Economic Development: Formal Monitoring Approaches Needed to Help Ensure Compliance with Restrictions on Funding Employer Relocations

In response to our recommendation, USDA has added a new question to the form used by its reviewers to approve the disbursement of EZ/EC funds to record whether grant funds will not be used for business relocation purposes. Additionally, USDA has included instructions to its reviewers alerting them to the new question that was added to the review form. USDA held Webinar training on October 28, 2008, with its EZ/EC communities and USDA Rural Development staff. The Webinar training included a review of the relocation regulations and the requirement to answer the relocation question with each disbursement request, which is then monitored by the state. Additionally, the monitoring of the relocation regulation was added to USDA's Fiscal Year 2009 EZ/EC program Management Control Review guide.

HUD has taken or has underway four actions in response to our recommendation. According to HUD, it has highlighted for its field staff the prohibition against using CDBG funds for employer relocations. Specifically, HUD noted that it had included issues related to job relocation in the training provided to its field and/or grantee staff in four cities as of July 30, 2008. Second, HUD stated that the restrictions against the use of CDBG funds for employer relocations were discussed during a bi-weekly conference calls with its field directors shortly after the issuance of the GAO report. According to HUD, the purpose of the reviewing the regulatory requirements is to ensure that the field directors can accurately convey to their staff the requirements associated with the job relocation provisions and to ensure thorough and adequate reviews. Third, HUD stated that it was in the process of finalizing guidance to its grantees highlighting the need for grantees to properly their economic activities consistent with regulatory requirements and the need for HUD field staff to check that documentation. According to HUD, the guidance was expected to be finalized by the end of September 2008. Lastly, HUD has revised its program monitoring handbook to include questions related to grantee compliance with the employer relocation provisions in its March 2008 update of the handbook, which is available from its website.