 through 2005. However, as mentioned in our letter to the  Assistant Secretary for Children and Families, OCS lacked the policies,  procedures, and other internal controls to ensure effective monitoring  efforts. As a result, states and Congress are not receiving required  information on monitoring findings, and states may not have made  improvements to how they administer CSBG funds. We recommended that  the OCS director establish formal written policies and procedures to  improve OCS’s monitoring and related reporting, and OCS officials have  made plans to address each of the recommendations included in the letter.  We also found that OCS did not systematically use or collect available  information that would allow it to assess states’ CSBG management risks.  Officials told us that they considered a variety of risk-related factors when  selecting sites for monitoring visits, including reports from state and local  officials about financial management problems and staff turnover, but they  did not have a systematic approach to assess risk or target monitoring  toward states with the greatest needs.
subsections: section_title: OCS Lacked Policies and Procedures to Help Ensure Effective Monitoring of States but Plans Improvements
paragraphs: OCS lacked policies, procedures, and internal controls to help ensure  effective on-site monitoring of state CSBG programs but has made plans to  address these issues. OCS officials told us they visited nine states since  2003: Delaware, Louisiana, Maryland, and North Carolina in 2003; Alabama  and Montana in 2004; and Kentucky, New Jersey, and Washington in 2005.  During these visits, OCS officials told us they used a monitoring tool to  assess the administrative and financial operations of state programs.  However, OCS sent monitoring teams that lacked required financial  expertise to conduct evaluations of states and did not issue final reports to  states as required by law. Consequently, the visited states may have been  unaware of potential OCS findings and, therefore, may not have developed  corrective action plans if needed. Furthermore, OCS officials also told us  that they lost documentation for the state visits conducted in fiscal years  2003 and 2004, leaving them unable to report to states they visited or  perform appropriate follow-up procedures. OCS officials did not include  information on their monitoring visits in their most recent CSBG report to  Congress, released in December 2005, as statutorily required. In addition,  OCS has not issued reports to Congress annually, as required by law.
We reported on OCS’s monitoring challenges to the Assistant Secretary for  Children and Families on February 7, 2006, and made recommendations  for improving these conditions (for a copy of this letter, see app. II).  Specifically, we recommended that the OCS director establish formal  written policies and procedures to (1) ensure that teams conducting  monitoring visits include staff with requisite skills, (2) ensure the timely  completion of monitoring reports to states, (3) maintain and retain  documentation of monitoring visits, and (4) ensure the timely issuance of  annual reports to Congress. In response to this letter, OCS officials said  that they plan to address each of our recommendations by hiring  additional monitoring staff with expertise in financial oversight, training  all staff on requirements that states must meet prior to visits, establishing  a triennial monitoring schedule for visiting states, developing new  guidelines for reporting to states and maintaining monitoring documents,  and issuing timely reports to Congress, among other efforts. See appendix  III for more details on HHS’s response to our letter.
section_title: OCS Did Not Use or Collect Available Information Needed to Assess States’ Risk of Mismanaging Their CSBG Programs
paragraphs: OCS did not systematically use or collect key information that would allow  it to assess states’ CSBG management risks and target its limited  monitoring resources toward states with the greatest risks. OCS officials  told us that they used a risk-based approach to select states to visit, but we  found the selection process to be ad hoc and often unexplained. OCS  officials explained that they used information received from state and  local officials on state CSBG management concerns to decide in which  states to conduct compliance evaluation visits. For example, upon learning  that local agencies in Louisiana were concerned that they had not received  all the funds allotted to them, OCS decided to conduct an evaluation of  that state. OCS officials also mentioned that when selecting states to visit,  they considered such risk factors as staff turnover and having limited  information about the state in general. However, OCS officials could not  provide an explanation for why they visited six of the nine states that had  undergone evaluations since 2003 and had no formal, written criteria for  determining which states to visit.
Each state provides annual program performance information to OCS, but  OCS does not systematically use this information to assess states’ risks of  not meeting program objectives. Specifically, states annually provide OCS  with information about the number of people receiving services and the  types of services local agencies provided and categorize this information  according to designated program goals, which can provide OCS with data  on whether state and local agencies are performing as expected. OCS also  did not systematically use information on the amount of CSBG funds  states have expended. OCS officials said they reviewed state Single Audit  reports when CSBG was included, but we found state CSBG programs  generally fell below thresholds to receive an annual required audit.
