oversight

Farmers Home Administration Use of Grant Funds for Water and Waste Disposal Systems

Published by the Government Accountability Office on 1977-08-17.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REPORT OF THE
COMPTROLLER GENERAL
OF THE UNITED STATES



Farmers Home Administration
Use Of Grant Funds For Water
And Waste Disposal Systems
GAO was asked why the Farmers             Home
Administration     has not always provided the
maximum       funds allowed by law or its own
regulations in providing grants for water and
waste disposal systems in rural areas. Of the
650 projects receiving grants in fiscal year
1976 (through June 301,429 (66 percent) did
not receive the highest possible grant.

The Agency said the basic goal is to reduce
payments to a reasonable level for farmers,
ranchers, rural residents, and other eliglble
rural users, and that after considering all fund-
ing on the projects covered by the analysis,
this goal has been accomplished.      It said it was
not willing to adjust grant amounts on the
projects already financed,     because it would
set a precedent difficult  to change.




CED-77-109                                             AUGUST 17, 1977
                        COMPTROLLER         GENERAL     OF     THE   UNITED   STATES
                                          WASHINGTON,    DC.     20548




B-114873



The Honorable           James         Abourezk
United  States          Senate

Dear    Senator       Abourezk:

           In response           to your June 14, July                   14, and July           21, 1976,
letters,          the General           Accounting         Office        (GAO),      in cooperation
with       the National            Demonstration           Water       Project       (Project),
undertook           an analysis           regarding        your     concern        that    the
Farmers          Home Admininstration                 (Agency)         was not making             grants
for      rural      water      and waste         disposal        projects        at the maximum
amounts          permitted         by its      regulations           and authorized             by the
Congress.            As suggested,             we met with           the Project          and a
member of your               office;        we agreed        that      the analysis           would
cover        all    projects         that    received        an Agency         grant      during
fiscal         year     1976 (through            June 30).          We also        agreed       that
the Project             would      perform       the actual          analysis        and then
make the results                 available         to us to respond              to your        request.

       The completed      Project    analysis      reveals                          that    429 projects,
or 66 percent,      of the 650 projects          included                           in the analysis,
did not receive       the maximum      allowable       grant.                          The amount      of
underobligation       for   the 429 projects         totaled                          $28,398,364,
or an average     of $66,197      per project.           The                       amounts     ranged
from   a low of $5 to a high         of $1,257,500.

         The Project’s            analysis        also     revealed        that     78 projects,
or 12 percent            of the total,            received         the maximum         allowable
grant      and that        143 projects,            or 22 percent            of the total,
received        more than         the maximum allowable                  grant.        However,
only     five     projects        would      be considered            overfunded          in terms
of the authorizing                legislation          in that        the grant         for    these
projects        exceeded        50 percent          of eligible          project       costs.
The total         amount      of overfunding             for     these     five     projects
amounted        to only       $20,955.          We have given            the Agency          the
details       on these        five     projects        so that        corrective
action       can be taken.             The remaining            138 projects           were
apparently          overfunded          according        to Agency         regulations           but
not according            to the authorizing                legislation.

        Our report   discusses                  the development                  and application        of
the    methods   used in the                 analysis   and the                 potential     for   making


                                                                                             CED-77-109
B-114873


adjustments       to the obligations          of those projects       not receiving
the maximum allowable           grant.       Appendix    I contains    a State-by-
State     summary of the number and amounts of underobligated,
fully    obligated,       and overobligated        projects.      Appendix   II is
a listinq       of individual      projects      showing the amount of
underobligation         and/or   overobligation         as computed by the
Project.        Appendix    III  identifies,       by name, each project        in
appendix      II that was underobligated.
METHODOLOGY OF THE ANALYSIS
---------------------------
        The analysis    consisted     of calculating        the maximum grant
allowable    under the three criteria          applicable      to the
Agency's    grant program.         The maximum possible        grant was
determined     by selecting      the smallest      possible    grant permitted
for a project      on the basis of the three following              criteria
identified     in the regulations:
       --The      50-Percent
          -----------------_- Rule:   By statute,         Agency grants     cannot
          exceed 50 percent       of total  eligible        project  costs.
       --The      l-Percent
          --------7---------     Rule:     Agency regulations     provide     that
          grants       will    generally    be limited    to an amount
          necessary          to reduce the debt service       burden,     assumed
          by the community,             to 1 percent   of the median family
           income of the community.
       --The      Similar
          -----e.-------y---.-w--Community -a---
                                             Rule: Agency regulations  provide
          that grants            will  be used to reduce user costs to a
          reasonable           level--  a rate comparable to that charged    in
          similar        communities.
        The original     methodology      developed       for the preliminary
phase of the study was too rigid               in that it assumed that
the three criteria        for calculating         the amount of Agency
grant were uniformly         applied    throughout        the country.       After
an indepth     examination     of a sample number of projects                 revealed
that the three criteria          were not rigidly           and uniformly      applied
in every case, a revised           and more comprehensive            methodology
had to be developed.          The revised       methodology       called    for a
general    case procedure,        as well as a set of deviant             procedures,
to handle the project-by-project               variations      found in the two
Agency forms used in performing              the analysis.
       Since the Agency did not have specific        instructions         for
determining    grant  amounts, one  had    to be developed      on    the
basis of the best information      available.     We noted that,
although    the Agency had issued an administrative          bulletin

                                         2
~-114873



to its    State      directors       relative          to determining          grant
amounts,     this      bulletin      provided         only     general     guidance,          and
not specific         instructions,           for determining            the amount          of a
grant.     However,          since   this      bulletin        was the best          infor-
mation    available,           we used it as a basis                for   our method-
ology    so as to have a consistant                      basis    for   performing
our analysis.

