Management of Farmers Home Administration's Water and Waste Disposal Program Needs To Be Strengthened

CED-78-61: Published: Mar 13, 1978. Publicly Released: Mar 13, 1978.

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During 1977, the Farmers Home Administration (FmHA) was authorized $750 million in grants to finance the construction and/or improvement of water and waste disposal systems in rural areas. FmHA allocates these funds to States on the basis of population and per capita income which necessitates many adjustments.

The present FmHA method of allocating the funds does not consider each State's individual needs. Some projects cannot be funded until the agency reallocates its moneys at the end of the fiscal year; moneys reserved for other States remain idle throughout the year until they are subsequently transferred to more needy States. There has not been enough information readily available for FmHA to effectively manage and evaluate its water and waste disposal program. Although certain priorities have been established for selecting projects, it is not known whether these priorities have been met. Also, there are no followup procedures to insure the timely receipt and review of borrowers' management reports. From the program's inception through June 30, 1976, FmHA reamortized 186 loans, of which 77 extended beyond the maximum 40-year period stipulated. The agency contends that these actions are authorized under the Consolidated Farm and Rural Development Act. The scope and relationship of the Act needs clarification.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Agriculture should direct the Administrator of FmHA to: determine the need for water and waste disposal systems in rural areas on a State-by-State basis, modify the formula for allocating water and waste disposal funds to require that the need for funds in the various States be considered, develop followup procedures to insure the timely receipt of borrowers' management reports, and establish procedures requiring the timely review of borrowers' management reports. The Secretary should ask Congress to clarify the agency's policy of extending the repayment period of reamortized loans for periods exceeding 40 years and, if necessary, to amend the Consolidated Farm and Rural Development Act.

    Agency Affected:


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