Grants Management: EPA Continues to Have Problems Linking Grants to Environmental Results
Released: 2004-07-20T00:00:00

Letter

Background

EPA administers and oversees grants primarily through the Office of Grants and Debarment, 10 program offices in headquarters, and program offices and grants management offices in EPA’s 10 regional offices. Figure 1 shows the key EPA offices involved in grants activities for headquarters and regions.

The management of EPA’s grants program is a cooperative effort involving the Office of Administration and Resources Management’s Office of Grants and Debarment, program offices in headquarters, and grants management offices in the regions. The Office of Grants and Debarment develops grant policy and guidance. It also carries out certain types of administrative and financial functions for the grants approved by headquarters program offices, such as awarding grants and overseeing the financial management of grants. On the programmatic side, headquarters program offices establish and implement national policies for their grants programs and set funding priorities. They are also responsible for the technical and programmatic oversight of their grants. In the regions, grants management offices carry out certain administrative and financial functions for the grants, such as awarding grants approved by the regional program offices, while the regional program staff provide technical and programmatic oversight of their grantees.

As of June 2004, 134 grants specialists in the Office of Grants and Debarment and the regional grants management offices were largely responsible for administrative and financial grant functions. Furthermore, 2,089 project officers were actively managing grants in headquarters and regional program offices. These project officers are responsible for the technical and programmatic management of grants. Unlike grant specialists, however, project officers generally have other responsibilities, such as using the scientific and technical expertise for which they were hired.

In fiscal year 2003, EPA took 6,753 grant actions involving funding totaling about $4.2 billion. These awards were made to six main categories of recipients, as shown in figure 2.

EPA offers two types of grants—nondiscretionary and discretionary: Nondiscretionary grants support water infrastructure projects, such as the drinking water and clean water state revolving fund programs, and continuing environmental programs, such as the Clean Air Program for monitoring and enforcing Clean Air Act regulations. For these grants, Congress directs awards to one or more classes of prospective recipients who meet specific eligibility criteria; the grants are often awarded on the basis of formulas prescribed by law or agency regulation. In fiscal year 2003, EPA awarded about $3.6 billion in nondiscretionary grants. EPA has awarded these grants primarily to states or other governmental entities.

Discretionary grants fund a variety of activities, such as environmental research and training. EPA has the discretion to independently determine the recipients and funding levels for these grants. In fiscal year 2003, EPA awarded $656 million in discretionary grants. EPA has awarded these grants primarily to state and local governments, nonprofit organizations, universities, and Native American tribes.

To highlight persistent problems and, it is hoped, to focus greater attention on their resolution, we designated EPA’s grants management, including achieving environmental results, as a major management challenge in our January 2003 performance and accountability report. In August 2003, we further addressed the question of environmental results. We reported that EPA (1) had awarded some grants before considering how the results of the grantees’ work would contribute to achieving environment results; (2) had not developed environmental measures and outcomes for its grants programs; and (3) often did not require grantees to submit workplans that explain how a project will achieve measurable environmental results. We also found that EPA’s monitoring efforts had not called for project officers to ask grantees about their progress in using measures to achieve environmental outcomes.

Problems Persist in Addressing Grants’ Environmental Results

For its grants programs, EPA is still not effectively linking grants to environmental results. The problems we identified in our previous 2003 report continue. Further, in our recent report, in 2004, we identified an additional problem. That is, we could not determine from EPA’s databases the types of goods and services provided by grants. To identify goods and services obtained from discretionary grants, we surveyed discretionary grant recipients. On the basis of our survey responses, we identified a total of eight categories (see table 1). We estimated that of all the goods and services indicated by grant recipients, 59 percent were in three of these categories: (1) research and development; (2) training, workshops, and education; and (3) journals, publications, and reports.

While we were able to identify goods and services from survey responses, we could not link them to results. We reviewed the files of 67 grantees to identify if there was any link between goods and services and program measures or outcomes in grant workplans. We found that none of the 67 grants identified measures and only 9 of the 67 grants identified anticipated outcomes in their workplans.

EPA has also found that grantee workplans often do not identify environmental outcomes. In 2003, EPA began conducting internal reviews that—for the first time—quantified the extent to which its grant-issuing offices, including program and regional offices, ensured that environmental outcomes are identified in grant workplans. EPA reported that, overall, less than one-third of the 93 grant workplans reviewed identified environmental outcomes. (See table 2.) Among EPA’s offices, the percent of workplans that identify environmental outcomes ranged from 0 to 50.

