Posts Tagged ‘GAO’

“The sheer depth of the crisis. . . .” Q&A with Paul Posner

May 6, 2010

Unlike all-too-many observers, Paul Posner hasn’t been looking at the stimulus act in isolation, but in a broader historical framework that we think is illuminating. His insight comes from first-hand experience with past stimulus efforts — first as director of federal programs for the New York City Office of Management and Budget in the mid 1970’s when federal grants helped hard pressed cities deal with the fall out from the oil crisis and unemployment of that era, then at GAO where he served as Director of Federal Budget and Intergovernmental Relations. Posner is currently director of the Master’s in Public Administration program at George Mason University .

How does today's stimulus act compare to the New Deal?

Following is a Q&A with him:

Q. The Congressional Budget Office reports that the stimulus added 2.1 percentage points to GDP growth and created or saved between 800,000 and 2.4 million jobs in its first year.Yet the majority of Americans are apparently against it. How does this reaction compare to the way the public greeted Roosevelt’s New Deal?

PP:  The New Deal stimulus had widespread popular acclaim. Its job creation programs – The Works Progress Administration, Public Works Administration, the Civilian Conservation Corps – enjoyed tremendous popular support, as did President Franklin Roosevelt. Each of these programs developed a strong political following.

Q. We’ve been going through a recession – maybe even a Great Recession. But was the far more extreme unemployment in the 1930s part of the reason the public bought in?

PP: Yes. The sheer depth of crisis characterizing the New Deal made institutional innovations politically possible that were unthinkable before. That generated bipartisan support in the first few years of FDR’s term. The economy grew by nine percentage points a year in the first years of the New Deal, reducing unemployment from 25 percent to 15 percent. Each of the programs developed a strong political following from grateful clients who identified them as a safe harbor in a horrible economic storm.

Q. How different was the political climate?

PP: FDR had enormous personal popularity that translated into support from an overwhelmingly Democratic Congress. But the Republicans of that day, many of whom were progressives, grudgingly voted for many New Deal programs as well. In this administration, no House Republican voted for the initial stimulus and both parties continue to escalate their rhetoric as the November elections approach.

Q. Did President Roosevelt have more solid support from his own party, too?

PP:.  Yes, but the political situation itself has changed. In those days, a popular president had long coattails. Presidents were much more able to carry their own parties to victory and congressional allies took their policy cues from the person who lifted them into office. Seventy years ago most of the electorate voted a straight party ticket.

By contrast, President Obama and most postwar presidents have to cobble together majorities in a more perplexing, challenging party system. Today, increasing shares of the electorate are independents who are prone to split their vote between the President’s own party, Congress and other offices on the ballot. Members of Congress, even in the President’s own party, understand this and keep their distance when the President’s policies might jeopardize their own unique local political coalitions. It’s also more difficult for presidents to find allies on the other side of the aisle. Members of Congress are increasingly influenced not by the median general election voter but the median primary voter and that pulls them away from the center toward the extremes of  the ideological spectrum.

Q. The relationship between the federal government and state or local governments was much different in the past as well. What impact has that had?

PP: Unlike today, the important job programs of the New Deal were direct centralized federal programs. Grateful clients of the programs had trained their hopes on the White House for deliverance. The President reaped considerable short term political rewards. Not only was he able to take credit for the millions of jobs produced, but he was also able to steer rewards to political allies and punish his opponents.

By contrast, the current stimulus is delivered using a highly decentralized structure. The expansion of national policy over the past 65 years has not been carried out by federal bureaucrats, but by a wide range of third parties, mostly state and local officials. In just the first quarter of the program, there were more than 130,000 state and local governments, nonprofits and private firms that received stimulus grants contracts and loans.

Q. How does that affect the political impact?

PP: This system of what I call “third party governance” raises political challenges. The President’s ability to deliver rests on the shoulders of thousands of non-federal implementers, all with different priorities and capabilities. Most critically, the responsibility for the outcome of the programs is highly dispersed and there’s no clear line of sight for the public to attribute credit to the President, particularly since the Governor, mayor and other political figures are likely to be competing for public approbation.

In addition, the strategy for rapid deployment of the stimulus dollars carried distinct political downsides for President Obama. His administration used existing programs and highly professionalized administrative networks to deliver the dollars. That avoided start up problems, but it has made it difficult for the public to differentiate the effects of the stimulus from the day to day effects of existing programs.

Q. Are there other ways that this effort to stimulate the economy has differed from attempts in the past?

PP: This one was enacted remarkably quickly. The 2009 stimulus became law only 14 months after the recession officially began in December 2007. In the past, 27 months have gone by, on average, between the beginning of a recession and the enactment of stimulus initiatives.


