[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]





 THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009: THE ROLE OF STATE 
                         AND LOCAL GOVERNMENTS

=======================================================================

                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 21, 2009

                               __________

                           Serial No. 111-34

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform




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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York         DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts       MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri              TODD RUSSELL PLATTS, Pennsylvania
DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
JIM COOPER, Tennessee                LYNN A. WESTMORELAND, Georgia
GERALD E. CONNOLLY, Virginia         PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   BRIAN P. BILBRAY, California
    Columbia                         JIM JORDAN, Ohio
PATRICK J. KENNEDY, Rhode Island     JEFF FLAKE, Arizona
DANNY K. DAVIS, Illinois             JEFF FORTENBERRY, Nebraska
CHRIS VAN HOLLEN, Maryland           JASON CHAFFETZ, Utah
HENRY CUELLAR, Texas                 AARON SCHOCK, Illinois
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------
------ ------
------ ------

                      Ron Stroman, Staff Director
                Michael McCarthy, Deputy Staff Director
                      Carla Hultberg, Chief Clerk
                  Larry Brady, Minority Staff Director









                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 21, 2009...................................     1
Statement of:
    Gilchrist, Timothy, senior advisor for infrastructure and 
      transportation, Office of Governor David A. Paterson.......    19
    Grannum, Colvin W., president, Bedford-Stuyvesant Restoration 
      Corp.......................................................    53
    Robinson, David G., associate director, Center for 
      Information Technology Policy, Princeton University........    64
    Skyler, Edward, deputy mayor of operations for the city of 
      New York...................................................    29
    Thompson, William C., comptroller, city of New York..........    72
Letters, statements, etc., submitted for the record by:
    Gilchrist, Timothy, senior advisor for infrastructure and 
      transportation, Office of Governor David A. Paterson, 
      prepared statement of......................................    22
    Grannum, Colvin W., president, Bedford-Stuyvesant Restoration 
      Corp., prepared statement of...............................    56
    Issa, Hon. Darrell E., a Representative in Congress from the 
      State of California, prepared statement of.................    14
    Robinson, David G., associate director, Center for 
      Information Technology Policy, Princeton University, 
      prepared statement of......................................    66
    Skyler, Edward, deputy mayor of operations for the city of 
      New York, prepared statement of............................    31
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of New York, prepared statement of...................     5
    Watson, Hon. Diane E., a Representative in Congress from the 
      State of California, prepared statement of.................    81

