Water Infrastructure: EPA and USDA Are Helping Small Water Utilities with Asset Management; Opportunities Exist to Better Track Results
Published: 2016-01-27T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Recent catastrophic breaks in water mains and sewer discharges during storms are indicators of the nation's old and deteriorating water and wastewater infrastructure. EPA estimates that small water utilities—those serving fewer than 10,000 people--may need about $143 billion for drinking water and wastewater infrastructure repairs and replacement over 20 years. EPA and USDA provide the three largest sources of federal funding for water infrastructure. In a March 2004 report, GAO found that water utilities may benefit from implementing asset management—a tool used across a variety of sectors to manage physical assets, such as roads and buildings.
GAO was asked to review water utilities' use of asset management. This report examines (1) what is known about the use of asset management among the nation's water utilities—particularly small water utilities— including benefits and challenges and (2) steps EPA and USDA are taking to help small water utilities implement asset management. GAO selected a nongeneralizable sample of 25 water utilities in 10 states based on largest infrastructure needs and interviewed EPA, USDA, state, and water utility officials.
section_title: What GAO Found
paragraphs: The small water utilities GAO reviewed in 10 selected states are implementing some asset management practices, although state officials said that large water utilities are more likely to implement asset management than small utilities. The asset management practices these small utilities used include identifying key assets, such as pipelines, treatment plants, and other facilities, and assessing their life-cycle costs. For example, officials from 23 of the 25 small water utilities GAO reviewed said they had maps that identify the location of at least some of their assets. However, of the 25 small water utilities, officials from 9 said they knew the cost of rehabilitation versus replacement for all of their assets. Officials from the Environmental Protection Agency (EPA), U.S. Department of Agriculture (USDA), and the 10 selected states identified benefits and challenges for small water utilities using asset management. The benefits that EPA, USDA, and state officials identified include cost savings and more efficient long-term planning. The key challenges these officials identified include the availability of funding to cover start-up and maintenance costs, the availability of human resources, information on how to implement asset management practices, and political support from elected officials to begin an asset management program or increase user rates.
EPA and USDA are taking steps to help water utilities implement asset management by providing funding, free or low-cost tools such as software, one-on-one technical assistance, and classroom training for small water utilities that plan to implement asset management practices. EPA and USDA collect feedback from training participants, but do not collect information that will help track the results of the agencies' training efforts (e.g., whether utilities participating in such training implemented asset management practices). GAO identified in a March 2004 guide that evaluating training programs is key to ensuring training is effective in contributing to the accomplishment of agency goals and objectives. EPA officials told GAO that they had considered collecting nationwide data on water utilities' use of asset management but did not have the resources to pursue it. Leveraging existing data collection methods may be a cost-effective way for the agencies to collect this information. EPA conducts periodic needs assessment surveys of water utilities and has included questions about asset management use in the wastewater survey, but not in the drinking water survey. EPA officials said they did not receive enough responses to questions in the wastewater survey, and they have not considered including them in the drinking water survey. By continuing to include questions on wastewater utilities and considering questions about drinking water utilities' use of asset management in the surveys, EPA could have better assurance that it has information on the effectiveness of its training efforts with USDA. In addition, EPA and USDA officials told GAO that the agencies share anecdotal data on the benefits of asset management through technical assistance, but had not considered compiling such information into one document to encourage water utilities to adopt it. EPA and USDA are not required to compile such information, but doing so could provide information on benefits, including cost savings, and costs to water utilities that have not received training and could help encourage them to adopt asset management practices.
section_title: What GAO Recommends
paragraphs: GAO recommends that EPA consider collecting information about utilities' use of asset management through its needs assessment surveys, and that EPA and USDA compile the benefits of asset management into one document. EPA and USDA generally agreed with GAO's findings and recommendations.

section_title: Letter
paragraphs: Recent catastrophic breaks in water mains and sewer backups and  discharges during storms are indicators of the nation’s old and  deteriorating water and wastewater infrastructure. The American Society  of Civil Engineers estimated in a 2013 report that there were more than 1  million miles of drinking water mains and 700,000 to 800,000 miles of  public sewer in the country, much of which was in poor condition.  Drinking water and wastewater infrastructure that is old and deteriorating  is at a higher risk of failure. Such infrastructure failures can disrupt the  availability of drinking water and impede emergency response, such as  fire-control efforts, or jeopardize public health by releasing sewage into  surface waters and drinking water sources. Emergency repairs of such  infrastructure can pose significant financial costs to communities. A water  utilities’ management professional estimated that emergency repairs can  cost three to four times more than regular repairs—for example, if the  cost to repair 1 mile of pipe is $550,000, the cost to repair this same pipe  in an emergency could range from $1.7 million to $2.2 million.
According to the Environmental Protection Agency’s (EPA) most recent  estimates, more than $655 billion may be needed to repair and replace  drinking water and wastewater infrastructure nationwide over the next 20  years. Large water utilities—those serving populations of 100,000 or  more—account for more of the projected infrastructure repair and  replacement needs. EPA estimates that large water utilities may need an  estimated $145 billion to repair and replace drinking water infrastructure  and an estimated $219 billion for wastewater infrastructure (for a total of  $364 billion). However, the majority of water utilities are small—serving  populations of 10,000 or less, and EPA estimates that small water  utilities may need an estimated $110 billion for drinking water  infrastructure and $33 billion for wastewater infrastructure (for a total of  $143 billion).
Across the country, there are about 52,000 drinking water and 16,000  wastewater utilities. These water utilities are generally subject to  requirements under the Safe Drinking Water Act and Clean Water Act,  respectively. EPA and states regulate water utilities’ compliance with  these provisions, but the water utilities and the communities they serve  are responsible for managing and funding the infrastructure needed to  implement requirements, including the costs of repairs and replacement.
Communities can fund construction, repair, and replacement of  infrastructure through such options as cash, municipal bonds, grants, and  loans. The costs, including the repayment of loans, are funded through  the rates communities pay on their water bills.
The federal government provides significant funding to assist water  utilities. The three largest federally funded drinking water and wastewater  infrastructure assistance programs are EPA’s Drinking Water State  Revolving Fund (SRF) program and Clean Water SRF program, and the  Department of Agriculture’s (USDA) Water and Waste Disposal program.  Through the Clean Water and Drinking Water SRF programs, EPA  provides annual grants to state-level SRF programs. States use the SRF  funds to, among other things, make loans to local communities and  utilities for various water infrastructure projects, such as upgrading and  replacing drinking water filtration and treatment plants and water mains,  and constructing, repairing, and replacing sewage treatment plants and  sewer pipelines. Communities of any size can apply for assistance  through the SRF programs. In fiscal year 2015, EPA provided an  estimated $1.6 billion for the Drinking Water SRF and $1.4 billion for the  Clean Water SRF. USDA’s Rural Utilities Service administers the Water  and Waste Disposal program, which provides subsidized loans and  grants for both drinking water and wastewater infrastructure projects in  small communities. In fiscal year 2015, USDA made an estimated $1.7  billion available through the Water and Waste Disposal program. Small  water utilities generally rely more on federal assistance to fund repairs  and replacements to infrastructure than large water utilities, according to  a 2012 Congressional Research Service report.
In a March 2004 report, we found that water utilities may benefit from  implementing asset management practices to better identify and manage  their infrastructure needs. Asset management is a widely recognized  tool used across a variety of sectors to manage physical assets, such as  highways, machinery, and buildings; in the case of water and wastewater  infrastructure, key assets are pipelines, tanks, pumps, and other facilities.  According to international asset management standards, asset  management is a framework for providing the best level of service to  customers at the lowest appropriate cost. For example, in our March  2004 report, we found that, by implementing asset management, a large  utility in California found that increasing preventive maintenance on its  tanks would be more cost-effective than replacing them, saving the utility  approximately $12 million. Federal law does not require water utilities to  implement asset management, but federal law does require  implementation of asset management in at least one other area.  Specifically, federal law requires states to develop and implement an  asset management plan for pavement and bridge assets that are part of  the National Highway System. Asset management is used by some  states to manage real property and highways, by private organizations  such as electric companies, and internationally in many sectors. Appendix  I provides information about requirements and incentives for asset  management.
In our March 2004 report, we found, among other things, that EPA had no  central repository to facilitate information sharing on asset management  within and across its drinking water and wastewater programs, which  would help avoid duplication of effort. As a result, we recommended that  EPA better coordinate its initiatives to promote asset management,  explore asset management tools developed by other federal agencies,  strengthen efforts to educate water utilities on how implementing asset  management can help them comply with regulations, and establish a  repository of information about asset management on the agency’s  website. EPA agreed with our recommendations and implemented them  by, among other things, holding workshops and coordinating initiatives to  provide asset management information. In a previous report, issued in  August 2002, we surveyed water utilities serving populations larger than  10,000 on how these water utilities manage existing assets and plan for  future improvements. We found that more than a quarter of the large  water utilities we surveyed did not have asset management plans as  recommended by water utility associations but had identified future  infrastructure needs. We did not survey small water utilities, and we did  not make recommendations in that report. (See the “Related GAO  Products” list for GAO’s most recent reports related to asset  management.)
In 2011, EPA and USDA signed a memorandum of agreement that stated  that small water utilities face unique challenges in providing affordable  drinking water and wastewater services. It noted that these systems face  declining populations, lack financial resources and have not engaged in  long-term planning activities, among other challenges. By signing this  memorandum of agreement, EPA and USDA agreed to collaborate in  promoting ways that small water utilities can better manage their  infrastructure needs and emphasized the use of asset management to  ensure long-term technical, managerial, and financial capacity.
In this context, you asked us to review water utilities’ use of asset  management to identify and fund capital improvements in response to  rising infrastructure costs. Our objectives were to examine (1) what is  known about the use of asset management among the nation’s water  utilities—particularly small water utilities—including benefits and  challenges, if any, for water utilities implementing asset management and  (2) steps, if any, that EPA and USDA are taking to help small water  utilities implement asset management.
