It’s All About the Beans

(This post was written by Chuck Edwards managing editor of Thompson Publishing Group’s federal education publications) In the wake of a 2011 presidential mandate to reduce administrative burden associated with grants, there has been a flurry of initiatives (see here and here) from federal agencies designed to streamline oversight and drive more funds to programs rather than to the bean-counters.

But the tradeoffs may be costly. When bean-counters go away, the bean-takers — waste, fraud and abuse — come out to play.

The competing priorities were vividly displayed at the annual Brustein & Manasevit spring grants forum held in Washington, D.C., last week. (Disclosure: Members of the law firm sit on our advisory board.)

In one session, Office of Management and Budget (OMB) official Gil Tran presented his agency’s sweeping new reform proposal, which would affect all of the government’s cross-cutting grant regulations. A centerpiece of the proposal is to reduce the share of each grant that goes to the grantee’s “indirect costs,” which may be defined roughly as overhead. While OMB’s stated intent — to preserve more money for direct services — may be laudable, a number of commenters have pointed out that cutting the share of funds available for management could hobble grantees’ abilities to properly track and account for their awards.

Illustrating the real costs of compliance were two presentations bracketing Tran’s talk. In one case, a panel from the Philadelphia school district recounted their five-year (and counting) experience in resolving a multi-million federal audit claim (no wrong-doing, just confusion). Among their many remedial measures was to hire 19 more people for grants management and internal control, a move that one panelist said was “not an easy thing to do when we were laying off thousands of teachers.”

A further consequence: “We decided that our grants should pay for our grants compliance monitoring system.” In other words, the district took steps to ensure that federal grants bear an appropriate share of oversight costs, rather than being indirectly subsidized by state and local administrative funds, as had been the case in the past. Thus, we have another whack at services.

Likewise, in a related presentation, a panelist noted that the Nashville metropolitan school district had to expand its grants management staff as part of its (ultimately successful) strategy to escape “high risk” status.

So, while almost everyone in the grants field would agree that there are ways to reduce burden and maintain accountability, these presentations show that the two goals may be difficult to reconcile.

As the Montana Department of Natural Resources and Conservation wrote to OMB in its comments on that agency’s streamlining proposal, “We ask that OMB recognize that enhanced transparency and accountability do not come cheap.”

Neither, I would hasten to add, do bean-counters.

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