oversight

National Service Programs: Status of AmeriCorps Reform Efforts

Published by the Government Accountability Office on 1997-09-03.

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

United States
General Aceoulain6! omce
Washh@.un, D.C. 20642

Health, Edimation, and
Human53emiceeDivifdon


B-277783
September3, 1997

The Honorable CharlesE. Grassley
United States Senate
The Honorable Christopher S. Bond
United States Senate
The Honorable Pete Hoekstra
Chairman, Subcommitteeon Oversight and Investigations
Committee on Education and the Workforce
House of Representatives

Subject: National ServicePrograms: Status of AmeriCor~s Reform Efforts            i

The AmeriCorps program, administered by the Corporation for National and
Commuuity Service(the Corporation}, is presently in its third year of operation.’
The program givesparticipants stipends and education awards in exchange for
service that addressesuumet needsin education, public safety, human services,
and the environment. The Corporation, with a total fiscal year 1997             .
appropriation of $616million, administers a variety of grants to existing and new
national service projects; AmetiCorps grauts, for which $215 million was
appropriated, constitute the largest share of these funds. AmeriCorps grants
include (1) operating grants to state commissions, which subgrant funds to local
projects; (2) operatig grants to national projects; and (3) grants for a recently
established Education Awards Program that provides funding for education
awards but minimal or no funding for project operations.
                                                 1

‘We first reported on AmeriCorps in 1995 (National Service Promms:
Am&                                                                GAO/HEHS
95-222,Aug. 29, 1995). The AmeriCorpsYJSAprogram is now known as the
AmeriCorps*StateINationalprogram; in this correspondence, we refer to it as
“AmexiCorps.” AmeriCorps is authorized under the National and Commuuity
Service Trust Act of 1993(P.L. 103-82,42U.S.C. 12571 et seq.). The Corporation
administers severalother programs, including the AmeriCorps*VISTA,
AmeriCorps*National Civjlian Commuuity Corps, Learn and Serve America, and
National Senior Vohmteer Corps programs.
                                        GAOIHEHS-97-198R   AmeriCkms   Reform Efforts
B-277733
In March 1996,responding to congressional criticism, the Corporation agreed to
10reform steps to improve AmeriCorps. These included reducing averageper-
participant costs, decreasingreliance on federal funding, eliminating grants to
federal agencies,and increasing the number of projects funded with grants for
the Education Awards Program. On March 14, 1997,you asked us to- determine
the status of the Corporation’s reform efforts. We agreed with your offices to
focus our work on the reform efforts that are related to reducing costs; more
specifmlly, our objectives were to determine

      how AmeriCorps funding changed per-participant from the initistl program
      year @rogram year 1) to the third program year (program year 3);
      whether private contributions to AmeriCorps increased on a per-
      participant basis from program year 1 to program year 3;
      the status of subgranteesof former federal agency grantees; and
      the status of Corporation efforts to increase the number of projects that
      provide only education awards to participants under the.Education
      Awards Program.3
In determining how AmeriCorps funding has changed,we relied on funding data
from the CorporatiorYsgrant data system on grant awards and expected funding
matches from non-Corporation sources. Although we.did not validate these data
with individual grant documents, we checked the data for internal consistency
and resolved any discrepancies with the Corporation. We recognize that actual
grant funds distributed, actual matching funds obtained, and actual participants
performing service may vary from the amounts expected, but actual data for
program year 3 are not available yet. In addition to this funding analysis, we

