Independent GAO Report Highlights

Weaknesses in Financial Oversight of Federal Community Services Block Grant Program

Findings Point to Need to Ensure Controls are in Place to Prevent Abuses that Cheat Disadvantaged Americans, Taxpayers, and Law-Abiding Local Anti-Poverty Agencies

WASHINGTON, D.C. – Republican leaders of the U.S. House Committee on Education & the Workforce today called attention to a new report by the independent Government Accountability Office (GAO) that warns of flaws in the financial oversight structure of the federal Community Services Block Grant (CSBG) program.  CSBG is a taxpayer-funded initiative to combat poverty in local communities.

Committee Republicans requested the independent report last year, amid concerns about the effectiveness of the program’s oversight structure and the possibility that fraud, abuse, or mismanagement could occur due to weaknesses in financial controls and program management.  The request for the report was highlighted last month as part of House Republicans’ “Spring Cleaning” oversight project.   

“Federal taxpayers invest more than a half billion dollars each year in CSBG programs,” said Education & the Workforce Committee Chairman Howard P. “Buck” McKeon (R-CA).  “It is troubling to find strong potential for fraud and abuse under the current accountability structure – or the lack of an accountability structure, more accurately.  I’m grateful the GAO has highlighted flaws that stand in the way of effective oversight in the CSBG program.  Congress simply cannot allow costly weaknesses in accountability – weaknesses that open the door to waste, fraud, and abuse.  The Education & the Workforce Committee has an obligation to review these findings carefully and act on them accordingly as we reauthorize the CSBG program.”

McKeon noted an oversight hearing to review the report’s findings may be necessary before a congressional reauthorization of the program.

While oversight of the CSBG programs rests primarily at the state level, the programs and services are administered locally through community action agencies (CAAs).  These local programs may also run other federal programs aimed at serving disadvantaged children and families, including the Head Start early childhood program.  Today’s independent report follows a GAO report released last year, which warned that the financial control system in the Head Start program is flawed and failing to prevent multi-million dollar financial abuses.  From 2003 to the early months of 2005, instances of financial abuse or mismanagement in Head Start programs in more than a dozen U.S. cities were uncovered.

“Unfortunately, after all we have been through with Head Start, the GAO has again found financial management concerns within the U.S. Department of Health and Human Services (HHS),” noted House Education Reform Subcommittee Chairman Mike Castle (R-DE), who joined McKeon, former Committee Chairman John Boehner (R-OH), and Subcommittee Chairman Tom Osborne (R-NE) in requesting the report.  “I am grateful for this information, and will use it to inform the reauthorization of CSBG to ensure the low income families who benefit from this program are not being shortchanged.  I am hopeful that HHS has taken GAO’s recommendations seriously and trust that they will work hard to ensure the program is working soundly."

In January 2005, Rep. Osborne introduced the Improving the Community Service Block Grant Act (H.R. 341), a bill to strengthen and improve the CSBG program by strengthening accountability and focusing on program quality.  The legislation would promote increased quality for CSBG grants by requiring states to reevaluate whether persistently low-performing grantees should continue to receive funds.  The bill would also increase accountability by ensuring that states monitor grantees for quality and efficiency.

“The CSBG program is an important program for fighting poverty in our communities, and we need to ensure that the system has the proper accountability structure in place to combat abuses,” said Rep. Osborne.  “As the Committee works on reauthorizing the CSBG program, it is critical that we ensure that the program continues to help those in need while curbing the potential for waste and fraud.”

The GAO study, available online here, concludes that the program lacks “effective policies, procedures, and controls to help ensure that it fully met legal requirement for monitoring states and federal internal control standards.”

Additionally, the GAO report found:

§         The Office of Community Service (OCS) under HHS “lacked a process to assess states’ CSBG management risks” and it “did not issue reports to states and annual reports to Congress on monitoring visits,” as required by law.

§         OCS “did not meet internal controls standards because it sent monitoring teams without adequate financial expertise and lost documentation from state visits conducted in fiscal years 2003 and 2004.”

§         OCS provided “limited information on the results” of grant programs that target local agencies with problems.  “Final reports on awarded grants provided no information on the outcomes of assistance for nearly half of the 46 local agencies” that were identified as being served. 

As a result, OCS may have missed opportunities to monitor states facing the greatest oversight challenges and to identify common problem areas where it could target training and technical assistance.  Furthermore, OCS cannot effectively determine where CSBG program risks exist or appropriately target its limited resources to where they would be most useful. 

More information about CSBG programs and Republican efforts to strengthen anti-poverty programs provided through CSBG, is available at http://edworkforce.house.gov/issues/109th/education/csbg/csbg.htm.

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