To examine what is known about water utilities’ use of asset  management, we interviewed EPA and USDA staff in the agencies’  headquarters about the data they collect from water utilities, including  data EPA collects in national assessments of water utilities’ infrastructure  needs that it conducts every 4 years. In addition, we interviewed state  officials responsible for managing EPA’s Drinking Water and Clean Water  SRF programs as well as officials in USDA’s state offices in a  nonprobability sample of 10 states. To select these states, we used  EPA’s most recent needs assessment data (i.e., 2011 for drinking water  infrastructure and 2008 for wastewater infrastructure)  to identify the  state in each of EPA’s 10 regions with the highest percentage of small  water utility needs. These states were: Arizona, Arkansas, Delaware,  Idaho, Iowa, Minnesota, Mississippi, New York, Vermont, and Wyoming.  We reviewed relevant documentation and information from EPA staff  responsible for maintaining the data to assess the reliability of both data  sets and determined that they were sufficiently reliable for the purpose of  selecting states and utilities for our review. Because our sample of states  and utilities was nongeneralizable, responses from the officials we  interviewed cannot be generalized to other states and their water utilities,  but they illustrate some of the uses of asset management practices  among small water utilities in states with the greatest infrastructure  needs. We also interviewed representatives of national water and  wastewater associations to identify potential sources of data on asset  management. From these interviews, we identified one report and one  on-going study. The report by McGraw-Hill Construction was published in  2013 and surveyed 451 persons representing water utilities on their use  of asset management. We reviewed the scope and methodology of this  report and determined that it was sufficient for our purpose of describing  qualitative information to corroborate information we obtained from our  interviews about large utilities’ use of asset management because the  study authors included asset management practices that were similar to  those identified by EPA. In 2015, the American Water Works Association  surveyed officials with 545 water utilities about their use of asset  management practices for the purposes of identifying additional  resources the organization could provide to better assist water utilities  wanting to start or advance an asset management program.  The results  of the survey were published in a report in December 2015.
To examine the extent of asset management use in our sample of 10  states, we used EPA’s 2008 Asset Management: A Best Practices  Guide—a federally-developed asset management framework for water  utilities. The components and practices of the framework formed the  basis of our interview questions. We used the practices in the framework  to interview officials in a nongeneralizable, random sample of small  utilities in the sample of 10 states. To select small water utilities in these  10 states, we used EPA’s Safe Drinking Water Information System and a  database of water utilities included in EPA’s 2008 Clean Watersheds  Needs Survey to randomly generate a nongeneralizable sample of two  drinking water and two wastewater utilities in each of these states for a  total of 40 small water utilities. Of these 40 small water utilities, we  conducted interviews with officials from at least one drinking water utility  and one wastewater utility in 9 of the 10 states, for a total of 25 water  utility interviews. The water utilities we contacted in Mississippi declined  to participate or did not respond to our interview requests. We also visited  Maine and New Mexico to conduct more in-depth interviews on water  utilities’ use of asset management. We selected these states based on  recommendations from EPA and USDA officials, representatives of  national water and wastewater associations, and technical assistance  providers. On these visits, we met with state SRF program and USDA  officials, representatives of large and small water utilities, and technical  assistance providers. To examine any benefits and challenges for small  water utilities in implementing asset management, we analyzed the  content of our interviews with state SRF program and USDA officials in  the 10 selected states and in-person visits to Maine and New Mexico.
To examine steps EPA and USDA have taken to help small water utilities  implement asset management , we reviewed EPA and USDA guidance,  reports, training materials, and software tools and interviewed EPA and  USDA officials. In addition, we interviewed technical assistance providers  funded by EPA and USDA to conduct training sessions that included  asset management. These technical assistance providers were the EPA- funded Environmental Finance Centers with the University of New  Mexico, Wichita State University, Cleveland State University, and  University of North Carolina at Chapel Hill and the national offices and  local affiliates in Maine and New Mexico of the Rural Community  Assistance Partnership and National Rural Water Association. We  compared the information we collected about the steps EPA and USDA  have taken with key practices related to federal agencies’ training efforts  and collection and dissemination of information that we identified in  previous reports. Appendix II contains a more detailed description of our  objectives, scope, and methodology.
We conducted this performance audit from January 2015 to January 2016  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: This section provides background information on (1) asset management  for water utilities, (2) federal funding for asset management, (3) water  utilities’ structures, and (4) EPA’s infrastructure needs assessments.
subsections: section_title: Asset Management for Water Utilities
paragraphs: To assist water utilities in adopting asset management, in 2003, EPA  developed an asset management framework for water utilities. In 2008,  EPA incorporated this framework into a best practices guide for water  utilities based on similar frameworks used by water utilities in Australia  and New Zealand. EPA’s asset management framework instructs water  utilities to (1) assess the current state of their assets, (2) determine the  level of service they need to provide to customers, (3) identify those  assets that are most critical to their operations, (4) incorporate life-cycle  costs, and (5) develop a strategy for the long-term funding of the repair  and replacement of their assets. As shown in figure 1, EPA’s 2008 best  practices guide describes the five components in EPA’s asset  management framework, which are characterized by a range of practices.  According to EPA’s best practices guide, these practices can be  implemented at varying levels of sophistication, depending on the size  and needs of the utility. For example, a small water utility with few assets  can document its inventory of assets on paper, although a large water  utility with many assets may use a software program.
Together, according to EPA’s 2008 best practices guide, these practices  make up a water utility’s asset management program and are to be  documented in the water utility’s asset management plan. The asset  management plan serves as a written record that the water utility can use  much like a budget or strategic planning document to communicate plans,  progress, and future goals and also communicate user rate adjustments  and recommended infrastructure investments. According to an EPA fact  sheet on building an asset management team, asset management  requires water utility staff who can promote and articulate the benefits of  asset management. The fact sheet further states that a successful asset  management program requires resources, including time and money, to  implement, as well as the support of political leaders who have the  authority and willingness to commit public resources and personnel.
We and others have cited examples of cost savings resulting from asset  management. In our March 2004 report, in addition to the water utility in  California that saved $12 million, we found that a water utility in  Massachusetts used asset management and saved $20,000 in oil  purchase and disposal costs for its pumps and decreased the hours spent  on preventive maintenance by 25 percent from the hours recommended  by the equipment manufacturer. In addition, a 2007 study of asset  management by the U.S. Conference of Mayors also found that public  water utilities in cities had experienced savings in capital costs and  operations and maintenance as a result of asset management. Further,  a 2008 EPA fact sheet about asset management for local officials stated  that implementing asset management may require some up-front costs  but could result in cost savings for water utilities.
In their 2011 Memorandum of Agreement, EPA and USDA agreed to  collaborate in promoting ways that small water utilities could better  manage their infrastructure needs and highlighted the use of asset  management to ensure long-term technical, managerial, and financial  capacity. The agencies also agreed to coordinate agency activities and  financial assistance in areas that would increase the technical,  managerial, and financial capacity for small water utilities. The  memorandum stated that EPA and USDA would encourage communities  to implement system-wide planning, including asset management, and  that the two agencies would share and distribute resources to water  utilities and provide training and information. In this same memorandum,  EPA and USDA stated that both agencies supported increasing the  technical, managerial, and financial capacity of water utilities nationwide.
section_title: Federal Funding for Asset Management
paragraphs: EPA and USDA funding for asset management activities falls under  various larger programmatic budget categories. EPA funds asset  management in the following three categories: (1) grants to provide  training and technical assistance to water utilities to improve financial and  managerial capacity; (2) grants to selected public, private universities or  colleges, and nonprofit organizations to provide technical assistance to  communities on a range of EPA priorities, including improving financial  capacity; and (3) drinking water SRF grants to states, a portion of which  may be used for increasing water utilities’ technical, managerial, and  financial capacity. USDA primarily funds asset management activities  through two programs: (1) the Water & Waste Disposal Technical  Assistance & Training Grants program, which provides grants to nonprofit  organizations in the 50 states for managerial technical assistance, and (2)  the Circuit Rider program, which provides training and technical  assistance through contracted staff called circuit riders, in each of the  50 states to provide technical assistance to small water utilities on day-to- day operational, managerial, and financial issues. Appendix III provides  more details about EPA and USDA funding for asset management.
section_title: Water Utilities’ Structures
paragraphs: Small communities share some common characteristics in how they  manage (govern and staff) their water utilities, according to EPA’s 2011  report on the characteristics of small water utilities. The report, and  EPA, have made several observations about small water utilities and the  small communities they serve. Namely, publicly-owned water utilities are  typically municipalities, townships, counties, or other public entities.  These entities can be governed by boards, mayors, managers, or city or  town councils. Privately-owned water utilities are typically governed by  corporate entities, homeowner associations, or sole proprietors. For both  publicly- and privately-owned water utilities, the governing bodies are  responsible for ensuring the water utility complies with state and federal  laws and regulations; setting and approving annual budgets; hiring staff;  and in many cases, setting and adjusting the rates that users pay. EPA’s  2011 report also states that small water utilities are typically staffed with  an operator (or superintendent), managers, and administrative staff that  may work part-time. In some cases, a publicly-owned water utility may  hire a private company to operate and maintain its facility.
section_title: EPA Infrastructure Needs Assessments
paragraphs: EPA estimates the nation’s drinking water and wastewater utilities’ capital  infrastructure needs over the next 20 years by administering to states two  needs assessment surveys: the Drinking Water Infrastructure Needs  Survey and Assessment and Clean Watersheds Needs Survey every 4  years. In completing the questionnaire for the drinking water needs  assessment survey, utilities report infrastructure needs to EPA and for the  clean water needs assessment survey states report these infrastructure  needs to EPA. EPA then uses the data from the drinking water needs  assessment survey to determine each state’s grant allocation for its  Drinking Water SRF program. According to EPA officials, the agency  does not use the clean water needs assessment survey to determine  each state’s allocation of Clean Water SRF program funds, but it reports  the data to Congress and the public.
