Recovery Blog

Watching over Sandy

Posted in From the Recovery Board Chair by on February 13, 2013

The Recovery Board was scheduled to expire on September 30 under the Recovery Act. However, a $50.5 billion emergency aid plan for victims of Hurricane Sandy extends the life of the Board and directs the panel to keep a close eye on how the funds are used.  The plan, adopted by Congress, was signed by the President in late January.

“Through September 30, 2015,’’ the law says, the Recovery Board “shall develop and use information technology resources and oversight mechanisms to detect and remediate waste, fraud, and abuse’’ in the aid program. Earlier in January, Congress approved a $9.7 billion aid bill, bringing total Sandy assistance to $60.2 billion.

The measure directs the Recovery Board to coordinate oversight with the Office of Management and Budget, along with the Inspectors General and heads of each federal agency that receives Sandy money. The Board also is required to submit quarterly reports to congressional appropriations committees with respect to its oversight activities.

In short, Congress clearly wants to ensure that aid funds are not misspent or diverted improperly. The money is designed to help rebuild the lives of the victims of superstorm Sandy, which invaded the East Coast and left a path of devastation in late October. New Jersey and the New York City area were especially hard hit.

The Recovery program and the Board, its oversight arm, were established in February 2009 as the financial crisis was in full swing. The Board created the Recovery Operations Center, an analysis center designed with fraud prevention and detection in mind. Analysts use advanced analytics to search massive amounts of data, looking for early warning signs of trouble linked to recipients of Recovery funds. This data includes criminal convictions, lawsuits, tax liens, bankruptcies, risky financial deals, and other telltale signs of problems. When a problem is spotted, analysts review the issue and forward their information to the relevant Inspector General for additional inquiry.

The ROC, in coordination with the Inspector General community, will serve as the focal point of our efforts to monitor Hurricane Sandy aid. In overseeing Sandy funding, the Board is expecting to support state auditors, state Attorneys General, and appropriate law enforcement task forces around the country.

– Kathleen S. Tighe, Chair, Recovery Board

Death, Taxes, and Inconsistent Data

Posted in From the Recovery Board Chair by on January 9, 2013

Benjamin Franklin once wrote that nothing can be said to be certain “except death and taxes.’’

If Ben were still around, he might now say: “except death, taxes, and inconsistent federal data standards.’’

For nearly a half century, the federal government has failed to develop a data standard system that would permit data sharing among agencies, save lots of money, and vastly improve the quality of information, including details on how the government spends your money. In nearly four years on the job, the Recovery Board and its staff have learned a lot—but nothing more important than the need for consistent data standards. Consistency would lead to better data quality, government-wide, a prospect that would ensure improved oversight of taxpayer dollars.

Indeed, the Board, the Government Accountability Office, and the Council of the Inspectors General on Integrity and Efficiency will convene a data forum on Wednesday, January 16, at GAO headquarters in Washington. The focus will be on the use of data analytics for oversight and law enforcement purposes.  The subjects include: Data Sources that can be used to prevent and detect fraud; Access to and Sharing of Data; and Technology Tools.

Data quality has always been an issue of paramount importance to the Board. In the early days of the Recovery program, the Office of Management and Budget issued guidelines defining the standard data elements that all recipients of stimulus funds had to report. Those guidelines allowed for data consistency and much better oversight. The Board, meanwhile, used only one electronic system——to collect the spending data from tens of thousands of recipients.

The results: Since October 2009, when the Board first began posting data from recipients, we have overseen 13 reporting periods without any major blunders. Our data quality, except for a glitch here or there, has been excellent.

There’s nothing mysterious about standards in our everyday lives. Without them, consumers and sellers of products would have a tough time doing business. Look around, you see them everywhere:

  • Every gas station has the same nozzles that fit every vehicle’s tank.
  • How about the four C’s of diamonds—cut, clarity, color, and carat weight? Each category has a strict set of standards by which diamonds are measured and rated. That’s how value is determined.
  • You love baseball? Standards are essential—baseballs are manufactured to specific standards. The same is true for bats.

Thus, it’s no surprise that consistent standards for government data would be a big plus. The Government Accountability and Transparency Board, a key ingredient in the President’s campaign against wasteful spending, summarized the issue of inconsistent data standards nicely in a report in December 2011.  The panel  said:

“The countless award identification (award ID) systems…make the task of reviewing and tracking spending data challenging even for the most expert investigator, much less the everyday taxpayer. Introducing consistency into the award process will help better reconcile spending information from multiple sources and allow for more effective analysis and oversight.’’