?I’he Corporation’s first operating grants for AmeriCorps projects were funded
with its fiscal year 1994appropriation, to be used in the 199495 program year.
Operating grants in the third year were funded with the Corporation’s fiscal year
1996appropriation for the 1996-97program year. Program years begin and end
at different times throughout the calendar year for different projects and may
extend for more than or less than 12 months.
90 increase the number of participants while reducing costs per participant, the
Corporation establishedthe AmeriCorps Education Awards Program as a
separategrant program in September 1996. It makes education awards available
to support community service through organizations that can largely or entirely
cover the cost of operating their projects without additional Corporation support.
2                                        GACVHEH+97-198R   AmeriCorps Reform Efforts
B-277783
discussedthe questions with and obtained documentation from Corporation
officials, discussed with some federal agencies (former grantees) their conlktued
funding of local projects, and discussedwith a few projects the private
contributions received, federal funding, and the Education Awards Program. We
conducted our review from June to August 1997in accordancewith generally
accepted government auditing standards.
In summary, our analysis shows that the Corporation has made progress in
taking some of the cost reduction reform steps but lacks data systemsto track
whether all these reforms have been made. Corporation grant funds per
participant have decreased by about 6 percent. Matching funds have increased
in total, but the Corporation is unable to document whether private contributions
have increased. No federal agencies,at either the national or field-office level,
are ktwriCorps grantees in program year 3. However, many of the subgrantee
projects of former federal agency grantees, as allowed by law, continue to
operate as AmefiCorps projects, having applied for and received Corporation
funds either directly from the Corporation or through state commissions. In
addition, the Education Awards Program is operationzil; 49 new projects have
been funded for a total of 6,400participants so far in program year 3.
BACKGROUND
The Corporation provides grant funds to projects to pay up to 85 percent of the
cost of participants’ living allowances and benefits and up to 67 percent of other
project. costs, including participant training, education, and service gear; staff
salaries, travel, transportation, supplies, and equipment; and project evaluation
and adn&&rative costs. To ensure that federal Corporation dollars are used to
leverage other resources to help pay for project support, granteesmust also
obtain matching support from non-Corporation sources. This matching support,
which can be cash or in-kind contributions, may come from other federal
sources as well as state and local governments and private sources.4
Project participants can serve full-tjme or part-time. A full-time participant
provides at least 1,700hours of service within a l-year period and‘receives an




41nthis correspondence, we refer to both cash and in-kind contributions as
“matching funds.” Matching funds do not need to be dollar-for-dollar.
3                                        GAOIHEHS-97-198R   AmeriCorps Reform Efforts
    R-277783
    education award of $4,725. Part-time participants receive a portion of this
    award, depending on the amount of service performed.’

    CORPORATIONGRANT FUNDS PROVIDEDPER PARTICIPANTHAVEI
    DECREASED

     Prom program year 1 to program year 3, Corporation grant funds provided per
     FTE to all projects have decreased6 percent, to about $10,000,as shown in table
     L6 Matching funds per FTE decreased10 percent, to about $8,800. Grant.funds
    in total increased by about a quarter, while FTEs increased by more than a third.




                                           1.
                                                                                 ._   ;ii




.

                                      .                                                     ‘.




    ‘Our analysis is conducted in terms of full-time equivalentparticipants (FIX). A
    full-time participant is counted as one FTE; a part-time participant is counted as
    a fraction of an FTE equal to the pro-rated fraction of a full-time service year in
    which he or she participates. These data came from grant applications and
    reflect the number of participants expected at the time ‘of the application. In our
    tables, we also include the number of participants, which is computed as the
    sum of full-time and part-time participants.
    ‘Note that the averageper-FTE funding discussedincludes only grant funds
    provided to projects. The education award and a pro-rated portion of the
    Corporation’s overhead, expensesthat were included in our 1995report, are
    exchrded.
    4                                           GAO/KEHS-97-198R   AmeriCorps Eeform Efforts
ES-277783
Table 1: Comtxxrison of Funding; Data for All Proiects Onerating in Program
Years 1 and 3


                                                                   I       Percent
                                                                          increase
         Category            Program year 1      Program year 3          (decrease)
 Corporation grant funds I      $147,925,690 1      $188,721,991 I                    28
 Matching funds                 $134,603,382        $164,902,486                      23
 Total funds                    $282,529,0721       $353,624,477                      25
 FITS                                 13,819 1             18,829 I                   36
 Corporation funds/FTE              $10,705              $10,023                    (6)
 Matching funds/FIX                  $9,741               $8,758                  WV
 Total funds/FlX                    $20,446              $18,781                    03)

 Number of projects                     298                  475                      59
 Number of participants              16,680               23,044                      38

Note: Program year 1 data include 71 projects that have since discontinued
operations, and program year 3 data include 248 projects that began operations
after program year 1.

