The U.S. federal government is the biggest grant-maker at around a trillion dollars a year. That makes grants management a big challenge. Other national government have a few grants management practices that might help things here. The Federal Drive with Tom Temin got more from the director of strategic issues at the Government Accountability Office, Jeff Arkin.

Interview transcript:

Tom Temin And grants management, I think the grants community considers itself in the United States kind of the gold standard for grants, making grants, evaluation throughout the world. That’s their view. What prompted you to look at some of the other countries practices?

Jeff Arkin So as you mentioned, grants about $1 trillion a year or a little more. It’s a large part of federal spending and it’s distributed across 50 plus agencies, hundreds of grant programs. And so we’ve found over the years challenges that have come up in managing all this. And we thought it would be helpful. And we were requested from the House Committee on Oversight to take a look at what have other countries done to try to reform their grant systems, to try to make it a more efficient process and a cost effective process.

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Tom Temin And looking at U.S. grants, that’s a wide range of activities, really. There are some grants that are almost akin to non-mandatory spending, such as unemployment grants to states or health care grants to states like block grants, that types of thing. And then there’s these big discretionary programs, challenge grants and so forth, that may have a one time effort. Even though they’re statutory, they don’t have permanence like some of the big grant programs. Do you have a sense of how that all breaks down in terms of percentages?

Jeff Arkin Yeah. So about 80% of grants are what are called formula grants or block grants where it’s set in statute. How much of that money will go to states or go to localities for various programs? And Medicaid is a good example of that. It’s the nation’s public health insurance program for low income individuals, covers about 1 in 5 Americans, and that’s about 60% of grants. It’s a massive program. And that’s set in statute by formula. It goes to the states compared to the other 20 or so percent of grants, which we call competitive grants. Those are grants where an organization and an entity, a state or locality, applies to an agency to receive an award through a grant program. And the agency employs whatever competitive process and screening to choose who those recipients will be. You talked about the different kinds of, or areas, I guess sectors, health care being by far the largest with Medicaid. Transportation is another big one. The money that we grant for the federal highway system is the second largest grant program. That’s around $50 billion. So quite a bit smaller than Medicaid, but still a lot of money.

Tom Temin Right. And I guess then that the oversight or management problems occur at different levels. Say, in the block grants it’s likely that Medicaid is following all the procedures in granting that money to the states. Problems come in, below the state level there is Medicaid fraud that happens by the secondary recipients, if you will. Whereas in competitive grants you have to worry about the direct recipient. And so there’s different levels, fair to say, at which the management challenges might happen.

Jeff Arkin Yeah, absolutely. And Medicaid has been around for decades. It’s a fairly smooth running in process in terms of the money going out to the states. But we do see it being one of the federal programs with the largest, what we call the improper payment rate money that is not spent in a way that it should be or going to ultimate recipients that shouldn’t be getting the money. And so that’s a consistent challenge. Other challenges we see have to do, and this is more on the competitive side, what’s the grantee capacity? Do grant recipients or even potential recipients have the capacity to identify and access grant funding? If they do get the funds, do they have the capacity to successfully implement and manage the programs with a lot of requirements? And on the federal side, how is the federal grants workforce managing the programs? Do they have the training they need to be able to provide assistance to grantees and also fulfill that compliance or oversight role rather. Are they making sure that the grantees comply with the many responsibilities and requirements that come with receiving federal funds?

Tom Temin We’re speaking with Jeff Arkin, director of strategic issues at the Government Accountability Office. And what countries did you look at for their grant management? And what were some of the highlights given that in the United States government there is a community of practice with its own established kind of group that is involved with grants chiefs.

Jeff Arkin Sure. We looked at Australia, Canada, the United Kingdom and then we also looked at the European Union, which is not a country, but is a government that awards competitive grants. And we chose those governments, one, because they do award competitive grants and they’ve also undertaken grant management reforms relatively recently. And we found a lot of interesting information that I think can at least be used as a basis of comparison to what we do here in the US. We found about a dozen different reform areas across those governments, and some examples of those, one category I guess, that I found particularly interesting is the level of centralization of the grant management process. As I mentioned, we have hundreds of grant programs across 50 plus agencies. In other countries, similarly, there are many agencies that manage grants, but some of the oversight, some of the responsibility for managing the grounds is a little more centralized, more centralization of policy making, providing training to federal training and resources to federal agencies, thinking of innovative practices, or even in some countries or at least one country we found where the processes for putting out grant opportunities of awards, maybe screening some of the initial grantees from the selection process, offering technical support was a little more centralized. And in talking with both agencies and grant recipients, we found that that change make things a little bit easier. And you had a lot of the knowledge concentrated as opposed to diffused across multiple agencies, even though, as you mentioned, we do have efforts to share information. The Office of Management and Budget within the White House creates policies on grants and does oversee a process to share information and best practices. But it is a widely distributed mechanism for awarding all these funds.

Tom Temin And do those other countries have the same distribution of grants? Do they have programs that are similar to our block or formula grants and then a whole other branch of grants that are more competitive? Are they structured similarly?

Jeff Arkin Yeah, I think there’s variation across the countries, but they certainly do offer or do award competitive grants. I think the health space is a little bit different because some of these countries have a more centralized health care system. So a program like Medicaid would be, not necessarily considered a grant program in the same way. But again, that’s why we picked these. We did look at initially at a lot of different countries. And these were ones that did offer a substantial amount of competitive grants, even though what substantial means is going to get to vary across the countries.

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Tom Temin And that idea of centralization, if 80% of the grants are going out through Health and Human Services now in the United States, you’ve got a guy, Dale Bell, who is the head of Grants for Health and Human Services. In a sense, it is centralized with 80% of the grants coming from one agency.

Jeff Arkin Yeah. And the Department of Health and Human Services (HHS) as the largest grant maker, they have started assuming more responsibility for providing like grant shared services, grant management tools, especially in the IT field. And so that’s relatively new. It’s something that we’ve been monitoring. I think it’s a promising practice to be able to have one agency performing some of these centralized actions or at least being able to offer solutions to the other smaller agencies, because by far, HHS, as you mentioned, is the largest grant maker in the country or within the federal government, I should say.

Tom Temin And did you have recommendations from this at the United Kingdom and the European Union, etc..?

Jeff Arkin Usually our reports have recommendations, this one did not. And really the reason for that is we were doing this comparison at a fairly broad level. So as I mentioned, we had about a dozen or so reform areas that I think could be interesting. I think going forward, one possibility is that the congressional committees that we report to may have interests, and some of them are more specialized areas or the more specific areas, I should say, within the grant management landscape. And that’s where maybe we would take a closer look and say, ok, are there specific recommendations that we would make? But this was such a broad look that it made it not as feasible to make a recommendation.

Tom Temin But fair to say, in the universal sense, grants management is the subject of concern pretty much across government. Everyone realizes that’s outspending visa contracts is grants.

Jeff Arkin Yeah, absolutely. It is quite a bit larger than contracts. A lot of challenges. Transparency is an issue that has become sort of top of mind. Where is the money actually going? And not just to the primary or first recipient of the funds, but they may pass that money to secondary or tertiary recipient. Do we know what’s happening? Is it going into places where we want it to go? Is it being used in the way it’s supposed to be used? There are mechanisms that capture that information, but we found some challenges with completeness and accuracy with that. And so that’s definitely an area where we are continuing to look at.

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