       It must be noted         that    the previous          grant    determination
form did not show how the grant                  amount      was determined,          but
rather    showed      the amount     of grant       and the effect          it had on
user costs       as well    as similar        data.      Following       the analysis,
the Agency       revised    its   form    for    determining        the grant        amount
to provide       additional     guidance       in documenting          the actual
grant    determination.

       Development     and application         of the revised      methodology
was done by the Project          with   monitoring       by us.    At three
points    during   the processing       of the data,       we participated
in a comprehensive        review     of specific      case discrepancies
and refinement       of the deviant       procedures.

         In calculatiang            the maximum possible                 grant       for   the
projects       studied,         the general         methodology,           as developed,
was followed,           utilizing        the data        sources       identified.
However,      most of the cases                studied      deviated         from      the
general      case.        In fact,       only     19 of the 650 projects
included       in the final           analysis       did not require               the use of
at least      one deviant           procedure.          Most of the deviations
were the result             of numerical          discrepancies            in the two
Agency     forms     used for         the analysis.            Twelve        projects        had
to be excluded            from the study            because      there       were too many
discrepancies           or too much missing               data     in the Agency             forms.

         Upon completion         of the Project’s               calculations,         we
randomly      selected      and analyzed           a number        of cases     to check
the validity         of the methodology              and the accuracy           of the
calculations.          Our sample         of 65, or 10 percent,               of the
projects      studied     revealed        that     although        some type      of
error      was made in 14, or 21.5 percent,                      of the cases,          in
only     5, or 7.7 percent,           of the cases            did the error         affect
the amount       of grant      the project           should      have received.            The
net effect       of these      errors       indicate        that     the Project’s
computations         of total      underobligations              of $28.4     million
was understated         by about        0.49 of 1 percent.




                                                  3
~-114873



POTENTIAL               FOR ADJUSTMENTS OF GRANT AMOUNTS
-------------------I-----~~--~------~--~-
FOR       UNDEROBLIGATED
--------------------____I                 PROJECTS

         We asked an Agency               official         if it was legally              permissible
for    the Agency        to adjust          the amounts            of grant         and loan
obligations        for     those      projects           we found        that     did not receive
the maximum allowable                grant.            In response           to our question,
the Agency       Administrator              requested         a legal          opinion    from    the
Department       of Agriculture’s                  Office     of the General            Counsel.
He informed        us, on December                 17, 1976,         that      to increase      the
amount      of grant       obligation,             with    a corresponding             decrease
in the amount          of loan        obligation,            posed a question             of timing
and of purpose           for    which       the funds         will      be used.        The
Administrator’s            response         stated:

         ‘* * *if    a loan and grant            are closed,       and the loan
           money has not been fully              advanced,      then the grant
           amount   could   possibly       be increased         since  FmHA
           [Farmers    Home Administration]             still     has control
           and can be certain         that     the grant      funds   would   be
           used for eligible         purposes.      I’

        The Administrator’s              letter            also stated      that      for
constructed       projects          for which            the loan and       grant       have     been
closed      and all    funds        expended,            that:

         I’* * *reimbursement     by increasing      the grant      amount    and
           decreasing    the loan amount     might   be interpreted        as
           refinancing    , which is an unauthorized        use of grant
            funds . ”

        In    an April        25, 1977,        letter,       to the      Acting     Administrator
of the Agency,             we   asked    whether        the    Agency      would     be willing
to make adjustments                on those        projects       that     were underfunded
where      it is legally           permissible          to do so.          In his reply,          the
Acting       Administrator          stated       that     the Agency         was opposed        to
retroactively            adjusting       the grant          amounts      for    those   projects
covered        in our analysis           for     the following           reasons:

        --The      computations            were based strictly         on a mechanical
            calculation          and     did not give     consideration      to the
            funding     priorities            established    in each State.

        --Agency     regulations            do not require             that     the    “maximum
           allowable     grant”           be made in every             case.

        --Other       factors,         such     as     the availability          of    funds      from
           other      sources,         affect        the final      determination           of    the
           grant      amount.


                                                     4
B-114873



       --The     program     has accomplished             its     basic    goal of reoucinq
          user     payments     to a reasonable             level,      and any adjust-
          ments      in grant     amounts  would          not have a siqnif        icant
           impact      on the user payments.

       --Adjusting      the grants   for  certain     grant  recipients
          covered    by the analysis     could    set a precedent       that
          would    be difficult    to change.

         The Acting     Administrator           also    stated       that the Fqency’s
foremost       concern     is that       the benefits        of the program       be
fairly      and equitably        distributed         to all      eligible    communities
desiring      Agency     assistance,         and that       he believes      that  the
Agency’s       present    program        is being      administered       in such a
manner.

         The scope of the report                 is limited      to a discussion        of
the Project         analysis       and the Farmers          Home Administration’s
comments       concerning        adjustments         to the obligations           of those
projects       not receiving           the maximum allowable           grant.       We will
inform      you in the event             that    the facts     raised    by the report
indicate       that    action      by GAO is needed          to insure       that   the
water     and waste       disposal         program     is implemented        in accoruance
with     congressional         intent.

