	Background

The Launching Our Communities’ Access to Local Television Act of 2000  created a guaranteed loan program to facilitate access to signals of local  television stations for households located in nonserved and underserved  areas of the United States. The Act established the LOCAL Television Loan  Guarantee Board (Board) whose primary function is to approve loan  guarantees to finance projects to provide local television access for  communities in remote areas throughout the United States. Specifically, the Act required the Board to:  (1) direct the Administrator to prescribe regulations within 120 days after  the Congress appropriated funds, (2) develop underwriting criteria in  consultation with the Director, Office of Management and Budget (OMB)  and an independent public accounting firm (IPA) within 120 days after the  Congress appropriated funds, (3) establish and collect loan application and  loan guarantee origination feesto offset the cost of administering the  Program under the Act, including the costs of the Board and the  Administrator, and (4) consider other numerous specialized technical and  business requirements prior to approving a loan guarantee. Although the Act was passed on December 21, 2000, which required the  establishment of program regulations and underwriting criteria, initial  funding for the Program was not provided until November 2001 through the  Agriculture, Rural Development, Food and Drug Administration, and  Related Agencies Appropriations Act, 2002. Figure 1 illustrates the relationships between the Congress, federal entities  involved in implementing the LOCAL TV Program, and the public. Scope and Methodology

To determine how the provisions of the Act were administered, we focused  primarily on program activities and related obligations and administrative  expenses that were incurred on behalf of the Program during fiscal year  2002. Since funds were appropriated in  November 2001, the target time frame was March 2002. However, as of the  end of August 2003, neither of these key documents had been finalized. According to Board and RUS officials, three factors contributed to program  delays: (1) initial uncertainties over program funding, (2) inadequate  dedicated staff resources for program activities, and (3) the decision to  issue a proposed rule. Policies and Procedures Needed as a Basis for Collecting User Fees Have Not Been Established

Total costs of administering the Program, including those incurred by the  respective departments and agencies providing support to the Board, were  not accumulated and charged to the Program. Statement of Federal  Financial Accounting Standard No. 4, Managerial Cost Accounting  Standards (SFFAS No. 4) requires federal agencies to capture the costs of  federal programs to assist the Congress in authorizing, modifying, and  discontinuing programs and to provide agencies with reliable cost data for  making informed managerial decisions and evaluating performance. Conclusions

The LOCAL TV Program has not been implemented within the time frames  specified in the LOCAL TV Act. We are sending copies of this report to the Secretaries of Agriculture,  Commerce, and Treasury, and the Chairman of Board of Governors of the  Federal Reserve System, members of the Local Television Loan Guarantee  Board, and the Director, Office of Management and Budget.
Why GAO Did This Study

The LOCAL TV Act required that GAO 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 fiscal year 2002, the LOCAL TV Program was funded; however, because it was not fully implemented in that year, there were no loan guarantee applicants for GAO to audit. Therefore, this report primarily addresses whether program administration during fiscal year 2002 satisfied the provisions of the Act.

What GAO Found

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 or LOCAL TV Program) and established the Local Television Loan Guarantee Board (Board) to approve guaranteed loans, totaling no more than $1.25 billion, to finance projects that will provide local television access to households with limited over-the-air television broadcast signals or cable service. The Board is comprised of the Secretary of the Treasury, the Chairman of the Board of Governors of the Federal Reserve System, the Secretary of Agriculture, and the Secretary of Commerce, or their designees. The Department of Agriculture (USDA) Rural Utilities Service serves as Program Administrator (Administrator). The LOCAL TV Program has not been established in an expeditious fashion as specified by the Act. Given that funds were appropriated in November 2001, thus starting the clock on the 120 days allowed for completing program regulations and underwriting criteria, the Program should have been ready for implementation by March 2002. According to the Board and Administrator, three factors contributed to program delays: (1) initial uncertainties over program funding, (2) inadequate dedicated staff resources for program activities, and (3) the decision to issue a proposed rule. As of the end of August 2003, neither of these key documents, which provide the overall framework for the Program, was ready for implementation, thus delaying lending activities and ultimately, realization of improved television reception in target areas throughout the United States. Further, the full costs of administering the Program, including those incurred by the respective agencies and departments providing support to the Board, were not accumulated and charged to the program as called for by federal accounting standards. Statement of Federal Financial Accounting Standard No.4, Managerial Cost Accounting Standards requires federal agencies to capture the costs of federal programs to assist the Congress in authorizing, modifying, and discontinuing programs and to provide agencies with reliable cost data for making informed managerial decisions and evaluating performance. Further, the capacity to capture these costs going forward is key to fully recovering certain costs of administering the Program through loan application and loan guarantee origination fees.