Summary
This is the second of two reports on the leveraging of federal funds in housing and community and economic development programs. Leveraging involves using a source of funds to attract other funds or combining multiple sources of funds. This report examines (1) the leverage measures and the transparency of the data and methods used to calculate them, and (2) the relevance of such measures in assessing performance that the Department of Housing and Urban Development (HUD) and the Department of the Treasury (Treasury) reported for six selected programs. To complete this work, GAO reviewed agency policies and reports, interviewed officials, and analyzed agency data.
The leverage measures (such as ratios) HUD and Treasury reported for the selected programs in performance, budget, and other documents lacked transparency because the agencies generally did not disclose the limitations of the data or the methods used to calculate them. Based on its review of available leveraging data and interviews with HUD and Treasury officials, GAO found that the leverage measures the agencies reported for the selected programs were based on incomplete data and thus did not capture the actual extent of leveraging in the programs. GAO also found that while the agencies generally reported measures that described the ratio of all other funds (federal, state, local, and private funds) to program funds, alternative measures that described the total federal investment or total private investment in a program provided considerably different results--also potentially of value to decision makers--about the extent of leveraging in a program. GAO regularly has reported that clearly communicating data limitations and their potential impact may foster appropriate use of data; however, no agency-specific or governmentwide guidance directs what agencies should disclose about the leverage measures they report for the selected programs. Consequently, absent specific information on how these measures were calculated and their limitations, decision makers would not have sufficient information to understand their meaning and determine how they could and should be used in performance assessment, budgeting, and other contexts. Leverage measures can provide basic information about the programs GAO reviewed; however, their relevance in assessing the performance of these programs varies considerably. For all of the programs GAO reviewed, leverage measures can describe inputs, or the resources used to support program activities, and may be useful for conveying basic financial information. To the extent that leveraging is a goal or expected activity of a program (as in the three Treasury programs), leverage measures generally can describe program outputs, or the products or services delivered (such as total leveraged funds), and may be used along with other performance indicators to assess the efficiency and effectiveness of a program in meeting its goals. In cases where leveraging is not clearly and appropriately linked to program goals and activities (as in the three HUD programs), use of such measures to describe program outputs could be misleading and result in adverse consequences. Although leveraging had limited relevance to the goals and activities of the selected HUD programs, GAO found that the Office of Management and Budget (OMB) and the agency often cited leverage measures for the programs in performance- and budget-related reviews and documents. Their continued use of leverage measures in these contexts could unnecessarily encourage HUD to place more importance on leveraging than meeting the stated goals of the selected programs.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
Team:
Phone:
William B. Shear
Government Accountability Office: Financial Markets and Community Investment
(202) 512-4325
Recommendations for Executive Action
Recommendation: To ensure that leverage measures provide accurate, useful, and relevant information to Congress and others, the Secretaries of HUD and the Treasury should consider disclosing the following when they publish such measures for the programs included in our review: Presentation of leverage measures should be accompanied by information about the completeness and accuracy of the data and the method(s) used to calculate the measures (for example, with leverage ratios, information on what sources of funds were compared, such as private funds to public funds or nonfederal funds to federal funds).
Agency Affected: Department of Housing and Urban Development
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Agency Affected: Department of the Treasury
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: To ensure that leverage measures provide accurate, useful, and relevant information to Congress and others, the Secretaries of HUD and the Treasury should consider disclosing the following when they publish such measures for the programs included in our review: Presentation of leverage measures should be accompanied by a discussion of the relevance of the measure in assessing the program's performance. For example, the agencies should discuss the extent to which leverage measures are linked to program goals and core activities.
Agency Affected: Department of Housing and Urban Development
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Agency Affected: Department of the Treasury
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Director of OMB should provide guidance to help agencies determine how to calculate, describe, and use leverage measures in a manner consistent with the programs' design.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Director of OMB should re-evaluate the use of leverage measures and disclose their relevance to program goals and activities in future Program Assessment Rating Tool or other performance reviews of the selected programs.
Agency Affected: Executive Office of the President: Office of Management and Budget
Status: In process
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
