Local Television Act:

Status of Spending for Fiscal Year 2003

GAO-05-18R: Published: Oct 15, 2004. Publicly Released: Oct 15, 2004.

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In December 2000, the Congress passed the Launching Our Communities' Access to Local Television Act of 2000 (Local TV Act or act). The act created the Local Television Loan Guarantee Program (Program) and established the Local Television Loan Guarantee Board (Board) to finance projects that will provide access to signals of local television stations to households in areas with limited or no access to such signals from a commercial satellite service or other multichannel video provider. The Board may approve loan guarantees up to 80 percent of loans totaling no more than $1.25 billion in aggregate. In November 2001, the Congress appropriated $2 million for administrative expenses to implement the Program. Section 1006 of the act requires that we perform an annual audit of the (1) administration of the provisions of the act, and (2) financial position of each applicant who receives a loan guarantee under the act, including the nature, amount, and purpose of investments made by the applicant. In October 2003, we issued our first annual report as required by the act. This second report addresses the status of the $2 million administrative appropriation and the fiscal year 2003 Working Group costs.

During fiscal year 2002, the Department of Agriculture obligated the $2 million in appropriated funds by issuing an order to GovWorks for its anticipated needs. GovWorks is a franchise fund established within the Department of the Interior by the Congress and the Office of Management and Budget to offer administrative services to federal agencies. As of the end of fiscal year 2003, GovWorks had awarded, on the Board's behalf, contracts totaling almost $1.2 million, leaving approximately $802,000 of the $2 million administrative appropriation still available for contracting with outside consultants or other administrative expenses. At the Board's request, GovWorks awarded a $677,448 contract to Ernst and Young for developing underwriting criteria and a $500,000 contract to Arnold and Porter for legal services. As of the end of fiscal year 2003, approximately $598,000, about 88 percent of the contract amount, had been disbursed to Ernst and Young. Because the Board had not used Arnold and Porter's services as of the end of fiscal year 2003, the original amount awarded remained available at fiscal year end. Separate from the $2 million appropriation for administrative expenses discussed above, the Board reported that during fiscal years 2002 and 2003, the Working Group incurred approximately $333,742 in administrative costs for continuing development of the Program regulations and underwriting criteria.

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