The issue of data standards in the federal government has been around since at least 1965 when President Lyndon B. Johnson issued a report to Congress addressing the government’s management of automatic data processing.  Several years later—in May 1974, to be precise–the General Accounting Office (now known as the Government Accountability Office) wrote: “Standardization could help reduce high costs of federal computer operations by eliminating unnecessary duplication and incompatibilities in collecting, processing, and disseminating data.’’ Nothing much has happened in the intervening years, however.

It’s about time to do something. In our  judgment, a good beginning would be to implement, government-wide, a universal award ID number for all contracts, grants, and loans. A universal ID would make it much easier to track and reconcile funds awarded to recipients of federal funds.

It would also make a lot of sense if the government developed a centralized system for collecting data for all government awards—something like, the website we created for collecting Recovery data.

The ideas are out there. What is needed now is action.

   –Kathleen S. Tighe, Chair, Recovery Board, and Inspector General, Department of Education

How 22 School Districts Used Recovery Funds

Posted in From the Recovery Board Chair by on November 14, 2012

The recession of 2008 dealt a severe blow to elementary and secondary school programs across the country. Declining tax revenues forced state and local governments to slash their assistance to school districts, which, in turn, cut their budgets, eliminated jobs, and scaled back vital services and activities.

A grim picture, to be sure, but one Congress sought to brighten when it adopted the American Recovery and Reinvestment Act of 2009. The Recovery Act included $97 billion for existing and new education-related grant programs. In August 2010, lawmakers adopted the Education Jobs Funds program, or Ed Jobs, providing another $10 billion in assistance to fund education jobs.

As the Inspector General for the U.S. Department of Education, which provided the funding, I wanted some answers: How much did that infusion of funds help beleaguered schools? Were many more jobs created, including teaching positions? I knew we did not have the resources to cover all 13,000 school districts across the country. By necessity, we had to be selective—an approach that would give taxpayers a snapshot of the impact of the spending programs in 22 school districts, big and small, across 21 states and the District of Columbia.

The 22 school districts ranged in size from about 1,000,000 students in New York City to about 13,000 students in Rapid City, South Dakota. To varying degrees, they all were affected by the economic downturn.  Unemployment rates in the counties in which the schools districts are located ranged from a high of 12.4 percent to a low of 4.7 percent.  Officials in about half of the districts told our auditors that the recession also severely affected housing market conditions and consumer-based taxes.

Before the recession, according to state and district officials, most states had been increasing their education funding and local financial support had been stable. Once the economic calamity grabbed hold, however, more than two-thirds of the school districts experienced reduced funding from state or local sources.

The review performed by our audit office covered about $4.4 billion in stimulus funds awarded to the 22 districts under three grant programs for elementary and secondary schools along with the Ed Jobs  program. Here is what we found:

  • To help drive the economic recovery and strengthen education resources, the Department of Education directed educators to spend Recovery Act and Ed Jobs funds quickly and wisely. The 22 school districts generally made quick use of funds, including amounts designated for educationally disadvantaged students and students with disabilities.  Some districts, however, held back money to maintain existing staffing levels into the future.
  • Education Department guidance gave school districts the flexibility to use Recovery Act money provided under the federal Education Stabilization Fund (ESF) on a broad range of education-related activities. But in the case of the 22 districts, many officials believed they had little or no discretion on how to use the funds; therefore, they used the money to offset cuts in state or local funding. By comparison, the districts often used other education funds made available under the Recovery Act–including disabilities grant programs–to advance educational reforms such as hiring instructional coaches to improve teacher and student performance.
  • The Recovery Act encouraged investment in infrastructure that would provide long-term economic benefits. Of the 22 districts reviewed, however, only Virginia Beach, VA, used ESF funds along with local money and charter bonds to partly fund construction of a new energy-efficient building to replace an old elementary school.  There were several reasons other districts chose not to fund construction projects, probably most importantly the need to use ESF funds to support school budgets.
  • To avoid so-called funding cliffs, many districts used some stimulus funds for services and activities requiring only one-time or short-term outlays.  A funding cliff occurs when a district is unable to sustain activities or services after Recovery Act funds are no longer available. Unless financial help came from state or local governments, most district officials said they expected to face moderate to significant funding cliffs after stimulus funds ran out.
  • For the three Recovery Act grant programs included in this review, most districts spent all of their funds within the grant period designated by the Education Department.  Officials in five districts reported, however, that they had $1.7 million in disabilities funds they had not spent, most from the Newark, NJ, district ($1.5 million).
  • The jobs picture was fuzzy, to put it mildly. School officials reported that increased spending had a positive impact, supporting teaching and other personnel jobs in their districts. Nonetheless, our auditors could not establish with any certainty the number of jobs funded in the districts. One reason: The number of jobs reported publicly by the districts under the Recovery program did not always represent new or specific jobs. Some districts used stimulus money to replace other funds that had previously supported personnel costs.