EPA works with states and the Office of Management and Budget (OMB)  to produce the surveys. The questionnaires for both needs assessment  surveys ask about water utilities’ infrastructure needs, including those  assets that are in need of replacement or rehabilitation. EPA officials said  that they accept certain documents as support for the states’ cost  information, including SRF loan applications, capital improvement plans,  and asset management plans. To support their reported infrastructure  needs, some water utilities submitted documentation that showed the use  of asset management practices, according to the results of the 2011  drinking water needs assessment survey, and other utilities’ supporting  documentation illustrated continuing gaps in knowledge about the  condition and remaining useful life of their infrastructure. The results of  the 2008 clean water needs assessment survey also highlighted water  utilities’ use of asset management and featured examples of states that  used asset management practices to determine the costs of projects  submitted to EPA.
section_title: Small Water Utilities in Selected States Are Implementing Some Asset Management Practices, and EPA, USDA, and State Officials Have Identified Benefits and Challenges
paragraphs: The small water utilities we interviewed in our sample of 10 states are  implementing some asset management practices, and the state SRF  officials we interviewed in these states said that large water utilities are  more likely to implement asset management practices than small water  utilities. EPA, state SRF, and USDA officials in our review identified  benefits that could result from water utilities’ use of asset management  practices, as well as challenges water utilities face in implementing them.
subsections: section_title: Small Water Utilities in Selected States Are Implementing Some Asset Management Practices
paragraphs: Officials we interviewed from small water utilities in the selected states  said that they are implementing some asset management practices, and  state SRF program officials in these selected states indicated that large  utilities are generally more likely to implement asset management.  Officials we interviewed at the 25 small water utilities we selected for our  review generally told us they were implementing some of the asset  management practices EPA identified in its 2008 asset management best  practices guide, but we found differences in the extent to which these  small water utility officials were implementing these practices. We discuss  what we found using EPA’s framework, which consists of the five  components and a written asset management plan.
Current state of assets. EPA’s 2008 best practices guide states that  water utilities, in assessing the current state of their assets, should  know what assets they own, what condition they are in, and their  remaining useful life—that is, how much longer the water utility  expects their assets to last. EPA recommends that water utilities (1)  compile this information into an asset inventory that lists each asset’s  age, condition, service history, and remaining useful life and (2)  develop maps that identify the location of these assets. Officials we  interviewed from 8 of 25 of the small water utilities we reviewed in the  selected states told us they had an inventory listing all of their assets,  and 19 of 25 told us they had an inventory that listed at least some of  their assets. Of the 8 small water utilities that had complete asset  inventories, 2 of 8 included information on each asset’s physical  condition, and 3 of 8 included an estimate of each asset’s remaining  useful life, according to the officials we interviewed with these utilities.  These officials described various types of inventories, ranging from a  list of assets included on insurance documents to a software program  that included information about the assets’ age, condition, service  history, and remaining useful life. Officials at almost all (23 of 25) of  the small water utilities in the selected states told us they had maps  that identify the location of at least some of their assets. These  officials described a range in the types of maps used by their water  utilities, including one official who described using maps dating back  to the 1980s, but others described using maps generated with a  geographic information system (GIS) to locate a water utility’s  assets.
Level of service. EPA’s 2008 best practices guide states that water  utility operators need to know the level of service they will provide— that is, (1) what customers and stakeholders demand, (2) what  regulators require, and (3) what operators need to know about the  actual performance and capabilities of the water utility itself.  According to EPA’s 2008 guide, water utilities should also set  performance goals related to these three facets of service. Officials at  (1) 11 of 25 of the small water utilities in the selected states told us  they had performance goals related to customer demand, (2) 19 of 25  said they had performance goals related to meeting EPA and state  regulations, and (3) 17 of 25 said they had performance goals related  to the actual performance of the system. For example, at a small  water utility, an official responsible for managing the community’s  water utilities described setting goals to control the loss of treated  drinking water from leaky distribution pipes and the loss of untreated  wastewater through leaks in the sewer system. According to EPA’s  website, leaks in sewer systems can result in sewage overflows,  increasing the quantity of water requiring treatment—which, in turn,  can increase a wastewater utility’s costs and present public health  and environmental risks. The official told us that the water utility  compares the amount of water that the drinking water utility produces  to the amount of water used by customers, as indicated by their  individual water meters, to ensure that no more than 20 percent of the  water is lost through leaky distribution pipes. Additionally, this official  described comparing drinking water production to flows from the  town’s sanitary sewer and wastewater treatment plant to ensure that  these overall flows are neither too high nor too low and no less than  90 percent of the community’s drinking water eventually makes it to  the wastewater utility for treatment. Other officials we interviewed in  the selected states described a range of goals, some of which did not  relate to asset management. For example, some officials told us that  their goals related to customer demand were to simply keep the water  utility operating or to meet peak customer demand.
Critical assets. EPA’s 2008 best practices guide states that water  utilities need to know which assets are the most critical to sustaining  the water utility’s operations, their risk of failing, and the  consequences if they do fail. Officials from 18 of 25 of the small water  utilities in our selected states told us they had identified their water  utility’s critical assets, but officials from 11 of 25 of those utilities said  they have assessed the probability of failure for every critical asset.  Officials we interviewed in 15 of 25 of the utilities in the selected  states told us that, generally, the likelihood and consequences of  failure for assets informed their decisions about which infrastructure  projects to fund. Officials we interviewed in the selected states  described taking a range of approaches to identify and assess their  critical assets. For example, an official from one small water utility  described the process of identifying and assigning a score (i.e., minor,  major, or catastrophic) to each critical asset based on the impact that  asset’s failure would have on the environment and customer needs.  An official with another small water utility described having enough  experience with the water utility to keep mental notes about which  assets were critical to the water utility’s operations, and another  official described using an online, computer-based system to operate  critical assets remotely to monitor the probability of failure.
Minimum life-cycle cost. EPA’s 2008 best practices guide states  that asset management enables a water utility to determine the  minimum life-cycle cost—that is, the lowest cost options for providing  the highest level of service over the lifetime of an asset. According to  the guide, water utilities can achieve this by scheduling operations  and maintenance based on the condition of assets; knowing the costs  to repair, rehabilitate, and replace assets; and having specific  response plans in case assets fail. Officials from 19 of the 25 small  water utilities we reviewed in the selected states told us they conduct  regular maintenance, but officials from 9 of 25 said they knew the cost  of rehabilitation versus the cost of replacement for all water utility’s  assets. For example, one official said that the water utility had not  determined the costs of rehabilitation versus replacement because the  assets were too old to be considered for rehabilitation. Additionally,  officials from 15 of the 25 small water utilities in our selected states  had written plans that describe their water utility’s response in the  case of asset failure. Concerning written plans to address asset  failure, one official described a plan outlining discrete protocols the  water utility should take to address asset failures or emergencies, but  another official described a list of individuals or repair companies the  water utility should notify when an asset fails.
Long-term funding plan. EPA’s 2008 best practices guide states that  asset management activities related to developing long-term funding  plans involve determining whether the water utility has enough  funding to maintain its assets based on the required level of service  (i.e., customer demands, regulatory requirements, and the capability  of the utility’s assets) and whether the user rates are sufficient for the  water utility’s long-term needs. EPA’s 2011 report on the  characteristics of small water utilities described communities and  water utilities as generally separating funds by routine operations and  maintenance and capital improvements and that they may also have  an emergency fund or reserve fund earmarked for a specific  purpose. Officials at 19 of the 25 small water utilities in the selected  states told us they had established a reserve fund to cover the cost of  short-lived assets, but officials at 11 of the 25 small water utilities  told us they had enough funds to cover their water utility’s long-term  capital infrastructure needs. For example, an official from one small  water utility described using a two-tiered rate structure consisting of a  monthly water usage rate and a depreciation fee. This official said that  the water utility uses the monthly rate to cover operations and  maintenance and short-term capital infrastructure costs and sets the  depreciation fee aside to fund long-term capital infrastructure costs.  Other officials from small utilities described a range of approaches to  planning for the long-term. For example, some small water utility  officials told us that the water utility established separate reserves for  short- and long-term capital investment needs, but an official from one  small water utility described establishing a general surplus account  into which the water utility put any surplus funds available at the end  of the year for repairs and replacement.
Asset management programs and plans. According to EPA’s 2008  best practices guide, asset management is implemented through an  asset management program and typically includes a written asset  management plan. Officials at the small water utilities we interviewed  said that they are implementing asset management practices as a  routine course of business rather than a concerted effort to implement  a formal asset management program or plan. Therefore, officials at 5  of the 25 small water utilities in the selected states said that they had  a written asset management plan.
The small utilities in our selected states were implementing some asset  management practices, but officials we interviewed with 9 of the 10 state  SRF programs in our selected states told us that, generally, the large  water utilities in their states were more likely than small water utilities to  implement asset management. Similarly, a 2013 market research study  by McGraw-Hill Construction found that larger water utilities were more  frequently implementing asset management practices than smaller water  utilities. Officials from the large utility we interviewed in Maine and the  large utility we interviewed in New Mexico said they were implementing  what they considered as comprehensive asset management practices,  that is, practices as outlined in all five components of EPA’s framework.  For example, officials from a large water utility in Maine said that it had a  performance goal for the district’s fire hydrants related to the level of  service provided to customers—that is, all fire hydrants would be in  working order and would not spend more than 3 days out of service.  These officials said that the inspections of the fire hydrants were  electronically tied to the asset management software, which allows the  water utility’s managers to monitor the status of the inspections and track  progress related to the performance goal.
section_title: EPA, USDA, and State Officials Identified Benefits Resulting from Water Utilities’ Use of Asset Management Practices and Challenges in Implementing Such Practices
paragraphs: EPA and USDA headquarters officials and state SRF and USDA officials  cited benefits for both water utilities and federal agencies resulting from  water utilities’ use of asset management practices. They also cited  challenges for water utilities—particularly small water utilities—in  implementing asset management practices, particularly the costs of  implementing such practices.
subsections: section_title: Benefits
paragraphs: EPA and USDA headquarters officials and state SRF and USDA officials  cited benefits for water utilities that implement asset management,  including: (1) cost savings for water utilities that prolong the useful life of  their assets and avoid costly emergency repairs, (2) more efficient,  focused long-term planning of management and operations, and (3)  improved financial health for water utilities. They also cited benefits for  federal agencies.
