Legislation News & Report (TM) 

TheWeekInCongress.com (TM)

Managing America: Authorizations Senate Earmarks

TheWeekInCongress.com

{The following explains the Appropriation Committee’s view on earmarks in HR 3043-Making appropriations for the Departments of Labor, Health and Human Services and Education. This report asserts that the predominance of earmarks in the bill (referred to as Directed Spending) are the responsibility of the White House and total $68,000,000,000. The report also raises questions and provides data supporting allegations that, in some cases, the process of steering bill funds to individual or corporate recipients were done outside the legal process of competitive grants and other mechanisms that aim to keep the contracting process fair to all who want to participate., Ed}

ADMINISTRATION-DIRECTED SPENDING

Directed spending.--The Committee notes that Congress has made significant reforms in the way it reviews funding for the Federal government; reforms which the Committee takes very seriously as it executes its constitutional authority. For example, the Committee has committed to reducing the number of earmarks in order to ensure that these projects are adequately vetted and evaluated. Nonetheless, earmarking or directed spending of Federal dollars does not begin with Congress. It begins with the Executive Branch.

For example, the Administration's own fiscal year 2008 request for this bill includes a number of requests to earmark funds to certain organizations. These earmark requests include: $10,000,000 for Reach Out and Read; $10,000,000 for Teach for America; $8,900,000 for the Points of Light Foundation; $4,450,000 for America's Promise; $1,774,000 for the Mind-Body Institute; and, $1,429,000 for the YMCA of America.

The Executive Branch also engages in another practice which steers or directs money to specific entities or purposes through a process of providing grants or contracts to support various activities and services. The practice of contracting has increased significantly in the past five years. For example, Department of Health and Human Services contract obligations have more than doubled from $4,970,200,000 in fiscal year 2001 to $13,199,400,000 in fiscal year 2006. The number of contract employees at HHS exceeds 32,000, about half the number of civil service employees. A significant share of these contracts was awarded on a non-competitive basis. In fiscal year 2006 alone, HHS awarded nearly 21,000 contracts worth $1,954,600,000 with less than full and open competition. In contrast, this bill is expected to limit Congressionally-directed earmarks by Members of the House of Representatives to approximately one quarter of that amount.

The Committee also notes recent audits and reports that have revealed egregious, potentially extralegal activities, which were aimed at steering funding to specific individuals and entities through non-competitive grants and contracts.

For example, between September 2006 and March 2007, the Department of Education Office of Inspector General (OIG) completed one of its most exhaustive investigations, which resulted in six separate audits of the reading first program. These audits documented efforts by the Department of Education to steer billions in reading first funds for the purchase of certain reading textbooks and assessments in order to benefit favored publishers and individuals.

In September 2006, the Department of Education OIG found that the Department's program officials strong-armed States and school districts until they selected the reading textbooks and assessments favored by Administration officials. (Office of Inspector General, U.S. Department of Education, Final Inspection Report, The Reading First Program's Grant Application Process (2006)). After further investigation of reading first, the OIG found that Department of Education administrators improperly promoted commercial reading programs in potential violation of Federal law (Office of Inspector General, U.S. Department of Education, Final Inspection Report, The Department's Administration of Selected Aspects of the Reading First Program (2007)). For example, the Madison School District in Wisconsin had substantial data demonstrating that its students were learning at the rate that reading first was aiming for. Nonetheless, the district lost its $2,000,000 reading first grant when the district would not purchase the unproven commercial reading program promoted by the Department of Education's contractors. Across the country, including in Illinois, Kentucky, Massachusetts, Maine and New Jersey, States and districts with programs that were not on the Department's preferential list were either rejected for grants or pressured to change their methods even though some argued, as did Wisconsin, that their programs met the law's standard. This is the type of pressure that the OIG found to be in potential violation of Federal law.

Finally, the OIG found significant bias and conflicts of interest on the part of contractors and their subcontractors who were hired to provide unbiased technical assistance to States and school districts, potentially in violation of Federal law (Office of Inspector General, U.S. Department of Education, Final Inspection Report, RMC Research Corporation's Administration of Reading First Program Contracts (2007)).

Recently, ABC News reported that, after receiving millions of dollars in reading first contracts, one publisher with political connections to the Administration sold his company--once valued at $5,000,000--for $360,000,000. (ABC World News With Charles Gibson (May 2007)). Some of these same publishers and individuals continue to reap financial gains under reading first because the Administration has failed to address ongoing conflicts of interest.

The seriousness of the OIG's findings is underscored by reports that the OIG has made criminal referrals to the Justice Department as a result of these investigations.

At the same time that the Department of Education was promoting certain reading products that lacked evidence of their validity, reading programs such as Reading Recovery and Success for All with strong evidence of effectiveness, according to the Department's own what works clearinghouse, were virtually shut out of reading first. In fact, Department of Education data show that schools without Reading first funds were more likely to use Reading Recovery and Success for All--proven approaches--than were schools receiving reading first grants.

The Committee finds, however, that efforts to steer funding to favored entities are not limited to the Department of Education. Recently, the Congressional Research Service documented an unusually large number of sole source grants issued by the Employment and Training Administration within the Department of Labor, which resulted in 90 percent of discretionary funds for the High Growth Job Training Initiative being awarded on a non-competitive basis over a five-year period.

Finally, the Committee notes that this bill contains more than $68,000,000,000 for discretionary grant programs under which all or a portion of the funds are allocated on a discretionary basis to grantees selected by the Administration. Altogether, the Administration steers or directs far greater spending to specific projects, individuals, and companies than is directed or earmarked by Congress.

##