                                             S incerely       yours,




                                             Comptroller   General
                                             of the United   States




                                             5
                                            UNDER-     AND OVEROBLIGATED

                                      WATER AND WASTE DISPOSAL PROJECTS

                                                     FY 1976 (JUNE 30)


                                                                                           Projects       Total
                 Iii-al-n            $nderobligations               Overobligations           fully    number of
    Name                    Number   Number        Amount           Number       Amount    obligated   projects.,

    Alabama                   1       22       $      838,632            2     $192,288                   24

    Alaska                   60                                          1      100,000                    1

    Arizona                   2         3             168,300            3      392,996                    6

    Arkansas                  3       33              992,358            1           647        1         35
P
    California                4         9          1,132,428             6      510,478         3         18

    Colorado                  5         7             246,920            2       19,522                    9
                                                                                                               .-’
    Connecticut               6         2              43,500                                              2

    Delaware                  7

    Florida                   9        5             465,000             2      155,700         1          8

    Georgia                 10         9             103,960             4      177,049         6         19

    Hawaii                  61                                                                  1          1
                                                                                                                          Ii
    Idaho                   12                                           6      211,260                    6         .g
                                                                                                                          w
    Illinois                13        18           1,124,900             2       20,688         3         23              H
        .
                                                                                     Projects       Total
                State            Underobligations         Overobligations               fully    number of
    Name                Number   Number        Amount     Number       Amount        obligated   projects    3
                                                                                                             "x
    Indiana              15        3      $      69,663     3        $125,669             1          7       H


    Iowa                 16         7            50,687     9         476,245             1         17

    Kansas               18        6            259,626                                   1          7

    Kentucky             20       14            653,065     3          732,411            1         18

    Louisiana            22       13             70,805     1                   53        6         20

    Maine                23         2           237,774     1           39,299                       3

    Maryland             24         2            84,417     3          383,891            1          6
N
    Massachusetts        25                                 3         410,693                        3

    Michigan             26         2           548,304     5          378,181            1          8

    Minnesota            27       16       1,869,769        3           30,563                      19

    Mississippi          28       36          1,811,223     3          151,528            1         40

    Missouri             29         5            78,450     4          170,967            3         12

    Montana              31         4            54,751                                   1          5

    Nebraska             32       11          1,093,496     1           17,707                      12

    Nevada               33

    New Hampshire        34                                  1         108,000                       1
                                                                                      Projects       Total         z
                   State            Underobligations       Overobligations               fully    number of          -
        Name               Number   Number        Amount   Number        Amount       obligated   projects         i
                                                                                                                   tf
                                                                                                                   2
        New Jersey          35        1      $    90,150                                              1            H


        New Mexico          36        3           15,500     9       $     663,724         1         13
        New York            37        6          997,030     4             261,942                   10

        No. Carolina        38        8          920,377    10           1,048,746         2         20

        No. Dakota          40        5          797,751         1            5,099                   6

        Ohio               41        13       1,017,509          7         738,188         2         22

        Oklahoma           42        15          712,490         7         208,898         8         30
    w
        Oregon             43        11          696,133         5          60,423         1         17
        Pennsylvania       44        11       1,833,490                                              11
"       Rhode Island       45

        So. Carolina       46        14          809,601         6         229,953         1         21

        So. Dakota         47         1          479,229                                              1
                                                                                                                   %
        Tennessee          48        34       1,898,609       1            200,000         7         42
                                                                                                                   3
        Texas              49        27       1,367,991      12            910,938         3         42            ::
                                                                                                                   x
        Utah               52         2            1,550      2             36,533                    4       eH

        Vermont            53
                                                                                                                       Projects                      Total
                    State                       Underobligations                       Overobligations                    fully                   number of
         Name                   Number           Number        Amount                   Number        Amount           obligated                  projects    5
                                                                                                                                                              !z
         Virginia                54                       6. ,$ 1,269,819                     1   $    19,908                  5                     12       H



         Washington              56                       8          454,802                  1         6,440                                         9

         West Virginia           57                       9        1,138,372                                                   2                     11

         Wisconsin               58                   24           1,897,928                  3        32,251                                        27

         Wyoming                 59                       2             2,005                 4       138,300                  4                     10

         Puerto     Rico         63                                                           1           101                 10                     11

         Virgin      Islands     -64                  -        -                                                          -
    .b

               Total                                 429      $28,398,364           --a/143       $9,367,279              =78                       650



\
         -a/Five  of these     projects   exceeded        the 50-percent        maximum, stipulated      in the authorizing        legislation,
             by $20,955.
APPENDIX II                                                         APPENDIX II

        GLOSSARY OF COLUMN HEADINGS ON LISTING
        --------------------------------------------------       OF PROJECTS
       BY STATE AND AMOUNT OF UNDEROBLIGATION AS COMPUTED BY
       -----------------------------------------------------
                 NATIONAL          DEMONSTRATION WATER PROJECT
                 ------------------------------------

CASE              Sequence      of project      in listing.
SEQNUM            Same as CASE.
PROJECT           Number     assigned    to individual          project.
PURPOSE           Purpose      of project.       A "1"    indicates          a water
                  project,      and a "2"     indicates      a waste         disposal
                  project.
STATE             Number identifying      the State   in which                the
                  project    is located.     (See app. I for
                  corresponding     State names.)
PCNTMAX           Percentage      of maximum allowable    grant.  Amount
                  of actual      grant divided   by amount of maximum
                  allowable      grant times 100.
FHAG              Total Agency grant.     Actual              amount       of money that
                  was granted  to a project.
DIFF              Maximum allowable          grant   minus      Agency       grant.
CALCl             Maximum allowable          grant   as determined            by the
                  SO-percent   rule.
CALC2             Maximum allowable          grant   as determined            by the
                  l-percent   rule.
CALC3             Maximum allowable          grant    as determined           by the
                  similar community          rule.