 
 THE AMERICAN RECOVERY AND REINVESTMENT ACT OF 2009: THE ROLE OF STATE 
                         AND LOCAL GOVERNMENTS

                              ----------                              


                        TUESDAY, APRIL 21, 2009

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                      Brooklyn, NY.
    The committee met, pursuant to notice, at 10:10 a.m., at 
Brooklyn Borough Hall, 209 Joralemon Street, Brooklyn, NY, Hon. 
Edolphus Towns (chairman of the committee) presiding.
    Present: Representatives Towns, Kucinich, Welch, Issa and 
Platts.
    Staff present: Katherine Graham, investigator; Mike 
McCarthy, deputy staff director; Jesse McCollum, senior 
advisor; Jenny Rosenberg, director of communications; 
Christopher Staszak, senior investigative counsel; Lawrence 
Brady, minority staff director; Frederick Hill, minority 
director of communications; Adam Fromm, minority chief clerk 
and Member liaison; Seamus Draft, minority deputy press 
secretary; and Christopher Hixon, minority senior counsel.
    Chairman Towns. We come to order. We're delighted this 
morning to be at Borough Hall, and of course the borough 
president of Brooklyn is here. And we would like for him to 
have an opportunity to welcome the Members to the great Borough 
of Brooklyn. Those of you that reside in our city do know his 
name. I don't have to introduce him in any way. All you have to 
do is just go someplace and say ``Marty Markowitz.'' 
[Laughter.]
    Mr. Markowitz. Thank you. Thank you very, very much. Of 
course, welcome to--right now we're called the Republic of 
Brooklyn.
    Actually, my name is Marty Towns Markowitz. [Laughter.]
    Your colleagues should know, for us in public service here 
in Brooklyn, we all wish we were related to Ed; and I have to 
tell you that perhaps he's truly the gold standard in our 
Borough. So, thank you, Ed, Congressman, very, very much.
    And certainly, I want to welcome Deputy Mayor Edward 
Skyler. Many people say that he bears an uncanny resemblance to 
me, I have to tell you. And let me tell you a part of it is his 
height. If I was his height, I'd definitely be his weight, am I 
right?
    Also, New York City Comptroller Bill Thompson and Timothy 
Gilchrist, a senior advisor to Governor Paterson in 
construction and transportation. And Colvin Grannum, it's good 
to see you are here as well, president of the Bedford 
Stuyvesant Restoration Corp. And David Robinson, associate 
director of the Center for Information Technology Policy at 
Princeton University.
    I can't think of a better person than Ed--Congressman 
Towns--to chair the House Committee on Oversight on Government 
Reform. I think you can all agree that this is one of the most 
important jobs in Congress at this moment.
    In this day and age when every dollar counts, and you all 
know that, we need someone like Congressman Towns to make sure 
that the government spends our money wisely, along with your 
colleagues.
    And if there's one thing that we all agree on, the American 
Recovery and Reinvestment Act, it is that this money needs to 
be spent now to give to our community a jump-start, no doubt 
about it. But it also needs to be spent well, so that we can 
get our economy back on the right track once and for all, and 
make sure that every penny allocated is used for the stated 
purpose.
    We go in uneasy and unsettling times but, please rest 
assured, in my opinion of course, that after a long 8 years of 
George W. Bush, we finally have in the White House a President 
who understands that our Nation exists on the engines of 
economic development of all nations.
    And we are fortunate that President Obama has sent 
Congressman Towns to make sure that fiscal responsibility 
returns in our Federal spending policy process.
    So now, Congressman Ed Towns, thank you for inviting me and 
your fellow congressional Members to this event. Thanks.
    Chairman Towns. Thank you. And thank you for welcoming us 
to Borough Hall. Thank you. Thank you so much.
    [Applause.]
    Chairman Towns. Today's hearing is the first in a series of 
field hearings that will be held in various locations 
throughout the country. The purpose of these hearings is to 
examine the crucial role that the State and local government 
will play in the administration of the American Recovery and 
Reinvestment Act of 2009, also known as the Stimulus Program or 
the Recovery Act.
    The American Recovery and Reinvestment Act of 2009 is a 
historic piece of legislation, which I was proud to be one of 
the nine co-sponsors of the legislation. The stimulus program 
had already been and will continue to be a powerful force for 
getting the American economy back on track.
    As we face the greatest economic crisis since the Great 
Depression, I'm especially proud to be here today in my 
district, in my home, the borough of Brooklyn. New York is the 
financial capital of the world. It is home to millions of these 
hardworking and dedicated people from all backgrounds who stand 
ready to help turn the American economy in the right direction.
    I'm also happy to have my friend and colleague from the 
State of California, the ranking member, Congressman Issa, here 
with me today, to get a look at how we do things in the borough 
of Brooklyn, and today we'll talk with people from the borough 
of Brooklyn.
    Just a few weeks ago, several hundred residents of Brooklyn 
attended a town hall meeting on a Saturday morning that 
Congresswoman Yvette Clark and I held to talk about President 
Obama's stimulus program. That is a simple but telling example 
of the commitments the American people have to overcome in 
these economic challenges that we all are facing together. And 
I emphasize the word ``together.''
    New Yorkers are a unique source of strength for America. 
And I know it will play a unique role in putting our economy 
back on the right track.
    In Washington, this committee has been working hard to make 
certain that Federal agencies do everything possible to protect 
your hard-earned tax dollars and see to it that they are spent 
wisely.
    Every dollar that we can stop from being wasted is a dollar 
that is put to good use on a school improvement project for our 
children, a job training program for those who want to work but 
need new skills, or construction projects resulting in 
something as simple but as important as a safer road or cleaner 
drinking water.
    For the Recovery Act to be effective, the Federal, State 
and local governments must coordinate, cooperate and 
communicate. As President Obama stated recently, ``This plan 
cannot and will not be an excuse for waste and abuse.''
    To fight fraud, the Recovery Act provides for an 
unprecedented degree of oversight and accountability. For that, 
the Recovery Act established the Recovery Accountability and 
Transparency Board [Recovery Act Board]. Some people refer to 
it as RAT. [Laughter.]
    Which is designed to provide transparency on how Federal 
recovery money is to be spent. The act also included 
significant increases in funding for the Office of the 
Inspector General, whose job is to root out waste, fraud and 
abuse in Federal programs.
    I applaud President Obama for his support of these 
measures. But I must admit that I have concerns, and let me 
tell you why. I'm concerned that a heavy burden is being placed 
on the State auditors who are responsible for monitoring the 
accounts for the stimulus funds they receive.
    This concern was raised at the committee's hearing last 
month and it needs to be addressed. Accordingly, I plan to 
introduce legislation that will provide increased funding for 
State audits so they will be able to meet the demands placed on 
them by the Recovery Act.
    With individual States receiving billions in stimulus 
funding, it makes sense that the States also be fully equipped 
to closely monitor those taxpayer's dollars.
    Not initially providing funds for State auditors under the 
Recovery Act was an omission, an omission that should be 
rectified as soon as possible.
    I'm also concerned that States have already started 
spending funds from the Recovery Act, but they have not yet 
been given complete guidelines from the Federal Government in 
terms of how the money is to be tracked and how they are 
required to report spending of stimulus funds.
    Further, I have major concerns about the administration of 
a primary transparency tool, Recovery.gov. The fact of the 
matter is that Recovery.gov is currently not usable. So, it's 
not a usable data base where citizens can go to see how their 
money is being spent.
    I expressed this concern to the chairman of the Recovery 
Act Board when he testified before this committee in Washington 
last month. It is my hope that he takes the concerns of 
Congress to heart and transforms Recovery.gov into a 
comprehensive, useful and easy to understand data base that 
will bring about true transparency.
    If he fails in this regard, you can be certain that the 
members of this committee will exercise their full oversight 
authority to ensure that he honors his commitment.
    Today, we will hear from people who have been and will 
continue to be at the forefront of the effort to ensure that 
the Recovery Act is administered at an efficient and fair 
manner at the State and the local level. We want to learn more 
from our witnesses about how the Federal Government is doing so 
far in administering the stimulus program, where and how can 
the Federal Government do better, and to ensure that the 
Federal Government is doing everything it can to help State and 
local governments to successfully administer the Stimulus 
Program.
    I want to thank all of our witnesses for appearing here 
today and I look forward to hearing their testimony. I will now 
yield to our ranking member, Mr. Darrell Issa, from the great 
State of California, for his opening statement.
    [The prepared statement of Hon. Edolphus Towns follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Issa. Thank you, Mr. Chairman. It truly is a pleasure 
to be here in the great borough of Brooklyn. I'm also, as you 
know, a Clevelander. So, we've had sort of a path of knowledge 
of things that have come out of this part of the world long 
before I went to California or to Washington.
    I want everyone to understand that one of the reasons that 
this makes today so special is that this committee is supposed 
to be about waste, fraud, abuse and is supposed to work in a 
bipartisan fashion.
    Under your leadership, it's very clear it is doing just 
that. For the chairman, obviously, and the majority of the 
party of the President to start shedding light on failures that 
we make in Congress, this stimulus bill of $787 billion; 
failures oversights, things which we were not consulted in 
advance, but in fact now, after the fact that Chairman Towns 
and this committee are seeking to make sure we can rectify.
    As the chairman so rightly mentioned, there was no funding 
in order to do oversight by the States in this legislation. And 
I join the chairman in making sure that we do find a way, 
either with the existing funds or the new funds, to provide 
that material to the States.
    Additionally, nothing in this legislation provides 
accountability below the first recipient; meaning, when Albany 
receives the funds, much of what we're talking about today, 
they could distribute it, meeting every requirement. But we had 
no way of a guarantee, transparency below that.
    So that if they were not doing their job to ensure that 
once the check is written, it was used properly, there was no 
oversight. We are going to work together on a bipartisan basis 
to change that.
    Additionally, as you undoubtedly will hear repeatedly 
today, there's a little bait and switch that goes on between 
the time the money leaves Washington and the time it does seem 
to arrive at hospitals and other areas of need here in the 
borough. And that's understandable.
    Both my State of California, which had a $45 billion 
deficit at one point, and a slightly smaller deficit here in 
New York, were partially wiped out by the stimulus funding; 
meaning, they didn't apply the money that we sent from 
Washington to additional projects, but rather simply pulled 
back their dollars, pushed forward Federal dollars.
    And as a result, when you thought you were getting more, at 
best, you may be getting what you originally were promised, or 
less.
    As we all know, we have lost millions of jobs in the 
stimulus package. At best, if used properly, it's estimated to 
save about 3\1/2\ million jobs. If we allow the moving around 
of the dollars in a way that diminishes the intent, we 
obviously will diminish the outcome. We cannot afford to have 
one of those 3\1/2\ million jobs we hoped to save lost. And 
clearly today, we will hear that is happening.
    The President, in fact, has made this one of the hallmarks 
of his administration early on. He did so with good intent and 
I join him in the belief that we needed something that is 
timely, targeted and temporary.
    But as we would have begun to see, the targets are often 
poorly defined. The temporary, as some States who were pushed 
back on the funding, is questionable because of little nuances 
pushed into the bill that are affecting the ability of States 
and localities to use the money in a temporary basis, and in 
some cases, require that the program may begin, which will only 
be funded for 18 months and thereafter would fall to your 
community.
    Mr. Chairman, I'm deeply concerned about the waste that 
will come if cities which were already stretched to the limit 
find themselves, when the money runs out, forced to continue 
with programs that may or may not suit their particular 
municipal area. Here in Brooklyn, you are an older city; so new 
construction and many of those items is not nearly as important 
as repair and reconstruction.
    One size does not fit all. I'm hoping today that our 
working in a bipartisan basis, the solidarity and the 
additional committee under your leadership has begun to have 
will show, and show it to the people here that this committee 
will not allow this fine city to be shortchanged between the 
time the money leaves Washington and the time it was supposed 
to arrive here.
    With that, I look forward to all the testimony that we will 
have, Mr. Chairman.
    Thank you very much.
    Chairman Towns. Thank you very much for your statement.
    [The prepared statement of Hon. Darrell E. Issa follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Chairman Towns. At this time, one of the hardest working 
gentlemen in the United States, the gentleman from Ohio, Mr. 
Dennis Kucinich. We yield to him 5 minutes for an opening 
statement.
    Mr. Kucinich. Mr. Chairman and my colleagues on the 
committee and the people of Brooklyn, I'm here to support our 
chairman, and also because I understand the concerns that 
Brooklyn has related to the concerns of the people all over the 
country now.
    Are we going to see a recovery? What will that recovery 
look like, will it provide more jobs, will it rebuild America's 
infrastructure?
    All across this country, there are people who are worried 
about losing their homes, their jobs, their health care, their 
retirement, their security and their investments. And this 
committee has the responsibility of being the watchdog to make 
sure that all Federal programs find their way through to the 
beneficiaries.
    And when you're talking about trillions of dollars, the 
money from the recovery program, money in the troubled asset 
relief program, we know that any time we're talking about 
spending on that level, it is inevitable that there is going to 
be problems with the way the money is distributed and problems 
with the dollars spent.
    You are fortunate in Brooklyn that your Congressman, Ed 
Towns, ascended to be the chairman of the Oversight Committee, 
because this committee has the ability to be able to make sure 
that we hold all of those who are entrusted with these funds to 
the highest level of accountability.
    And the only way that can be done is to make sure that you 
have people representing you who have the kind of experience 
that can see if something looks like it's going on that is not 
right.
    And because of Ed Towns' experience in rising to Congress 
from this borough, you can be sure that his eyes, his ears, are 
going to be essential in making sure that these programs find 
the way in helping people who were the intended. And also, if 
there's any mismanagement involved, that would be brought to 
the public's attention.
    Let's go back to where we are as a Nation. The Obama 
administration understands that this American Recovery Act is 
only the first step. A hundred million dollars out of the 
initial $787 billion will go toward infrastructure and 
improvement.
    And yet, Mr. Chairman, the American Institute of Architects 
says there's over $2 trillion in infrastructure needs, to 
rebuild our bridges, water systems, to rebuild our roads, 
schools, hospitals.
    America needs to be rebuilt, meaning that those people are 
back to work doing that. But we will not have the confidence, 
the Members of the Congress here to vote for more programs, 
unless we conclude that these programs are being set up, are 
going to be operated in a way where there's integrity and where 
there is a commitment to making sure that the program that we 
say that we want money for, that's what happened and that 
they're done in a way that's honest and efficient.
    I'm a person who believes the government can work, but it 
only works if we have the people watching to make sure it 
works. And so that's what this committee is about.
    And I am proud to be here with my chairman and with the 
ranking member, Mr. Issa, Congressman Platt and Congressman 
Welch, so that we can hear from the people of Brooklyn about 
what their dreams and hopes and expectations are and what 
you're concerned about.
    And we can take that information back to Washington and 
share it with our colleagues. This is a great community. I am 
glad to be here at this moment to be a part of this hearing and 
I look forward to hearing your testimony.
    And thanks again, Mr. Towns, for giving us the opportunity 
to come to Brooklyn so that we can hear from your constituents 
whose concerns expressed are the concerns of all Americans. 
Thank you very much. Great to be here.
    Chairman Towns. Thank you very much. Thank you for your 
kind words, as well.
    Also, I'd like to recognize a person that I've had an 
opportunity to serve with as the ranking member, who was the 
chair of a subcommittee and who--I had enjoyed working with 
you. And he said that if you give him an opportunity to give 
you input, I expect your output. And I want you to know that I 
had enjoyed working with you and that it was an arrangement. I 
want you to know that the deal still is an offer. [Laughter.]
    Mr. Platts. Thank you, Mr. Chairman. It's great to be with 
you. It is great to be with my colleagues here. First, it is 
wonderful to be back in the city of New York and the borough of 
Brooklyn.
    I know we've called up hearings here at Borough Hall in the 
past as well as at the Brooklyn School of Law, close by, and it 
is just a wonderful opportunity to visit a great city. I want 
to add my words of thanks to my colleagues, to you for holding 
this important oversight hearing.
    One of the most important responsibilities we have as 
public officials, as elected Members of the Congress, is to 
ensure that we are good stewards of the American people's 
funds, and that is what this hearing is all about. It is 
ensuring that the funds they have sent to Washington and 
entrusted us to oversee are then returned to our communities, 
including here in New York, in the most efficient, effective 
and accountable way possible.
    And this oversight hearing is all about ensuring that we 
achieve that very important fiscal rule. So, thank you for your 
leadership as chair of the oversight committee and also to 
those witnesses who are here with us today, who have been--the 
State and the local level will give us a good insight as to how 
fast and more effectively we perform our oversight 
responsibilities. With that, I will go back to the chairman.
    Thank you.
    Chairman Towns. Thank you very much.
    Now, I'd like to yield 5 minutes to Congressman Welch from 
Vermont, one of the very thoughtful members of this committee, 
who makes sure that we do our research and homework before 
moving forward.
    Congressman Welch, of the great State of Vermont.
    Mr. Welch. Thank you very much, Mr. Chairman. I'll be 
brief. It is thrilling to hear from our distinguished 
witnesses. You know what? In government we do two things. One, 
we set a policy, and we did that by passing this stimulus, 
which after a vigorous debate, the policy direction has been 
set. And No. 2, we implement a policy. And usually we don't--
oftentimes we don't do this as well as we need to, remember to 
achieve the goals. Mr. Issa outlined all of the challenges that 
we face.
    And with $787 billion of our money, your money at stake, 
and also the ability to make the economy stop its free fall and 
hopefully begin a recovery, every single dollar, every single 
job is absolutely important.
    And Mr. Chairman, what I appreciate of your work on this 
committee is that you are getting started before the reports of 
mismanagement or fraud come in, not waiting until after. 
Oftentimes, with this amount of money it is inevitable. There 
will be outright fraud, and that creates not only a waste of 
money but bitterness in the minds and hearts of the taxpayers 
who paid for it.
    And oftentimes even more money is wasted because of poor 
management and getting behind the curves on making certain 
things, and we're doing well, we need more of it, and if things 
aren't working, we stop.
    So, having this hearing, Mr. Chairman, at the beginning and 
working so cooperatively with Mr. Issa to get us focused at the 
outset on finding the critical contribution we can make; and 
what is tremendous is that we are going to start by hearing the 
people on the front lines of implementing the policy.
    Because in Congress we set a policy that oftentimes the 
harder work is the work that you do back home to implement that 
policy. So, I am very eager to hear from the folks on the front 
line.
    And I wanted to thank you, Mr. Chairman, for welcoming 
Vermont to this important country. [Laughter.]
    And I feel pretty safe so far. And Mr. Issa, it is good to 
be here with you, and my colleagues, as well.
    Chairman Towns. Thank you very much for everything, all of 
you for your statements.
    At this time, I would like to ask our panelists to come 
forward.
    Mr. Gilchrist, Deputy Mayor Skyler, please stand.
    Chairman Towns. Longstanding tradition, I will swear all of 
our witnesses in. Please raise your right hands.
    [Witnesses sworn.]
    Chairman Towns. Let the record reflect that they both 
answered in the affirmative.
    Just before we introduce our panelists, let me introduce to 
you the United Talmudical Academy of Satmar. They appear in the 
room from the school. Let's give them a big round of applause.
    [Applause.]
    Chairman Towns. United Talmudical Academy of Satmar, I am 
always happy to have our young people to come in to see the 
government in action. Let me introduce our witnesses.
    Mr. Timothy Gilchrist is a senior advisor to Governor 
Paterson, Department of Infrastructure and Transportation. 
Serving in this role, Mr. Gilchrist leads the New York State 
Recovery and Reinvestment Act with Governor Paterson, which 
informs and oversees the distribution of Federal Recovery Act 
funds throughout the State.
    In his current position, Mr. Gilchrist served as a deputy 
secretary to the Governor for economic development 
infrastructure, overseeing the major economic development 
infrastructures and transportation agencies and authorities in 
the State. Before he joined the executive chamber, Mr. 
Gilchrist served for over 26 years at the New York State 
Department of Transportation in a variety of management roles, 
including the director of strategic planning. He is a graduate 
of the State University of New York at Oswego and Harvard 
University, as well.
    Deputy Mayor Skyler is the deputy mayor of operations for 
the city of New York. Mr. Skyler has been asked by Mayor 
Bloomberg to coordinate New York City's stimulus spending. In 
addition, Mr. Skyler has a broad range of responsibilities 
through assisting the mayor, Mayor Bloomberg.
    He manages the Police Department, Fire Department, Office 
of Emergency Management, Office of Management and Budget, and 
the Office of Labor Relations.
    Mr. Skyler also directly oversees several city agencies and 
departments, which includes the New York City Department of 
Transportation, the Department of Environmental Protection and 
the Department of Sanitation.
    Prior to his employment as a deputy mayor of operations, 
Mr. Skyler served as deputy mayor for administration and as the 
mayor's communications director and press secretary. He is a 
graduate of the University of Pennsylvania and Fordham Law 
School.
    Let me say to you, I welcome both of you. Gentlemen, the 
rule is that we have 5 minutes to present. And then after your 
presentation, then we have a question-and-answer period. Now, 
the light that we start out, the light is on green. When it 
tells you that you should be conscious of the fact that your 
time is about to end, it goes to yellow. And then when your 
time ends, it goes to red. And it is very clear. If there is 
any question about that, let me know. [Laughter.]
    So, we will start with you there.

