Rural Development:

USDA's Approach to Funding Water and Sewer Projects

RCED-95-258: Published: Sep 22, 1995. Publicly Released: Sep 22, 1995.

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Pursuant to a congressional request, GAO reviewed the Department of Agriculture's (USDA) process for allocating and distributing loan and grant funds for water and sewer projects, focusing on: (1) funding levels for the Water and Waste Disposal Program; (2) the formula used to allocate funds among USDA state offices; and (3) the approach that USDA state offices use to distribute funds within states.

GAO held that: (1) the USDA water and sewer program has provided loan and grant support totalling about $28 billion, supporting almost 17,000 projects, and assisting over 12,500 communities throughout the United States; (2) the three factors that USDA considers in its allocation formula for water and sewer funds are rural population, rural poverty, and rural unemployment; (3) no state may receive more than 5 percent of the total available funds in the initial allocation; (4) the allocation formula may partially reflect states' needs and ability to pay, but it does not reflect cost differences between states; and (5) although USDA state and district offices have considerable flexibility in determining the amount of grant assistance for individual projects under the current approach, this flexibility can result in differing funding decisions for similar communities.

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