OCS does not systematically collect other key information that would  allow federal officials to assess risk related to states’ oversight efforts and  therefore cannot determine whether states are fulfilling their requirement  to visit local agencies. For example, although OCS required states to  certify that they will conduct statutorily required on-site visits of local  agencies in their CSBG applications, it did not require states to submit  documentation, such as reports on their monitoring findings, to verify that  they had conducted these visits. OCS officials told us that they relied on  state Single Audit reports to learn which states did not comply with  monitoring requirements. However, we found these audits rarely, if ever,  review state CSBG programs. OCS officials told us that they were not  aware of how rarely CSBG is reviewed through the Single Audit.
OCS also does not systematically collect information on the local agencies  that experience management problems or on the extent to which  identified problems are being resolved. The federal CSBG director told us  that as a result, OCS may not be fully aware of the extent to which states  had local agencies facing challenges with managing CSBG. OCS is aware  of some local agencies with problems but has not established regular  methods for collecting this information. OCS officials told us that it is the  states’ responsibility to identify and address problems in local agencies. In  our review of Single Audit data, we found that financial management  problems were common, with about 30 percent of local agencies reporting  findings in 2002 and 2003. However, less than 10 percent of all local  agencies reported more severe findings that could result in undetected  financial reporting error and fraud, that are material weaknesses, in either  year (see app. IV for Single Audit data).
section_title: Frequency of State On-Site Monitoring Varied, but Selected States Performed Other Oversight Activities
paragraphs: All five states we visited conducted on-site monitoring of local agencies  with varying frequency and performed additional oversight efforts, such as  reviewing financial and programmatic reports from local agencies. The  state programs that we visited had different views on what they must do to  meet federal requirements to monitor local agencies at least once during  each 3-year period, and OCS had not issued guidance clarifying the time  frames states should use when conducting on-site visits. Specifically,  officials in two states conducted the on-site visits at least once between  2003 and 2005, but officials in the other three states visited their local  agencies less frequently. While states varied in their frequency of  monitoring visits, all five states offices visited local agencies with  identified problems more often. Capacity to conduct on-site monitoring  varied among the five state offices, particularly in the areas of  administrative and financial monitoring resources. Officials in all five  states that we visited reviewed local agency reports as an additional  oversight effort and provided required training and technical assistance to  local agencies. In addition, some state offices coordinated with other  federal programs that fund local activities to gain further insight into local  agencies’ management practices.
subsections: section_title: Frequency of On-site Visits Varied
paragraphs: The frequency of on-site visits to local agencies varied among the five  states we visited, ranging from 1 to 5 years between site visits. State CSBG  offices in Illinois and Texas conducted visits to each local agency between  2003 and 2005. Specifically, officials in these two states visited at least half  of their agencies each year. In contrast, Pennsylvania, Missouri, and  Washington officials monitored their local agencies less frequently, with  Missouri allowing up to 5 years to pass between monitoring visits to some  local agencies. Washington and Pennsylvania officials had visited nearly  all of their local agencies from 2003 through 2005, leaving less than 10  percent unmonitored during this period. Conversely, the Missouri state  CSBG office visited 4 of 19 local agencies from 2003 to 2005, leaving nearly  80 percent of agencies unmonitored since 2001 or 2002. While states varied  in their frequency of monitoring visits, officials in all five states told us  they visited local agencies with identified problems more often. Illinois,  Texas, and Washington assessed local agencies’ management risks to  prioritize which local agencies they visited more frequently during a  monitoring cycle. Table 1 below shows how many local agencies these  states monitored with on-site CSBG reviews from 2003 through 2005.
Although the CSBG Act states that local agencies should be visited at least  once during each 3-year period, the state officials we visited have different  views on what is necessary to meet this requirement, and OCS has not  issued guidance to states to clarify how the law should be interpreted.  During the fiscal year 2004 Single Audit, Pennsylvania state auditors, using  OMB guidance stating that reviews of local agencies must be conducted  once every 3 years, found the state CSBG program to be out of compliance  with federal requirements. However, the Missouri CSBG program manager  stated that even though 15 local agencies have not been visited between  2003 and 2005, according to the state’s interpretation of the CSBG law, the  CSBG office will meet monitoring requirements because all local agencies  will be visited within the two 3-year periods of 2001 to 2003 and 2004 to  2006. For example, the Missouri officials visited five agencies in 2001,  during the first 3-year period, and plan to visit these agencies again in  2006, during the second 3-year period.