      STATEMENT OF TIMOTHY GILCHRIST, SENIOR ADVISOR FOR 
INFRASTRUCTURE AND TRANSPORTATION, OFFICE OF GOVERNOR DAVID A. 
                            PATERSON

    Mr. Gilchrist. Thank you very much Chairman Towns and all 
the members of the committee. And I hope my transportation 
background will help me work through the light system. 
[Laughter.]
    On behalf of Governor Paterson, who is in Albany trying to 
deal with the MTA crisis, I'm very pleased to be here this 
morning and hope we can help assist the committee in 
considering its role for State and local governments in regard 
to the implementation of the American Recovery Investment Act.
    I've provided written testimony to the committee and I'll 
provide a summary of that, and we're welcoming any questions 
after my colleague, Deputy Mayor Skyler.
    My name is Timothy Gilchrist. I serve as Governor 
Paterson's senior advisor for infrastructure and 
transportation, and serve as the lead for the implementation of 
the American Recovery and Reinvestment Act.
    Our latest estimate is that New York State will receive 
over $26.7 billion in funds from the American Recovery and 
Reinvestment Act, in addition to the funding that will be 
provided for the local governments organizing discretionary 
funding that we will be aggressively seeking, including an FMAP 
increase of $1.1 billion and State fiscal stabilization funds 
of over $3 billion.
    And we also currently estimate that we would receive over 
$4 billion for infrastructure and energy programs, $5.9 billion 
to help in the services programs, $2.3 billion for education 
programs, and $124 million for public safety programs.
    Of all these funds, over $1.8 billion have been expended, 
mostly FMAP funds, with additional funds pending disbursement.
    In addition, the Governor certified over $200 million worth 
of highway transportation projects that are currently out to 
bid.
    In anticipation of the American Recovery and Reinvestment 
Act, Governor Paterson established at that time a recovery and 
reinvestment cabinet on February 10th, ahead of the legislation 
in order to coordinate the State's economic development.
    The cabinet of which I serve as chair has representatives 
from over 30 of our State agencies and authorities; and there's 
a dedicated staff working in the agencies and in the Governor's 
office to support the activities.
    Within the cabinet, we have several work groups, and we are 
constantly re-aligning these groups to meet the ongoing 
challenges of moving forward. But I'm going to touch on some of 
those highlights that we're doing to oversee the disbursement 
of the funds and to ensure transparency in the accountability 
and to root out waste and fraud.
    One of the important working groups in the reinvestment 
cabinet is the internal control working group, which is made up 
of the State agencies, internal audit or internal control 
officers in the Office of the State Comptroller, which is a 
separately elected position within the State of New York.
    This group is meeting on a regular basis to help agencies 
review their internal control processes, look at their 
contracting process, their contract disbursement process, their 
contractual award process, to insure that the funds are spent 
within all of the current guidelines.
    What I'd like to point out is that New York State has a 
very robust internal control procurement process to limit 
waste, fraud and abuse. The State has a strong due process that 
lines out the funding that needs to be spent in the budget that 
was passed in the first week of April. All of the American 
Recovery and Reinvestment Act funds that were appropriated have 
been separately flagged in the appropriations so that they can 
be tracked.
    The Office of the State Comptroller, Central Accounting 
System, has set up a special accounting code to track all of 
the funding that is being spent on ARRA funds. And because a 
certain amount of the funding flows directly from the Federal 
Government to State authorities outside of the State budget 
process, the enacted State budget requires regular reporting by 
those authorities.
    In addition, we have an MBE/WBE office that reports 
directly to the Governor's office and has an active role as 
part of the committee. We have an independent inspector general 
that roots out fraud and abuse; and a separately elected 
comptroller and attorney general that need to sign off on all 
of the contracts that the agency allows through the competitive 
processes.
    We are not only going to administer all of our own funding, 
but we're putting programs in place to help localities that are 
not always as sophisticated as the State of New York. We report 
on their funds and follow tracking programs, and have continued 
outreach to with Members of Congress and members of our State 
delegation to give information to not-for-profits and elected 
local officials' funds.
    I look forward to your questions.
    Chairman Towns. Thank you very much for your testimony, Mr. 
Gilchrist.
    [The prepared statement of Mr. Gilchrist follows:]

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    Chairman Towns. Now, we call upon you, Deputy Mayor Skyler.