                                         5
APPENDIX III                                            APPENDIX III

                     LISTING OF PROJECTS
                     --------m---m------
                   UNDEROBLIGATED BY STATE,
                   -----------------w--w--
                PROJECT NUMBER, AND PROJECT NAME

                      Project
State
a----                 number
                      ------                 Project-------- name
                                             ---
Alabama   (1)             80         Northeast        Ala. Water and
                                         Sewer and Fire
                        100          so. Marengo Co. Water &
                                         Fire Protection
                        180          Cullman County
                        160          Bakerhill        Water and Fire
                                         Protection       Auth.
                        220          Roupes Valley         Water
                                         Authority
                        170          Spring      Valley    Water System
                        150          Curry Water Authority
                        140          Little      Waxie Water
                                         Authority
                          50         Choctaw-Edna         Water & Fire
                                         Protection
                          20         Greenpond Water System
                         250         Pickens       County Water Sewer
                                         & Fire
                         190         V.A.W. Water System,          Inc.
                         240         Smiths Water Auth.
                          70         No. Dallas        Co. Water and
                                         Fire Protection
                         210         Big Wills        Water & Fire
                                         Protection
                         120         St. Elmo-Irvington          Water
                                         Authority
                         110         Kushla Water & Fire
                                         Protection       Dist.
                          90         Rockwood Water Authority
                          40         Greenwood Water & Fire
                                         Protection
                         260         Northwest        St. Clair   Water
                                        System
                          60         Goodman Water & Fire
                                       Protection
                          30         Harrisburg   Water Authority




                                29
APPENDIX III                                        APPENDIX III




                  Project
State             number                  Project     name

Arizona    (2)        300        Twin City Water Works
                      280        Porter  Creek Water Co. Inc.
                      310        S. Rainbow Valley  Water
                                   Cooperative

Arkansas    (3)       580        Vilonia    Waterworks     ASSOC.
                      530        North White Co. Water
                                     Assoc.
                      460        Hughes Community Water
                                     Assoc. Inc.
                      500        New London Water Assoc.
                                     Inc.
                      360        Cleveland      County Rural
                                     Water Assoc.
                      640        Town of Pottsville
                      490        Marysville      Water Assoc.
                                     Inc.
                      510        Wesson Newell Water ASSOC.
                      590        Town of Cushman
                      600        Town of Flippin
                      480        Faircrest      Water Assoc.
                     5960        Four Mile Hill        Water
                                     Assoc. Inc.
                      350        Lake Chicot      Water Assoc.
                      420        Long Lake Water Assoc.
                      430        Trumann Rural Water Assoc.
                      370        Kelso-Rohwer      Water Assoc.
                      650        Felsenthal      Water Assoc.
                      630        Standard-Umpstead        Water
                                     Assoc.
                      390        Pleasant     View Water Users
                                     Assoc.
                      570        Vanndale-Birdeye        Water
                                     Assoc. Inc.
                      330        Bradley     County Rural Water
                      520        City of Clinton
                      670        City of Lincoln
                      550        Poplar     Grove Sewer Imp.
                                     Dist.   #l
                      400        Mockingbird      Hill   Water
                                     Assoc.
                      440        City of Vandervoort
                      610        Town of Marie
                      470        Town of Fifty       Six


                            30
APPENDIX III                                                  APPENDIX III




                           Project
State                      number                   Project     name
                              660         City of    Cotter
                              620         Town of    Western Grove
                              340         Locust    Bayou Water Corp.
                              560         Town of    Lead Hill
                              380         City of    Branch
California         (4)        860         Joshua Basin County Water
                                             Dist.
                             5990         Arrowbear Park County
                                             Water Dist.
                               900        Butte County Service
                                             Area No. 26
                               910        San Andreas Sanitary
                                             Dist.
                               870        Linden Co. Water Dist.
                               750        Inyo County Bishop
                                             AD #l
                               890        Allensworth    Membership
                                             Water Co.
                               770        Mono County June Lake
                                             PUD #2
                               690        Riverdale PUD Imp. Dist. A
Colorado     (5)              5460        Town of Meeker
                              5490        Spring Canyon Water and
                                            Sanitation
                              5480        Orchard Mesa Sanitation
                                            Dist.
                              5560        Town of Milliken
                              5470        Archuleta Water Company
                              6190        Horseshoe Lake Sanitation
                                            Dist.
                              5510        Town of Seibert
 Connecticut         (6)      5570        Town of Burlington
                               950        Town of New Hartford
 Florida     (9)               980        West Hernando Water &
                                             Sewer Dist.
                               970        City of High Springs
                              1010        City of Umatilla
                              1000        Astor-Astor    Park Water
                                             Assoc.
                              5580        Water and Sewer Dist.
                                             #2 Escambia Co.
                                     31
APPENDIX III                                                           APPENDIX III
                          %




                              Project
State                         number                         Project      number

Georgia           (10)          1100            City    of   Palmetto
                                1120            Town    of   Lome Oak
                                1070            Town    of   Whitesburg
                                1040            City    of   Shellman
                                1180            City    of   Greenville
                                1160            City    of   Woodbury
                                1170            City    of   Demorest
                                1060            City    of   Kingsland
                                1110            City    of   Darien

