The good news is that the American Recovery and Reinvestment Act (ARRA) of 2009 has pushed some state governments to be more transparent.

The bad news is that the $787 billion ARRA funding window will eventually close and, without consistent, centralized grant management practices, some states might not be capitalizing on the free money, according to ARRA Presents Strategic Opportunities for State Governments, an Accenture report.

For a long time, citizens across the country have been clamoring for governments on all levels to be more open. But data reporting costs money and takes time, and state and local governments didn't have the resources, said Mark Howard, ARRA program director for Accenture, an international consulting and technology services company.

"Without the mandate, it becomes optional," Howard said. "If it's optional, you can find higher priorities."

When it comes to ARRA funding, states don't have that option; federal requirements force states to report how much money is received and show where the money goes in order to prevent fraud and abuse. For some states, such as Massachusetts, this process has been a catalyst to improve overall performance reporting, looking beyond the number of jobs created to shine the spotlight on other areas such as transportation, education and health.

"It's given them an impetus to do more," Howard said.

This extensive reporting approach, he said, should last longer than the limited-time ARRA opportunities. But state governments need to make adjustments to keep the transparency momentum going, he added, and it might start with improving how states manage stimulus grants.

Wanted: Collaboration

Last summer, Accenture and the National Association of State Auditors, Comptrollers and Treasurers (NASCAT) conducted a survey of state comptrollers to find out how they were managing federal grants. The online survey -- 2009 State Comptrollers Survey: Are States Ready to Manage Federal Grant Funds? -- consisted of 32 multiple-choice and open-ended questions; 24 states responded. The results revealed crucial holes in the grant management process on the state level.

For instance, more than 90 percent of state comptrollers reported that individual state agencies indentified the federal grant opportunities with no centralized support. The idea was that each agency would know best how much funding was needed and why. But with a more collaborative approach, Howard said, states could have developed stronger proposals and possibly received more money.

"Because each agency will go after grants on their own, they may not be getting the best thinking," Howard said. "If you're not taking advantage of all of the resources to make the best proposal, you're risking not getting grants awarded."

For state agencies that won grants, the process worked slightly differently. Federal funds received by states are centrally managed, tracked and reported. But some states still fail to deliver sufficient reports on the funding results, Howard said, a critical step that could impact a state's chances for getting more money in the future.

"If they can't report on results delivered," he said, "when the next grant comes around, they may not win it."

Wanted: Best Practices

For state governments, in many ways, stimulus grant management is brand-new territory. For that reason, as the Accenture report shows, "there are no uniform best practices among states for managing the grants life cycle."

States must account for every dollar of ARRA money spent, but without a standard of best practices, governments end up spending extra time and energy figuring out how to avoid the funding cliff. According to the Strategic Opportunities report, states can use ARRA as a model for boosting

Russell Nichols  |  Staff Writer