STATEMENT OF EDWARD SKYLER, DEPUTY MAYOR OF OPERATIONS FOR THE 
                        CITY OF NEW YORK

    Mr. Skyler. Good morning, Chairman Towns, Representative 
Issa, and other members of the committee. Thank you for the 
opportunity here today. I'm here on behalf of Mayor Bloomberg, 
who is actually in Washington with some of your colleagues for 
that bill to be signed by President Obama later in the 
afternoon.
    I'm here to testify on the measures the city has in place 
to ensure that all stimulus funds allocated to the city are 
spent appropriately and the steps the Federal Government is 
taking to assist us in this endeavor.
    In total, the city and citywide entities are expected to 
receive about $4 billion in expenses and $1 billion in capital 
funds for the next 2 years. For the stimulus funds, we want the 
city to be a national paragon of transparency and 
accountability. We intend to not only use our existing systems, 
but take additional steps to ensure that our share of funds are 
spent properly. This increased transparency will enable you and 
the public to hold us accountable on many levels.
    First, when we discuss New York City's robust fraud and 
waste prevention measures; the Mayor's Office of Contract 
Services oversees all procurements throughout the city. City 
agencies must conduct background checks on all potential 
vendors, checking for compliance regarding the worker filing 
and licensing rules, as well as the means for passing a company 
or its principles; and then make the responsibility 
determination for every contract awarded.
    In addition, vendors who have received contractors or 
subcontractors that meet certain financial thresholds must 
submit detailed questionnaires with the companies and its top 
principal officers, which are entered into the city's Vendex 
system to inform the agency decisions regarding vendor 
responsibility.
    For awards greater than $100,000, the city's Department of 
Investigation also conducts a vendor name check, checking every 
entity in person names on the Vendex questionnaire against 
their data base to see if they've been subject to any criminal 
investigations and if there is any other relevant information 
that should be provided to the contracting agency to aid in the 
responsibility determination.
    Next, all contracts must be certified by the relevant 
agency's chief contracting officer. We've assigned specific 
point people to take responsibility with the integrity of our 
contracts, including compliance with the city, Federal minority 
and woman-owned business participation requirements.
    For every contract, other than those obtained by 
competitive bidding, the mayor's office will certify that the 
city has complied with all applicable laws and rules, and the 
corporation counsel will certify the legal authority of the 
contracting agency to proceed with the award.
    In addition to the mayoral oversight, the Department of 
Investigation and the Comptroller, people we will hear from 
later, we also closely monitor contract work going in.
    On top of these checks we already have in place and prior 
to the enactment of the stimulus bill, we created a government 
structure known as the Stimulus Oversight Group, through which 
all stimulus funds are overseen by the mayor's office and the 
appropriate oversight agencies.
    We've assigned every funding stream for which the city is 
eligible to working groups: infrastructure and energy 
efficiency, social safety net, economic and work force 
development, public safety and fiscal assistance.
    These working groups review allocations, applications and 
documentation for all funding streams. Adjustments are based on 
the following criteria: ability to deliver program results, job 
creation, economic stimulus impact, the speed at which spending 
could occur, long-term public benefit, integrity and fraud 
prevention.
    All working groups are represented under the oversight 
group, the deputy mayor, and the oversight agencies; and this 
level of involvement has brought unparalleled scrutiny to each 
funding decision.
    In addition to these steps, we're also implementing an 
additional way of public transparency. We launched an 
interactive Web site called the Systems Tracker, available 
through New York City with the government. This will track all 
dollars on the way from districts, city programs and projects 
through the step of contracting, financial processing and 
payment for project work.
    So, the ultimate impact of each fund is shown on the lives 
of the New Yorkers. These features are set to be fully 
operational by the end this month. In addition, we obtained an 
additional level of scrutiny provided by KPMD, whose services 
were obtained to help guide New York City's stimulus reporting 
process.
    By obtaining experts in the accounting field, we will start 
to meet and exceed the Federal and State reporting requirements 
for these stimulus funds.
    Taken together, these measures will provide an 
unprecedented level of oversight in funding additional 
contracts that allows us to verify that we are spending our 
stimulus moneys as efficiently and effectively as possible.
    As you know, New York State is 1 of 16 States that's to be 
audited by the Government Accountability Office. Our staff 
recently met with GAO, and we did indicate to GAO we have 
specific information of those hired by the Federal Government, 
but we are challenged to account for the impact of our funds in 
a manner consistent with the government expectations.
    For example, we strongly recommend the creation of 
standardized job creation methodology that accounts for 
regional differences. With the new Federal guidelines, we would 
ask that local governments be allowed to ask the Governors to 
use stimulus dollars to meet enhanced reporting requirements. 
We encourage Congress and Federal agencies to issue additional 
guidelines as soon as possible.
    Thank you very much for the privilege to testify this 
morning. I'm happy to take any questions you may have.
    Chairman Towns. Thank you very much.
    [The prepared statement of Mr. Skyler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. I want to thank both of you for your 
testimony.
    Now, we would like to start the question and answer period. 
There was an article in the Wall Street Journal yesterday 
entitled, ``Stimulus Confusion Frustrates Business.''
    Have either of you heard about any widespread confusion 
that businesses have about the timing or details of the 
stimulus program?
    Mr. Gilchrist. Yes. Certainly, in our conversations around 
the State, in the forum such as in Brooklyn a few weeks ago and 
in other forums throughout the State, I believe that there's 
not an understanding in a lot of the business community as to 
the availability of the funding.
    And that often they're looking for funding for programs 
that were not authorized within the bill. We have received over 
16,000 projects worth over $100 billion in our request for 
projects, many of which are not really eligible for the 
program.
    And that's part of the education that we are working to 
carry forward as the Federal Government comes out with 
information to put on our Web site, Recovery.ny.gov, 
information on those programs for New York businesses.
    Chairman Towns. Thank you.
    Mr. Skyler. Our concern has been reaching out to Federal 
agencies as to the questions from the private and not-for-
profit sector to get a better understanding of the guidelines 
that are coming out.
    We calculate that about 50 percent of the individual 
programs included in the stimulus bill have yet to--that 
there's not guidelines distributed for them, including 
deadlines for application submission. So, there's still a great 
deal of information that needs to be distributed by Federal 
agencies charged in distributing funds. And as soon as we get 
that information, we pass that on to the stakeholders in the 
private and not-for-profit sectors.
    Chairman Towns. Thank you.
    Let me say that just a few weeks ago we met with Mr. 
Devaney, who is the inspector general and a superstar among 
inspector generals, who is in charge of the board. And he 
indicated that without very aggressive--because we're very 
aggressive--leadership from this committee and others in terms 
of--what's involved with the stimulus package, that out of the 
$787 billion that's being allocated throughout this fashion, 
$55 billion would go to waste, fraud and abuse.
    Can any of you help us out? Do you have any ideas or 
suggestions on how we can cut down? Because that to me seems to 
be a lot of money that can do a lot of good things for a lot of 
areas in this Nation. But $55 billion, that's a lot of money.
    So, do you have any ideas what we might be able to do as a 
committee to bring about some changes, to be able to prevent 
this from happening?
    Mr. Gilchrist. One thing, Mr. Chairman, you and other 
Members, one of the things that you've done today is an example 
of what can happen; and also what's going on with the GAO and 
the accountability of the board, is paying attention to issues 
such as waste, fraud, abuse up front.
    Often, hearings like this were reviewed by an IG, and done 
well after a contractor is close in the implementing process, 
and the agency doesn't have time to make a course correction. 
So, constant reviews that we often see as burdensome by the 
implementing agencies do give us the opportunity to make sure 
that we move forward and still prevent waste and fraud abuse.
    And then your opening remarks also made a very important 
point. The act provides for a lot of funding, Federal agencies 
and Federal IGs for oversight. While they're not a direct 
allocation to State auditors or State Governor's offices, who 
are all under very tight fiscal control--so are the mayor's 
offices--under tight fiscal situations, to hire contractors or 
additional staff to help us.
    So, the city is going to bring in independent outside 
consultant firms or auditors to help us. We are scraping within 
our funding to provide that, while on the Federal level, the 
moneys that are provided out of the Recovery Act to the 
agencies.
    Mr. Skyler. First, let me say that Mayor Bloomberg's 
intention and the government's intention is to make sure this 
is the case and that not one penny of stimulus dollars of New 
York City is wasted. The mayor is very appreciative of the 
funds that are going to New York City because of this 
legislation, and he is doing everything in his power to ensure 
the trust being placed in New York City is not undermined.
    We believe in New York to that end; and to that end what we 
have done voluntarily, and continue to do as programs are 
funded, is put as much information on the Internet as possible. 
We already started our public announcements to try to put out 
as much information about the grants as we can.
    We announced $260 million in transportation funds for 
streets and bridges in New York City, and a press release of 
around 30 pages, talking about how much each project was, 
explaining when ground would be broken. So, we're going to put 
out as much information and we will be judged by the public, by 
the Congress, by the media, and that is one of the things we've 
voluntarily done in going at the Federal requirements.
    We've also spent non-stimulus dollars for our accounting 
office, so that we have somebody on our behalf independent 
scrubbing our books to make sure we're not accumulating 
inappropriately and every dollar is accounted for. We do not 
want to embarrass the Congress or the President by allowing 
fraud or misuse of funds to take place.
    So, we would certainly provide more information about those 
two steps, but also encourage this panel to make sure that 
others take similarly transparent steps.
    Chairman Towns. Thank you very much.
    Now, the ranking member from California, Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Mr. Gilchrist, when you said, rightfully so, that there was 
no money in the stimulus bill for your portion of the 
oversight, I had to muse a little bit. Because you said there's 
a lot of money for oversight on the government side. Now, I'm 
just an old fashioned businessman, so bear with me for a 
moment. If you took $1 billion out of the $787 billion, and put 
it into a very conservative T-bill, maybe for California' tax 
freeze, it would make 5 percent a year.
    One billion would give you $50 million of income a year, if 
you factor $1 billion. The total allocation for oversight of 
GAO is $25 million, so you wouldn't get half of what you'd get 
on $1 billion in the bank for a year. It's a very, very small 
amount, and the attorney general has authorization for, I 
think, for 30 staff people, and doesn't have them yet.
    So, I'm very concerned that although it seems generous from 
those of us who earn a little bit of money; looking up, it is 
really very little relative to the size that we're going to be 
asked to oversee.
    I think a couple of questions are particularly germane here 
and I'm glad that the State and the city are represented.
    Mr. Gilchrist, have you ever been in a meeting in which 
there is a discussion, or have you heard of a meeting in which 
there is a discussion, about how Federal stimulus dollars could 
be used for already budgeted projects which would then free up 
those dollars to be used elsewhere? State dollars to be used 
elsewhere by putting, plugging the Federal dollars stimulus 
into that use?
    Mr. Gilchrist. Well, I think there's a multiple part to 
that question, Congressman, because as we move forward with, 
for example, transportation programs, in order to meet the 
Federal requirements and to meet with timeframes, we have taken 
projects that were in the original programs that we've created 
in the State Department of Transportation or the Metropolitan 
Transportation Authority, that could not be funded because of 
cost overruns from the last several years.
    Mr. Issa. I appreciate that. I'll narrow the question. 
Let's look at transportation. Were there on-budgets--at the 
time that Albany was viewing the Governor's budgets, were there 
projects in the budget which are now in shovel-ready projects 
being allocated Federal funds to do them?
    Mr. Gilchrist. Yes; and the State funds and the 
government----
    Mr. Issa. And then the State funds were used elsewhere.
    Mr. Gilchrist. No, no. The State funds were reprogrammed to 
presentation projects and the Governor has signed the required 
maintenance of effort requirement for the next year's budgets; 
and these are the requirements for the Accountability Act.
    Mr. Issa. So, following up with this----
    Mr. Gilchrist. There was a slowdown in the fall of State 
spending on all areas.
    Mr. Issa. I understand. And I understand that. The reason I 
asked that because--I happen to have my wife's first cousin 
living here, three blocks away; and she's watching your 
hospitals, not yet well-funded and finding themselves being 
closed even though stimulus dollars are being allocated. And 
what she is seeing is the total dollars----
    [Applause.]
    Chairman Towns. This is a Federal hearing, not a town hall 
meeting. [Laughter.]
    Mr. Issa. It is important to me because what I see from the 
oversight standpoint is very clear to my home State of 
California, the State of New York, cities within the States 
have budget deficits. We filled some of those budget deficits. 
No matter how much we said is allocated in a certain way, the 
truth is where it is being allocated is not a net increase.
    And isn't it true that many of these programs were 
obligations? So you couldn't have not funded them if nothing 
came from us; and yet they didn't get flushed up even when 