Illinois           (13)         1250            Jersey County Rural Water
                                                    co. Inc.
                                5410            Village    of Stewardson
                                1370            Village    of West City
                                1260            Fort Massac Water Dist.
                                1320            Village    of Altona
                                1350            Village    of Davis
                                5380            Village    of Sparland
                                1360            Village    of Tiskilwa
                                1310            Village    of Cave in Rock
                                5390            Village    of Plainville
                                1420            Village    of Dieterich
                                1330            Village    of Claremont
                                1340            Village    of Strasburg
                                1290            Village    of Xenia
                                5870            Town of New Canton
                                1270            Lick Creek Water Dist.
                                1280            Hoyleton     Rural Water Co.
                                1375            Village    of West City
Indiana           (15)          6060            Canaan Utilities   Corp.
                                1440            Paxton Water Corp.
                                1430            South Harrison   Water Corp.
Iowa       (16)                 1490             Town   of   Coulter         c
                                6260             Town   of   Fertile
                                1500             Town   of   Crystal      Lake
                                6280             Town   of   Paton
                                1460             City   of   Delta
                                1510             Town   of   Rutland
                                1520          * .Town   of   Menlo

Kansas       (18)               1590            Rural Water       Dist.     No. 13
                                                  Jefferson       Co.


                                        .32
APPENDIX III                                              APPENDIX III




                      Project
State                 number                    Project       name

                       1560          Rural Water      Dist.     No. 2
                                       Barber Co.
                       1630          Rural Water      Dist,    #2
                                       Pottawatomie        Co.
                       1620          Rural Water      Dist.    #4
                                       Neosho Co.
                       1570          Rural Water      Dist.     #l
                                       Cloud Co.
                       1600          Rural Water      Dist.     #4
                                       Lyon Co.
Kentucky    (20)       1780          Wood Creek Water Dist.
                       1720          City of Stanton
                       1670          Bullock     Pen Water Dist.
                       1810          Christian      County Water
                                        Dist.
                       1750          City of Dry Ridge
                       1660          East Clark County Water
                                        Dist.
                       1790          Eliho-Rush      Branch Water
                                        Assoc.    Inc.
                       5590          City of Barlow
                       1740          Morgantown      Road Water Dist.
                       1700          Rumsey Water Dist.
                       1650          North Barren Water Assoc,
                                         Inc.
                       1640          Allen     County Water Dist.
                       1770          Rochester      Water Dist.
                       1760          Logansport      Dunbar Water
                                         System Inc.
Louisiana      (22)    1970          Village    of Calvin
                       1870          Keatchie    Water System Inc,
                       1930          Halfway    Carroll       Water
                                         System   Inc.
                       1900          Village    of Delta
                       1860          South Claiborne          Water System
                                         Inc.
                       1840          Southeast      Bienville      Water
                                         System   Inc.
                       1980          Mt. Zion Water System
                                         Inc.
                       1990          Walnut Bayou Water Assoc.
                                         Inc.


                                33
APPENDIX III                                                       APPENDIX III




                                Project
State                           number                   Project    name
                                 1910          Indian   Village    Water
                                                  System Inc.
                                 1830          Mt. Calm Water System
                                                  Inc.
                                 1820          Southwest     Allen  Parish
                                                  Water
                                 1920          Lena Water System Inc.
                                 1940          Corney Water System
                                                  Inc.
Maine      (23)                  2030          Town of Wilton
                                 2020          Limestone   Water     &
                                                  Sewer Dist.
Maryland          (24)           2090          Lavale Sanitary   Comm.
                                 2060          Kent County Sanitary
                                                 Dist. Inc.
Michigan          (26)           2130          Ottowa    County
                                 2140          Village    of Mattawan
Minnesota          (27)          2250          Alexandria      Lake Area
                                                  Dist.
                                 2210          Marshall       Polk Water System
                                 2350          City of      Avon
                                 2320          City of      Isanti
                                 2190          City of      Taunton
                                 2260          City of      Nelson
                                 2310          City of      Harris
                                 2230          City of      Roscoe
                                 2280          Oakland      Sanitary  Sewer
                                                  Dist.     #l
                                 5880          City of      Northome
                                 2240          City of      Backus
                                 2330          City of      Lynd
                                 2340          City of      Beardsley
                                 2270          City of      Freeborn
                                 2290          City of      Milroy
                                 2300          City of      Ellendale
Mississippi              (28)    5070          Northeast    Itawamba
                                                 Water Assoc.     Inc.
                                 2410          Central   Yazoo Water
                                                 Assoc.   Inc.


                                          34
APPENDIX III                                                             APPENDIX III




                                Project
                                number                         Project     name

New Jersey        (35)           2720              Eqq Harbor      Township
                                                     Municipal      Utilities

New Mexico        (36)           2780              Lower Valley   Water Users
                                                     Assoc.
                                 5540              Southside   Water Users
                                                     Assoc.
                                 2790              San Acacia MDWC Assoc.

New York       (37)              5900              Town of     Ontario
                                 5440              Town of     Newfane Sewer
                                                       Dist.   #2
                                 2840              Village     of Deposit
                                 5890              Village     of Sylvan Beach
                                 6160              Village     of Walton
                                 2820              Town of     Boston
North   Carolina         (38)    6360              Dare County
                                 2910              Town of Blowing     Rock
                                 2865              Jackson Park Sanitary
                                                      Dist.
                                 2900              Perquimans   County
                                 6090              Bell Arthur    Water Corp.
                                 6370              Tyrrell   County
                                 6080              Hertford   County
                                 2890              Handy Sanitary     Dist.
North    Dakota       (40)       3000              Cass Rural Water Users
                                                      Inc.
                                 5950              Dakota Water Users Inc.
                                 2990              Fort Lincoln  Estates  Coop.
                                 2980              City of Dunn Center
                                 2970              City of Dodge
Ohio    (41)                      3010             Rural Lorain     Co. Water
                                                       Auth.
                                  5630             Highland    County Water Co.
                                                       Inc.
                                  5620             Village    of West Union
                                  6410             Scioto    Water Inc.
                                  3060             Village    of Prospect
                                  5610             Jackson County Water Co.
                                                       Inc.
                                  6400    -        Switzer    Water Assoc.    Inc.