Cost savings. EPA headquarters and state SRF and USDA officials told  us that water utilities implementing asset management can experience  cost savings by prolonging the useful life of the assets they already own  through preventive maintenance, including pipe lining and repair, and  deferring replacement costs. EPA’s guidance states that preventive  maintenance can help water utilities avoid unnecessary additional costs.  Officials in our review provided the following examples:
An official from one small water utility in Maine told us that the  process of creating an asset inventory helped the water utility identify  assets they did not know they owned and therefore had not  maintained. This official also told us that the utility’s use of asset  management helped utility staff assess the condition of the utility’s  assets and implement a regular preventive maintenance schedule to  maintain those assets. According to the official, this helped the utility  avoid larger replacement costs, but he could not estimate the amount  of savings.
Another official with a small water utility in Idaho told us that the utility  used asset management to plan the maintenance and repair of its  drinking water reservoir and fire hydrants, which extended their useful  life and resulted in cost savings.
Another official with a small water utility in Maine told us that the utility  assessed the condition of its sewer lines and realized that hydrogen  sulfide —a result of the type of materials used to construct the pipes— had built up and put several lines at risk of collapsing. The official said  the utility spent $12,000 to remove the hydrogen sulfide and  prevented the collapse.
More efficient and focused long-term planning of operations and  management. State SRF and USDA officials said that water utilities  implementing asset management can plan more efficiently for the long- term, such as planning for capital investments, identifying changes in  infrastructure needed as a result of population change, hiring or  succession planning, improved emergency planning; and making  decisions about repairs and replacements. The officials we interviewed  highlighted the following examples:
Officials at a small water utility in New Mexico told us that having an  asset management plan allowed the utility to prioritize its capital  investment needs, identify the associated costs, and determine what  resources it would need going forward.
An official with a small water utility in Arkansas told us that the utility  used its asset management plan to assess the effect of a new  housing development on its drinking water and wastewater  infrastructure over the next 5 years. As a result of this assessment,  the water utility was able to set connections and new user fees to  recover the costs of adding the housing development without  increasing water utility rates for existing residents.
An official with a small water utility in Maine told us that because it  identifies assets, maintenance schedules, and replacement  schedules, creating an asset management plan was the best way for  water utilities to transfer decades of knowledge retiring operators and  maintenance staff had about the system. The official said that  ensuring the continuity of operations and service to the community  after employees retire provides some long-term planning.
Improved financial health. State SRF and USDA officials told us that  water utilities implementing asset management can improve their financial  health. EPA headquarters officials said that asset management can help  water utilities better budget for capital investments and justify increases in  user rates. Asset management also enables water utilities to better  account for the value of their capital assets and asset depreciation, which  can improve financial transparency and help the utilities with the  documentation needed for financial audits. The officials we interviewed  highlighted the following examples:
An official at a small water utility in Maine told us that the utility used  its asset management plan to determine its financial needs, calculate  a new user rate to meet these needs, and successfully justify raising  rates to the water utility board and its customers.
Another official at a small water utility in New Mexico told us that the  water utility uses its asset management program to track its finances,  including the depreciation of its assets—information that is typically  reviewed as part of its financial audit.
Benefits to federal agencies. According to state SRF and USDA  officials we interviewed, the federal agencies with programs that provide  loans and grants to small water utilities to help fund capital infrastructure  can also benefit from water utilities’ use of asset management, as follows:
State SRF and USDA officials said that a benefit of asset  management, for lenders, is knowing that federal funds would be  better targeted for infrastructure projects that address a community’s  greatest needs and knowing that the federal funds are paying for a  project that the community could not afford on its own.
EPA officials stated that increased use of asset management by small  water utilities would improve the utilities’ assessments of their capital  needs, thereby improving the quality of the data collected for EPA’s  needs assessments. In addition, EPA officials we interviewed said  that water utilities’ use of asset management can result in more  accurate information about infrastructure needs, such as costs, and  better management of the funds spent on infrastructure repairs and  replacement.
section_title: Challenges
paragraphs: In addition to benefits, the state SRF and USDA officials we interviewed  generally identified the following key challenges small water utilities face  in implementing asset management:
Costs. According to EPA’s 2008 guidance on asset management for  local officials, implementing an asset management program may  include start-up costs. For example, SRF officials in one state told us  that start-up costs are the largest costs for water utilities, often  challenged with limited resources, in implementing asset  management. According to state SRF and USDA officials, start-up  costs can include (1) purchasing asset management tools, such as  software or creating GIS maps, or (2) hiring an engineer or consultant  to create an asset management program or plan on water utilities’  behalf. For example, officials with two separate small water utilities in  New Mexico told us that they spent $34,000 and $50,000,  respectively, to hire a company to create GIS maps of the water  utility’s assets and officials with another small water utility in New  Mexico told us that they paid an engineer $12,000 to develop an asset  management plan.
Funding. State SRF and USDA officials we interviewed said that  small water utilities have difficulty obtaining funds or anticipate they  will have difficulty obtaining funds to cover the start-up and  maintenance costs associated with asset management. In describing  challenges with funding asset management, for example, officials with  a small water utility in New Mexico told us that the utility did not have  the funds to pay an engineering firm to develop the needed additional  GIS maps with the locations of their assets and would have to apply to  a state infrastructure grant program for an additional $50,000.
Human resources. According to the state SRF and USDA officials  we interviewed, small water utilities do not have human resources to  dedicate to asset management. For example, officials with a small  water utility we visited in Maine said that, at the time of our review, the  Maine Department of Transportation was completing a major road  project in the state that affected the buried pipes for multiple  communities, including the one in which this utility operated. These  utility officials said that work on these pipes in addition to the routine  day-to-day responsibilities of operating the utility left the small staff  little time to work on asset management. Similarly, an official with  another small water utility in Maine told us that one staff person was  assigned to develop an inventory of the water utility’s assets, and that  finding the time was the greatest constraint to completing the  inventory, coordinating with operations and maintenance staff, and  implementing additional asset management practices.
Information. Acquiring information about how to start or maintain an  asset management program was another challenge for small utilities  that state SRF and USDA officials cited. For example, officials with a  small water utility in New Mexico said that the town leadership was  unaware of asset management prior to applying for an infrastructure  loan through a state program. As a result, it took some time for the  water utility operator and the utility’s board to understand the asset  management concept and implement the activities required as part of  the state’s loan program.
Political support. According to some of the state SRF and USDA  officials we interviewed, small water utilities are challenged with  garnering and maintaining the political support of elected officials and  the local community to begin or maintain an asset management  program or increase user rates or expend funds on repairs as a result  of implementing an asset management program. For example, an  official with a small water utility said that the town’s council was  supportive of the recommendations the utility operator made  regarding the likelihood of failure for assets and the need to address  those assets before they failed. However, the town council did not  always implement the recommendations because, among other  things, they said they wanted to avoid having to raise user rates to  cover the costs. An official with another water utility said that the water  utility would benefit from raising user rates incrementally each year,  but that elected officials do not want to raise rates, even minimally,  because the community would not support such raises.
section_title: EPA and USDA Are Taking Steps to Help Small Utilities Implement Asset Management but Do Not Collect Information on Asset Management to Track Its Use or Compile Information on Costs and Benefits
paragraphs: EPA and USDA are taking steps to help small utilities implement asset  management and address identified challenges that water utilities face.  EPA and USDA recognize the benefits to water utilities and their loan  programs and the need for water utilities, particularly small water utilities,  to increase their use of asset management, but the agencies do not  collect information on asset management that would enable them to track  their efforts or compile information on costs and benefits that could be  used to encourage wider use.
subsections: section_title: EPA and USDA Are Taking Steps to Help Small Water Utilities Implement Asset Management
paragraphs: EPA and USDA officials told us that they would like for as many water  utilities as possible to increase their managerial and financial capacity,  including the implementation of asset management. The officials said  they are aware that small water utilities face challenges in implementing  asset management and are taking steps to help them. To help small  water utilities implement asset management, EPA and USDA provide  funding for the development of asset management plans, free or low-cost  tools such as software to develop asset management programs and  plans, classroom training, and one-on-one technical assistance or  coaching.
subsections: section_title: Funding
paragraphs: Both agencies provide funding for the development of asset management  plans, helping to address the challenges of costs and funding. EPA  provides funds that can be used for the development of asset  management plans through grants to state drinking water SRF programs.  According to state SRF officials in some of our selected states, these  funds can help water utilities address challenges in finding the funds to  cover the start-up costs of asset management activities. For example,  officials with the Maine Drinking Water SRF program told us that the state  SRF program uses its drinking water SRF funds to pay up to 75 percent  of the cost of developing an asset management plan for water utilities  serving populations of fewer than 3,300 people and up to 50 percent for  water utilities serving populations of more than 3,300 people. According  to these officials, about 15 water utilities have applied for this funding  between 2013 and 2015. State officials with the Delaware Drinking Water  and Clean Water SRF programs, for example, told us that they recently  started a new program providing grants to water utilities for funding  activities leading to the development of an asset management plan. As of  June 2015, the state had provided a grant ranging from $60,000 to  $100,000 to each of the 4 publicly-owned water utilities that participated  in the program.
