Overseeing the American Recovery and Reinvestment Act

As the feds help states and cities, a new relationship may be developing.

Carousel and thumbnail photo by Argonne National Laboratory, flickr CC.

Almost anything you read about the American Recovery and Reinvestment Act is a matter of debate: It created lots of new jobs. No, it didn’t. It’s been good for the states. No, it hasn’t. It’s been generally well run. No, it hasn’t.

But two things seem clear. First, the stimulus has done a great deal to change the federal government’s relationship with states and localities. The unprecedented speed with which the money was turned out required this to be true. Second, it’s been transforming the way many in government think about transparency -- a culture change forced by reporting requirements and oversight.

To better understand the way this has been playing out, we talked to Earl Devaney, chairman of the Recovery Accountability and Transparency Board, and Nancy DiPaolo, the board’s assistant director of congressional and intergovernmental affairs. The board provides a central point of contact for states, and to some extent, local governments.

In some circles the phrase, “We’re the federal government, and we’re here to help you,” is considered an oxymoronic joke. But we’ve heard a great many comments recently from state and local government officials who say their relationship with the federal government has improved since the Recovery Act was passed. As DiPaolo sees it, “This kind of reporting had never been done before -- nothing on this scale.” Part of her role, however, is to help the states get help at the federal level. “I just find the right person to give the right answers.”

What’s more, the feds have provided training sessions in which state representatives were brought in to discuss knotty questions. One of these, for instance, was how to deal with the Davis-Bacon Act and its prevailing wage requirements that initially stalled the allocation of funding for the weatherization program. After a session in Denver in June 2010, states were enthusiastic about the advice and counsel they were getting from the federal government. The bottom line, DiPaolo says, is that the states can get answers. “They have faith that the feds can do more than chuck money at them.”

The feds are also helping states deal with another issue: lack of funding for oversight coupled with an increase in state responsibilities to do so. As Devaney sees it, “The act asked states and localities to participate in the oversight activity and didn’t give them any money to do that. That was unfair.”

The lack of money on the state side has led to a more collaborative relationship with the federal inspectors general. In the past, the men and women who held that title were perceived as people who periodically swooped in to find flaws in the way federal dollars were spent. Now they’re working directly and in partnership with states and localities to stem fraud and provide oversight.

When the Recovery Act was first passed, there were complaints aplenty about onerous paperwork requirements. There may be some validity to those grievances, but the recovery board, Office of Management and Budget and others at the federal level have been making earnest efforts to simplify the reporting process. For example, federal agencies discovered that they could pre-fill some information that the feds already had in hand and didn’t need to obtain, yet again, from state or local government recipients. Similarly, the federal government supplemented software with internal connections between congressional districts and ZIP codes. That provided a cross-check that ensured those data points couldn’t be entered incorrectly -- a significant problem in the program’s early stages.

New efforts are still being developed. Early on, for instance, the federal government and states began to realize that it would be beneficial to work with a grant-contract system that has common rules and a unique number to identify each contract or grant. Since the act was launched, 28 agencies have had recovery dollars to disburse. Each has had its own alpha-numeric code to track the money. You can guess the problems this has produced.

Now, however, the recovery board is advocating a single alphanumeric code -- establishing something that would be more like a credit card number with each part of the number telling a consistent story about that money. The first four numbers, for example, might represent the agency. “This would make the harmonizing of data 10 times better than it is right now,” Devaney says. “If you’re going to be advocating transparency, it has to be done.”

We’re not claiming that the relationship between the federal government and lower levels has been all beer and skittles. There’s been plenty of tension to go around, and not all the federal agencies involved have been equally helpful. But in the area of intergovernmental relations, there have been more positives to point to than many people anticipated at the beginning of the process. And that’s good news.

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