                                              37
APPENDIX III                                               APPENDIX III




                     Project
State                number                      Project    name
                      3080              Portage    County Sewer Dist.
                                            No. 4
                      5640              Monroe Water Dist.
                      3150              Village    of West Farminbgton
                      3050              Village    of Vanlue
                      5650              Old Straitsville     Water
                                            Assoc.
                      3030              Village    of Beaverdam
Oklahoma      (42)    3190              RWD No. 8 McClain Co.
                      3180              Rural Water Sewer & Solid
                                          Waste Johnston   Co.
                      5930              Rural Water Dist.   No. 6
                                          Mayes Co.
                      3350              Oklahoma Rural Water Inc.
                                          Kay Co.
                      3280              RWD No. 2 Woodward Co.
                      3290              Rural Water Sewer & Solid
                                          Waste Mgmt. #6 Grady Co.
                      3340              Dale Water Corp.
                      3240              Yale Rural Water Corp.
                      3320              Rural Water Dist.   No. 2
                                          Cotton Co.
                      3230              RWD No. 3 Pawnee & Payne
                      3300              Watts Public  Works Auth.
                      5260              RWD No. 1 Cotton Co.
                      3330              RWD No. 2 Garvin Co.
                      3270              Kerr Water Dist.   Seguoyah
                                          co.
                      3220     :        Osage Public  Works Auth.
Oregon     (43)      3530               Tri City Sanitary    Dist.
                     3410               Depoe Bay Sanitary     Dist.
                     3400               City of Canyonville
                     3500               Oceanside   Water Dist.
                     3420               City of Union
                     5500               City of Brookings
                     3430               City of Glendale
                     3510               City of Stanfield
                     3440               Glide Water Assoc.
                     3480               Beverly   Beach Water Dist.
                     3520               Reith Water Dist.




                                   38
APPENDIX III                                        APPENDIX III




               Project
State          number                     Project     name

                2450          Crooked Creek Water
                                 Assoce Inc*
                5240          New Providence         Water
                                 Assoc. Inc.
                5210          Porterville         Water
                                 Assoc. Inc.
                5820          East Quitman Water
                                 Assoc.      Inc.
                5130          Three Forks Water Assoc,
                                  Inc.
                2380          Monteray       Water Assoc.
                                  Inc.
                5150          Town of Tishomingo
                2370          Evergreen        Water Assoc,
                                  Inc.
                5190          Acona Water Assoc.
                5055          Nicholson        Water &
                                  Sewer Assoc, Inc,
                 2430         Panhandle        Water Assoc,
                                   Inc.
                 2390         Wayside Water Assoc.
                 5310         East Quitman Water Assoc,
                                   Inc.
                 2480         East Fernwood Water Assoc.
                                   Inc.
                 2500          Liberty-Plattsburg            Water
                                   Assoc.
                 2400          Hiwannee Water Assoc.             Inc,
                 2360          South Lake Water Assoc.
                                   Inc.
                 5120          Palmer Water Assoc.
                 5140          Harmony Central          Water
                                   Assoc,     Inc,
                 5060          New Salem Water Assoc.
                                    Inc.
                 5045          Holcomb Utility          gist,
                 5100          New Candler         Water Assoc,
                 2470          Northeast        Perry County
                                    utility
                 5230          Town of Falkner
                 5180          Atlanta      Water System
                                    Inc.
                 5220          Village      of Gattman
                 2420          Choctaw Water Assoc,             Inc,
                 5170          Town of Rienzi

                         35
APPENDIX III                                            APPENDIX III




                   Project
State              number                     Proiect     name
                    5090          Denmark Water Assoc.
                    2440          Beat III Greene Co.
                                    Water System Inc.
                    5110          Polkville  Water Assoc.
                    5200          C b M Waterworks  Assoc.
                                     Inc.
                    2460          51 55 Water Assoc. Inc.
                    5040          Holcomb Utility  Dist.

Missouri   (29)     5430          Public      Water Supply Dist.
                                     #l    Cedar Co.
                    2590          City     of Malta Bend
                    6000          Public      Water Supply Dist.
                                     No.     3 Vernon Co.
                    2540          City     of Graham
                    2520          Public      Water Supply Dist.
                                     #6    Stoddard   County
Montana    (31)     6025          Ashland County Water
                                    and Sewer
                    6020          Ashland County Water
                                    and Sewer
                    6145          Basin County Water and/or
                                    Sewer
                    5365          Carter-Chouteau County
                                    Water
Nebraska    (32)    2690          Rural Water Dist.      No. 3
                                      Otoe Co.
                    2670          Rural Water Dist.      No. 1
                                      Dawes Co.
                    2680          Little    Blue Natural
                                      Resources  Dist.
                    2620          Village    of Diller
                    2710          Village    of Dubois
                    2700          Village    of Anselmo
                    2630          Village    of Merriman
                    2600          Rural Water Dist.      No. 2
                                      Boyd Co.
                    2640          Village    of Hayes Center
                    2660          Village    of McLean
                    2610          Village    of Spencer




                             36
APPENDIX III                                                       APPENDIX III




                               Project
State                          number                    Project     name