Another way to look at trends in Corporation grants is by analyzing Corporation
grant data for the 227 projects operating in both program years 1 and 3, as
shown in table 2. These projects’ per-participant funding tiends may reflect
efforts to eliminate expensive projects or decreases in per-participant funding
from more expensive start-up years to later years. For these projects,
Corporation funding per FI’E decreased 20 percent to about $9,300. Unlike the
decrease in matching funds per FTE shown for all projects above, these projects
showed an increase in matching funds per FTE of about owetenth. The increase
in matching funds per FTE and the decrease in Corporation funds per FTE are
consistent with the Corporation’s reform agreement. The changes result in the
matching funds per l?f’E nearly equaling the Corporation funds per l?f’E.




                                        GAO/EEHS-97-198R    AmeriCorps    Reform Efforts
B-277783

Table 2: Comnarison of Fund& Data for Proiects Onerating in Both Program
Years 1 and 3




Note: n/a = not applicable.

The Corporation has taken several steps to decrease its grant funds per
participant. In program years 1 and 2, the Corporation set no target for per-FIX
funding. However, for program year 3, the Corporation limited its grant funds
per FTE to $13,800 or, if more than that, the grantee was required to reduce the
per-FTE funding from program year 2 by at least 10 percent.7 For program year
4, the Corporation will limit its grant funds per FI’E to $11,750. In calculating
average per-FTE funding, states may include participants in the Education
Awards Program. In addition to setting these grant fund limitations, the
Corporation increased its non-Corporation match requirement from 25 to 33
percent beginning in program year 3.

Akhough the Corporation has reduced the amount of its own grant funds
expected to be disbursed per planned participant, the Corporation does not
collect data on the amount of federal funding from other departments and


‘For state commissions, which are grantees for several projects in their states,
this requirement applied to the overall average of state projects.

6                                        GAOBEHS-97-198R   AmeriCorps   Reform Efforts
B-277783
agencies. Projects are permitted to use federal funds from non-Corporation
sources to meet required matches for most budget categories but are not
required to report this information to the Corporation. For our 1995 study on
AmeriCorps resources, we collected information directly from projects showing
that federal resources from non-Corporation sources totaled $3,177 per FTE in
program year 1.

Corporation officials explained that the primary reason they do not collect
information on sources of matching funds is that Office of Management and
Budget (OMB) grant requirements limit the data agencies providing grants may
collect without special OMB permission.* Thus, the Corporation generally
collects information only on the total amounts of Corporation funds and non-
Corporation funds spent. The Corporation is considering requesting OMB’s
permission to deviate Tom these requirements and collect detailed information
on the sources of matching funds; however, Corporation officials expressed
concern that they lack the resources required for such a data gathering effort.

CORPORATION UNABLE TO DOCUMENT TRENDS IN PRIVATE
CONTRlBUTlONS

Although the Corporation has implemented some changes intended to increase
the amount of private resources flowing to AmeriCorps projects, it has no
system to determine the actual amounts projects are receiving. Lacking a system
that idenmes the source of matching funds (as discussed above), the
Corporation cannot determine whether private contributions are increasing.

Although the Corporation does not have information on private funds obtained,
officials have taken some steps to increase the amount of these funds going to
local projects. Then. efforts include the following.

      Unlike in program years 1 and 2, for program year 3 all projects were
      requested to raise some funds (cash or m-kind) from private sources.

      The amount of matching funds that projects are. required, to obtain
      increased from 25 percent in program years 1 and 2 to 33 percent
      beginning with program year 3. Matching funds come from all sources
      (other federal agencies, state and local government agencies, and private
      sources).




‘these requirements are found in OMB Circular A-110.