section_title: States’ Capacity to Conduct On-site Monitoring Varied
paragraphs: Administrative and financial monitoring resources varied in the five states  we visited. Specifically, administrative funding ranged from less than 1  percent ($135,380) of CSBG funds in Missouri to 4 percent ($1.2 million) in  Texas. The Missouri program manager told us that the state CSBG office  used less than 1 percent for administration because state hiring  restrictions prevented the CSBG program from hiring full-time CSBG staff.  In addition, state officials in Missouri, Pennsylvania, and Washington told  us that staff shortages prevented them from visiting local agencies more  frequently. The number of staff available, funding for administration, and  other related information are shown in table 2.
State programs generally developed and made use of written monitoring  guides, but they varied in their ability to assess local agencies’ financial  operations. The five state programs we visited all had written guides for  monitoring visits that covered such areas as financial controls,  governance, personnel, performance outcomes, and previous monitoring  findings. However, state auditors in Washington told us that the CSBG  office could not provide evidence that the guides were consistently used  during monitoring visits because available documentation showed that the  guides were often incomplete after a visit. Illinois, Texas, and Washington  offices regularly used accountants to support their reviews of local  agencies’ financial operations as part of the on-site monitoring visits.  Conversely, Missouri and Pennsylvania officials told us they did not  regularly involve accountants in their monitoring efforts but had taken  steps to improve the guides they used to review local agencies’ finances.  Specifically, the Missouri CSBG office, in consultation with MICA, made  changes to its monitoring guide and provided financial training to its staff.  The state CSBG office in Pennsylvania, with input from state budget staff,  revised the financial aspects of its monitoring guide.
section_title: States Made Efforts to Provide Additional Oversight of Local Agencies
paragraphs: The states that we visited provided oversight in addition to on-site  monitoring through such activities as reviewing reports, coordinating with  other federal and state programs, and providing formal training and  technical assistance. All five state programs collected regular financial and  performance reports and reviewed local expenditure reports. In addition,  officials in the five states told us that they reviewed reports of the annual  Single Audits for local agencies when they included findings related to the  CSBG program. For example, a state audit manager in Washington  reviewed the audits and regularly notified the CSBG program office when  local agency findings were identified, and state CSBG program staff  followed up with local agency officials and worked to ensure that the  findings were addressed. States also required all local agencies to submit  performance data. State officials told us that local agencies established  their own performance goals, and the state offices reviewed these goals  and sometimes modified them in consultation with local agencies.  Additionally, all state CSBG offices reviewed local community action  plans.
Illinois, Texas, and Washington officials used information from these  additional oversight activities to conduct risk assessments and select local  agencies for more frequent on-site monitoring visits. In conducting these  risk assessments, the state programs considered such factors as the  amount of funds received from the state, the time since the last monitoring  visit, and any identified concerns about an agency’s competency, integrity,  or proficiency. State officials told us that they directed local agencies to  use preventive training and technical assistance to address any issues  raised by risk assessments.
Three of the five state CSBG offices that we visited also coordinated  oversight activities with other federal and state programs that fund local  agencies. For example, the Missouri, Texas, and Washington offices  performed joint monitoring visits with state LIHEAP officials, and Missouri  exchanged the results of local agency monitoring visits with the regional  Head Start office. Coordination with other federal and state programs that  provide funds to local agencies, such as housing-related programs and  Head Start, generally consisted of occasional meetings and the sharing of  some information. Also, OCS and the Head Start Bureau entered into a  memorandum of understanding to foster collaboration and improve  oversight of local agencies. While most regional and state officials told us  they were aware of the memorandum of understanding, some told us that  its intent was unclear and that they needed additional guidance to  implement it more usefully.
State associations of community action agencies played an important role  in providing formal training and technical assistance to local agencies.  CSBG officials in Illinois, Missouri, Pennsylvania, and Texas relied on state  community action associations to provide technical assistance. For  example, the Illinois Community Action Association received state training  and technical assistance funds to provide on-line resources, peer coaching,  and routine conferences on a regular basis. Missouri’s state association for  community action agencies, the Missouri Association for Community  Action, also received CSBG training and technical assistance funds, which  it used to help local agencies improve communications and management  information systems and provide additional technical assistance as  needed. In addition the Missouri association provides networking  opportunities for local agencies and has a full-time training expert on staff,  supported by the state CSBG contract, to provide one-on-one support to  local agencies. In addition to training provided by the association, the  Texas CSBG staff sponsored conferences and workshops that allowed the  staff members to provide training directly to local agencies. In  Washington, the association and state staff sponsored discussion groups  for the local agencies. Additionally, during on-site monitoring visits, state  CSBG officials provided immediate informal technical assistance and  follow-up with local agencies on monitoring findings when necessary.
