Amount and Percentage of Funds Lent Generally Increased

The overall amount of funds lent by the nine states increased between 1995 and 1996, from $3.3 billion to $4.0 billion. All nine states increased the amount of funds they lent between 1995 and 1996. The other three states increased their amount of funds lent by 30 percent or more. Three states increased their percentage by 17 percentage points or more. Specifically, five states lent 80 percent or more of their available funds, another three states lent 70 to 79 percent, and the final state lent 60 percent. Lack of Legislative Reauthorization and Other Federal-Level Factors Constrained Lending in Eight States

Officials in eight of the nine states cited one or more factors at the federal level as affecting the amount and percentage of funds they lent. In seven states, officials said that uncertainty about the reauthorization of the SRF program discouraged some potential borrowers. Finally, in three states, officials identified other reasons, such as federal restrictions on the use of SRF funds. Expiration of Legislative Authorization Discouraged Some Potential Borrowers

Officials in seven of the nine states said that the lack of reauthorization of the Clean Water Act limited their success in lending funds. EPA officials said they were aware that many states had a concern about the prevailing-wage requirement. To determine the percentage of funds lent by each state as of the end of 1995 and 1996, we divided the total amount of funds lent by the total funds available to lend, as defined above, both as of the end of the year. Table I.2 shows the amount and percentage of funds lent for the nine states for each state’s fiscal year 1995 and 1996.
Why GAO Did This Study

GAO discussed selected states' experience with the Environmental Protection Agency's (EPA) Clean Water State Revolving Fund program, focusing on: (1) the amount of funds lent and the percentage of available funds lent, as of the end of each state's fiscal year 1996; and (2) information on factors at the federal and state levels that constrained the amount and percentage of funds lent.

What GAO Found

GAO noted that: (1) the nine states increased the total amount of funds they lent from $3.3 billion in 1995 to $4.0 billion in 1996; (2) all nine states increased the amount they lent by 15 percent or more, and three states achieved increases of 30 percent or more; (3) in addition, seven of the nine states increased the percentage of available funds they lent; (4) of these seven, three states increased this proportion by 17 percentage points or more; (5) nevertheless, the percentage of funds lent as of the end of 1996 varied substantially among the nine states; (6) specifically, five states had lent 80 percent or more of their available funds, three states had lent between 70 and 79 percent, and one state had lent 60 percent; (7) in eight of the nine states, officials identified the expiration of the authorizing legislation, as well as federal requirements, as affecting the amount and percentage of funds lent; (8) for example, officials in seven states said the legislation's expiration created uncertainty about the loan conditions that might apply in the future and caused some communities to postpone seeking or accepting loans; (9) also, officials in seven states said that other federal requirements, such as a prevailing-wage provision, discouraged some communities from seeking loans; and (10) finally, in two states, officials said that state program decisions constrained lending.