Why weatherization dollars have been delayed

April 7, 2010

Two recent reports, one from the GAO and one from the Department of Energy’s Inspector General, both address the delays states have had in using stimulus dollars to get their homes weatherized due to a variety of issues. You may recall that we recently posted a video  of Washington’s Governor Christine Gregoire fulminating about this issue.

The biggest single obstacle has come in complying with the Davis-Bacon Act, which mandates that the U.S. Department of Labor set wage rates for federally funded or assisted projects.  It requires that workers involved in such efforts be paid according to prevailing wages for their jobs and geographic region.  But what makes this requirement so time consuming? We were curious, talked to some smart folks in several states, and thought we’d fill you in on some of the reasons that Davis-Bacon has slowed progress.

  1. Figuring out the local prevailing wage usually means a county-by-county survey. In job areas, like weatherization, that hadn’t previously dealt with Davis-Bacon requirements, surveys had to be done after the money already started to flow. The wage guidance wasn’t completed until last October.
  2. Part of the difficulty of determining rates for workers in this field is that weatherization encompasses a broad variety of jobs, from electrical work to heating or ductwork to carpentry or welding.
  3. Even though the Secretaries of Labor and Energy insisted in July 2009 that weatherization work could begin before the wage determinations were completed, many states and their contractors were unwilling to take on the additional headache of figuring out back pay, should they have over- or underestimated payments to workers—especially when some of those workers might have moved on to different jobs by the time the certifications came out.
  4. Finally, one somewhat strange provision complicated and slowed the situation even further: weatherization projects in buildings taller than four stories required that workers be paid commercial prevailing wage rates, which are higher than those that would otherwise be used for weatherization projects.

In Washington and elsewhere, weatherization is finally getting on track, if a bit later and perhaps a bit more expensively than some had hoped. All seems to be improving, but it’s a little premature to declare sunny days ahead. We’ll tell you more about this soon.

Keeping up with the GAO

March 8, 2010
Keeping up with the Government Accountability Office’s reports about the Recovery Act is a pretty demanding undertaking. But we’re going to try to do so on your behalf, and offer you summaries of the most important reports as they come out (as well as links to others).
The most comprehensive new report was the GAO’s major 174-page look at the Recovery Act “One Year Later”.  It gives a very clear picture of the pace at which dollars are being distributed, the vast array of oversight activities and a variety of agency specific topics (like the wage issues that have stalled the delivery of weatherization funds).
A few of its important points:

* Data quality. For individuals who have been following the fracas in the press over the last six months about data issues — like jobs reported for Congressional Districts that don’t exist, double counted jobs, incorrect dollar figures, etc. — the GAO report is surprisingly comforting. Lots of improvements were put in place for the second reporting period, which ended on December 31, 2009. New simplified job data have helped increase accuracy, along with ways to flag potential errors as data is input. (For example, the system will now stop people from proceeding if they input a Congressional District that doesn’t match their zip code.)

* Maintenance of Effort. One of the trickier issues pertaining to the Recovery Act are the “maintenance of effort” requirements, particularly in transportation.  A continuing budget crisis, coupled with legislative cuts and changes, has made it difficult for many states to certify to DOT that the stimulus money will actually be adding to previously planned spending. The Federal Highway Administration is expecting lots of states to send in revised certifications this week, according to the GAO. Whether or not states meet maintenance of effort requirements is likely to be an ongoing question.

* Capacity. As states and local governments grapple with all their responsibilities for reporting Recovery Act information, capacity questions continue to loom large. This problem will become increasingly acute as beleaguered budgets necessitate layoffs and temporary furloughs. For example: The GAO reports that capacity has been a barrier in housing agencies, causing some to bypass applying for competitive grants. This is particularly a problem for smaller agencies. Capacity issues also create obstacles for small agencies in particular in dealing with the distribution of weatherization dollars and the administrative requirements

Here are the two other GAO reports that came out last week.

Recovery Act: California’s Use of Funds and Efforts to Ensure Accountability
Recovery Act: Factors Affecting the Department of Energy’s Program Implementation

Race to the Top: A New Beginning?

March 4, 2010
There’s a pot of cash and the states can come and get it – if they follow the desired performance standards. . . . In the case of Race to the Top, “the very sweet carrot,” as  Posner puts it, has created real momentum for reform at the state level.

Around 1:00 P.M. today, the Department of Education announced that 15 states and the District of Columbia have been selected as finalists for the first installment of  “Race to the Top,” grants. This much-discussed element of the  stimulus was designed to spur innovation and performance improvement in state education systems. The finalists were picked out of 41 applicants. Those that were turned away – as well as new entrants — will have an opportunity to try again in the second round.