In the end, it seems clear that the stimulus and Ed Jobs funding provided critical help to the hard-pressed school districts we reviewed. Beyond that finding, measuring results on issues not related to personnel, such as student academic achievement and graduate rates, proved elusive. One example should suffice: Officials in several districts said they used multiple funding sources to finance activities aimed at improving student academic achievement. Given that context, the officials said they did not attempt to measure results tied to their use of stimulus funds.

– Kathleen S. Tighe, Chair, Recovery Board, and Inspector General, Department of Education

Working Together Pays Off

Posted in From the Recovery Board Chair by on July 16, 2012

This is a story about a small amount of money but it’s one that illustrates why government works best when people pull together.

This past February, the hotline at the Office of Inspector General, Department of Education, received a complaint about the overpayment of Recovery Act funds to eight special education employees from a school district in the state of Washington. The complainant said that the school district discovered the overpayments and directed the employees to pay back the funds. The problem:  The repayments were credited to the district’s general fund, not to the Recovery program.

Once alerted by the Education IG’s office, agency officials moved quickly to correct the situation. They notified Washington state education officials whose staff then conducted an on-site review of the district’s books. As it turned out, the hotline complainant was right on the money. In June, the district acknowledged an over claim from Recovery funds of a little more than $20,000. State and district officials agreed to remit the funds to the federal Education Department.

A little story, to be sure, but one that shows the government’s Recovery oversight program is working well. A hotline complaint was filed, federal education officials took swift action, and local and state officials helped solve the problem.  Taxpayers benefit when government agencies at all levels work together. It’s that simple.

Kathleen S. Tighe, Chair, Recovery Board, and Inspector General, Department of Education

Training Equals Taxpayer Savings

Posted in From the Recovery Board Chair by on March 22, 2012

During the three-year history of the $840 billion economic stimulus program, the Recovery Board and its oversight partners in the Inspector General community have trained nearly 150,000 people in federal, state, and local governments. Participants learn about contracts and grant management, the requirements of the Recovery Act, and the elements of fraud both in the civil and criminal areas.

This rigorous effort to keep close tabs on the Recovery program has paid off, as demonstrated in a recent investigation at the Department of Education where I serve as the Inspector General.  Because of the quick thinking of an Education grant officer who went through an IG training course, a crook won’t be feasting on taxpayer dollars; instead, he’ll be dining on prison food for the next 30 months.

Take a step back to late 2009. William Hamel, the Assistant Inspector General for Investigation, and Marta Erceg, the Counsel to the Inspector General, put their heads together and developed a fraud awareness training program for more than 500 grant officers in the Education Department. The training, offered six different times to ensure all grant officers would be able to attend, focused on the elements of civil and criminal fraud, red flags and vulnerabilities in grant programs, and regulations on how federal funds can be spent.

“We decided we wanted people to have a better understanding of what constitutes fraud,’’ Hamel says. “About two or three days after one of the sessions, I got a call from a grant officer who said, ‘I really don’t know if there is anything there, but I just had the training session and I want to tell you about something that doesn’t look right.’”

Reviewing a purported grant award notification, the grant officer noticed that the paperwork contained a program number that did not exist in federal government files.  According to Hamel, the grant officer suspected that the paperwork was fraudulent and recommended a “further investigation.’’

As it turned out, the information provided by the grant officer led investigators to uncover what can only be described as a bizarre scheme to defraud the federal government.  In the end, the investigation undertaken by Education IG investigators in New York saved taxpayers at least $3.4 million.

The case involved a man named Robert Friedland, who was an instructor with the Prep for Success program administered by the City University of New York Research Foundation. The program prepares low-income high school students for college. According to investigators, Friedland forged a grant award notification indicating that that the Department of Education had awarded approximately $3.4 million to him.

The Education investigation also discovered that the ever creative Friedland had earlier falsified a document to get his job as an instructor. When he applied for the job in 2008, investigators said, the university’s foundation did a background check revealing he had previously been convicted of a crime. However, Friedland presented the foundation with a fraudulent court order that claimed he had been the victim of identity theft.

Friedland was convicted on three counts of fraud in June 2011. In mid-March, a federal judge in New York sentenced him to 30 months in prison.

“I think training heightens the awareness and acuity of the people we rely on to serve as our fiduciaries for the United States government,’’ Hamel says. “We train thousands of financial aid administrators every year and we get a lot of referrals from training. The Friedland case helps demonstrate the validity of our training program.’’

Kathleen S. Tighe, Chair, Recovery Board

The Big City Take on Federal Spending

Posted in From the Recovery Board Chair by on March 12, 2012

New Yorkers aren’t known for sitting around and waiting for things to happen.

So, in November 2009, feeling more feedback was needed from Washington on the new Recovery program, New York City’s Chief Recovery Officer began contacting other major cities to get a sense of what they were experiencing.  They had pretty much the same complaints about poor communication, says Michelle Light, the NYC Recovery Chief.

