Rural Development:

New Approach to Empowering Communities Needs Refinement

RCED-97-75: Published: Mar 31, 1997. Publicly Released: Apr 16, 1997.

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Pursuant to a congressional request, GAO reviewed selected aspects of the Department of Agriculture's (USDA) rural Empowerment Zone/Enterprise Community (EZ/EC) Program, focusing on: (1) the federal funding levels of the rural EZ/EC program over the 10-year life of the program; (2) the status of the implementation of the program; (3) the difficulties that the communities have encountered in implementing their plans; and (4) USDA's oversight of the program.

GAO noted that: (1) it estimates that federal funding for the rural EZ/EC program will total more than $1 billion over the 10-year life of the program; (2) this amount includes the $208 million in EZ/EC funds from the Social Services Block Grant (SSBG) program and an estimated $428 million from tax incentives; (3) estimates for direct funding from federal, state, and local programs as well as private sources are not generally available; (4) however, one federal agency, USDA, reports that it plans to provide about $246 million to the rural EZs and ECs over the first 4 years alone and that its funding for the 10-year life of the program could reasonably be expected to reach $600 million; (5) the status of the communities' implementation of the EZ/EC program varies; (6) all 33 rural EZs and ECs have established the basic organizational structures and procedures necessary to implement their strategic plans; (7) in terms of implementing the projects contained in these plans, such as day care services, emergency 911 services, and job training, some communities have made considerable progress and some have made very little; (8) the rural EZs and ECs have experienced a number of difficulties that have slowed their initial efforts, continue to impede their progress, or both; (9) these difficulties include the short time frames provided for applying to the program and the initial misinformation provided by officials at USDA headquarters about the program's basic operations; (10) while some of these difficulties have been or are in the process of being resolved, two issues continue to be of concern; (11) these issues are a lack of clarity about which federal regulations are applicable to the construction projects funded by EZ/EC Social Services Block Grants, and the conflict between the verbal guidance and the written guidance that the Department of Health and Human Services (HHS) has provided to the states on their responsibilities for ensuring that funds are reasonably and prudently spent; (12) under the EZ/EC program, USDA is responsible for overseeing the progress of the rural EZs and ECs and USDA is to accomplish this oversight through reviews of the periodic reports submitted by the EZs and ECs and by site visits conducted by USDA field personnel, known as EZ/EC state coordinators; (13) however, USDA cannot adequately fulfill its oversight responsibilities because the EZs, the ECs, and the EZ/EC state coordinators do not provide USDA with complete and systematic progress reports; and (14) consequently, USDA lacks the basic management information for identifying problem areas.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To reduce confusion about the program's guidance on the uses of and financial controls over the EZ/EC SSBG funds, the Secretary of Health and Human Services should direct the Assistant Secretary for Planning and Evaluation to clarify which construction-related standards the EZs and ECs should follow in using the EZ/EC SSBG funds.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: HHS has taken several actions that it believes will be responsive to this recommendation, including the issuance of two information memoranda to rural EZ/EC lead entities.

    Recommendation: To reduce confusion about the program's guidance on the uses of and financial controls over the EZ/EC SSBG funds, the Secretary of Health and Human Services should direct the Assistant Secretary for Planning and Evaluation to eliminate the conflicts between the Department's verbal and written guidance on the states' fiduciary responsibility for the EZ/EC SSBG funds.

    Agency Affected: Department of Health and Human Services

    Status: Closed - Implemented

    Comments: HHS has provided guidance to state governments and EZ/EC lead entities. It has also taken steps to confirm that its personnel are knowledgeable about the policies.

    Recommendation: To improve USDA's oversight of the EZ/EC program, the Secretary of Agriculture should instruct the Director, Office of Community Development, to upgrade the Office's monitoring system so that it can routinely provide the necessary information for assessing the progress of the EZs and ECs in implementing the program. This action could be accomplished by more strictly enforcing the EZs' and ECs' current self-reporting requirements and by developing more systematic reporting requirements for USDA's EZ/EC state coordinators.

    Agency Affected: Department of Agriculture

    Status: Closed - Implemented

    Comments: USDA has taken steps to implement this recommendation.

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