ARRA Stimulates State Transparency, Highlights Grant Management Flaws

Inconsistent grant management practices in state governments could hurt chances for states to win optimal amount of federal funding.

by / January 28, 2010

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

performance in four key areas:

  • Outcome Reporting, Scorecarding and Enhanced Transparency: States should adopt and apply these strategies as a standard part of the government process.
  • Econometric Forecasting -- Statewide and Localized: Using econometric modeling, states can figure out the impact of policy choices and address the demand for services.
  • Centralized Grants Management: States should develop a core competency responsible for handling grant applications and tracking funding received.
  • Web-Based Reporting and Tracking Options: States should create a way to gather and integrate data from various sources into a central database that provides reports, analysis and channels for citizen interaction.

By using these strategies as a springboard, Howard said, states can move beyond ARRA reporting compliance to provide long-term value. But states cannot successfully adopt this model, he added, without the right tools.

Wanted: Resources

The push for technology coincides with the call for transparency, but states need to know how to utilize the tools and resources at hand. According to the NASCAT survey, 64 percent of the states did not use technology to manage and report on grants received.

Was the technology not available or did the people tracking the grants not know how to use it? Either way, the number underscores the underuse of enabling technology, which could be a problem considering the pivotal role technology plays in transparency.

For example, governments can use business intelligence software to reduce the time it takes to gather, analyze and deliver presently scattered data. Users can view that public information online. Layered with GIS technologies, the data can be used to create maps, charts and other applications, as seen with innovative contests like Apps for Democracy.

But other than money and technology, building an open platform also requires dedicated people who know what they're doing. Most states have created ARRA reporting offices, but Howard sees this as a possibility for public-private partnerships, where a private vendor could step in and handle the reporting duties so public employees can focus on advancing the state's goals and programs.

"Gathering data and getting it out on the Web for reporting is a hard process," Howard said. "Most states are putting significant resources to actually just doing reporting."

Now that ARRA has opened the door to numerous opportunities and influenced some states to disclose more data, state governments won't be able to simply stop once the stimulus funding season ends.

"The genie's out of the bottle," Howard said. "One year and a half later when ARRA funding is done, they're not going to be able to say 'OK, we're not reporting anymore.'"


Russell Nichols Staff Writer
Platforms & Programs