The finalists: Colorado, Delaware, Florida, Georgia, Illinois, Kentucky, Louisiana, Massachusetts, New York, North Carolina, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee and the District of Columbia.

The importance of Race to the Top goes a lot deeper than this set of grants. The Government Accountability Office and others who focus on performance have long been looking at ways that grants can be more performance oriented. [See the September, 2006 GAO report on “Enhancing Performance Accountability” in grant management.]

If Race to the Top is successful, it may help to usher in a new era in which competitive selection is used by the federal government in a way that could motivate states, counties or cities to focus more closely on improvements in performance outcomes.

The federal grants were scored based on 30 selection criteria. States moved forward on a number of fronts over the last year in order to make themselves more attractive candidates. According to an early January Education Week article about Race to the Top inspired reforms, the application criteria encouraged Alabama Governor Bob Riley to call for legislative action to permit charter schools. A number of other states, similarly, changed laws that limited charters.

One of the key requirements for applicants is the ability to link student achievement data to teacher evaluation. That led governors in Tennessee and Maine to push for legislative measures that would facilitate that connection. Last October, California’s Governor Arnold Schwarzenegger worked with the legislature to remove a data firewall that prohibited the use of test scores to evaluate teachers.  That barrier “would have put the state out of the running for the Race to the Top,” wrote Erik Robelen in Education Week.

Paul Posner

We talked with ever-helpful Paul Posner (left)  about this a few days ago. Now director of the Masters in Public Administration program at George Mason University, Posner had a long and distinguished career at the Government Accountability Office, which he left in 2005. He sees Race to the Top as a departure from a more punitive compliance-oriented federal approach that sparked tremendous state resistance to both the No Child Left Behind and Real ID programs. In contrast, Race to the Top didn’t impose rules or standards on states, he says, but harked back to methods of the Great Society and New Deal, using cooperative federalism and relying on the “catalytic role that grants can play.”

The idea is that there’s a pot of cash and the states can come and get it – if they follow the desired performance standards. If you don’t want the money, you don’t have to play.  In the case of Race to the Top, “the very sweet carrot,” as Posner puts it, has created real momentum for reform at the state level.

“The whole Recovery Act has regenerated interest in federal grants as a tool to promote new national policies. Race to the Top is a pull rather than a push. It has the potential to change priorities and standards over time.”

Welcome. . .

March 4, 2010
The blog that begins today in this space is our effort to help to fill in some of those blanks – and also to provide an opportunity for discussions of a variety of other interesting, stimulus-related news and observations.

There is a mammoth amount of information available about states and localities and the American Recovery and Reinvestment Act of 2009. That’s no surprise. About $280 billion (of the $862 billion total) flows to and through the states for schools, higher education, incentive grants, Medicaid, highways, mass transit, economic development and more. This is the biggest influx of unanticipated money to hit state and local budgets in the history of the Union.

The vast majority of the coverage of the stimulus act, however, has gone to detailed information about the dollars spent, including who is getting them, what’s being done with them and what kinds of controls the states have in place. The Government Accountability Office has focused on these areas, as have most of the state websites devoted to providing details about the stimulus package.

Yet, while swimming in a sea of data, there appears to be a significant hunger among people both inside and outside of state government for material about the actual outcomes of the dollars spent. Did they actually improve services? Did they permit service to remain at acceptable levels? Did they succeed in sparking innovations that will lead to long-term savings? How?

As Mike Pagano, dean of the College of Urban Planning and Public Affairs at the University of Illinois in Chicago told us, “We need to see the ‘impact’ or ‘outcomes’ of ARRA investment and not just the ‘inputs’ or ‘outputs.”

Stan Czerwinski, one of the GAO’s leading experts about the stimulus, agrees. We had a good conversation with him about this, and his major point was this. The Recovery Act has multiple dimensions, “yet it’s always about jobs, jobs, jobs. And jobs aren’t what it’s really about in a lot of cases. . . .There isn’t a lot of what we’d call outcome measurement happening yet. In some respects that’s interesting and in other respects it’s frustrating.”

Of course, there’s every reason to be sympathetic to the men and women in the federal government and the states, on this front. They’ve been assigned a mammoth task of following the money and have been, sensibly, focused on looking at oversight and accountability. Still, a key point made in a major report published by the GAO, in December, highlights the road of the future: “Reporting on Recovery Act performance results is broader than the employment-related reporting required by the act. We continue to recommend that the Director of OMB—perhaps through the Senior Management Councils—clarify what other program performance measures recipients are expected to report on to demonstrate the impact of Recovery Act funding.”

The blog that begins today in this space is our effort to help to fill in some of those blanks – and also to provide an opportunity for discussions of a variety of other interesting, stimulus-related news and observations. Please let us know what you think. This is new territory for everybody, and we all have a lot to learn from one another.