section_title: OCS Targeted Some Training and Technical Assistance Funds to Grantees with Problems, but Information on Results Is Limited
paragraphs: While OCS targeted some training and technical assistance funds to local  grantees with financial and programmatic management problems, the  information on results of this assistance is limited. In fiscal years 2002  through 2005, OCS designated between $666,000 and $1 million of its  annual $10 million training and technical assistance funds to local  agencies with problems, but OCS did not have information to determine  whether its training and technical assistance programs and their funding  amounts were appropriate for addressing the areas of greatest needs.  Specifically, the federal CSBG director explained that OCS currently  allocates training and technical assistance funds based on input from some  state and local agencies, but this process was not guided by a systematic  assessment of state and local needs. Information on the results of OCS’s  current grant programs that target local agencies with problems was  limited. However, information provided by progress reports for these  grants showed that some of the agencies assisted had improved.
subsections: section_title: OCS Designated $1 Million or Less of Its Annual Training and Technical Assistance Funding to Assist Local Agencies with Problems but Does Not Know if These Funds Addressed the Greatest Needs
paragraphs: In fiscal years 2002 through 2005, OCS designated $1 million or less of its  annual $10 million training and technical assistance funds to assist local  agencies with problems, but it had no way to determine whether this  money was allocated in a way that addressed the greatest needs of state  and local agencies. OCS divided its annual $10 million training and  technical assistance funds among program support, contracts, and grants.  The Deputy Director of OCS told us that program support funds paid  salaries and expenses for OCS officials that manage CSBG grants, and  contract funds paid for costs associated with logistics such as outreach  and meeting with grantees, costs related to a management information  system, and costs related to grant competitions. Training and technical  assistance grants may be used for a variety of purposes, and OCS allocated  these funds to support different types of activities each year. For example,  OCS frequently funded activities such as supporting the implementation of  ROMA, encouraging agencies to share innovative ideas, and providing  program and management training opportunities for community action  professionals. OCS designated between $666,000 and $1 million of annual  training and technical assistance grants to assist local agencies with  problems through two grant programs: Special State Technical Assistance  Grants and the Peer-to-Peer Technical Assistance and Crisis Aversion  Intervention Grants. These grants were commonly used to address to  management, financial, and board governance problems at local agencies.  Table 3 shows the allocation of CSBG funding for grants, contracts, and  program support.
Despite a congressional recommendation, OCS officials told us there is no  process in place to strategically allocate its approximately $10 million in  training and technical assistance funds among program areas. OCS drafted  a strategic plan for allocating its training and technical assistance funds— an action directed by congressional conferees in the fiscal year 2005  Consolidated Appropriations Act conference report—but did not  implement the plan. The federal CSBG director told us that OCS did not  implement the strategic plan because the President’s recent budget  proposals did not include funding for CSBG, although Congress has  continued to provide funding for the program. The federal CSBG director  also told us that the draft plan focused resources on such areas as  financial integrity and management, leadership enhancement, and data  collection.
The federal CSBG director also told us that OCS currently allocates  training and technical assistance funds based on input from some state  and local agencies, but this process was not guided by a systematic  assessment of state and local needs and did not involve guidance or  specifications on the actual amounts that should be awarded for activities.  Specifically, OCS sought input each year from the Monitoring and  Assessment Taskforce—a group made up of some state and local CSBG  officials and national CSBG associations such as the National Association  of State Community Service Programs (NASCSP)—to generate a list of  priority activities. OCS then presented this list at national community  action conferences, such as those sponsored by NASCSP or the  Community Action Partnership, for additional comments. However, OCS  does not track which local agencies experienced problems and what those  problems were. As a result, OCS could not provide us with information on  the extent to which these current efforts are addressing those needs.
section_title: Limited Data on the Results of the Assistance Showed That Some Local Agencies Had Improved
paragraphs: Information on the results of OCS grant programs that targeted local  agencies with problems was limited. However, the available information  showed that some local agencies have improved financial and  programmatic management as a result of the assistance they received. Our  review of all available grant applications and subsequent progress reports  for SSTA and Peer-to-Peer grants identified 68 local agencies that these  grants targeted for assistance between 2002 and 2005. Of these 68  agencies, 22 had no results available because the assistance was ongoing  and therefore final progress reports were not yet due. We identified  outcomes for 25 of the remaining 46 agencies, as shown in figure 2. Of  these 25 agencies, 18 reported improvement, and the remaining 7 agencies  had unresolved issues, had closed, or had undeterminable results. Results  were unknown for the other 21 agencies because their grant progress  reports did not include information on outcomes.