7                                        GAOAEHS-97-198R   AmeriCorps Reform Efforts
B-277783
      The Corporation has acted to build and improve relations with potential
      private funding sources by, for example, raising AmeriCorps visibility
      through a nationdl summit, directing potential corporate sponsors to a
      portfolio of projects in their interest areas, and providing individual
      projects with technical assistance in raising such funds.

OmR     FEDERAL AGENCIES’ ROLE IN AMERICORPS GREATLY REDUCED

In program year 3, the Corporation provided no grants to federal agencies to
operate AmeriCorps projects as it had done in the tist two program years. In
program year 1, the Corporation provided about $14.6 million in grants to 15
grantees within 13 federal agencies.’ Jn February 1996, the Corporation notified
its federal agency grantees that it would not “make direct grants of funds to
federal agencies for AmeriCorps programs” in anticipation that such grants
would be disallowed in the Corporation’s pending appropriations bill-l’ However,
the Corporation gave erristing local subgrantees of the federal agency grantees a
choice of applying for Corporation funds, as either individual applicants or a
member of a consortium of projects submitting a joint application.” Jn program
year 3, several of these local projects contiued to receive Corporation funding
through one of these arrangements.

F’urther, as allowed under the authorizing legislation, some of these projects
continue to receive non-Corporation federal funding-cash or in-kind-to operate
their projects. We contacted the six former federal agency grantees whose
subgrantees received more than $1 million from other federal sources in program
year 1 and determined that five provided funding (from non-Corporation




the 15 grantees included three grantees within one agency, the Department of
Health and Human Services, and one grantee in each of 12 other agencies.
10TheOmnibus Consolidated Rescissions and Appropriations Act of 1996 (P-L.
104134), which became law shortly thereafter, eliminated funds for national
service projects run by federal agencies.
“The Corporation initially provided a third option: federal agencies could apply
for Corporation funds for only education awards. However, after determining
that some members of the Congress believed it did not meet the spirit of the
ArneriCorps reforms agreement, the Corporation eliminated this option.

8                                         GAOBEHS-97-198R   AmeriCorps Reform Efforts
B-277783
sources) to at least one former subgrantee each in program year 3-l’ Most of
this funding appeared to be at reduced levels relative to program year 1. For
example, EPA provided a total of more than $700,000 of in-hind support to 6
projects in program year 1; an agency official said that currently only a small
amount of technical assistance from EPA regional offices goes to these projects.
The Department of Energy contributed more than $900,000 in cash and about
$450,000 of in-kind support to the Salmon Corps AmeriCorps project in program
year 1, while in program year 3, according to Energy staff, Energy’s contribution
is about $500,000 in cash and a minimal amount of in-kind support.
Furthermore, most of the local projects that were subgrantees of the Department
of Agriculture, the largest federal grantee, did not receive program year 3
operating grants, according to an Agriculture official, and the $21.million of
support that Agricuhure provided to its subgrantees in program year 1 has been
eliminated.

AMERICORPS EDUCATION AWARDS PROGRAM BEING IMPLEMENTED

Before the Education Awards Program began, only a few projects were funded
with Corporation funds for just education awards ($4,725 per full-time
participant) under the operating grants to local projects. The administration has
proposed expanding the Education Awards Program to 50,000 participants over
the next 5 years.

As of July 1997, the Corporation had established three review cycles for
Education Awards Program applications, with application deadlines of October
31, 1996, February 28, 1997, and June 30, 1997. Decisions on grant awards have
been made on the first two cycles. Grants were approved for 49 projects with
about 6,400 participants (3,200 FTEsj totaling about $15 million in education
awards. The Corporation permitted grant applicants to request up to $1,000 per
FI’E for project management expenses, and many applicants requested these
funds. Examples of allowable expenditures for these funds include oversight of
a multisite organization and training for participants and supervisors in
AmeriCorps procedures. For the 49 projects approved, funds approved for
managing the projects totaled $1.6 mihion, or about $500 per FIE.,.