they're using the Federal funds. Isn't that a reasonably fair 
statement, yes or no? Please, followed by a comment.
    Mr. Gilchrist. You have a yes and no; because you need to 
work through each one of the different programs. And the State 
had a very difficult challenge, in that we're one of the first 
States that had to implement our budget 6 weeks after the 
Recovery Act was passed.
    And to be fair, the issue in the report, some of the 
questions had been, how the money was allocated in your 
budget----
    Mr. Issa. One final question, and I'll let you answer both 
together. For both of you, since it's very clear that there is 
money shifting in order to meet these requirements, isn't it 
fair for the Federal Government, particularly this committee, 
to demand not just a recognition of where the dollars went, but 
a detailed analysis of the shifting that went on? So that, as 
we see dollars at a par level to hospitals and we see dollars 
moved elsewhere, isn't it fair for us to know, was it stated in 
the health care system, or the shortages, and are you prepared 
to deliver us that kind of explanation over and above the 
initial requirement? Where you spend it, can you tell us all 
the shifting of the sand that is going on with the other money?
    Mr. Gilchrist. Yes.
    Mr. Issa. Will you----
    Mr. Gilchrist. Yes. On Friday or early next week we'll be 
sending out the fiscal report early required for the 
implementation of the State budget; and that will detail how 
recovery funds were used.
    It is interesting to be answering your questions about 
whether or not the money is used to offset other things, while 
we've been widely criticized since April 1st since the size of 
the increase in our overall State budget, which is because the 
recovery funds were listed over and above the normal spending. 
So, we will be issuing a report on our State budget. We will 
make sure that the committee has that report.
    Mr. Skyler. We not only believe it's fair for you to get 
that, we've voluntarily started to do that. So, $260 million in 
transportation money directly received by the city funded eight 
projects that were already funded by city dollars.
    So, what we did is, we programmed the Federal money, 
stimulus money, to those eight projects. And the $260 million 
that was freed up by the stimulus and was allocated toward 25 
other projects that didn't have funding to go forward; and also 
didn't meet the criteria of the time deadlines being shovel 
ready, etc., to be part of the stimulus program.
    Sometimes with the Federal reviews, and environmental 
reviews, there was an 180 degree window. So, prior to falling 
out of that window, there was still time to get Federal 
funding; and we will do that with every other program.
    For example, we were able to work out of the State an 
arrangement to save 14,000 teaching positions in our city 
school system with stimulus money. And that money will stay 
within the school system. So, in short, we think it's fair that 
we will work with you to do that, so there is no three card 
monte with the funding.
    Chairman Towns. Thank you very much.
    Five minutes from the gentleman from Ohio, Mr. Kucinich.
    Mr. Kucinich. Mr. Skyler, how long will it take you to 
spend $4 billion?
    Mr. Skyler. We believe we'll spend the $4 billion over 2 
years; 2 fiscal years, on the spend side. On the capital side, 
we have about $1 billion. There is $250 million for 
transportation, as I've mentioned; about $250 million in clean 
water, and about $426 million or so for the Housing Authority. 
So, in addition to $1 billion the MTA will receive.
    For those, we hope to be breaking ground on the majority of 
these projects this calendar year. Some of those projects, such 
as bridges, are multi-year projects. Some of those capital 
projects actually stretch over possibly a 2 or 3 or 4 year 
window.
    The expense funding, as soon as we get the money here, 
we're putting it right to the budget. For example, we've 
already put in about $250 million of the FMAP money. And we 
have an allocation for funding that we expect to put into our 
next police classes, funded by the Department of Justice.
    So, we're not going to waste any time. We're not going to 
save for later use. As soon as the money is received by the 
city, we will pump it right into the programs it is intended 
for.
    Mr. Kucinich. In your program response, when you say you'll 
spend it over 2 years, after 2 years, what happens to the 
programs that received the money?
    Mr. Skyler. It's an excellent point, sir. We're not able to 
use our financial situation to baseline any of these programs.
    Mr. Kucinich. Can you explain that?
    Mr. Skyler. The city operates on a financial plan, which 
means match our revenues with our expenses on a year-to-year 
basis. And we put forward tax projections over the 4-year 
window. And we can only afford programs that we knew we have 
revenues identified to fund them.
    So, stimulus funding which is over and above those tax 
revenues, we can only provide for a year or 2-year duration. 
So, after that time period closes, we will not have all of the 
other funding available. And we will not have the resources to 
continue them.
    Mr. Kucinich. So, these stimulus funds, and this goes into 
a question, and I'm sure it's raised--they're being used to 
supplement additional spending--you're not substituting for 
city spending? You're not swapping the funds and using the 
funds for anything else? Using your funds from the city budget 
for something else?
    Mr. Skyler. What we are doing is, using the stimulus funds, 
essentially gap closers, to continue extension services that we 
otherwise did. It provides, for example, without the use of the 
stimulus funds, we would be forced to reduce the work force of 
the Department of Education, a work force of 14,000 teachers.
    So, even though we're in an economic downturn, we intended 
to continue with those positions. We did not have the funds to 
do so until the full stimulus money came through.
    Mr. Kucinich. Let me ask you about this. The stimulus money 
is plugging a $4 billion downturn gap or helping you address $4 
billion in needs. You are the person that goes over all of 
these numbers. What are the needs? Are they more than $4 
billion? Are they $6 billion, are they $8, $10, $12? What are 
they? What are your capital needs? Are they $1 billion, are 
they $10, are they $20? What are they?
    Mr. Skyler. I can't give you an answer on what our needs 
are, because we do try to spend within our means. We have a 
capital plan, which the mayor will announce later next week, 
for $70 billion. That is an enormous amount of money, but it 
will be cut, like 30 percent, when we present it.
    So, we try to fill what the pressing needs are and match up 
the resources to it. Program stimulus--the Mayor presented his 
budget in January, a $4 billion budget deficit. With the 
stimulus funding available this fiscal year, about $1 billion 
of it was in the form of gap closing through money which is 
being used to keep existing programs afloat, or to do 
additional work force training or other services that the city 
wouldn't have the money to do or weren't contained in the 
financial plan.
    Mr. Kucinich. Mr. Chairman, I think one of the things that 
we will be doing with this committee is that we really analyze 
how much of a stimulus this stimulus package is for the 
economy. We're talking about a couple years. The implication is 
and, I think, the expectation throughout the country is that it 
stimulates something. The stimulus is something that happens 
over a couple of years. That's No. 1.
    No. 2, there's no doubt that New York and other cities 
across the country are experiencing severe declines in their 
tax revenues, which is creating huge needs and demands. It may 
be that this stimulus program is just beginning to set the 
stage for a necessity in going forward with its general revenue 
shares.
    The third thing I want to point out is that, according to 
the revenue architects, we need over $2 trillion in repairs for 
infrastructure. It's something that local communities aren't 
going to be able to support. So that might be an opening for 
some later spending that may keep the stimulus going if they 
find some way to get the shovel-ready projects going to really 
move the economy, like FDR did in the 1930's when we had the 
New Deal that rebuilt a lot of this community.
    Thank you.
    Chairman Towns. Point well taken.
    At this point, I yield 5 minutes to Congressman Platts from 
Pennsylvania.
    Mr. Platts. Thank you, Mr. Chairman. I thank both of our 
witnesses for their testimony.
    And as I said in my opening statement, one of the most 
important responsibilities that we have as officials is being 
good stewards of the funds. Each of you in your respective 
rules, city level and State level, play a critically important 
role in that sense.
    I want to, first of all, question my colleagues on the use 
of the funds to supplement and not replace State levels, so 
that it truly benefits the increase in the enhancement, if not 
status quo.
    Mr. Skyler, you laid out pretty well what the city is doing 
with its transportation money, 260 funded shovel-ready 
projects; and to the city's 260 move an 25 additional projects.
    So, is it fair to say that you will see that same approach 
statewide, Mr. Gilchrist, that at the end of the day, we're 
going to see any of these projects with Federal money in and X 
number of additional projects are added?
    Mr. Gilchrist. Yes. But on the transportation side, we 
operate on a 5-year program. One of the things we're tracking 
are all of the projects that are selected, whether or not they 
were part of the original 5-year program. And if they were, 
then how the funds are reprogrammed, similarly the way the city 
has come forward.
    It's a little more cumbersome for us to move forward, 
through the 13 plans and organizations that are doing the same 
thing as the city. That's part of our tracking.
    Mr. Platts. I think I'm the only Member in Congress who 
actually was a member of the NGO, my local community, from my 
State house days; and I actually enjoyed transportation issues 
immensely and I'm glad to be part of that effort.
    One of the concerns--and I hadn't seen it in my region, but 
I have seen it in Pennsylvania, that some of the projects that 
we're working for, bridges, because of the timeframe 
restraints, that we're moving projects that are not the 
substantive type of infrastructure projects that ultimately are 
going to have a long-term benefit--but because of the short 
timeframe.
    Is that a concern you have in New York?
    Mr. Gilchrist. Well, one of the concerns that they 
expressed about the projects that are in there, many of them 
are projects such as bridge painting, culvert repair, minor 
paving and minor bridge repair.
    But let's point out two things. One is, all of those are 
transportation issues. So, all of those are very important 
things that any kind of asset management system can tell you 
are investments; that they should be made.
    The second note is, the stimulus portion of the program, 
they are all very labor-intensive jobs. It can get people to 
work. There's not much individual support, labor-intensive; 
they're replacing the culverts or painting a bridge or fixing 
cracks on the highway.
    And that puts people to work. There's $2 billion that New 
York State got for transportation, not taking care of our 
backlog, that would allow to get projects out there and get 
people to work.
    Mr. Platts. And I share the opinion that these maintenance 
projects for the long-term will prevent further or more 
substantive work having to be done because you do it now.
    You kind of touched on my next point, both of your 
testimonies. You touched on the issue of a common methodology 
being important when it comes to job creation and job retention 
numbers; because our goal here is 3\1/2\ million jobs created 
or obtained.
    You both touched on that testimony. The way it was touched 
on is, that you get to see firm guidance from GAO on how to 
establish those job numbers. And, in fact, I think one of you 
said that perhaps the approach is that you provide all your 
data and let this be successful for your job creation numbers, 
very essential jobs.
    Can you expand on that and what, if any, additional 
guidelines have been given by GAO?
    Mr. Skyler. I believe we are in discussion with the 
individual agencies. For example, on the transportation side, 
we use the Federal transportation formula to calculate about 
25,000 jobs be created by the transportation problems the city 
is going to do, for construction jobs.
    On the Housing Authority, we are owed money which is about 
$430 million or so. We do not have comparable guidelines from 
HUD on how many jobs that we could create. So, we're trying to 
do different types of work to make those calculations.
    And on our Web site, we have tracked how many jobs we 
created. And we want to make sure that those numbers are 
accurate. Some of these are easier to measure. For example, COP 
funds, which is we're going to fund the police officers 
straight toward these accounts; education money that we got 
through the Governor's help to save 14,000 teacher positions 
that we can have.
    Construction jobs are a little more subjective. So, we 
would like to get it from a centralized source; it would be 
incredibly helpful.
    Mr. Platts. And I agree with what you said where the 
Federal Government could be very helpful for providing that, as 
well as direct and indirect jobs that you created.
    It gives you an ongoing dialog with GAO at the State level, 
specifically, that have guidelines with OMB and the guidance of 
the agencies. One of our recommendations would be that, 
something that OMB will be taking control of, and not 
necessarily the administration agencies.
    Thank you, Mr. Chairman.
    Chairman Towns. Thank you.
    At this time, I will yield to the gentleman from Vermont, 
Mr. Welch.
    Mr. Welch. Thank you very much, and I appreciate your 
testimony.
    Now, there are three issues that keep coming up about 
stimulus. One is the confusion, Mr. Chairman, that so many 
people have about whether the money is there for their 
particular program. And then after all the testimony, it's best 
to explain what the limitations are and it sounds like an 
infinitely funding bill.
    Second, to stop fraud, and both of you outlined your good 
procedures to try to stop it, and be on top of it.
    And the third issue that we're starting to talk about, the 
most challenging, is how do you make it effective? And once you 
go beyond the categorical programs, how do you make it 
effective?
    And I guess that I'll ask each of you--there's two 
questions. One is, how do you make it effective? What are the 
points that each of you focuses on in the implementation?
    When you started mentioning maintenance projects, I happen 
to agree with it. It's visible, labor-intensive and consistent 
with the goal. But do each of you have some comments about 
that?
    And then second, how do we measure effectiveness so that 
you can strategically make mid-course corrections? It's got to 
be done at the delivery level, not the Washington level.
    Mr. Gilchrist, can you answer this?
    Mr. Gilchrist. On the State level, what we're trying to do 
is take a look by program to go through what our measures are, 
the objectives of spending the money on. We talk a lot about 
transportation money that had the earliest deadlines.
    But for the water and sewer funding or any of the other 
funding that comes through by formula, we are asking each 
agency to make sure that they articulate and have a Web site 
