In fiscal year 2003, EPA  awarded $656 million in discretionary grants. In August 2003, we  further addressed the question of environmental results. We reported that  EPA (1) had awarded some grants before considering how the results of  the grantees’ work would contribute to achieving environment results; (2)  had not developed environmental measures and outcomes for its grants  programs; and (3) often did not require grantees to submit workplans that  explain how a project will achieve measurable environmental results. Problems Persist in Addressing Grants’ Environmental Results

For its grants programs, EPA is still not effectively linking grants to  environmental results. EPA reported  that, overall, less than one-third of the 93 grant workplans reviewed  identified environmental outcomes. Not surprisingly, given the lack of outcomes in the workplans, OMB found  that EPA grant programs are not demonstrating results. In February 2004,  OMB found that 8 of the 10 EPA grant programs it reviewed were “not  demonstrating results.” These programs total about $2.8 billion. Furthermore, not every EPA program office has yet developed  environmental measures for their grant programs. EPA plans to issue its environmental outcomes policy—a key objective  originally scheduled for 2003—in fall 2004, but the policy will not become  effective until January 2005. Furthermore, as a result of this delay, EPA has delayed meeting the  objectives of developing a tutorial for grantees, requiring outcomes in  solicitations, and incorporating success on achieving outcomes into the  criteria for awarding grants—objectives that are contingent on the  issuance of the policy. In the absence of a final outcomes policy, EPA issued an interim policy in  January 2004. Finally, EPA will not meet the grant management’s plan first-year (2004)  target for the performance measure of the environmental outcomes goal— the percentage of grant workplans, decision memoranda, and terms of  conditions that discuss how grantees plan to measure and report on  environmental outcomes. As drafted, this policy appears to have EPA moving in the right  direction for addressing environmental outcomes. Emphasizes environmental results throughout the grant life cycle— awards, monitoring, and reporting. Specifically, the draft policy requires  that EPA program offices (1) ensure that each grant funding package  includes a description of the EPA strategic goals and objectives the grant  is intended to address and (2) provide assurance that the grant workplan  contains well-defined outputs, and to the “maximum extent practicable,”  well-defined outcome measures. In conclusion, we believe that if fully implemented, EPA’s forthcoming  outcome policy should help the agency and the Congress ensure that grant  funding is linked to EPA’s strategic plan and to anticipated environmental  and public health outcomes. We believe that the major challenge to  meeting EPA’s goal of identifying and achieving outcomes continues to be  in implementation throughout the agency. Given EPA’s uneven performance in addressing its grants management  problems to this point, congressional oversight is important to ensuring  that EPA’s Administrator, managers, and staff implement its grants  management plan, including the critical goal of identifying and achieving  environmental results from the agency’s $4 billion annual investment in  grants.
Why GAO Did This Study

The Environmental Protection Agency (EPA) has faced persistent challenges in managing its grants, which constitute over one-half of the agency's budget, or about $4 billion annually. These challenges include achieving and measuring environmental results from grant funding. It is easier to measure grant activities (outputs) than the environmental results of those activities (outcomes), which may occur years after the grant was completed. In 2003, EPA issued a 5-year strategic plan for managing grants that set out goals, including identifying and achieving environmental outcomes. This testimony describes persistent problems EPA has faced in addressing grants' environmental results and the extent to which EPA has made progress in addressing problems in achieving environmental results from its grants. It summarizes and updates two reports GAO issued on EPA's grant management in August 2003 and March 2004.

What GAO Found

EPA's problems in identifying and achieving environmental results from its grants persist. The agency is still not consistently ensuring that grants awarded are clearly linked to environmental outcomes in grant workplans, according to GAO's analysis and EPA's internal reviews. For example, EPA's 2003 internal reviews found that less than one-third of grant workplans reviewed--the document that lays out how the grantee will use the funding--identified anticipated environmental outcomes. Not surprisingly, given the lack of outcomes in grant workplans, the Office of Management and Budget's recent review of 10 EPA grant programs found that 8 of the grant programs reviewed were not demonstrating results. Furthermore, not every EPA program office has yet developed environmental measures for their grant programs. EPA's progress in addressing problems in achieving environmental results from grants to this point has been slower and more limited than planned. While EPA had planned to issue an outcome policy--a critical ingredient to progress on this front--in 2003, the policy's issuance has been delayed to the fall of 2004, and will not become effective until January 2005. In the meantime, EPA has issued a limited, interim policy that requires program offices to link grants to EPA's strategic goals, but does not link grants to environmental outcomes. Furthermore, as a result of the delay in issuing an outcome policy, EPA officials do not expect to meet the 5-year plan's first-year target for the goal's performance measure. The forthcoming draft policy we reviewed appears to be moving EPA in the right direction for addressing environmental outcomes from its grants. For example, the draft policy emphasizes environmental results throughout the grant life cycle--awards, monitoring, and reporting. Consistent and effective implementation of the policy will, however, be a major challenge. Successful implementation will require extensive training of agency personnel and broad based education of literally thousands of grantees.