In 2004, EPA plans to review seven other offices. As of July 2004, EPA had completed reviews of three offices. Among these three offices, EPA found environmental outcomes in a little less than half of grant workplans. Final agencywide data will not be available until the end of 2004, when EPA completes its internal reviews.

Not surprisingly, given the lack of outcomes in the workplans, OMB found that EPA grant programs are not demonstrating results. In February 2004, OMB found that 8 of the 10 EPA grant programs it reviewed were “not demonstrating results.” These programs total about $2.8 billion. (See table 3.) OMB rated the two remaining grant programs—Brownfields and Tribal Assistance Programs—totaling $224 million as “adequate” in demonstrating results.

According to EPA’s Inspector General, EPA’s failure to consistently identify environmental measures and outcomes can weaken grant oversight. For example, the Inspector General recently reported that EPA Region 6 could not determine whether its oversight of water, hazardous waste, and air programs in Louisiana was effective because, in part, Region 6 had not linked these programs to environmental outcomes. Region 6 had focused only on program outputs; it therefore could not determine whether it was using its resources wisely and achieving program results.

EPA’s program and regional grants officials have identified difficulties in measuring and achieving environmental outcomes. For example: In response to EPA’s internal reviews, Region 9 officials noted that it is costly and difficult to measure outcomes when there is a substantial time lag between implementing the grant and achieving environmental outcomes. Moreover, it is difficult to attribute environmental outcomes to one specific grant when dealing with complex ecosystems. In addition, Office of Environmental Information project officers stated that environmental outcome requirements should not apply to support functions like information management.

Responding to the recent Inspector General report faulting Region 6 for its oversight of Louisiana’s environmental programs, Region 6 officials indicated that they had been unfairly criticized for not implementing environmental measures since the agency, as a whole, had been unable to do so.

These concerns demonstrate the need for guidance that addresses the complexities of measuring and achieving environmental results.

Furthermore, not every EPA program office has yet developed environmental measures for their grant programs. For example, in June 2004, the Inspector General found that EPA has been working on developing environmental measures for the Clean Water State Revolving Fund program since 1998. However, EPA has not yet developed these measures or a comprehensive plan on how it plans to develop these measures, although it plans to develop these measures by February 2005.

EPA’s Plan Focuses on Results, but Initial Implementation Has Been Slow and Limited

In 2003, we reported that EPA’s new 5-year grants management plan was promising. In the plan, EPA had established the goal of “identifying and achieving environmental outcomes” with the objectives and associated milestones shown in table 4. As table 4 shows, EPA’s progress in implementing the plan’s environmental outcomes objectives is behind schedule.

EPA plans to issue its environmental outcomes policy—a key objective originally scheduled for 2003—in fall 2004, but the policy will not become effective until January 2005. EPA officials stated that the policy was delayed because of the difficulty in addressing environmental outcomes. Furthermore, as a result of this delay, EPA has delayed meeting the objectives of developing a tutorial for grantees, requiring outcomes in solicitations, and incorporating success on achieving outcomes into the criteria for awarding grants—objectives that are contingent on the issuance of the policy. EPA is also delaying the objective of incorporating grantee’s previous success in identifying outcomes into the criteria for awarding new grants in order to give grantees a year to understand the new policy.

In the absence of a final outcomes policy, EPA issued an interim policy in January 2004. The interim policy is a positive step in that for the first time EPA is requiring project officers to identify—at the pre-award stage—how proposed grants contribute to achieving the agency’s strategic goals under the Government Performance and Results Act of 1993 (GPRA). (See fig. 3, example 1.) As we reported, project officers were linking the grant to the agency’s goal after the award decision, so that the linkage was a recordkeeping activity rather than a strategic decision.

While the interim policy is a positive first step, it does not require project officers to link grant funding to environmental outcomes. Instead, it “encourages” project officers to link grant funding to outputs, outcomes, and performance goals, as illustrated in figure 3, example 2. EPA officials explained that the interim policy did not require the full strategic plan/GPRA “architecture”—goals, objectives, subobjectives, program/project, outputs, outcomes, and annual performance goals— because not all EPA staff are trained on how to implement the strategic plan/GPRA architecture. However, when EPA’s outcome policy becomes effective, it will require every grant workplan to address the full strategic plan/GPRA architecture, including outcomes.