Pennsylvania       (44)         6450          Gen. Mun. Auth. Boro. of
                                                  Harveys Lake
                                3580          Windsor Township Municipal
                                                 Auth.
                                3570          Worthington      Municipal     Auth.
                                3560          Mountain     Water Assoc.
                                5810          Boro. of Wellsville
                                                 Municipal     Auth.
                                6440          North Lebanon County Auth.
                                6420          Millersburg      Area Auth.
                                5800          Point Township       Sewer Auth.
                                5830          Connoquenessing        Borough
                                                 Auth.
                                6430          Royalton     Borough Auth.
                                6460          Lake Meade Municipal         Auth.
South   Carolina        (46)    3660          Darlington      County Water &
                                                 Sewer Auth.
                                3590          Beaufort-Jasper       County Water
                                3650          Chesterfield      Co. RR Water
                                                 co. Inc.
                                5250          Daniel     Morgan Rural
                                                 Community
                                3690          Wallace     Water Co.
                                5750          Town of Varnville
                                5720          Meansville-Riley       Road
                                                 Water Co. Inc.
                                5680          Trico    Water Co. Inc.
                                3670          Marlboro     Water Co. Inc.
                                5710          Bull Swamp Rural Water Co.
                                                  Inc.
                                3680          Marlboro     Water Co. Inc.
                                5740          Town of Brunson
                                3630          Grassy Pond Water Co. Inc.
                                3620          Goucher Water Co. Inc.
South   Dakota        (47)       3700         Randall    Community     Water
                                                Dist.
Tennessee      (48)              3850         Cumberland   Utility    Dist.
                                3900          Tow11 U; Pig Sandy
                                3940          Arthur   Shawanee Utility
                                                 Dist.
                                 3860         City of Barlett


                                         39
APPENDIX III                                           APPENDIX III




               Project
State          number                        Project       name

                3960           Cross Anchor Utility
                                  Dist.
                3760           First      Utility         Dist.      of
                                  Hardin Co.
                3930          City of Dunlap
                4040           Elbridge         Water Assoc. Inc.
                3780          Lincoln        Co. Board of
                                  Public        Utilities
                4090          Tri-Cities           Sullivan
                                  Utility         Dist.
                4000          City of Savannah
                5980          Dekalb Utility               Dist.
                4080          Tri-Cities           Sullivan
                                  Utility         Dist.
                3870          Fall Branch Utility                    Dist.
                3800          Town of Adamsville
                4110          HB & TS Utility                Dist.
                4020          Town of Puryear
                3910          Utility        Dist.       of Southwest
                                  Bedford
                3750          Town of Monteagle
                4100          Town of Spencer
                4030          Pleasant          Valley       Utility
                                  Dist.
                3890          Laguardo Utility                 Dist.
                3970          North Greene Utilities
                                  Inc.
                5970          Dekalb Utility               Dist.
                4070          Northeast          Robertson
                                  Utility        Dist.
                3950          County Wide Utility                    Dist.
                                  of Crockett            Co.
                3990          Town of Hornsby
                3880          City of Collinwood
                3920          West Warren Utility                    Dist.
               3730           City of Cumberldnd                   Gap
               4050           Town of Byrdstown
               5910           Town of Bell Buckle
               3770           Town of Hohenwald
               4060           Wolf Branch Utility                   Dist.
Texas   (49)   6550           Manville  Water Supply Corp.
               6510           Bi County Water Supply
                                Corp.


                         40
APPENDIX III                                                  APPENDIX III




                         Project
State                    number                     Project     name

                          4150          Zephyr Water Supply Corp.
                          4380          Consolidates     Water Supply
                                           Corp.
                          6540          City of Nome
                          6520          Red River Auth. of Texas
                          4410          Southwest    Milam Water
                                           Supply Corp.
                          4280          Tempe Water Supply Corp.
                          6490          Dobbin Plantersville
                          4240          North Milam Water Supply
                                           Corp.
                          4140          Mustang Valley      Water Supply
                                           Corp.
                          4130          McCoy Water Supply Corp.
                          4340          Callisburg    Water Supply
                                           Corp.
                          6480          Birome Water Supply Corp.
                          4330          Coleman County Water Supply
                          6530          Maloy Water Supply Corp.
                          4250          Men Water Supply Corp.
                          4390          Rock Hill    WSC
                          4260          Wildorado    Water Supply
                                           Corp.
                          4270          Damascus-Stryker      Water
                                           Supply Corp.
                          4400          Salem Elm Ridge Water
                                           Supply Corp.
                          4300          El Sauz Water Supply
                                           Corp.
                          4310          Sharon Water Supply Corp.
                          4420          North Runnels Water Supply
                                           Corp.
                          4320          Bell Milam Falls      Water
                                            SUPPlY
                          4370          Tri-County    Water Supply
                                           Corp.
                          4160          Westbound Water Supply
                                            Corp.
Utah       (52)           4470          Town of Cannonville
                          4481)         Town of Woodruff
Virginia          (54)    5860          Buchanan     County     Public
                                          Service


                                   41
APPENDIX III                                                APPENDIX III




                           Project
State                      number                 Project     name
                            5840          John Flannagan Water Auth.
                            6185          Dinwiddie County Water
                                          Auth.
                            5300          Town of Virgilina
                            5330          Town of Fincastle
                            5290          Pulaski County Public
                                            Service
Washington      (56)        4540          Liberty  Lake Sewer Dist.
                            4600          Town of La Conner
                            4570          Steptoe Sewer Dist. #l
                            4520          Hockinscn Water Assoc.
                                             Inc.
                            4580          Wallula Water Dist. #l
                            4530          Town of Hartline
                            4550     -    Town of Spangle
                            4560          Walla Walla Water Dist.
                                            #2