From those initial contacts was born the ARRA Big City Network, which includes almost two dozen cities that have received funds under the American Recovery and Reinvestment Act of 2009, otherwise known as ARRA. The cities include Atlanta, Boston, Jacksonville, FL, Milwaukee, Portland, Los Angeles, Seattle, and Phoenix.

“We were filling a void. In the early stages of the program, it wasn’t clear to us what the Recovery Board was responsible for, what OMB [the Office of Management and Budget] was responsible for, and what the White House was responsible for,’’ says Ms. Light. “We mobilized so we could get better feedback.’’

That dedication paid dividends, as is quite clear from a survey of its members completed late last year by the ARRA Big City Network. The survey showed that feedback from Washington had improved dramatically during the three-year history of the program.  According to the survey, 66 percent of the respondents said that federal agencies had “often’’ communicated with them. Another 23.29 per cent described that communication as “sometimes.’’

The ARRA Big City Network’s survey was aimed at providing insights to the Government Accountability and Transparency Board. The so-called GAT Board, of which I am a member, was created last year by President Obama to improve transparency and accountability in federal spending. The Board issued its report to the President in December.

At a fundamental level, the cities were describing the lessons they had learned from participating in the $840 billion Recovery program.  New York City, for instance, has plenty of experience to draw on — the city has received direct Recovery funding of about $7 billion.

Describing their experience submitting spending reports under the Recovery program, nearly 62 percent of the respondents thought the system brought about “greater transparency.’’ Some 40 percent thought the reporting system led to “more accountability in the way funds are spent.’’

Half of the respondents thought the program guidance from Washington was “vague or conflicting,’’ while nearly half believed that reporting required “duplicative paperwork.’’

Looking to the future, respondents were asked about how often reports should be filed if a reporting system similar to the Recovery program were implemented for all government spending. The answer: 75 percent believed the reports should be submitted quarterly — the same as ARRA reporting.

However, even with quarterly reporting, says Ms. Light, “there’s always a level of stress.’’ She says that Congress, in creating the Recovery program, insisted on recipients submitting reports within 10 days of the end of a calendar quarter — “a crushing timeframe.’’ She argues that for future spending submissions, it would better to give recipients a month to submit their reports. “It’s not easy,’’ she says, “to pull all of this together when you have some of our agencies with 40 to 50 local partners and vendors.’’

Respondents, 68 percent of them, also thought it was important to “standardize and consolidate reporting documents’’ to avoid excessive and redundant paperwork. “The redundancy piece was something that recipients really struggled with,’’ Ms. Light says.  Cities, she said, would fill out a Recovery spending report, then would be required to submit the same information to the agency that funded the project.​​​

“Part of our hope and intention with the survey is to be able to show we are willing partners in the process and totally understand the importance of accountability and transparency,’’ she says. “We need to have a continual dialogue with the federal government, which also needs to keep in mind the costs and burdens involved in the reporting process.’’

                                 ​                                     –Kathleen S. Tighe, Chair, Recovery Board                                                                                                                                                                                          

Working Together Pays Rich Dividends

Posted in From the Recovery Board Chair by on February 22, 2012

What makes for good government?

Building partnerships is certainly a key. Consider the work the Recovery Board has done with its partners at the federal and state levels.

The other day, at a national leadership conference in Washington sponsored by the Association of Government Accountants, I spoke about how cooperation among the Recovery Board, other federal agencies and state officials had produced a more efficient and effective oversight process for the $840 billion Recovery program.

That cooperation is no accident. The Recovery Act, passed in February 2009, encourages states to work closely with the federal government. The law requires the Governor of each state to certify that Recovery funds would be spent properly, a requirement that makes Governors key players in the oversight process.

From the beginning, the Board has focused on assisting state governments. We set up an office that serves as a direct contact for state and local oversight officials, along with Governors and state program agencies. The Board also created a robust “help desk’’ for state governments and other recipients who must file quarterly reports with, the website used to collect spending data.

The federal Inspector General community also works closely with state oversight agencies. As the Inspector General of the Department of Education, I can speak first-hand about this subject. At Education, we focused on ensuring accountability at the state level and local levels. My office:

  • Worked closely with the U.S. Government Accountability Office, the congressional watchdog agency, to determine which states and local education agencies would be reviewed.
  • Shared audit guidelines with state and local auditors who had responsibility for overseeing their Recovery programs.
  • Developed a strong outreach program allowing for continuing contacts by our auditors and investigators at the state and local levels.

In the end, cooperation throughout all levels of government has paid nice dividends: There’s been a lot less fraud and waste in the Recovery program than was initially anticipated.

Kathleen S. Tighe, Chair, Recovery Board


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