for public comment; what their criteria are. What are the types 
of water systems that are funded sooner? How much attention 
they pay to energy conservation plus other issues and job 
creation issues.
    We're also asking the New York State Energy Research 
Development Authority about our energy program, putting 
together the plans to outline ahead of time what their 
objectives are.
    The last point you hit on is public policy. One of the more 
difficult ones is finding those effective formulas that were 
used to go through that. But we are all going through our 
cabinet structure or agencies to go back south in the system 
and what their measures would be beyond the job creation or the 
job retention program.
    Chairman Towns. Thank you.
    Mr. Skyler.
    Mr. Skyler. I think for us, that starts at the inception, 
which is in our oversight; where every deputy mayor with a 
stimulus funding for a program to present to the working group 
and justify the funding.
    We haven't carved up the pie and given it to our 
colleagues, ``This is your amount, this is your amount, do with 
it what you wish.'' Externally, there's oversight to make sure 
that the needs are real.
    Some of the programs lend themselves to efficiency issues 
that are managed better than others. For example, $80 million 
in energy efficiency.
    We have auditors in place; the city verifies energy 
efficiency already, so that we can tell what the payback is for 
$80 million worth of project. We'll be able to measure them as 
time goes by; where they are relating projects or generation 
projects, hybrid vehicles. How much money the city had saved 
from other places, such as the work force. The Investment Act 
and job training will be able to measure how many people were 
trained.
    So, we are endeavoring to create that for each category, 
and obviously there are dozens of categories, and some of them 
are more challenging. But at the inception, what we wanted to 
do is make sure that none of these are done in the back room 
and that every person in administration that's involved in the 
process comes to where the money is being spent. And then we 
have that internal accountability. And then when decisions are 
made, we're externally accountable.
    Mr. Welch. And the final question.
    What suggestions, concrete suggestions, do you have for 
what we can do in Washington and make it more likely to be 
successful here in New York?
    Mr. Skyler. Keep sending it.
    Mr. Gilchrist. I think he's saying that to try, making sure 
there are some consistencies in the guidelines. Because through 
it, and the Federal Government does what it often does, we'll 
share the information across the States. So, when you go 
through your processing and you pick up a good idea, you can 
get it to us so we can also look at it.
    Mr. Skyler. We are chomping at the bit, and not just from 
the authority, but from the information from the Federal 
agencies on how to spend funds. They all have rigorous 
guidelines attached to them. And although we started meeting 
and decided where we wanted to fund programs, we don't know 
when those, for instance, eligible agencies put out the 
information.
    As I said before, over half the programs don't have the 
guidelines, the guidance and deadlines out there for us to 
judge. So, we can't make the internal funding decisions where 
we manage the money until that information comes out.
    So, as far as maximizing the effectiveness of the money, 
stimulating the economy, if the stimulus has the intent to 
speed it as part of that, as soon as these Federal agencies can 
get that information to us, we will take advantage of that.
    Mr. Welch. Thank you very much.
    Chairman Towns. Thank you very much.
    Let me take a moment to introduce a person that served on 
this committee for 24 years, Congressman Major Owens.
    [Applause.]
    Chairman Towns. Let me start the second round of questions. 
And as I move around, companies, small companies, small 
businesses, they have a complaint. They're saying that we have 
more opportunities. We're left out, what do we do. When we talk 
about ``stimulus,'' they don't mean us.
    Now, what can we do to grow small businesses and at the 
same time meet your deadlines? And I understand that there's 
time differences in all of that. But what can we do to be able 
to let the small businesses come in? But they are saying that 
they wanted to talk about the big guys.
    Mr. Gilchrist. One of the challenges we face, Congressman, 
and I think we need to work on, is getting information out into 
the community early about what is going on; so there will be 
that contracting opportunity. And so we can move as much as 
this through the competitive bidding process as we can, which 
helps you with the waste, fraud and use standard contractor 
process. We at the State level are struggling on how to do a 
better job, getting out not only to the State job bank where 
the jobs are, information for the small businesses, so that 
they can work with the other contractors and suppliers.
    And that's one of the challenges we're facing as we're 
moving forward. And one of the things we really need to do as 
we put the first set of contracts out, there's a lot more that 
we can do in that regard.
    Chairman Towns. Mr. Skyler.
    Mr. Skyler. Thank you.
    We have on the private side, the greatest opportunity for 
us, we got small businesses involved in construction. Most of 
the expense funding goes directly to the city agencies for 
public employees, whether education money, it goes to the 
grants, essentially for existing city programs.
    There are contracts, but the opportunities are not-for-
profit sectors. And we have, Mayor Bloomberg announced last 
week, one person in the mayor's office who's going to be 
basically the outreach for not-for-profits. Any not-for-
profits, a question on getting contractors in the city; whether 
it's stimulus related or not, we'll have one person to call for 
30 or so city agencies with different contracts. They can get 
the opportunity to have, essentially, one-stop shopping.
    And we're continuing to work with the city council and 
their partners in construction industry are MWBE programs, to 
make sure that everybody possible benefits from at least the $1 
billion in construction funding stimulus that pumps into the 
economy. And that has been a priority from the beginning and we 
will do that.
    Chairman Towns. Thank you. The Recovery.gov Web site states 
that, ``. . . Does not plan to issue formal guidelines directly 
to State or local governments. But agencies should seek to do 
so as appropriate, potential infrastructure funding through 
their programs.''
    Does it concern you that the guidelines on stimulus funding 
may come down from the individual agencies instead of one 
uniform guidance document?
    Mr. Gilchrist. In certain regards, particularly toward the 
job creation and the tracking and the reporting, I think the 
State would prefer we had several guidelines. For certain 
ideas, especially job creation, the reporting requirements, 
some of the overall contracting requirements, we would prefer 
central guidance rather than to have to deal with multiple 
agency requests.
    And the agencies, we believe, are best left to specific 
rules, such as the authority for water, sewer funds, and those 
agencies with specific responsibilities; rather than the 
overall reporting-type guidance that we think should come 
central.
    Mr. Skyler. For us, a lot of these programs are existing 
programs that existed in the past. So, for example, the TARP 
program, we have a relationship with their office in DC--GOJ, 
that administers the program.
    So, their relationships from people that worked in the 
cities, the administration, and people in the Federal agencies 
have worked with State administration to administer certain 
programs so that there is existing infrastructure to move 
things forward.
    So, we can live with the existing system. As we mentioned 
before, our main priority would be the speed of the information 
getting out. Since the administration appears to make a 
decision from a centralized warehouse of information that comes 
from the agency's administrator, then we just urge them to 
please expedite the issuing of the guidelines.
    Chairman Towns. Let me ask you this. Does New York State 
and offices of New York City have adequate staff to be able to 
deal with the situation? I ask both of you that question.
    Mr. Gilchrist. One of the things that we are processing 
through right now--we have a work force route set up to deal 
with every agency, so that we can go through and measure their 
needs, particularly in the current budget climate, in 
implementing the program. And we will bring the staff in from 
the agencies.
    Mr. Skyler. Although extra resources would be helpful in 
administering of the stimulus funding, we will do what needs to 
be done with the existing resources we have. I have redirected 
people on my staff from other responsibilities to this.
    It is a priority. Similarly, the economy is a priority. And 
all the programs within the stimulus funding are, and the 
decisions we need to make are what the priorities are. 
Certainly, we won't turn away funds that were made available, 
but we don't want to be taking funds on one hand and 
complaining on the other hand that we don't have enough people 
to administer them. So, it will be helpful, but we'll do what 
we can with what we have.
    Mr. Gilchrist. And I'd like to clarify where we're really 
looking at positions, temporary positions such as construction, 
especially. We're not adding to the overhead of the agencies.
    Chairman Towns. Thank you.
    Mr. Issa. Thank you, Mr. Chairman.
    Mr. Skyler, I'd probably focus on you, but it is a question 
for both of you. I happen to be a child of a child of the 
depression. My grandfather worked on WPA projects, for 
carpenters and cabinet makers. There was no work for much of 
those jobs. And he left behind a legacy of things that actually 
were built during that time that my grandmother and my mom 
would tell me about, and even go show me a museum to see a 
piece that he worked on.
    So, I appreciate that it was a model, in the Great 
Depression, of Federal money used to keep people employed, and 
keep their skills--keep their work ethic. And we--it's not a 
measurable item. I'm sure there are figures of how many people 
were employed under WPA and other programs, but he left a 
legacy.
    This summer I was on the West Coast, and I drove from 
Seattle--I was on summer vacation, going from defense 
contractors, and then drive down the coast. The drive down the 
coast part, I went over bridge after bridge after bridge, all 
of which were built under the WPA.
    As a result, I think what differed here, $800 billion is 
actually bigger than several years of WPA. Yet, if I read 
correctly, you talk about how many jobs were saved and so on.
    Isn't it fair, Mr. Skyler, to say that if you move Federal 
dollars into things which you can't fund under our rules, and 
then you moved dollars elsewhere, that it's almost likely, 
whether you saved 14,000 jobs or in fact that money really went 
somewhere else and it created 6,000 jobs?
    Isn't that an accounting nightmare to actually give us a 
fair assessment and--in a sense, wouldn't you also take just 
the number of, you know, X amount per million we're going to 
create because--you are in a position where the numbers you 
report are where you used our money but not necessarily where 
you're using the money that's freed up for other projects, 
which may or may not be labor-intensive?
    Mr. Skyler. I agree with your assessment that it is very 
difficult to get accurate job estimates. On the construction 
side, it is by far the simplest task because we do it all the 
time on city projects, how much--replacing a ramp on a bridge, 
how much to replace a sewer main, how many jobs that creates.
    Unfortunately or fortunately, depending on what your 
priorities are, the vast majority of funding in the stimulus 
bill is actually not for infrastructure. It is----
    Mr. Issa. We are acutely and sadly aware of the case.
    Mr. Skyler. Mayor Bloomberg met with the President along 
with Governor Arnold Schwarzenegger in March to discuss 
reauthorization of some key legislation; but there is a huge 
need for infrastructure.
    Mr. Issa. Sure. And we need 5 to 10-year programs. I'll 
followup with just a couple of questions. For all those 
potential contractors, for any parts of the stimulus, because 
in many cases here in New York and my home State of California, 
really, what you have is a group of projects you are already 
doing and a group of projects that you're able to say or do as 
a result of the stimulus.
    In a sense, there's really no new work for a contractor. 
These are two pools which before the stimulus may or may not 
have been funded. And now that they've got the stimulus, 
instead of a $10 million, $15, $20 million cut across the board 
of the State, you're cutting less.
    So, from an expectation, shouldn't the expectation of 
contractors be, well, it's not going to be as much of a down 
year because New York was able to deal, at State and city-
level, with its shortfalls? So, realistically, they'll look for 
new work--less reduction than they otherwise would have had. 
And as a result, put your expectations reasonable with the new 
opportunity. If anything, it's going to be a little slower this 
year.
    Is that a fair enough way to put it?
    Mr. Skyler. I agree with you. The assessment depends on 
what program you're talking about. The city will receive in 
fiscal year 2010, according to our projections, $6 billion less 
in tax revenue, off the basis.
    Mr. Issa. So, if you're talking about receipt is less, the 
State and the city level, from the previous year, including the 
stimulus, your net output will be less, too.
    Mr. Skyler. So, what I can do is assure you that only 
because of this, of the Stimulus Act, the pain that will be 
felt in our private sector, in the government sector of New 
York City, will be considerably less than it would have been.
    Mr. Issa. I'm sure less. Let me ask you one last question. 
The chairman alluded to this in the beginning, and I very much 
support it.
    Wouldn't you say that one possible legacy of the stimulus, 
if we are able to allow you to redirect funds or, potentially, 
a new fund; would it be, if in fact the Federal Government and 
the States and the major cities were able to advance the 
reporting systems with computers and the ongoing oversight--
this isn't the only Federal funding; you receive them every 
year--If we can get a portion of this money allocated to be 
reallocated for new funds?
    And I realize as--we don't know for sure what we're 
committing to, but if we would at least create that 
opportunity, wouldn't one of the best legacies for your jobs be 
to really, really make a modern leap in the ability to account 
and report for funding that we all do within government?
    Mr. Skyler. That would absolutely be an amazing legacy. Too 
often in government, projects are judged by the costs, not the 
outcomes. And that is the model Mayor Bloomberg is trying to 
get away from: Not judging projects by how much you spend, but 
what you get for the money.
    Mr. Gilchrist. And on the accountability, also, what we're 
discovering is the ability to show to the taxpayers all of the 
sources of funding that are going to the community, where 
before it was often left to the individual agencies. So, now we 
are trying to line up highway, water and sewer modernization 
and housing projects all together.
    Chairman Towns. Thank you very much.
    Congressman Kucinich.