The AmeriCorps Education Awards Program has fewer grant requirements than
the operating grants. SemiannuaI project progress reports are required rather


‘?he six former federal agency grantees we contacted were the departments of
Agriculture, Defense (Department of the Navy), Energy, the Interior, and Justice
and the Environmental Protection Agency (EPA).

9                                        GAO/HEBS-97-198R AmeriCorps Reform Efforts
     B-277783

     than the more detailed quarterly reports required under the AmeriCorps
     operating grants. If no Corporation funds are provided for managing the project,
     no financial reporting is required. Further, no minimum living allowance for
     participants has been set and no benefits are required. However, the service
     requirements are the same as those for participants of projects funded under the
     operating grants.

     AGENCY COMMENTS

     We provided a draft of this correspondence to Corporation officials for review
     and comment Corporation officials did not take issue with our analysis and
     results. They provided technical comments and suggested clarification of several
     statements, which we incorporated as appropriate. For the Corporation’s
     comments, see the enclosure to this correspondence.



     As we arranged with your offices, unless you publicly announce the contents of
     this correspondence earlier, we plan no further distribution until 30 days from its
     date. We will then send copies to the appropriate House and Senate committees
     and the Chief Executive Officer, Corporation for National and Community
     Service, and we will make copies available to others on request.

     Please contact me at (202) 512-7014if you or your staffs have any questions
     concerning this correspondence. Major contributors to this letter include Larry
     Horirko, Assistant Director; Carol Patey, Evaluator-in-Charge; and Nancy
     Kintner-Meyer and James Sparkling, Senior Evaluators.




     Carlotta C. Joyner
     Director, Education and
      Employment Issues

     Enclosure




10                                             GAOMEHS-?7-198R   AmeriCorps   Reform Efforts
 ENCLOSURE                                                                                       ENCLOSURF

                                                    August 27,1997


                                                                                                  CORPORATIOS
              Ms. Comelia M. Blanchette                                                           FOR KATIOVAL
              AssociateDirector, Education and
               Employment Issues                                                                  F3S E R V I C E
              GeneralAccounting Office
              Washington, DC. 20548

              Dear Ms. Blanchette,

                      Thank you for the opporttmiry to commenton the General Accounting Office’s draf?
              report entitled “National Service Programs: Statusof AmeriCorps Reform Efforts.”

                     As you lmow, in March 1996,I enteredinto a ten;point agreementwith Senator
             Grassleyon stepsto improve AmeriCorps. The spirit of this agreementwas that in lowering
             the cost of the program, improving the ability of our partners to increasethe shareof costs
             they bear, devolving responsibility to the states,rooting ourselves squarelyin the continuum
             of service, being unqualifiedly nonpartisanand non-political, and making our internal
             systemsmore effective, AmeriCorps would becomea program in which all Americanscould
             take pride. I believe the Corporation has lived up to both the letter and the spirit of the
             agreement,and that’swhy I am pleasedthat Sen.Grassley has askedthe GAO to look into          ’
             our reform efforts.

                      While recognizing that the G-40’s analysisof our reform efforts focuseson four of
             the ten items in the agreement,we are proud of the progresswe have madein meetingall of
             the items in the agreement. As promised,the Corporation has taken strongmeasuresto
             prohibit AmeriCorps membersfrom lobbying or engaging in other prohibited political
             activities; to increasecollaborations with national non-profit organizationsand the
             participation of unstipendedvolunteers; to strengthenthe autonomy of statecommissions;to
             improve the grant review process;and to expandthe Corporation’s evaluationefforts.

