Good News, Bad News
In its short history, the economic stimulus program has been critiqued by Congress, the Government Accountability Office, and various watchdog groups. Now, an independent team of researchers from Harvard University has produced an assessment of the Recovery Act’s impact on government transparency. The lengthy report, done for the IBM Center for the Business of Government, contains both good and bad news for those involved in overseeing the Recovery program, including the Recovery Board.
The study is the work of Francisca M. Rojas, the research director at Harvard University’s Transparency Policy Project. The Recovery program requires recipients of $276 billion in contracts, grants, and loans to submit spending reports that are posted publicly on Recovery.gov. Rojas and her team examined that transparency effort “to understand what the disclosure of spending data accomplished, who used the available information, and how it was used.’’ The team focused on the Recovery Act’s transparency requirements at the state level, specifically Maryland, Massachusetts, Colorado, Mississippi, Texas, and Washington.
“Overall, the most significant effect of Recovery Act spending transparency,’’ the Rojas team wrote, “was an improved capacity by state officials to manage the disbursement of federal funds.’’ The team found, among other conclusions:
- State compliance with federal spending disclosures requirements was very high. States exceeded the law’s transparency requirements in building comprehensive websites to post data.
- Transparency requirements served as a deterrent, contributing to low rates of fraud, waste, and abuse of taxpayer funds.
- The quality and timeliness of transparency data improved over time.
- Spending transparency became institutionalized in some states and at the federal level. Congress and the White House both have proposed Recovery-style transparency to track spending for all federal contracts, grants, and loans.
Rojas’ team, however, pointed to one big problem—identifying how many jobs have been actually created or saved under the Recovery program. “…The rate of spending turned out to be more straightforward than tracking the number of jobs created or saved,’’ the report says. “Job metrics attributable to Recovery Act funds had to be created without the benefit of precedent—always problematic in new transparency systems.’’
The report said the initial methods used by the Office of Management and Budget to estimate jobs “made it difficult to accurately capture employment impact…’’ Early in the program, the report says, OMB changed those procedures so that jobs were estimated only on a quarterly basis, meaning that “Recovery Act-funded jobs could not be aggregated across quarters due to the risk of double counting.’’
The conclusion: “Even though employment outcomes were critical to gauging the ongoing impacts of the Recovery Act, doing so through the disclosure system was almost doomed to fail because of the complexity of measuring these effects.’’
The Recovery Board did not escape criticism. The reports notes that the issue of data quality became “a significant controversy’’ during the first reporting period after some recipients entered non-existent or otherwise wrong congressional districts in their reports. The “phantom’’ congressional district controversy became a big headache for the Board, which had posted the incorrect information from recipients on Recovery.gov. We later corrected the situation, but the Rojas team’s report says the damage was done: “This early experience with reporting errors compromised the credibility of the data,’’ the report concludes. “Unreliable data initially frustrated journalists and advocates trying to understand the impacts of Recovery Act spending.’’
Still, the report leaves no doubt that transparency in government spending was greatly improved by the Recovery program. Bottom line: “Federal transparency requirements created a ripple effect of voluntary transparency efforts….All states and many state agencies created their own websites for spending disclosure. Journalists and advocacy groups built multiple online outlets to make it easier for the public to access spending information. Further, rates of fraud, waste, and abuse of Recovery Act funds were reported to be lower than expected for federal programs.’’
– Michael Wood, Executive Director, Recovery Board