    Mr. Kucinich. Mr. Skyler, how much funds have the city of 
New York received already from this program?
    Mr. Skyler. It's $250 million.
    Mr. Kucinich. You're expecting a total of----
    Mr. Skyler. $4 billion, sir.
    Mr. Kucinich. $4 billion.
    Mr. Skyler. In additional capital.
    Mr. Kucinich. And when will that $4 billion be finally 
received?
    Mr. Skyler. I believe that's--for example, the FMAP funds 
goes from three separate fiscal years. So, we expect to get 
installments into, I believe, fiscal 2011. We got our first 
installment in the current fiscal year 2009, until--over 2\1/2\ 
fiscal years, we'll be getting installments of that money.
    Mr. Kucinich. When this money comes in, where does it go? 
Just walk us through it. The Federal Government sends you 
money; how do they deliver it?
    We are doing oversight. Walk us through, how do you get 
$250 million from the government?
    Mr. Skyler. Essentially, the city--my understanding of the 
way these are treated is that--for accounting purposes, we 
don't really exist. We are creatures of the State and our 
funding, our Federal funding, actually flows through the State 
of New York, to a large degree, to prevent----
    Mr. Kucinich. Through what, please.
    Mr. Skyler. Through the State of New York. And, for 
example, the Medicaid funding, although we worked with our 
allocations----
    Mr. Kucinich. Mr. Gilchrist, how much money has the State 
of New York received?
    Mr. Gilchrist. We've spent about $1.8 billion so far.
    Mr. Kucinich. Now, the U.S. Government gives you $1.8 
billion. What do you do with it? Where does it go, physically?
    Mr. Gilchrist. Physically, it changes by program.
    Mr. Kucinich. Where does it go? Does it go into an account?
    Mr. Gilchrist. The State treasury, an account the State 
treasury would hold, through the Tax Department in the State of 
New York.
    Mr. Kucinich. Now, what does the State treasury do with its 
deposits? What happens to that money in the State treasury? Do 
you invest it in various banks?
    Mr. Gilchrist. It's invested in various securities for 
overnight or daily, depending upon the State cash-flow, or it's 
turned right back around. A program such as FF would go back 
and the funding would go from the State program and go out 
through the localities.
    Mr. Kucinich. So, let me ask you this.
    I just want to take a few minutes to understand this 
involvement.
    So, some of the money that's coming from the Federal 
Government, in fact, is going into the Treasury and you 
reinvest that money, right?
    Mr. Gilchrist. Well, the bulk of it is given to us on a 
reimbursement basis.
    Mr. Kucinich. Meaning?
    Mr. Gilchrist. So, for example, our highway program----
    Mr. Kucinich. So, you spend it and----
    Mr. Gilchrist [continuing]. We spend, the Federal 
Government reimburses us. So, we have to have----
    Mr. Kucinich. But what about the other programs we were on, 
the programmatic--the highway?
    Mr. Gilchrist. Again, I believe that FMAP money that we 
received, was the ability to build back to last fall----
    Mr. Kucinich. So, you're saying all the Federal dollars you 
received from this American Recovery and Reinvestment Act are--
you're just getting reimbursed.
    Mr. Gilchrist. I can't say every dollar. It depends on--
each program is different.
    Mr. Kucinich. How much of the money are you not getting 
reimbursed for, that in effect, you are getting money and then 
you're going to spend it?
    Mr. Gilchrist. I would have to get back to you on that; I 
couldn't----
    Mr. Kucinich. Well, do you have any idea at all?
    Mr. Gilchrist. I couldn't give you an accurate answer.
    Mr. Kucinich. Well, what I'm interested in, Mr. Chairman, 
is this: I'm only interested where national stimulus funds are 
going in. Are States reinvesting that money as a way to spend? 
Because if they are, then that's another way to help the banks.
    And so, I'm very concerned about this. It's not just New 
York or any other State. I want to find out--let this committee 
know. When the money is coming, what happens to the money? And 
if you're talking about--if your State is issuing financing, 
like participation notes, OK, are you then issuing this money 
and then these are helping pay off interest?
    I want to find out the role of the banks in this chain of 
custody of the money. And are the banks in any way--not just in 
New York but across the country, are the banks in any way 
benefiting from the Federal dollars that are coming in, and the 
money is not being spent, is waiting to be spent?
    We have heard testimony here that some of this money won't 
be spent till 2011. Now, if that's a fact, I'm interested in 
knowing where the money is, when it's being transferred. 
Reimbursements I can understand, but I want to know if any 
money is sitting around waiting to find a program while there 
are people around the country waiting for a job. So, if you 
could give us that information, we'd be----
    Mr. Gilchrist. We will provide that. I don't believe we 
have any money sitting around.
    Mr. Kucinich. Thank you.
    Chairman Towns. We will hold that open to receive the 
information.
    Congressman Platts.
    Mr. Platts. Thank you, Mr. Chairman.
    Mr. Kucinich started our followup, but first I want to 
commend Mayor Bloomberg and his administration for a hands-on 
approach to ensure accountability, transparency in the tracking 
system, the Stimulus Tracker.
    On the detail, to followup my colleague, where the money is 
going to be spent, how detailed do you expect it to be in the 
sense of the flow of money, all the way down to identifying 
subcontractors on construction projects that actually are 
recipients of these funds, or were the initial contractor and--
--
    Mr. Skyler. What I will do is, I will get the committee a 
sample when we bid out the first construction project. I will 
then be able to show you exactly what level of detail goes into 
it. We already have some information on the projects, but we 
haven't done the bidding yet. We haven't put all the--the 
details don't exist yet.
    What we will do is, we will get to you a sample of the 
level it goes to. If there's suggestions on going even deeper 
into it, we will certainly do it. Some of the programs don't 
really lend themselves to that type of depth.
    For example, we received an increase in money for food 
stamps. We've got 1.3 million New Yorkers whose allocations 
have gone up by 13 percent. So, there isn't the same type of 
detail provided for that.
    But for one such as construction, we trace it from 
allocation to groundbreaking. We should be able to provide any 
and all information.
    Mr. Platts. And when there's a contract for using these 
funds, being different than a contract signed, subcontractor 
signed, and then that would be relevant, to kind of follow the 
trail.
    Related to that--and I do commend the mayor in his 
approach. Do you have concerns from the OMB--I know they talk 
about the guidance coming, leaving to a great extent right now 
up to the State--and advise how extensive your reporting 
process is and what detail you're going to include?
    But if these recent guidelines early this month would be 
left open, then they have the authority and may require 
additional information. As you advise your system, that may 
create problems. You don't want to spend a lot of money on an 
information technology system that generates X data and then 
find out they want something else.
    Again, is there a dialog at your level or perhaps at the 
State level that gives you some assurances that the money 
you're spending on your information technology is going to be 
well spent? Because I'm going to have to be revising one or two 
down the road because of all these changes.
    Mr. Skyler. We haven't had any situations thus far that, 
where we've gone for information from OMB or gotten from a 
Federal agency. So, I assume part of their plan in making OMB 
kind of a clearing house for Federal stimulus funds--to 
delegate that responsibility to an agency that there wouldn't 
be cross information and confusing the different municipalities 
or States.
    The mayor did meet with Peter Orszag several weeks ago to 
talk about systems accountability; and we gave them a sample of 
our Web site so that they'll be able to see it. And on my 
level--and I called several officials at OMB on different 
issues that the FMAP funding or other ways to budget, and they 
then called back within 24 hours. And so, we're pleased with 
the direction and response from the administration.
    Mr. Platts. And that approach that you're taking, the mayor 
is very commendable.
    Mr. Chairman, if I could ask one more here.
    At the State level, Mr. Gilchrist, the reference to your 
testimony that the inspector general had an important role at 
the Federal level to play, in reference to the jurisdiction 
including overall private entities that receive funds for doing 
business with--to what extent is that authority to go in and 
look at financial documents of those recipients? How extensive 
is that authority? I know it's early in the process, 2 months 
in; but has there been any IG efforts as far as early stages 
and saying, ``Hey, this concerns us?''
    Mr. Gilchrist. We've done, early on, some preventive 
measures. State law requires us to select the lowest 
responsible bidder, which means that these are similar to the 
City Vendex program, and have the contractor go through and 
show us the financial capability and relationship of those 
areas.
    Early on in this process, what we're doing is going back 
and reviewing previous findings to make sure that corrective 
actions have been instituted as our first level of prevention; 
of broad-based prevention.
    Mr. Platts. I've had the privilege of chairing, not the 
full committee, like Mr. Towns, but of a subcommittee; and that 
approach was to have interim controls, and up front information 
is critical.
    Mr. Gilchrist. Dennis Whalen, who is the director of State 
operations, who all the State agencies report to, issued a memo 
last month that requires each agency by May 1st to give Dennis 
and the Division of the Budget a report on what their internal 
control programs are doing, all of the programs who received 
ARA funds; and what they have done to solve all of their 
outstanding audit findings. And we're also instituting a broad 
waste prevention training program in conjunction with the 
Office of the State Comptroller.
    Chairman Towns. Thank you.
    I yield to the gentleman from the State of Vermont, Mr. 
Welch.
    Mr. Welch. Mr. Chairman, my questions have largely been 
answered from the questions of my colleague, Mr. Kucinich.
    Mr. Kucinich. Mr. Skyler, in your contracting that's going 
on as a result of the money that you're getting, what do you do 
to make sure that no minority business enterprises are actually 
going to be part of that?
    What kind of effort is being made so that all this money 
that's coming doesn't just go to the big name contractors who 
don't necessarily find a way to link up with minority 
departments?
    Mr. Skyler. We have existing programs for minority and 
women-owned businesses in New York City. In all stimulus 
programs, especially----
    Mr. Kucinich. I know you have programs, I'm familiar with 
those programs. But what kind of effort is being made? Have you 
had meetings already with minority business entrepreneurs 
telling them how they become part of the program?
    Mr. Skyler. As I mentioned before, we set up a one-stop 
shop or one-point contact for the nonprofit communities. A lot 
of the contracting that's desired in that community is actually 
the not-for-profit sector.
    We've designated a one-point person to be accessible and to 
have meetings and to share information as information is made 
available to us so that there is transparency and there is 
accessibility to the programs; so people don't get lost.
    And as I said, part of our frustration is that we haven't 
gotten guidelines of a great many programs from the Federal 
Government, I think, something like 50 percent. So, we don't 
necessarily have the answers to the question being asked of us.
    We do commit to share that information, whether it's 
through the Web site or whether it's through one-point 
contacts, to try to get these question answered.
    Mr. Kucinich. Thank you. One last question.
    Do you deal with the MTA?
    Mr. Skyler. I do. I'm not on the board, but I'm the Mayor's 
Office liaison.
    Mr. Kucinich. Could you answer this: I understand that the 
MTA may be assessed billions of dollars in penalties by banks 
for technical default--no insurance because of AIG. Have you 
heard about that?
    Mr. Skyler. I have not, sir.
    Mr. Kucinich. OK. Maybe afterwards we can talk about it.
    Thank you.
    Chairman Towns. Thank you very much. If there are no 
further questions, let me thank you, first of all. We look 
forward to working with you to make certain that the money is 
used for the purpose intended. And that is, stimulate the 
economy, not stimulate the big guy's pocket. [Laughter.]
    We need to make certain that's not the case. We will be 
talking with you as we move along, because we think oversight 
and the responsibility is important. And for the superstar of 
inspector generals to say to us, even if we are aggressive, of 
the $787 billion, that $55 billion will go to waste and fraud, 
is disturbing.
    I understand that never before in all of my years I have 
seen this kind of money flow out. At the same time, we have to 
make certain that the money is used for the purpose; that is, 
to stimulate the economy.
    Thank you so much.
    [Applause.]
    Chairman Towns. Next. Mr. Colvin Grannum is the president 
of the Bedford Stuyvesant Restoration Corp., one of the oldest 
community development organizations in the United States.
    Restoration owns and manages a 300,000 square foot 
commercial and cultural center in Brooklyn that provides 
services and programs in the areas of arts and education, youth 
education, work force development and housing development.
    Mr. Grannum formerly served as founding director and CEO of 
Bridge Street Development Corp., a community development 
corporation which continues to serve the community through 
promoting housing development, home ownership and financial 
literacy.
    He practiced law over 17 years before embarking on his 
career in community development. He has been employed by the 
U.S. Department of Justice, the New York State Attorney 
General's Office, and the New York City Corporation Counsel.
    Mr. Grannum was in high school right here in Brooklyn 
before he headed off to the University of Pennsylvania and, of 
course, Georgetown Law School. He has devoted much of his life 
to working for the people of Brooklyn, and we are happy to have 
him today as one of our witnesses.
    And let me move on to Mr. David Robinson. David Robinson is 
the associate director of the Center for Information Technology 
Policy at Princeton University. Before accepting his current 
position, he was managing editor of the American, a business 
magazine published by the American Enterprise Institute.
    He has written about the social impacts of technology for 
the American, the Wall Street Journal and Time magazine. And 
his work at the center includes research and writing, strategic 
planning and management of the center's operations. He's a 
graduate of Princeton University.
    Mr. Robinson, we welcome you. We welcome you, Mr. Grannum, 
as well. Gentlemen, I would ask you to summarize your 
statements within 5 minutes, which will allow us to have a 
question and answer period.
    If you, Mr. Grannum, would start out; and a maximum of 5 
minutes. Thank you.