                     The four items on which the GAO hasfocusedall relate, in one way or another,to
             reducing the cost of AmeriCorps. Again, we are pleasedwith the progresswe havemadein
             this area.For example,the GAO examinedgrantsprovided to the sameprojectsover a three-              .
             year period and found that Corporation funding for full-time AmeriCorps members
             decreased,while non-Corporation matching funds increased.Your draft report statedthat
             “[t]he increasein matching funds per FTE andthe decreasein Corporation fiinds per !ZTEare
             consistentwith the Corporation’s reform agreement.”
                                                                                                :a:.%IYNL
                                                                                                        hC11C. rw
                                                                                               wL.c~eon.
                                                                                                       DC_-9:-i
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                                                                                               Is+&  -0‘*:‘ww
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11                                                          GAO/HEHS-97-198R       AmeriCorps Reform Efforts
ENCLOSURE                                                                                          ENCLOSURE

            Page2

                     Most of the comments on this draft report are made in order to put your analysisinto
            a broader context. Others have beensuggestedto correct factual statementsor clarify the
            analysis. For example, AmeriCorps is not ‘America’s national serviceprogram,” but rather
            one of several national service programsadministered by the Corporation for National
            Service. The Corporation also administersthe Learn and ServeAmerica programandthe
            National Senior Service Corps program. In addition, AmeriCorps itself consistsof three
            distinct programs: AmeriCorps*StateNational, AmeriCorps*VISTA, and
            AmeriCorps*NCCC. The portion of my March 1996 agreementwith SenatorGrassleythat
            relates to costs per member focuseson the AmeriCorps*State/National program.

                    In the section entitled “‘ResultsIn Brief,” the draft report assertsthat the Corporation
            lacks the data systemsto track whetherall of the cost reduction reformshave occurred. The
            only data related to these reforms that the Corporation doesnot routinely gatheris the
            increase in private sector contributions. The GAO gatheredbaselinedatafor its survey of
            Program Year 1, but did not gathersimilar data for Program Year 3. At this point, this leaves
            us with no comparative data. However,my letter datedAugust 15,1997, to your office
            requeststhat baseline data so that the Corporation can develop a survey instrumentand obtain
            approval from the Office of Managementand Budget for the information collection activity.

                     Also, in “‘Results In Brief,” the draft report statesthat “[w]hile no federal agenciesare i
            AmeriCorps grantees in ProgramYear 3, many of their former subgranteeprojects,as
            allowed by law, continue to operateand receive Corporation funds. . __“ As a point of.
            clarification, these former subgranteesare not branch offices of, or in any other way related
            to, the federal agencies. Rather, they are local nonprofit organizationsthat have competedfor
            and won AmeriCorps grantsjust ashave other grantees.

                    On page 4, the draft report statesthat proposedFTE matching funds decreased10
            percent for Program Year 3. However,it should be noted that the overall proposedFTE
            program costs also declined 9.2 percentfor Program Year 3. The reducedcostsper FTE
            reflect a greater number of AmeriCorps membersin a larger numberof programs.a positive
            development.

                   Footnote 6, on page 4, notesthat this draft report doesnot in&de the education
            award and a pro-rated portion of the Corporation’s overheadexpenses,information that was
            included in the GAO’s 1995 report. This exclusion is unfortunate becausethis information
            would have demonstrated a significantly lower FTE cost overall, due to the fact while the
            Corporation’s expensesfor overheadhave not increased,the number,ofMembershas.

                  Finally, on page 6, the draft report statesthat the Corporation is consideringobtaining
            OMB approval to gather data on other sourcesof matching funds. While the Corporation is
            committed to gathering this data andwill include it in its requestto OMB, the project




12                                                             GAOLHEHS-97-198R &eriCorps            Reform Efforts
ENCLOSURE                                                                                               ENCLOSURE


                    Page3

                    requiresgatheringactualincurred costsand sourcesof funded expenditure. This information
                    will not be availableuntil the endof Year 3 programs, many of which are still operating.

                          Thesecommentsput in context, I hope, the broad reform effort we have made- both
                    pursuantto the agreementwith SenatorGrassley and on our own. Thank you for considering
                    thesecommentsin preparingthe final report.

                                                           Sincerely,




                                                           Harris Woff&d
                                                           Chief Executive Officer

                         .:   i                        :


                                      _:      -:
                                                   .   -.




           _. _..




(104898)


13                                                                      GAO/HERS-97-198R   AmeriCorps   Reform Efforts
     ‘_


          5, I:


          I!:,,

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