A new OMB memo regarding administrative costs has been
issued ahead of more substantive guidance due in June. But according to
state and local officials, the price for transparency and
accountability will be a complex number to figure.

The American Recovery and Reinvestment Act (ARRA) of 2009 set forth
to provide monetary aid accompanied by the most transparency and
accountability ever witnessed by the American public. The $787 billion
package has thus far seen two rounds of guidance from the Office of
Management and Budget, telling federal and state governments how to
track and report stimulus projects. And a third guidance will be
forthcoming this June.

However, incremental steps have trickled from the federal government
between major updates to OMB’s guidance to help deal with the most
urgent of emerging issues.

On May 11, OMB Director Peter Orszag issued a memorandum
(.pdf) concerning an issue getting a lot of attention from local
leaders and press from around the country. Administrative costs for
tracking and reporting stimulus dollars from the Recovery Act were
mounting, but the federal government had not yet specified how states
were supposed to pay for such implementation efforts. During a Governing online forum sponsored by SAP, much of the conversation was driven by this and forthcoming OMB guidance.

“One of the big issues facing local leaders is tracking and
reporting on Recovery Act funds and transparency in general,” said
Scott Pattison, executive director at the National Association of State
Budget Officers.

According to the May 11 memo, states are encouraged “to utilize
existing flexibilities to recover administrative costs related to
carrying out Recovery Act programs and activities in a more timely
manner.” Specifically, the memo suggests state and local governments
utilize provisions under OMB Circular A-87 where states can recoup
Recovery Act administrative costs through the State-wide Cost
Allocation Plan (SWCAP). The costs can be included as “centralized
services” or as “billed services,” according to the memo.

“Both options provide flexibility for states to recoup the
administrative costs related to Recovery Act activities and should be
read through carefully,” Mr. Pattison urged.

The options will make it possible for states to get money “more
quickly than would be permitted under the traditional SWCAP process…and
enable States to obtain the resources necessary for enhancing their
administrative capacity to meet Recovery Act responsibilities,” the
memo concludes.

Also part of the forum was Laura Chick, Inspector General of Federal
Recovery Act Dollars for the State of California and James Creedon,
Secretary at the Department of General Services and ARRA Chief
Implementation Officer for Pennsylvania. Ms. Chick said she was
watching two bills at the federal level, which will provide money in
not just administrative costs, but more specifically for oversight
costs. “We need dollars specific for oversight to work,” she said.

Ms. Chick also spoke about the need for interdependence and
cooperation when mitigating the risk of Recovery Act misuse and waste.
“All of us at the state and local levels really need to join hands on
this endeavor and work with OMB, GAO, federal inspectors general, US
Attorneys, and district attorneys.”

In another piece of the transparency puzzle, May 17 marked the
ninetieth day since the signing of the Recovery Act. This is important
because ninety days after the signing of the Recovery Act federal
agencies had to submit their “plan of attack” for spending stimulus
dollars and those reports were made available on Recovery.gov.
Twenty-eight agencies receiving Recovery funds have submitted plans to
Recovery.gov, including broad goals, information on contract
competition and contract types, and details on how the agency will
mitigate risk associated with accountability. To see those plans, click here.

Those accountability officers and inspectors general at the front
line of the Recovery Act know they sit in a position ripe to change
government for the better, but they also know it will be difficult.

California Inspector General Chick said, “I see this as an enormous
mandate to rev up the economy, but as a huge opportunity to show the
public that we, Government, with a big ‘G’, can do things right. But I
say this with my heart in my throat because I’ve been educated by
experts who are telling me to count on 7 - 10 percent fraud occuring in
this pot of money.”

To read the original article, click here.