Report: Feds Not Monitoring How Taxpayer Funding Is Being Spent

Agencies failing to monitor grant recipients

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March 15, 2019

Federal agencies are not monitoring how taxpayer funds are being spent, or whether research grants are being properly disclosed to the public.

A new report released by the Government Accountability Office found the Departments of Labor, Health and Human Services, and Education are failing to enforce the Stevens Amendment, which requires grant recipients to disclose federal funding when they publicize their projects.

The Labor Department's Employment and Training Administration (ETA) does not know how much taxpayer funding is going towards salaries for groups who receive grants, and the National Institutes of Health says it has difficulty calculating where taxpayer funding is going because research programs can have "multiple funding streams" and research portfolios of academics are "now more complex."

The three agencies accounted for over $500 billion in taxpayer-funded grants in fiscal year 2017. HHS alone handed out $455 billion in grants.

Since 1989 the Stevens Amendment, named after the late senator Ted Stevens of Alaska, has required grant recipients to disclose how much federal funding they received for projects when they publicize their taxpayer-funded work in press releases, statements, and other documents.

In his rationale for the law, Stevens said taxpayers "ought to be informed how much money comes from Federal sources in any program, project, or grant activity."

Institutions have failed to comply with the law. A study released two years ago found Ivy League schools did not disclose how $200 million in taxpayer-funded research projects were spent.

In response to the report, Sen. Joni Ernst (R., Iowa) released legislation to require every taxpayer-funded project to "include a price tag that is easily available for taxpayers." The Cost Openness and Spending Transparency Act, or COST Act, would update the Stevens Amendment by not only requiring disclosure of taxpayer cost, but giving the Office of Management and Budget the power to withhold grant funding from academics and organizations that are not being transparent to taxpayers.

"Taxpayers in Iowa, and across the nation, have a right to know exactly how their hard-earned dollars are being spent," Ernst said in a statement. "While current law requires projects funded by some federal agencies to disclose the costs, my office has found that these agencies are largely ignoring the law and failing to comply. That's unacceptable."

"The COST Act guarantees hardworking Iowans have easy access to see how their tax dollars are being spent, and gives them the ability to decide for themselves whether or not the price is right," she said."

Ernst's office cited examples of taxpayer-funded NIH studies that have not been properly disclosed, including a $1.3 million study that found "cats that are pampered with treats and classical music every day are less likely to poop outside of the litter box or cough up hairballs."

Other studies that did not disclose funding from taxpayers included a $90,000 grant inspired by a sour cream and onion flavored potato chip that resembled Elvis Presley.

"The potato chip really does look like Elvis!," according to the study, which analyzed brain activity response to "series of squiggles" that appeared to be recognizable.

Another $178,000 NIH study did not reveal that taxpayers funded research into "how do cats manage to walk so graciously on top of narrow fences or windowsills high above the ground while apparently exerting little effort?"

The new GAO report found the majority of agencies within these departments were not monitoring whether schools and organizations are complying with the federal law. In turn, the agencies do not know precisely how taxpayer-funds are being spent.

"Most HHS operating divisions said they did not review grantees for Stevens Amendment compliance," the GAO said. "Education also did not monitor for grantee compliance with the Stevens Amendment's requirements."

A majority of the agencies examined in the audit were not collecting information from grantees on how they calculate dollar amounts they attribute to the federal government on their Stevens Amendment disclosures. This includes how much taxpayer funds are going to indirect costs, such as salaries.

"For example, DOL's ETA officials said that they do not know how the dollar amounts reported by grantees were calculated, and have not inquired about the level of detail factored into indirect costs involving the grantee organization's structure and the percentage of funds spent on salaries," the report said.

Divisions within the Department of Health and Human Services, which gave Planned Parenthood at least $31.1 million in grants last fiscal year, also noted it is more difficult to disclose how taxpayer funds are spent due to "multiple funding streams."

"Similarly, officials from HHS's National Institutes of Health operating division noted that calculations can be difficult given that a research program can have multiple funding streams that feed into a grant project and grantees' research portfolios are now more complex than they have been in the past," the GAO said.

Top HHS officials at the department level said "they have no knowledge about whether their operating divisions conduct monitoring and enforcement of the Stevens Amendment."

The GAO found all of HHS's 10 operating divisions, which includes the NIH, the FDA, and the CDC, did not "monitor grantees' compliance with Stevens Amendment requirements."

Transparency requirements were not monitored despite HHS policy that requires "active monitoring" in regards to "the stewardship of Federal funds."

The NIH said it was unaware of any violations of the Stevens Amendment, despite previous reports of widespread transparency failures.

"NIH officials stated that they do not specifically monitor for Stevens Amendment compliance and that NIH officials have not received any reports of noncompliance with the Stevens Amendment," the GAO said. "They said they would address any non-compliance issues if they were raised."

The GAO said by not checking to see if its grant recipients are following the law, the government has no idea if violations are occurring.

"Without having processes to manage and administer their grantees' compliance with the Stevens Amendment, which is included in HHS's appropriations provisions, there is no way for HHS or its operating divisions to ensure that grantees are in full accordance with the statutory requirements of the Stevens Amendment appropriations provision and the agency-communicated conditions of the federal award," the report said.

Republican Sens. Ron Johnson (Wis.), James Lankford (Okla.), Rand Paul (Ky.), and Ernst requested the GAO report. The audit was conducted from January 2018 to March 2019.