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. As figure 1 shows, all nine states increased the amount of funds they lent between 1995 and 1996. Six states increased their amount by 15 to 29 percent. 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 amounts and percentages of funds they lent. 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. Louisiana officials said that before the prevailing-wage requirement expired, the state had experienced difficulties in making loans largely because local officials perceived the requirement as increasing the costs of projects. In the early years of the SRF program, Pennsylvania officials decided to finance about $248 million in wastewater projects with these state funds rather than wait for SRF funding to become available, according to state officials. According to a state official, efforts to inform local government officials about the SRF program and interest them in participating were not effective in the program’s early years. Amount of funds lent (thousands of dollars)

Methodology for Computing the Percentage of Funds Lent

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, both as of the end of the year.
Why GAO Did This Study

Pursuant to a congressional request, GAO reviewed selected states' use of their revolving funds, focusing on the: (1) amount of funds lent and the percentage of available funds lent, as of the end of each state's fiscal year (FY) 1996; and (2) factors at the federal and state levels that constrained the amount and percentage of funds lent.

What GAO Found

GAO found that: (1) the nine states GAO surveyed increased the total amount of funds they lent from $3.3 billion in 1995 to $4.0 billion in 1996; (2) six states achieved an increase of between 15 and 29 percent, and the other three states achieved an increase of 30 percent or more; (3) seven of the nine states increased the percentage of available funds they lent, and of these seven, three states increased this proportion by 17 percentage points or more; (4) the percentage of funds lent as of the end of 1996 varied substantially among the nine states; (5) 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; (6) 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; (7) officials in seven states said that other federal requirements, such as a prevailing-wage provision, discouraged some communities from seeking loans; (8) in two states, officials said that the decisions made by the state programs constrained lending; (9) program managers in one state decided to finance certain wastewater projects from state funds rather than from the revolving fund, thereby limiting both the amount and the percentage of funds lent from the revolving fund; and (10) in the other state, efforts to publicize the program to local officials were not effective in the early years of the program.