State SRF officials in some of the 10 states in our review told us that in  meeting state requirements for SRF loans, small water utilities in their  states were engaging in some asset management practices. State  officials we interviewed provided examples, such as requiring (1) a report  of the inventory and condition of the utility (or preliminary engineering  report) to show technical capacity; (2) a community to raise user rates to  pay back the loan; or, (3) a community to set up a reserve fund to pay for  short-lived assets. Officials we interviewed at 10 of the 25 small water  utilities in the selected states said that they currently had an SRF loan.
USDA officials in the agency’s headquarters and all 10 state offices we  interviewed also told us that, as a result of their loan requirements,  small water utilities with USDA loans were engaging in some asset  management practices. USDA headquarters officials told us that asset  management is incorporated throughout their loan conditions.  Specifically, USDA state officials said that they consider the following loan  conditions to equate to asset management practices: requiring (1) a  review of financial audits, (2) a preliminary engineering report, (3) a  community to create a reserve to fund debt payments and cover the  repair and replacement of short-lived assets, (4) development of an  operations and maintenance manual, and (5) the restructuring of user  rates to cover the cost of the loan and repair and replacement of short- lived assets. According to some USDA headquarters and state officials,  USDA’s state offices also conduct periodic (every 3 years) inspections of  the condition of the facilities they fund once they are built. Officials we  interviewed at 6 of the 25 small water utilities in the selected states said  that they currently had a USDA loan.
USDA officials said that their use of the preliminary engineering report is  the key way in which the agency introduces its loan applicants to asset  management. In 2013, USDA, in conjunction with EPA and other federal  agencies and states, issued a preliminary engineering report template, a  planning document that, in general, includes an inventory of the category  of assets and assessment of the assets in the entire facility (e.g., the  assets involved in the project being funded, a map of the assets in the  water utility); information about the need for the project (including most  critical aging infrastructure and future growth needs); and the costs for the  repair, rehabilitation, and replacement of some assets. USDA regulations  require loan applicants to submit a preliminary engineering report, and  encourage applicants to consult agency guidelines in preparing the  report. In a 2013 bulletin to state officials, USDA encourages its state  offices to use the preliminary engineering report template. EPA does not  require SRF loan applicants to submit a preliminary engineering report,  but like USDA, it encourages its use; specifically, it encourages state SRF  programs to require its use. EPA officials told us that as of October  2015, 10 state SRF programs had adopted the preliminary engineering  report template and 10 other state SRF programs had adopted it and  modified it by including additional requirements.
section_title: Free or Low-Cost Tools
paragraphs: Both agencies provide free or low-cost tools for developing asset  management programs and plans to help address the challenges of cost  and providing information. EPA provides a free asset management  software program, and both EPA and USDA provide free tools such as  guidebooks, case studies, and other written materials for small water  utilities on the agencies’ websites. EPA’s free software program, Check  Up Program for Small Systems (CUPSS), allows water utilities to develop  asset management programs and plans. EPA officials told us that the  original development of CUPSS was funded with SRF funds. Users of  CUPSS can enter data into the system to develop an inventory of assets,  record information to track the scheduling of maintenance tasks, and  produce a written asset management plan. EPA officials told us that, with  CUPSS, water utility managers can produce a report specifically  communicating the condition of the water utility’s assets to elected  officials. EPA also provides free training on how to use CUPSS. The  availability of CUPSS also allows utilities to avoid some of the costs they  would incur if they were to hire a professional engineering firm to do the  same work. For example, an official with a small water utility we  interviewed said that he did not incur any monetary costs to implement  asset management because he used CUPSS to develop his asset  management plan and program.
section_title: Classroom Training
paragraphs: EPA, USDA, and state SRF programs provide classroom training on  asset management to help provide information to operators and other  staff about how to implement asset management.
EPA’s Environmental Finance Center (EFC)  at the University of  North Carolina at Chapel Hill leads the Smart Management for Small  Water Systems project that provides 1-day workshops for operators of  water utilities on various aspects of managing a water utility.  According to an official with the EFC at the University of North  Carolina at Chapel Hill, the EFC partners with other EFCs (including  the University of New Mexico and Wichita State University) to conduct  the workshops, which include a discussion of asset management. As  stated on the website for the EFC at the University of North Carolina  at Chapel Hill, from 2012 to 2014, these EFCs held more than 100  workshops, with 2,000 participants, in all 50 states and four U.S.  territories.
According to USDA headquarters officials, operators of small water  utilities and their elected officials participate in financial and  managerial training courses provided by organizations, such as the  National Rural Water Association, Rural Community Assistance  Partnership, and others. According to these officials, these training  sessions can include asset management. An official with the National  Rural Water Association told us that the organization’s training  sessions generally include a component of asset management.  Officials with the Rural Community Assistance Partnership told us that  their organization provides workshops specifically on implementing  asset management, including workshops for elected officials.
EPA and USDA officials told us that the agencies’ key collaborative  effort is a workshop on water utility management, with the goal of  helping to increase water utilities’ managerial and financial capacity.  The workshop, based on a 2013 EPA and USDA document entitled  Rural and Small Systems Guidebook to Sustainable Utility  Management, describes 10 steps in effectively managing a water  utility. EPA and USDA officials said that asset management is  discussed as part of 1 of the 10 steps. EPA and USDA’s guidebook  defines the steps, describes challenges water utilities may face  related to the steps and the effects of those challenges, and describes  the types of actions taken by high-performing water utilities to address  the challenges. The workshop materials focus primarily on the  logistics of implementing a workshop. EPA and USDA train technical  assistance providers to conduct the workshop for water utilities. Both  agencies also provide free materials for the workshop on their  websites. A 2015 EPA and USDA report stated that the agencies  had trained1,600 persons in workshops across the United States  since 2013. EPA agreed with our estimate that the two agencies,  together, train about 250 water utilities per year. USDA officials told us  that for fiscal year 2015, the agency provided a grant to a technical  assistance provider to provide two workshops in each of the 50 states.  EPA funds this effort through its Small Systems Training and  Technical Assistance Grants program, and USDA funds this effort  through its Water & Waste Disposal Technical Assistance & Training  Grants program.
State SRF programs also use some of their federal funds to provide  classroom training, for small water utilities, on a variety of topics  related to building small water utilities’ managerial and financial  capacity, including asset management. For example, according to  Maine Drinking Water SRF officials, Maine’s Drinking Water SRF  program provided four $25,000 grants to a local technical assistance  provider to train operators of small water utilities and their elected  officials on asset management.
This classroom training provides water utilities with education and  information about asset management and how to implement an asset  management program.
section_title: One-on-One Technical Assistance or Coaching
paragraphs: Both agencies also provide one-on-one technical assistance or coaching  on asset management, which helps address the challenges of costs,  funding, and providing information. EPA, USDA, and state SRF programs  work with many of the same organizations to provide technical assistance  services in their states. EPA also reaches small water utilities through its  EFCs. The two primary organizations with whom EPA and USDA work to  reach small water utilities are the National Rural Water Association and  Rural Community Assistance Partnership. EPA and USDA officials have  said that their contracts for technical assistance with these two providers  are not exclusively for asset management, but that technical assistance  providers are trained to and frequently help water utilities implement asset  management and develop asset management plans. In conjunction with  its workshop on sustainable utility management, EPA and USDA officials  told us that technical assistance providers, in their workshops, also  conduct follow-up calls to workshop participants and, if necessary,  provide one-on-one assistance. The availability of one-on-one technical  assistance also allows water utilities to avoid some of the costs they  would incur if they were to hire a professional engineering firm to do the  same work. For example, an operator with a small water utility in Maine  told us that the utility developed its asset management program and plan  through CUPSS with the free help of an organization contracted with EPA  and USDA to provide technical assistance. This operator said the water  utility’s asset management program would not have been developed  without this technical assistance.
section_title: EPA and USDA Do Not Collect Information on Asset Management to Track Their Efforts or Compile Information on Costs and Benefits to Encourage Wider Use
paragraphs: EPA and USDA recognize the benefits of asset management to water  utilities and their loan programs and the need for water utilities,  particularly small water utilities, to increase their use of asset  management. Both agencies—EPA since 2003 and USDA since 2011— have identified asset management as a tool that water utilities can use to  increase their ability to address infrastructure needs. In their 2011  memorandum of agreement, EPA and USDA agreed to collaborate in  promoting ways that small water utilities can better manage their  infrastructure needs and highlighted the use of asset management to  ensure long-term technical, managerial, and financial capacity. EPA and  USDA agreed to coordinate agency activities and financial assistance in  areas that would increase the technical, managerial, and financial  capacity of small water utilities. The memorandum also stated that EPA  and USDA would encourage communities to implement system-wide  planning, including asset management, and that the two agencies would  share and distribute resources to water utilities and provide training and  information. EPA and USDA officials told us that they want their efforts to  result in as many water utilities as possible increasing their managerial  and financial capacity, including the use of asset management. However,  even though EPA and USDA promote sustainable water infrastructure,  and the agencies encourage water utilities to better manage their  resources to address the long-term challenges posed by deteriorating  infrastructure, limited funds, and declining populations, they do not—and  are not required to—collect information on utilities’ use of asset  management. Specifically, they do not collect information that tracks the  results of their training efforts on utilities’ use of asset management  practices or compile information on the benefits and costs of  implementing asset management.
First, EPA and USDA do not collect information that tracks the results of  the agencies’ training efforts (e.g., whether participating utilities use asset  management practices). EPA stated in a 2011 policy document  describing its plans to promote sustainable water infrastructure that the  agency has an interest in tracking the results of the agency’s training.  This is consistent with our January 2004 report on selected agencies’  experiences and lessons learned in designing training and development  programs and our March 2004 guide on assessing strategic training and  development efforts for human capital, in which we reported that  evaluating training programs is key to ensuring that training is effective in  contributing to the accomplishment of agency goals and objectives. It is  also consistent with our September 2005 report on enhancing  performance management, which states that information can be used to  make decisions that affect future strategies, planning and budgeting,  identifying priorities, and allocating resources.