OCS officials told us that they hold grantees accountable for conducting  activities under the proposed scope of training and technical assistance  grants, not whether these activities result in successful outcomes for the  local agencies they assist. OCS’s guidance to training and technical  assistance grantees recommends that the grantees report whether  activities are completed but does not include a requirement to report on  outcomes. Further, HHS’s guidance on discretionary grant reporting,  which covers CSBG training and technical assistance grants, does not  specify what information program offices should collect on performance  and outcomes. We also spoke with officials in HHS’s Office of Inspector  General who mentioned that on the basis of prior reviews the office had  some concerns about the administration of CSBG discretionary grants.  Specifically, these officials had concerns about the completeness and  accuracy of progress reports and whether grantees were meeting their  goals.
Officials involved in efforts to use grants to assist agencies gave mixed  reviews on the effectiveness of activities funded by these grants. State and  local officials in Texas and Missouri spoke highly of their interaction with  MICA to assist agencies with problems. State officials in Texas said they  had used an SSTA grant to assist two local agencies and had hired MICA  as the contractor to provide the assistance. Texas officials were pleased  with the assistance that MICA provided and said that the state did not have  the resources to provide the kind of long-term, on-site assistance that  MICA offered. Missouri officials told us that all five local agencies that the  state had contracted with MICA to work with had benefited from MICA’s  expertise, particularly with regard to financial matters. Like Texas, the  Missouri office also used SSTA grants to provide assistance to four of  these agencies. In contrast, we also spoke to national, regional, and state  community action association officials who said they had worked with  local agencies that received assistance from MICA and had concerns about  MICA’s work. Specifically, they told us that MICA was not always effective  in resolving local agencies’ problems, did not use money efficiently, and  had an apparent conflict of interest stemming from its practice of  conducting agency assessments and offering services to correct problems  those assessments identify. For example, an Ohio official who managed a  local agency’s contract told us that even with 6 months of paid assistance  from MICA, the local agency had closed. In response to these criticisms, a  MICA official said that some problems at local agencies were too severe  for them to address and that MICA tries to be transparent about its costs  by issuing a detailed proposal before starting work with an agency.  Additionally, the MICA official said that MICA and OCS officials had  discussed the conflict of interest issue, and OCS had encouraged MICA to  continue efforts to assess agencies and address their problems.
section_title: Conclusions
paragraphs: Under the CSBG program, federal, state, and local agencies work together  to help low-income people achieve self-sufficiency. The federal  government’s role is to oversee states’ efforts to ensure that local agencies  properly and effectively use CSBG funds. OCS currently lacks the  procedures, information, and guidance to grantees that it needs to  effectively carry out its role. Specifically, OCS does not fully use the data it  collects and does not collect other key information on state oversight  efforts and the outcomes of training and technical assistance grants that  could enhance its oversight capabilities. Additionally, OCS has not issued  guidance for how often states should visit local agencies. Thus, OCS  cannot determine where program risks exist or effectively target its  limited resources to where they would be most useful. Consequently, OCS  may have missed opportunities to monitor states facing the greatest  oversight challenges and to identify common problem areas where it could  target training and technical assistance.
section_title: Recommendations for Executive Action
paragraphs: In order to provide better oversight of state agencies, we recommend that  the Assistant Secretary for Children and Families direct OCS to take the  following actions:    Conduct a risk-based assessment of state CSBG programs by  systematically collecting and using information. This information may  include programmatic and performance data, state and local Single  Audit findings, information on state monitoring efforts and local  agencies with problems, and monitoring results from other related  federal programs that may be obtained by effectively using the  memorandum of understanding with the Head Start program and other  collaborative efforts.
Establish policies and procedures to help ensure that its on-site  monitoring is focused on states with highest risk.  Issue guidance on state responsibilities with regard to complying with  the requirement to monitor local agencies at least once during each 3- year time period.
