Federal Aid Program

Dr. John G. Rogers


July 20, 1999


Mr. Chairman and members of the Committee, I appreciate the opportunity to discuss the U.S. Fish and Wildlife Service's administration of the Federal Aid program. I am accompanied by Mr. Tom Melius, Assistant Director for External Affairs; and Mr. Bob Lange, Chief, Office of Federal Aid.

I want to begin by acknowledging many of the weaknesses the General Accounting Office (GAO) pointed out and by agreeing with many of the issues that they highlight. At the same time, I want to stress what they did not find. GAO is not reporting that funds are being improperly allocated to the States, or that the States are not using the funds for their intended purposes, or that the programs are not benefiting fish and wildlife resources or their use by America's hunters and anglers.

What GAO did find was problems in how the Service administers these programs. A number of these concerns were raised during the Service's internal review, initiated almost four years ago under former Director Mollie Beattie, and efforts have been underway -- but are obviously not completed -- to address these issues.

As you know, the grant programs established under the Federal Aid in Sport Fish Restoration Act (Wallop-Breaux Act), Federal Aid in Wildlife Restoration Act (Pittman-Robertson Act), Clean Vessel Act (pump-out), and the Coastal Wetlands Planning, Protection and Restoration Act provide a broad array of benefits to the States. These funds have helped states to restore fish and wildlife habitat and their habitats, develop thousands of boating access sites and sanitation pumpout facilities, and restore thousands of acres of wetlands. In addition, millions of the Nation's young hunters have taken hunter education courses offered by the States, making hunting a safer family activity.

Funds for these programs are collected from excise taxes paid by sportsmen on firearms and ammunition, archery equipment, fishing tackle and motorboat fuels. These programs are administered by the Service through our Office of Federal Aid. They are perfect examples of user-pay user-benefit conservation mechanisms and they are being studied by other countries as potential models for their own conservation efforts.

This year, the Fish and Wildlife Service provided almost $500 million to states to manage the Nation's fish and wildlife resources and related programs from excise taxes provided by sportsmen. Since the beginning of the first grant program--the 60 year old Wildlife Restoration program--over $7 billion has been provided to the States.

Four years ago, the Service began a systematic review of, and improvements to the Federal Aid program. Our resulting administrative changes, audits, and automation efforts, which I would again point out are not complete, are designed to address, and have been addressing, many of the findings GAO has made.

Federal Aid's basic system to track allocations to the states and the Services' use of administrative funds is the Budget Allocation System (BAS) administered by Division of Budget and the Federal Financial System (FFS) administered by the Division of Finance. Each month, obligations are made either of grant funds through Grant Agreements or administrative funds by contracts and others means. Obligations are totaled up each month in FFS by the Denver Finance Center. FFS records monthly obligations, unobligated balances, and provides reports in more detail of month to month activity in each account. At the end of the year, usually by mid-October, reports are available of final obligations and carry-over balances.

Individual Federal Aid Offices, both in the regions and here in Washington, also use BAS and FFS. Each office provides the allocations for BAS entry which are surnamed and approved by the Division of Budget Each office also checks month to month activity against the FFS reports. When budget issues are identified that do not match individual office records, that office works closely with Budget or Finance to determine whether it is a reconciliation issue, an error, a matter of timing of transaction data, a software problem, or another cause..

As a result of our internal review process, we initiated a financial systems reconciliation effort to reduce errors and improve efficiency of fund transfers in the program. When we began, program information and accounts were contained in vast amounts of paper records, scattered all over the country. We found inadequate management and internal controls over clerical input, reconciliation, and data transmission among systems. We are working through this, and as the GAO statement indicates, our efforts are not yet completed.

While this is underway, we have established and installed a network of state/federal computers and software, which is in its shake- down phase. We have called this FAIMS, the Federal Aid Information Management System. Our contractor is developing and our staff is implementing a national computer network that will improve communication of program information and status among resource managers, record accomplishments and benefits of the funds transferred to the States, and include the necessary fiscal support and record-keeping systems. Within a year, the actual submission of funding requests from the States will occur electronically.

We have also developed a national training and education program for state and Service staff who review the State grant proposals. Funds in the grant programs, particularly the Sport Fish account, were increasing rapidly and many employees were new in the program. In addition, such financial activity was becoming more complex, and state and federal staffs needed consistency in program administration from Region to Region and state to state. This will help eliminate inconsistencies in grant administration.

Over 200 individuals from almost all states and the Pacific islands have participated in these courses. We believe we will be administering the programs better and more consistently because of this training.

Another of our program initiatives is a new audit program of grant funds in all the states. The first five year cycle will complete in depth audits of all states by the end of Fiscal Year 2000. The audits are being conducted independently by the Defense Contract Audit Agency. These audits are coordinated fully with the Office of Inspector General and they cover only audit areas not covered by state auditors under the Single Audit Act. Many state departments of natural resources have had little or no audit coverage in over 15 years. As the Service and DCAA have gained experience in this new program, the audit process has become more consistent.

In another area, GAO is critical of the national administrative grants program and the Director's Conservation fund. Beginning a year ago the Service began to take a fresh look at these efforts. In September 1998 the Service published a Federal Register Notice providing for public comment on the administrative grants program. The first alternative listed was "no program." Since then the Service has terminated the administrative grants program and a Notice to this effect will be in the Federal Register in the near future. The Director terminated the Conservation Fund at the beginning of the year.

GAO has commented on inconsistent use of administrative funds by regional offices. We have a Service policy on regional office assessments, but we are going to study their findings and recommendations carefully in the months ahead to assure that it is being followed.

To that end, we have recently begun a partnership State/Fish and Wildlife Service review of the Federal Aid program to identify ways to make the program more efficient, more effective, and more responsive. This review will be completed by mid-November of 1999 and it will result in recommendations for improvement.

Oversight of revenues is another important theme of our programmatic improvement effort, one which GAO did not address. We have been very assertively performing in this role for three years, working cooperatively with other agencies involved with the excise taxes for the Sport Fish Restoration Program and the Wildlife Restoration Program . Efforts with the Department of Treasury have been particularly fruitful. Over two years ago the Service initiated a review of excise tax collections and transfers from U.S. Customs, Bureau of Alcohol, Tobacco and Firearms, and the Department of Transportation. These efforts identified $23 million in additional excise tax collections that should be credited to the Sport Fish Restoration program. These funds were credited and they were apportioned to the states in FY l999.

Our efforts also identified ways to transfer the excise taxes to Treasury more rapidly from the Internal Revenue Service. Over $10 million in excise tax collections is now available for apportionment a year earlier than it might have been in the past. These earlier transfers lead to more interest accrual to the accounts. Additional efforts, such as coordinating closely with the Corps of Engineers to identify their long-term construction schedule under the Coastal Wetlands Planning, Protection and Restoration Act, led to improvements in investment strategy for those funds, in that we were able to invest at higher rates.

We feel that our oversight and management of revenues has been aggressive, innovative and productive, resulting in many tens of millions of dollars being available for the Federal Aid programs. We look forward to the time in the near future when we will be able to say the same of our internal operations related to these programs.

We welcomed and cooperated with the GAO audit of program administrative funds. We have also been glad to work with Committee staff who have reviewed Federal Aid administration in the past six months. We have already found many opportunities to improve the program and GAO has pointed out others. We want to make this as efficient, as it is already successful. We would welcome the opportunity to work with the Committee to identify any other improvements that would help us better do our job of administering these programs.

Mr. Chairman, I appreciate the opportunity to testify before the Committee. I am happy to answer any questions you and other Committee members may have.