Finally, EPA will not meet the grant management’s plan first-year (2004) target for the performance measure of the environmental outcomes goal— the percentage of grant workplans, decision memoranda, and terms of conditions that discuss how grantees plan to measure and report on environmental outcomes. For this performance measure, using 2003 as its baseline year, EPA determined that, as previously discussed, less than one- third of its grant workplans had environmental outcomes. EPA established targets that progressively increase from this baseline to 70 percent in 2004, to 80 percent in 2005, to 100 percent in 2006. EPA officials do not expect that EPA will meet its target for 2004 because its outcome policy is not yet in place.

EPA has drafted a policy and guidance on environmental outcomes in grants. As drafted, this policy appears to have EPA moving in the right direction for addressing environmental outcomes. The policy Is binding on managers and staff throughout the agency, according to EPA officials. Previously, the Office of Grants and Debarment targeted only project officers through brief guidance on outcomes in their training manual.

Emphasizes environmental results throughout the grant life cycle— awards, monitoring, and reporting. In terms of awards, the draft policy applies to both competitive and noncompetitive grants. For example, program offices and their managers must assure that competitive funding announcements discuss expected outputs and outcomes. In terms of grant monitoring, the policy requires program offices to assure that grantees submit interim and final grantee reports that address outcomes.

Requires that grants are both aligned with the agency’s strategic goals and linked to environmental results. Specifically, the draft policy requires that EPA program offices (1) ensure that each grant funding package includes a description of the EPA strategic goals and objectives the grant is intended to address and (2) provide assurance that the grant workplan contains well-defined outputs, and to the “maximum extent practicable,” well-defined outcome measures. According to an EPA official, while the policy requires that program offices assure that there are well-defined outputs and outcomes, the grant funding package—an internal EPA document—will not identify each output and anticipated outcome. EPA is concerned that certain types of grants have too many outputs and outcomes to enumerate. Potential grant recipients also will not be required to submit workplans that mirror the strategic plan/GPRA architecture, owing to EPA’s concern that such a requirement would cause the grant to be for EPA’s benefit, and thus, more like a contract. EPA included the provision to “the maximum extent practicable” because it recognized that some types of grants do not directly result in environmental outcomes. For example, EPA might fund a research grant to improve the science of pollution control, but the grant would not directly result in an environmental or public health benefit.

EPA’s forthcoming policy and guidance faces implementation challenges. First, while the guidance recognizes some of the known complexities of measuring outcomes, it does not yet provide staff with information on how to address them. For example, it does not address how recipients will demonstrate outcomes when there is a long time lag before results become apparent. Second, although the policy is to become effective in January 2005, all staff will not be trained by that time. EPA has planned some training before issuing the policy and has issued a long-term training plan that maps out further enhancements for training grant specialists and project officers on environmental results. Finally, EPA has not yet determined how environmental results from its programs will be reported in the aggregate at the agency level. EPA’s forthcoming order establishes that program offices must report on “significant results” from completed grants through existing reporting processes and systems, which each program has developed. EPA plans to convene an agencywide work group in fiscal year 2005 to identify ways to better integrate those systems.

In conclusion, we believe that if fully implemented, EPA’s forthcoming outcome policy should help the agency and the Congress ensure that grant funding is linked to EPA’s strategic plan and to anticipated environmental and public health outcomes. We believe that the major challenge to meeting EPA’s goal of identifying and achieving outcomes continues to be in implementation throughout the agency. Realistically, EPA has a long road ahead in ensuring that its workforce is fully trained to implement the forthcoming policy and in educating thousands of potential grantees about the complexities of identifying and achieving environmental results.

Given EPA’s uneven performance in addressing its grants management problems to this point, congressional oversight is important to ensuring that EPA’s Administrator, managers, and staff implement its grants management plan, including the critical goal of identifying and achieving environmental results from the agency’s $4 billion annual investment in grants.

Mr. Chairman, this concludes my prepared statement. I would be happy to respond to any questions that you or Members of the Subcommittee may have.

Contacts and Acknowledgments

For further information, please contact John B. Stephenson at (202) 512- 3841. Individuals making key contributions to this testimony were Avrum I. Ashery, Andrea W. Brown, Tim Minelli, Carol Herrnstadt Shulman, Rebecca Shea, Bruce Skud, and Amy Webbink.

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