Establish reporting guidance for training and technical grants that  would allow OCS to obtain information on the outcomes of grant- funded activities for local agencies.  Implement a strategic plan that will focus its training and technical  assistance efforts on the areas in which states face the greatest needs.
OCS should make use of risk assessments and its reviews of past  training and technical assistance efforts to inform the strategic plan.
section_title: Comments from the Department of Health and Human Services on Our Evaluation
paragraphs: We provided a draft of this report to the Department of Health and Human  Services and received written comments from the agency.  In its  comments, HHS officials agreed with our recommendations and, in  response, have planned several changes to improve CSBG oversight.   Specifically, HHS officials stated that OCS is finalizing a risk-based  strategy to identify state and local agencies most in need of oversight and  technical assistance based on characteristics identified in state plans,  audit reports, previous monitoring and performance reports, and reports  from other programs administered by local agencies that receive CSBG  funds.  HHS officials said that this strategy will result in OCS implementing  a triennial monitoring schedule they plan to have fully operational by fiscal  year 2008.  HHS officials also said that by October 1, 2006, OCS will issue  guidance to state CSBG lead agencies to clarify the states’ statutory  obligation to monitor all local entities receiving CSBG funding within a 3- year period, as well as requirements for states to execute their monitoring  programs.  Additionally, HHS officials said that OCS has worked with a  group of local and state CSBG officials and national CSBG associations to  develop a comprehensive training and technical assistance strategic plan  focused on issues such as leadership, administration, fiscal controls, and  data collection and reporting. See appendix V for HHS’s comments.
As agreed with your offices, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days after its  issue date. At that time, we will send copies of this report to the Assistant  Secretary for Children and Families, relevant congressional committees,  and other interested parties. We will also make copies available to others  upon request. In addition, the report will be available at no charge on  GAO’s Web site at http://www.gao.gov.
Please contact me at (202) 512-7215 if you or your staff have any questions  about this report. Other major contributors to this report are listed in  appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To gain a better understanding of oversight efforts undertaken by state  and federal program offices to monitor the Community Services Block  Grant (CSBG) program and ensure the accountability of funds, we  examined (1) the extent to which the Department of Health and Human  (HHS) oversight of states efforts to monitor local agencies complied with  federal laws and standards, (2) the efforts selected states have made to  monitor local agencies’ compliance with fiscal requirements and  performance standards, and (3) the extent to which HHS targeted federal  CSBG training and technical assistance funds to efforts to assist local  agencies with financial or management problems and what is known about  the results of the assistance.
To address the first objective, we reviewed federal laws and standards to  obtain information on the Office of Community Services’s (OCS)  requirements and responsibilities for the oversight of states and  interviewed federal officials about their oversight efforts. In addition, we  obtained and reviewed available information on OCS monitoring policies  and procedures; documentation of federal monitoring visits of states  conducted during fiscal years 2003 through 2005; other information OCS  collects from states, including state applications and performance data;  and guidance issued by OCS to communicate program-related information,  concerns, and priorities to grantees to assess OCS’s compliance with laws  and standards. We also reviewed available Single Audit data for local  agencies and grouped them by state to assess the percentage of local  agencies with Single Audit findings at both the national and state levels  reported in fiscal years 2002 and 2003, the most recent years for which  information was available. The scope of this review included the District  of Columbia and Puerto Rico as well as the 50 states. We assessed the  reliability of Single Audit data by performing electronic and manual data  testing to assess whether the data were complete and accurate. We also  assessed the reliability of CSBG statistical data by interviewing officials  knowledgeable about data collection and maintenance. We determined  that the data were sufficiently reliable for the purposes of this report. In  addition, we interviewed federal officials with Head Start, the Low-Income  Home Energy Assistance Program, and the Community Development  Block Grant program, which also distribute funds to local agencies, to  learn whether officials from these programs shared information with  CSBG officials to support oversight efforts.
To address the second objective, we reviewed federal laws and standards  to obtain information on states’ CSBG oversight responsibilities and  conducted site visits.
We visited five states, Illinois, Missouri, Pennsylvania, Texas, and  Washington, that were selected using several criteria including grant  amounts, number of local agencies, state administrative structure, and  analysis of Single Audit results among local agencies. CSBG association  officials recommended some of these states based on promising efforts to  monitor local agencies. Table 4 provides characteristics we considered for  each state.