Both EPA and USDA collect some information from the water utilities that  participate in classroom training or receive one-on-one technical  assistance; however, the agencies do not collect information that may  allow them to better measure the results of their efforts to assist utilities.  EPA collects information on the number of utilities that have taken training  per year and reports this as part of its major performance goals. For  example, as stated above, since 2011, 250 small utilities per year have  taken the EPA and USDA trainings (of the 68,000 utilities nationwide). In  addition, both EPA and USDA collect feedback from water utilities on their  experience in training. For example, the agencies collect feedback forms  from those attending the training to determine how to improve it.  However, the information EPA collects does not show whether the water  utilities that receive training from the agencies went on to incorporate  asset management practices into their work processes or whether these  water utilities have improved their managerial or financial capacity.
EPA and USDA officials said that information on water utilities’ use and  incorporation of asset management would help EPA and USDA  understand how the training and technical assistance they provide are  affecting utilities’ use of asset management. EPA officials said that they  would like to collect data on water utilities’ incorporation of asset  management and determine whether these water utilities have improved  their managerial or financial capacity, but they do not have the resources  to do so. An EPA official said that when the agency was considering a  nationwide study in 2006, the agency wanted to study the incorporation,  costs, and benefits, of water utilities’ use of asset management. However,  EPA found that the costs of such a data collection effort would be in the  hundreds of thousands of dollars. In particular, according to an EPA  official, in addition to the costs of collecting the data from water utilities,  the agency would also face costs in submitting the required Information  Collection Request proposal to OMB. USDA officials similarly stated that  they would be interested in collecting data on how the water utilities that  participate in their sustainability workshops incorporated asset  management or other management practices into their work processes.  However, a USDA official told us that the agency would have to explore  whether it could do a study such as this.
Leveraging existing data collection methods to collect information, such  as adding questions to existing information collection requests, could be a  cost-effective option for EPA and USDA to obtain information on water  utilities’ use of asset management. In particular, EPA’s drinking water and  clean water infrastructure needs assessment surveys provide national  data on water utilities’ infrastructure repair, rehabilitation, and  replacement needs. EPA officials said that EPA works in partnership with  states to obtain the data, and it works with state officials to convey the  importance of the surveys. This work includes discussing the types of  questions in the surveys, including any additional policy areas the  questions will cover. EPA officials told us that the agency can add  questions to the needs assessment surveys and has done so in the past  on such policy issues as climate change and energy efficiency; the  officials said that few states have responded to the questions, however,  because participation by the states and water utilities is voluntary, and  states are not required to answer all of the questions in the surveys.
EPA officials said that the agency included questions about asset  management in the clean water needs assessment survey in 2008 and  2012. Specifically, these officials said, the questions asked water utilities  to identify the status of their implementation of asset management and  related costs. According to these officials, the agency did not receive  enough responses to analyze and include the data in the final reports.  EPA officials representing the clean water needs assessment survey said  that they would be open to more discussions with states about asset  management given their increased awareness. An EPA official that works  with the drinking water needs assessment survey told us that EPA has  not systematically asked questions about asset management in the  drinking water needs assessments survey because the agency has  determined that its efforts are best focused on asking questions required  to determine infrastructure needs and for which the agency is likely to  receive a large response from the states. In addition, this official said that  EPA encourages water utilities to implement asset management practices  through its guidance to states about the types of information the agency  will accept as support for responses to the survey. An EPA official said  that the agency has not considered or determined what asset  management questions it might ask on the drinking water needs  assessment survey. By continuing to include questions on the clean water  needs assessment and considering questions about water utilities’ use of  asset management to include in the drinking water needs assessment  survey, EPA may have better assurance that it is collecting information in  a cost-effective way to assess the effectiveness of its asset management  training efforts with USDA. The EPA official representing the drinking  water needs assessment survey said that there would be value for the  agency in asking water utilities about asset management.
Second, EPA and USDA do not collect information on the benefits and  costs of using and implementing asset management to encourage use.  EPA and USDA do not—and are not required to—compile information on  the benefits and costs of implementing asset management to encourage  small utilities to use it. EPA and USDA officials stated that increasing  water and wastewater utilities’ use of asset management increases the  utilities’ managerial and financial capacity and, for this reason, EPA and  USDA (through technical assistance providers) share anecdotal data to  encourage water utilities to adopt asset management. In particular, these  officials said that they promote managerial and financial capacity building  trainings, which include asset management training, by attending  conferences at which they present to water utility officials, provide one- on-one technical assistance outreach, and engage in conversations with  state SRF and USDA officials. EPA also provides some information about  the potential benefits of asset management in documents available on its  website. For example, EPA’s 2008 best practices guide provides a list of  the benefits of using asset management.
EPA and USDA’s training materials for their workshops on Rural and  Small Systems Guidebook to Sustainable Utility Management include  examples of management challenges and best practices— many of which  are asset management practices—to address the challenges. The  training materials do not, however, include cases showing communities’  use of asset management and the resulting benefits, including the costs  that could result from implementing these best practices. According to an  EPA official, most of the information on benefits, including cost savings,  and costs comes from specific anecdotes and materials that technical  assistance providers have developed and conveyed through their  individual training and interactions with water utilities’ staff or governing  bodies. Some of EPA’s technical assistance providers, such as the EFCs,  have used information on the benefits of asset management to encourage  water utility board members and city councils to adopt asset  management.
However, the agencies have not compiled information about the benefits  and costs of asset management into a single document that is more  broadly available to water utilities. EPA and USDA officials told us that  they had not considered compiling information about the benefits of asset  management into one source, and they are not required to. However,  providing information on benefits and costs to those who have not  attended the agencies’ trainings could help encourage them to adopt  asset management practices. We noted in a September 2002 report that  agencies use information dissemination as one of several tools to achieve  goals for programs in which agencies do not act directly, but inform and  persuade others to act to achieve a desired outcome. Additionally, in a  September 2005 report, we reported that agencies can evaluate their  efforts using fact-based understandings of how their activities contribute  to accomplishing the mission and broader results and to identify and  increase the use of program approaches that are working well. In this  same report, we stated that agencies can adopt a number of practices to  enhance the usefulness of information. One of these best practices for  improving the use of information is to ensure that it is, among other  things, relevant, accessible, and easy to use. For example, in 2006, EPA  and the Federal Highway Administration collaboratively conducted a case  study review of communities’ experiences, including the benefits, of  implementing asset management across multiple infrastructure sectors  such as water, wastewater, and transportation. According to the study,  the purpose of the review was to provide, in one resource, relevant  examples of how communities were responding to their infrastructure  needs by using asset management practices.
An EPA official told us that, in 2006, the agency considered compiling  information on cost savings by asking a question in a potential nationwide  study of water utilities’ use of asset management but did not pursue this  study because, among other things, the agency did not have the  resources to pay for it at that time. This official told us that EPA has  instead engaged in activities that cost less than a nationwide study, such  as developing case studies or other small-scale information collection  efforts. A USDA official said that the agency would be open to exploring  ways to collaborate on a study of the benefits and costs of asset  management for small water utilities. As shown by the EPA and Federal  Highway Administration study, EPA provided useful examples of the  benefits for entities considering asset management by compiling and  making broadly available information about the benefits and costs of  asset management. Consistent with best practices for using performance  information, compiling the information that EPA and USDA technical  assistance providers share with water and wastewater utilities to  document the benefits and costs of asset management could provide a  resource for a broader audience of small water utilities that are  considering using this approach. Both EPA and USDA officials said that  they had developed several materials for small water utilities through their  coordinated efforts and that a compilation of existing cases and examples  of communities’ use of asset management, its benefits, including cost  savings, and costs could be useful in persuading some water utilities to  use asset management.
section_title: Conclusions
paragraphs: EPA and USDA have provided millions of dollars of federal funding to  help small water utilities increase their technical, managerial, and  financial capacity to better meet the challenge of repairing and replacing  the nation’s aging water infrastructure and, also, provide safe and clean  water to communities. Both agencies have identified asset management  as a tool that water utilities can use to increase their ability to address  current and future infrastructure needs.
EPA and USDA have played a significant role in encouraging and helping  water utilities to implement asset management through funding  conditions, training, and other resources. With 68,000 water utilities  across the country, it is important to know which are using asset  management and which are not. However, EPA and USDA do not collect  information on water utilities’ use of asset management, particularly from  utilities that have taken part in agency training sessions on asset  management. Existing data collection efforts such as EPA’s needs  assessment surveys may be a cost-effective means of doing this. By  continuing to include questions in the clean water needs assessment  survey and considering questions about water utilities’ use of asset  management to include in the drinking water needs assessment survey,  EPA may have better assurance that it is collecting information in a cost- effective way to assess the results of its asset management training  efforts with USDA. In addition, persuading elected officials and  communities of the need for infrastructure investment is important, as is  the need to use asset management to make investment decisions. EPA  and USDA share the benefits and costs of asset management in various  documents provided on their websites and through technical assistance  providers. However, the agencies have not compiled the information on  the benefits and costs of asset management, particularly the cost  savings, into one source. A documented compilation of the benefits and  costs of asset management, including the cost savings, consistent with  performance management best practices, that is widely available to water  utilities, may be helpful to EPA and USDA in encouraging a broader  audience of small water utilities to consider adopting asset management.
section_title: Recommendations for Executive Action
paragraphs: As EPA and USDA continue to consider ways to track and promote water  utilities’ implementation of asset management, we recommend the  following:
First, that the Administrator of EPA direct the Office of Groundwater  and Drinking Water and Office of Wastewater Management to  continue to include questions on water utilities’ use of asset  management in the clean water needs assessment and consider  including questions about water utilities’ use of asset management in  future drinking water infrastructure needs assessment surveys.