West Virginia       (57)    6570          City of Shinnston
                            4650          Lincoln Public Service
                                             Dist.
                            4670          Raleigh County Airport
                                             Auth.
                            4700          Mountain Top Public Service
                                             Dist.
                            4690          Lynco Public Service Dist.
                            4680          Clay Battelle    Public
                                             Service
                            4620          Town of Kermit
                            4610          Chestnut Ridge Public
                                             Service Dist.
                            4640          Silverton   Public Service
                                             Dist.
Wisconsin    (58)           4790          Town of Norway Sanitary
                                             Dist.
                            6600          Village of Lake Nebagamon
                            4800          Poy Sippi Sanitary Dist.
                            4780          Oakdale Sanitary Dist.
                            4750          Sand Creek Sanitary Dist.
                                              #l
                            4770          Village of Endeavor
                            4740          Village of Wyocena

                                     42
APPENDIX III                                          APPENDIX III




                 Project
State            number                     Project      name

                  4825          Stone Lake Sanitary
                                    Dist.
                  4870          Town of Lyndon Sanitary
                                    Dist.
                  6640          Village      of Curtiss
                  6580          Drummond Sanitary            Dist.
                  4760          Village      of Ridgeway
                  4835          St. Joseph Sanitary
                                    Dist.    #l
                  4710          Village      of Wheeler
                  4840          Ashippun       Sanitary      Dist.
                  6645          Village      of Curtiss
                  4830          St. Joseph Sanitary                .
                                    Dist.    #l
                  4860          Town of Kossuth Sanitary
                                    Dist.
                  6610          Jamestown Sanitary            Dist.
                                    #3
                  4820          Stone Lake Sanitary             Dist.
                  4810          Blenker-Sherry          Jnt.
                                    Sanitary      Dist.
                  4730          Sanitary       Dist.    No. 1
                                    Town of Lakeland
                  6585          Drummond Sanitary            Dist.
                  4720          Town of East Troy
                                    Sanitary      Dist.
Wyoming   (59)    5780          Town of Marbleton
                  5775          Sunburst Water &
                                  Sewer Dist.




                           43
APPEN3IX IV                                                                                      APPENDIX IV
                            UNITED   STATES         DEPARTMENT                  OF AGRICULTURE
                                      FARMERS           HOME       ADMINISTRATION

                                                WASHINGTON.          D.C.    20250




      Mr. John Landicho                                                                           May     27,     1977
      Associate   Director
      Community and Economic Division
      U.S. General Accounting Office
      Washington,    DC 20548


      Dear Mr. Landicho:

      This is in reply to your letter       of April 25, 1977, concerning      your
      recent analysis      of the Farmers Home Administration      (FmHA) water and
      waste disposal     grant program.    You indicated    that of the 650 projects
      receiving    grants in fiscal   year 1976, 429 were funded at less than the
      maximum amount allowable      by law and FmHA regulations.       You ask whether
      FmHA would be willing      to make adjustments     on those projects  that were
      underfunded,     where it is legally   permissible    to do so.

      We are opposed to retroactively   adjusting  the grant                              amounts       for     those
      projects covered by your analysis    for the following                              reasons:

              1.     Although the basic methodology and protocol          used in the
      analysis     resulted      in the computation    of a grant amount based strictly      on
      a mechanical       calculation,     we do not believe consideration     was given to
      the matter of priorities.            FmHA regulations    provide that State Directors
      will    establish     priorities    for funding of applications     based on the
      applications       on hand and the availability        of funds from the States'
      allocation.        FmHA regulations     do not require    that the "maximum allowable
      grant" be made in every case.            Also, there are other factors     that affect
      the final      determination     of grant amount such as the availability        of
      funds from other sources.

              2.    In a major portion     of the cases covered by the analysis,         the
      difference      between the actual grant made and the "maximum allowable
      grant" as computed during the analysis             is not substantial    enough to
      warrant    adjustment.     Such a small increase in grant amount would not
      have a significant      impact on the user payment for those users being
      served by the project       and receiving      the benefits    of the grant.   The
      basic goal of the program is to reduce user payments to a reasonable
      level for farmers,      ranchers,    rural residents,       and other eligible  rural
      users.     We believe   that after     considering    all funding on the projects
      covered by the analysis,        this goal has been accomplished.




                                                              44
APPENDIX IV                                                                         APPENDIX IV

              3.      Such a retroactive     adjustment       could set a precedent          that'would
      be difficult        to change.     By adjusting      the grants for certain           grant
      recipients       covered by the analysis,         other recipients        may rightfully
      demand equal treatment.            This could set in motion a process that could
      run for an undeterminable           amount of time.         To attempt      to retroactively
      construct       all the circumstances       surrounding      the negotiations         between the
      recipient       and FmUA at the time the grant offer was tendered and accepted
      by the grantee would be a difficult               and time-consuming         process.       Project
      funding was based on full           consideration       of all the circumstances            that
      existed      at the time the grant was approved.               All parties,      including       the
      applicant,       agreed that a reasonable         user cost had been achieved.               We
      believe      that it would place an unreasonable             administrative        burden on the
      Agency's resources        to attempt     such an adjustment.

      Our foremost     concern is that the benefits   of the program be fairly    and
      equitably   distributed    to all eligible  communities desiring our assistance.
      We believe   that our present grant program is being administered        in such
      a manner.

      Sincerely,




      DENTON E. SPRAGUE
      Acting Administrator




                                                      45
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