During our state site visits, we interviewed and collected information from  state and local officials in Illinois, Missouri, Pennsylvania, Texas, and  Washington about state oversight efforts from fiscal year 2003 through  fiscal year 2005. Specifically, we interviewed state program officials and  reviewed related documentation including state guidance and directives to  local agencies, application instructions, state on-site monitoring  schedules, on-site monitoring guides, sample contracts, and reporting  forms for local agencies. We also visited three local agencies in each state  and interviewed staff to learn more about state oversight and monitoring  efforts, including application processes, fiscal and performance reporting,  on-site monitoring, and training and technical assistance. In each state we  visited, we reviewed program files for six local agencies, including files for  the three we visited and three others, that included community action  plans and applications, financial and performance reports, and state  monitoring reports and follow-up correspondence. In addition, we  obtained information on state audit findings related to CSBG and met with  state auditors during site visits to learn more about additional state  oversight of CSBG and related programs and local agencies. We also  interviewed state officials in the Low-Income Home Energy Assistance  Program and the Community Development Block Grant programs, as well  as regional HHS officials, to learn whether any coordination occurred  between the programs to support state oversight efforts. Our results on the  five states that we visited are not generalizable to all state CSBG  programs.
To address the third objective, we interviewed federal officials and  contractors that provide training and technical assistance to obtain  information on the extent to which OCS grants were targeted to assist  agencies with problems and how they determined whether these efforts  were effective. We obtained and reviewed training and technical  assistance grant applications and progress reports for Special State  Technical Assistance (SSTA) Grants and Peer-to-Peer Technical  Assistance and Crisis Intervention (Peer-to-Peer) Grants for fiscal year  2002 through fiscal year 2005 to assess efforts to assist local agencies with  problems and the results of these efforts. This review included  applications for all 39 SSTA Grants awarded during this period, progress  reports issued in 6-month intervals for the Peer-to-Peer Grant, and  available final progress reports for the SSTA Grants. We were not able to  obtain some SSTA Grant progress reports because the assistance was still  ongoing, particularly for grants issued recently. We also interviewed a  national association representative and state and local officials to learn  about the results of training and technical assistance efforts.
We conducted our work from July 2005 through May 2006 in accordance  with generally accepted government auditing standards.
section_title: Appendix II: Community Services Block Grant Program: HHS Needs to Improve Monitoring of State Grantees, GAO-06-373R
section_title: Appendix III: The Department of Health and Human Services’s Response to GAO-06-373R
section_title: Appendix IV: Ranking of States Based on Percentage of Local CSBG Subgrantees with Single Audit Findings
paragraphs: Tables 5 and 6 present Single Audit data by state for local CSBG agencies  (i.e., community action agencies) for 2002 and 2003, respectively. For each  state, we report (1) the number of local agencies for which Single Audit  data were available, (2) the percentage of local agencies in the state that  had any type of Single Audit finding, (3) the percentage of local agencies  that had material weakness findings, and (4) the percentage of local  agencies that had material noncompliance findings. States are ranked in  decreasing order by the percentage of local agencies in the state that had  any type of Single Audit finding.
section_title: Appendix V: Comments from the Department of Health & Human Services
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Bryon Gordon (Assistant  Director), Danielle Giese (Analyst-in-Charge), Janice Ceperich, Tim Hall,  and Andrew Huddleston made significant contributions to this report.  Curtis Groves, Matt Michaels, and Luann Moy provided assistance with  research methodology and data analysis. Jim Rebbe provided legal  counsel, and Jonathan McMurray and Lise Levie assisted with report  development.
section_title: Related GAO Products
paragraphs: Community Services Block Grant Program: HHS Needs to Improve  Monitoring of State Grantees. GAO-06-373R. Washington, D.C.:   February 7, 2006.
Head Start: Comprehensive Approach to Identifying and Addressing  Risks Could Help Prevent Grantee Financial Management Weaknesses.  GAO-05-465T. Washington, D.C.: April 5, 2005.
Head Start: Comprehensive Approach to Identifying and Addressing  Risks Could Help Prevent Grantee Financial Management Weaknesses.  GAO-05-176. Washington, D.C: February 28, 2005.
Internal Control Management and Evaluation Tool. GAO-01-1008G.  Washington, D.C.: August 2001.
Standards for Internal Control in the Federal Government.   GAO/AIMD-00-21.3.1. Washington: D.C.: November 1999.
Grant Programs: Design Features Shape Flexibility, Accountability, and  Performance Information. GAO/GGD-98-137. Washington, D.C.: June 22,  1998.