Second, that the Administrator of EPA, and the Secretary of USDA,  through the Rural Development Agency, consider compiling into one  document the existing cases and examples of the benefits and costs  of asset management and widely share this information with water  utilities.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided the Administrator of EPA and the Secretary of USDA with a  draft of this report for review and comment.  In written comments provided  by EPA (reproduced in app. IV), EPA generally agreed with our findings  and recommendations. In addition, in an e-mail received from the GAO  and OIG Liaison Officer within USDA’s Rural Development agency,  USDA agreed with our report.
In response to our recommendation that EPA continue to include  questions on water utilities’ use of asset management in the clean water  needs assessment and consider including such questions in future  drinking water infrastructure needs assessment surveys, EPA included “a  significant caveat” to its agreement. Specifically, EPA’s comments stated  that the agency generally agrees with the recommendation, with the  significant caveat that the method for continuing to assess the  effectiveness of the agency’s asset management training and technical  assistance must be both effective and efficient. It further stated that  although the agency has included asset management questions as part of  the needs assessment surveys in the past, this mechanism has led to  limited information regarding the level of implementation of asset  management at utilities. Further, the comments stated that the needs  assessment survey may not be the most efficient and effective way to  collect these data since the survey’s primary focus and design is to  assess and quantify the nation’s infrastructure need and not the adequate  implementation of asset management. EPA stated that it would be willing  to explore other means of obtaining data that would provide an indication  of how utilities are benefitting from the agency’s asset management  training and technical assistance. We continue to consider the needs  assessment survey to be a cost-effective and efficient method for  collecting data from water utilities. If EPA explores others approaches and  finds that the information can be systematically collected from the nation’s  water utilities for comparison over time, we agree other approaches could  be appropriate.
In response to our recommendation that EPA and USDA consider  compiling, and widely share, existing cases and examples of the benefits  and costs of asset management, EPA noted that it agrees that it is  important to educate utilities on the benefits of asset management in  protecting the nation’s infrastructure investment and described steps it  has taken to do so. EPA stated that, as funding and resources allow, the  agency would most likely consider the development of a case study  compilation document focused on local decision makers who are key to  ensuring that asset management is a priority and is implemented  appropriately. We agree that focusing on local decision makers is  important and believe that a document compiling case studies could be  useful and made available to water utilities as well as local decision  makers. USDA did not comment specifically on this recommendation and  stated in its e-mail message that the agency will continue to emphasize  asset management through its technical assistance providers funded  through the agency’s Technical Assistance and Grant program and joint  EPA/USDA Work-Shop-in-a-Box initiative.
We are sending copies of this report to the appropriate congressional  committees; the Administrator of EPA; the Secretary of Agriculture; the  Director, Office of Management and Budget; and other interested parties.  In addition, this report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or gomezj@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. Key contributors to this report are listed in  appendix V.
section_title: Appendix I: Requirements and Incentives for Asset Management
paragraphs: Federal law does not require water utilities to implement asset  management. However, in 2014, federal law began requiring all recipients  of Clean Water State Revolving Fund (SRF) loans for repair,  replacement, or expansion of a water utility to develop fiscal sustainability  plans. According to the law, fiscal sustainability plans should include (1)  an inventory of critical assets; (2) an evaluation of the condition and  performance of such assets or groups of assets; and (3) a plan for  maintaining, repairing, and, as necessary, replacing the utility and a plan  for funding such activities. According to Environmental Protection Agency  (EPA) officials, some of the activities required as part of the fiscal  sustainability plan are asset management practices.
Officials in one state told us their state requires water utilities to develop  asset management plans as a condition of SRF loans for water  infrastructure, and officials in another state told us their state requires  asset management plans for SRF loan forgiveness. Other states may  provide incentives during the application process. Specifically, states may  award additional points in the application scoring process known as  “priority points.” Table 1 provides information about the requirements and  incentives reported by officials in the states we reviewed.
section_title: Appendix II: Objectives, Scope, and Methodology
paragraphs: This report examines selected water utilities’ use of asset management.  Our objectives were to examine (1) what is known about the use of asset  management among the nation’s water utilities—particularly small water  utilities—including benefits and challenges, if any, for water utilities  implementing asset management and (2) steps, if any, that the  Environmental Protection Agency (EPA) and U.S. Department of  Agriculture (USDA) are taking to help small water utilities implement asset  management.
To examine what is known about water utilities’ use of asset  management, including benefits and challenges, if any, we used EPA’s  framework for asset management. The framework, from EPA’s 2008  Asset Management: A Best Practices Guide, describes five components  and the practices that comprise asset management. The components and  practices described in this document formed the basis of our interview  questions. We also used other EPA documents describing the agency’s  asset management framework: 2003 Asset Management: A Handbook for  Small Water Systems: One of the Simple Tools for Effective Performance  (STEP) Guide Series  and 2008 Building an Asset Management Team.  This criterion remains relevant today because it is a federally-developed  asset management framework for water utilities.
To determine if there were existing sources of information on the extent to  which utilities use asset management, we interviewed EPA and USDA  Rural Development staff about data each agency collects on water  utilities’ use of asset management, including any data on asset  management collected by EPA in its national needs assessment surveys.  We also interviewed representatives of national water and wastewater  associations to identify potential data sources. Through this process, we  identified one national study, a market research study conducted by  McGraw-Hill Construction, a company that provides analytics, news, and  intelligence for the North American construction industry, and CH2M, a  company that, among other things, provides consulting services related to  asset management. The report described the results of a survey of 451  persons representing water utilities in the United States and Canada and  the extent to which they had adopted 14 asset management practices.  Thirty percent of the 451 persons in the survey sample represented  utilities providing only drinking water services and 70 percent represented  utilities providing drinking water and wastewater services. The 14  practices included such actions as (1) the use of a computerized  maintenance management system, (2) the use of an asset register to  facilitate analysis and planning, (3) the development of customer service  and asset service-level performance measures, and (4) consideration of  risks and consequences of alternative investment/ budget decisions, but  the report did not describe how the 14 practices were selected. The report  also included information from confidential interviews with water utilities  on their insights in implementing asset management. We reviewed the  authors’ description of the study’s methodology and determined that the  data were sufficient for the purpose of describing qualitative information to  corroborate information we obtained from our interviews about large  utilities’ use of asset management because the study authors included  asset management practices that were similar to those identified by EPA.
To understand the extent to which small utilities are using asset  management, we conducted semistructured interviews with officials in a  nonprobability sample of 10 states: Arizona, Arkansas, Delaware, Idaho,  Iowa, Minnesota, Mississippi, New York, Vermont, and Wyoming. To  select these 10 states, we identified the state in each of EPA’s 10 regions  with the highest percentage of small water utility needs, using EPA’s most  recent needs assessment data from the 2011 Drinking Water  Infrastructure Needs Survey and Assessment and the 2008 Clean  Watersheds Needs Survey. EPA’s 2011 Drinking Water Infrastructure  Needs Survey and Assessment calculated the need among small water  utilities serving fewer than 10,000 people for 35 of the 50 states. For the  remaining 15 states, EPA provided data on small water utilities serving  fewer than 3,300 people. We calculated the percentages of small water  utilities’ share of statewide need for these 15 states using this information.  The 2008 Clean Watersheds Needs Survey calculated the need for small  water utilities serving fewer than 10,000 people for 47 states, the District  of Columbia, and U.S. territories. It did not report data for 3 states,  Alaska, North Dakota, or Rhode Island. As a result, we did not include  these states in the data we used for our selection.
In our sample of 10 states, we used a standard set of questions for  conducting interviews, by telephone, with state drinking water and clean  water State Revolving Fund (SRF) program officials and USDA state  office staff. Our standard set of questions consisted of closed- and open- ended questions to ensure we consistently captured officials’ responses.  During these interviews, we asked officials to estimate the use of asset  management practices by water utilities’ in their state, the benefits for  utilities and lenders of using asset management, the challenges small  utilities experience in implementing asset management, funding and  technical assistance for asset management available to water utilities in  their state, and the asset management practices for which small utilities  are most in need of technical assistance. In addition, we asked USDA  officials about the loan conditions they consider to be asset management  practices. We also specifically asked SRF officials about requirements for  asset management practices or plans as a condition of SRF loans. In  these interviews with officials representing state SRF programs, USDA  state offices, and small water utilities, we did not receive answers to every  close-ended question we asked; we note in the report the number of  answers provided for each question. Because our sample of states was a  nonprobability sample, responses from the officials we interviewed cannot  be generalized to other states and their water utilities, but they illustrate  some of the uses of asset management practices among small water  utilities in states with the greatest infrastructure needs.
In addition to interviewing state SRF and USDA officials in the 10  selected states, we interviewed, by telephone, officials in a  nongeneralizable, random sample of small drinking water and wastewater  utilities serving populations of 10,000 or less. To select these small water  utilities, we used two EPA databases of water utilities. To identify drinking  water utilities, we used EPA’s Safe Drinking Water Information System, a  database of information about drinking water utilities and their regulatory  violations. To identify wastewater utilities, we used a publicly available  database of the water utilities included in the 2008 Clean Watersheds  Needs Survey. We assessed the data reliability for both databases by,  among other things, reviewing published documents and data regarding  EPA’s quality assurance and quality control procedures for the needs  survey assessment tools, contacting EPA officials to ensure we used the  correct search fields and parameters, and reviewing past GAO reports  and other documentation on the reliability of the data. Through these  steps, we determined that the data were sufficiently reliable for our  purposes of sampling drinking water and wastewater utilities in each of  our 10 states. We selected a sample of 40 utilities, two drinking water and  two wastewater utilities in each of the 10 selected states, and conducted  interviews with at least one drinking water and one wastewater utility in 9  of the 10 states, for a total of 25 water utility interviews. (All of the water  utilities we contacted in Mississippi declined to participate or did not  respond to our interview requests.) To ensure our sample represented a  range of small water utilities, we selected one drinking water utility serving  a population of more than 500, but less than or equal to 10,000 and one  drinking water utility serving a population of 500 or fewer people.  Similarly, for each of the 10 states we selected one wastewater utility  serving a population between 1,000 and 10,000 and one wastewater  utility serving a population of less than 1,000 in each of the 10 selected  states. In addition to the 40 utilities, we also generated a back-up list of  randomly selected water utilities from which to choose if the utilities in the  original sample declined to participate in our review or did not respond to  our requests for an interview after three or more attempts. In total, we  contacted 68 water utilities in all 10 of the states and conducted  interviews with officials representing 25 water utilities in 9 states. Of these  25, 12 were drinking water utilities, and 13 were wastewater utilities.  Table 2 provides a summary of the population served and ownership for  the water utilities we interviewed in the 10 states.
