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Federal grants will require more scrutiny

Federal grants will require more scrutiny

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State agencies and Maryland nonprofits receiving federal grants will face even more requirements for transparency and accountability under a new board created by President Barack Obama, the controller of the Office of Management and Budget told a grants conference in College Park Monday.

Speaking at an event sponsored by the Governor’s Grants Office, Controller Danny Werfel said the new push for more current information grew out of the spending in the American Recovery and Reinvestment Act. The president institutionalized it June 13 with an executive order setting up an 11-member board chaired by Vice President Joe Biden. Werfel will serve on the board.

The constricting federal budget is “the new normal,” Werfel said, and reduced spending includes greater public scrutiny of how funds are spent “to lower levels of fraud, lower levels of waste.”

The website for the Recovery Act’s stimulus spending was sometimes an imperfect tool, he said, and the feds will seeks to standardize how data is collected and presented. The use of federal accounting categories, such as Treasury accounts, made it “hard to present information in a citizen-friendly way.”

Werfel said he recognized that some of the new requirements “created headaches for you … when we’re trying to do the right thing by taxpayers.”

Grant reports in the future will probably require greater detail about how the money is spent, but he promised that state and local officials will be included in a more open way on setting the requirements.

Federal audit requirements would probably be rewritten so that they generate more useful information to help uncover “fraud, errors, waste and improper payments,” while eliminating some reporting “to make your lives less nuts,” Werfel said.

Obama’s new initiative doesn’t go far enough for some members of Congress, such as Rep. Darrell Issa, chair of the House Oversight and Government Reform Committee. The California Republican would like to see openness in government spending enshrined in statute — not just a presidential order.

Eric Brenner, director of the Governor’s Grants Office, said “everybody believes” that government spending should be more transparent, as the president has said, but it was important for grant writers and nonprofits to hear “why we do this” and what it might require in the future.

Brenner said that the disclosure rules once applied only to the main recipients of federal grants, but “now sub-recipients have to be involved” and “report one layer down.”

“It doesn’t line up to one easy package,” Brenner said.

In fiscal 2011, Maryland got 520 different federal grants amounting to $10.3 billion — about a third of the state budget. This year about $9.1 billion is expected, as the stimulus dollars from the Recovery Act disappear.

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