The Corner

Stimulus Transparency Update

Last month, I wrote about the limitations to transparency of the Recovery.Gov website. As the administration sets out to spend an estimated $500 billion from the stimulus package (not including the tax rebates), President Obama has promised an unprecedented level of transparency. But originally, the guidelines that the administration produced suggested that money would not be traced very far. Specifically, they said:

Reporting requirements only apply to the prime non-Federal recipients of Federal funding, and the subawards (i.e., subgrants, subcontracts, etc.) made by these prime recipients. They do not require each subsequent subrecipient to also report. For instance, a grant could be given from the Federal government to State A, which then gives a subgrant to City B (within State A), which hires a contractor to construct a bridge, which then hires a subcontractor to supply the concrete. In this case, State A is the prime recipient, and would be required to report the subgrant to City B. However, City B does not have any specific reporting obligations, nor does the contractor or subcontractor for the purposes of reporting for the Recovery.gov website.

The 175-page April 3 guidance that the administration subsequently produced reiterates that only the recipient and sub-recipient are subject to disclosure, with a few added details, some of which do appear to improve reporting requirements:

o  For the approximate $85 billion in competitive grant awards, information will be available from the local organization that is the primary recipient of the award, including any sub-recipients that receive funds.  

o  For the approximate $75 billion in Education grants, information will be available from the State on how they are using the funding, including the local school districts receiving funds.

o  For the approximate $8 billion in Housing funds, information will be available from the local housing authority on how they are using the funding, including reporting on what entities, if any, they distribute funding to.

o  For the approximately $37 billion in highway and transit formula funding, grant recipients will be required to report on contractors they hire for various projects.

In limited circumstances, recovery funds will go from a Federal agency to a State, and then to a local government or other local organization. In this case, the current reporting model will not track funds to subsequent recipients beyond these local governments or other organizations.

The last bit reinforces the impression that many potentially inappropriate uses of the money will remain undetectable, particularly when it comes to municipal corruption. No one wants Tony Rezko or Patrick Daley to end up with all of the money.

The new guideline also promises stronger reporting requirements in the future. But given that the stimulus money is supposed to be spent quickly, it is likely that most of it will be out the door by the time the public knows much. No reporting is required by law until October 10, and after that, reporting occurs on a quarterly basis.

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