Our interviews with small water utilities consisted of a standard set of  closed- and open-ended questions. Officials participating in these  interviews were, for example, water utility operators or superintendents,  maintenance staff, public works directors, elected city officials, water  utility board members, and engineers. We asked about officials’ familiarity  with asset management as defined by EPA, the extent to which they were  implementing asset management practices, and, if so, the costs and cost  savings they had identified, whether water utility staff or governing  officials had received technical assistance on asset management, and  contextual background on the community in which they served. Because  our sample of water utilities in the 10 selected states was a  nongeneralizable sample, we do not use the data collected from these  states to generalize about the use of asset management in other states  and by other water utilities.
To analyze the open-ended questions in our surveys, we conducted  several content analyses. Specifically, we conducted a content analysis to  categorize the benefits (to water utilities and federal agencies) of asset  management and the challenges small utilities face in implementing asset  management practices. To identify categories in which to classify the  open-ended responses, we examined the responses and used content  analysis software to count the words officials used most frequently and  identified broad groupings of concepts. We classified the responses to the  open-ended questions on benefits to water utilities into the following  categories: (1) planning, (2) financial, (3) awareness (of the system and  assets), (4) management, (5) technical, (6) other benefits, and (7)  unaware of benefits. We classified the responses to the open-ended  questions on benefits to federal agencies into the following categories: (1)  system and (2) lender. We classified the responses to the open-ended  questions on challenges into the following categories: (1) financial, (2)  human resources, (3) support, (4) education, and (5) other challenges.
Where appropriate, we also identified subcategories to classify  responses.
To conduct the content analysis of responses, two analysts independently  assigned officials’ responses to one or more categories and compared  their analyses. All initial disagreements regarding the categorizations of  officials’ responses were discussed and reconciled. The analysts then  tallied the number of responses in each category. We tabulated the  responses from closed-ended questions counts. To characterize officials’  views we identified throughout this report, we defined modifiers to  quantify officials’ views. For example, “most” represents instances in  which at least one state official in more than five states provided a  response. The modifiers are as follows:  For state SRF and USDA state offices in the 10 selected states,  “most” represents state SRF and USDA officials in more than 5 states,  “half” represents state SRF and USDA officials in 5 states, and  “some” represents state SRF and USDA officials in less than 5 states.
We also conducted two in-person visits to Maine and New Mexico. We  selected Maine and New Mexico based on recommendations from EPA  and USDA officials in the agencies’ headquarters, national water and  wastewater associations, and technical assistance providers. In addition,  we selected New Mexico because of the state’s requirement that water  utilities have an asset management plan as a condition of Clean Water  SRF infrastructure funding. The officials that recommended Maine  generally told us they did so because the state has long encouraged  utilities to adopt asset management. During our visits to Maine and New  Mexico, we interviewed a total of 12 small and large, public and private,  water utilities. We selected these water utilities based on  recommendations from state SRF officials and technical assistance  providers in each state and, in the case of New Mexico, EPA regional  office staff. Table 3 provides descriptive information about the water  utilities we interviewed in Maine and New Mexico.
To examine the steps, if any, that EPA and USDA have taken to help  small water utilities implement asset management, we reviewed EPA and  USDA guidance, reports, training materials, and software tools available  on asset management. One particular guidance we used was the 2011  Memorandum of Agreement on Promoting Sustainable Rural Water and  Wastewater Systems, which describes EPA’s and USDA’s joint efforts to  promote the technical, managerial, and financial capacity of small utilities  and includes an emphasis on promoting asset management. We then  interviewed EPA and USDA officials to understand the actions they have  taken, the funds they have spent, and the efforts they have made to  coordinate on asset management activities. We also interviewed technical  assistance providers funded by EPA and USDA to conduct trainings and  one-on-one technical assistance on asset management. These technical  assistance providers included the EPA-funded Environmental Finance  Centers at the University of New Mexico, Wichita State University,  Cleveland State University, and University of North Carolina at Chapel Hill  and the National Rural Water Association and Rural Community  Assistance Partnership’s national offices and local affiliates in Maine and  New Mexico. We compared the information we collected about the steps  EPA and USDA have taken to key practices related to federal agencies’  training efforts and collection and dissemination of information that we  identified in previous reports.
We conducted this performance audit from January 2015 to January 2016  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
section_title: Appendix III: Federal Funding for Asset Management
paragraphs: The Environmental Protection Agency (EPA) and the U.S. Department of  Agriculture (USDA) have funded asset management activities through  their existing programs and, more recently, used some of this funding for  collaborative efforts. Specifically, EPA officials told us that they first began  funding asset management activities through the Drinking Water State  Revolving Fund (SRF) program when the 1996 amendments to the Safe  Drinking Water Act authorized states to use a certain percentage of their  grants for such programs. According to USDA officials, USDA has  contracted with national organizations that incorporated asset  management training as part of their work in assisting small water utilities  in managing and operating their facilities. With the 2011 issuance of a  memorandum of agreement on sustainable infrastructure, EPA and  USDA agreed to collaborate on training and to coordinate agency  activities and financial assistance in areas that would increase technical,  managerial, and financial capacity, including through the use of asset  management. As a result, EPA and USDA spending on asset  management activities falls under various larger programmatic areas.
EPA’s spending falls into the following three categories:
Small Systems Training and Technical Assistance Grants. EPA  funds asset management activities through this grant program to  improve technical, managerial, and financial capacity of small drinking  water and wastewater utilities. In fiscal year 2014, EPA provided an  estimated $13.1 million in grants to support training and technical  assistance for small utilities. Of the estimated $13.1 million, about $3  million was used to provide training and technical assistance to water  utilities to improve financial and managerial capacity, which included  asset management.  In December 2015, legislation was enacted to  reauthorize the small systems training and technical assistance grants  program for $15 million per year for fiscal years 2015 through 2020.
Drinking Water SRF. EPA also funds asset management training and  technical assistance through the Drinking Water SRF. Subject to  certain limitations, states may reserve a portion of these grants to  fund various activities including training and technical assistance.  States can spend 2 percent of their SRF grants to provide small water  utilities with technical assistance; up to 4 percent for state program  administration and technical assistance to water utilities of any size;  up to 10 percent for the development of technical, managerial, and  financial capacity, operator certification programs, and other activities;  and up to another 15 percent for a variety of activities that can also  include programs to develop technical, managerial, and financial  capacity. Examples of assistance that states can provide with these  funds include such activities as written guidance, one-on-one  coaching, and online and classroom training that can include asset  management.
Environmental Finance Center Grant Program. EPA also funds  asset management activities through its Environmental Finance  Center Grant Program. EPA officials said that in fiscal year 2014 they  provided a total of $1 million in grants to selected public, private  universities or colleges, and nonprofit organizations to provide  technical assistance to communities on a range of EPA priorities,  including improving financial capacity. This assistance included one- on-one technical assistance, workshops and other classroom  trainings, and written guidance. EPA’s Environmental Finance Center  at the University of New Mexico has been working on asset  management since 2003 and has provided training and technical  assistance on the use of asset management since 2006.
USDA funds asset management activities through two programs:
Water & Waste Disposal Technical Assistance & Training Grants.
This program provides grants to various nonprofit organizations for  technical assistance on managerial topics, assistance with preparing  loan applications, and helping water utilities to find solutions to  problems in operating their facilities. USDA provides the grant funds  for 1 year. In fiscal year 2014, USDA provided an estimated $19  million to nonprofit organizations. Nonprofit organizations can apply to  provide services to one state or multiple states. USDA gives priority to  certain types of applicants, including those that serve communities of  fewer than 5,500 or fewer than 2,500, and those that will primarily  provide ‘‘hands on’’ technical assistance and training to water utility  managers and operators experiencing problems with operations and  maintenance or management.
Circuit Rider Program—Technical Assistance for Rural Water  Systems. Under this program, the National Rural Water  Association—a training and technical assistance organization serving  small communities—is contracted to provide staff in each of the 50  states with technical assistance on day-to-day operational,  managerial, and financial issues. Specifically, according to the  information the National Rural Water Association publishes on its  website, staff known as “circuit riders” work on site with water utility  personnel to troubleshoot problems, evaluate alternative technological  solutions, recommend operational improvements, assist with leak  detection, respond to natural disasters and other emergencies,  provide hands-on training, participate in board and council meetings,  and conduct user rate analyses. In fiscal year 2014, USDA provided  about $15 million for the Circuit Rider Program.
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Susan Iott, Assistant Director;  Mark Braza; Antoinette Capaccio; Bruce Crise; Tahra Nichols; and Alison  O’Neill made key contributions to this report. In addition, Jon Melhus and  Kiki Theodoropoulos made important contributions to this report.
section_title: Related GAO Products
paragraphs: Water Infrastructure: Approaches and Issues for Financing Drinking  Water and Wastewater Infrastructure. GAO-13-451T. Washington, D.C.:  March 13, 2013.
Water Infrastructure: Comprehensive Asset Management Has Potential to  Help Utilities Better Identify Needs and Plan Future Investments.  GAO-04-461. Washington, D.C.: March 19, 2004.
Water Infrastructure: Information on Financing, Capital Planning, and  Privatization. GAO-02-764. Washington, D.C.: August 16, 2002.