 STATEMENT OF COLVIN W. GRANNUM, PRESIDENT, BEDFORD-STUYVESANT 
                       RESTORATION CORP.

    Mr. Grannum. Thank you, Chairman Towns, and the other 
members of the committee. I want to just thank you for the tone 
you are setting through your early intervention and oversight 
of this process. It really is a tremendous amount of resources 
that the country is investing in the stimulus plan. And it is 
critically important, as you have articulated, that there be 
oversight. So, to ensure not just efficiency but that the 
purposes of the legislation are achieved.
    I've been invited to speak about the impacts on the local 
community. A community such as Bedford-Stuyvesant, which is a 
very robust community, of course, has a substantial number of 
people who are low income and a substantial number of people 
who have been hurt by the current economic downturn. So, I want 
to speak to that a little bit. I have submitted written 
testimony, which I'll try to briefly summarize.
    Chairman Towns. Written testimony will be included in the 
record.
    Mr. Grannum. Thank you. By the summary, the way I'm looking 
at it, is that it's very clear. I believe that the stimulus 
package will have some very concrete benefits for a community 
like Bedford-Stuyvesant, which has very high unemployment 
rates, very high mortgage foreclosure rates.
    As you know, the high school graduation rates lag behind 
the city and statewide averages. And very high, relatively high 
poverty rates; despite the fact, as I've mentioned earlier, 
that it has a robust community with a range of incomes--people 
with a range of household incomes.
    And the community just before the economic downturn had 
been experiencing a very significant growth. But the act will 
have benefits clearly, I think in the area of infrastructure 
development, energy efficiency, education, job training and 
social safety net. And those benefits will improve the 
conditions in the community, particularly physical conditions. 
And I speak a little about that in the testimony.
    I think what's less clear is, despite the significant 
benefits, is whether residents of communities like Bedford-
Stuyvesant residents who are low-skilled and chronically 
unemployed will directly receive employment opportunities as a 
result of the act.
    And the second consideration would be whether minority and 
women-owned businesses will directly receive business 
opportunities as a result of the act.
    These are serious concerns, but I don't want to downplay 
the benefits because they are real. For example, in places like 
Bedford-Stuyvesant, as mentioned, because of the substantial 
number of people who are living in poverty or who are working 
poor, in that poverty number, a fair number of people are 
working poor. The fact that we're going to have extended 
unemployment insurance benefits, the Social Security one time 
payment, the enhanced food stamp benefits and the lower payroll 
taxes are all going to have a significant positive impact for 
residents and local businesses. That's clear.
    I think in addition to that, the city of New York, I 
think--I'm in favor of what the city of New York did with the 
money, to use the lion's share of it for youth employment. 
Because I think this summer, they have young people working, 
acquiring skills, being able to supplement the household 
income, that's going to be very important. Of course, that was 
a given also, in part, because these funds have to be spent in 
2 years.
    And of course, there is going to be substantially more work 
force development funds available to assist residents, 
particularly in the job training area; and other benefits as 
they relate to the physical conditions in the community.
    For example, one of the projects being funded by the city 
of New York, one of the transportation projects is the 
improvement of the commercial corridor in central Brooklyn 
along Fulton Street, where Your Honor's offices were previously 
located.
    And that's going to result in new sidewalks, new signage, 
new street furnishings, new streets. This is important for that 
particular corridor because it will assist the local businesses 
in creating a safe and attractive environment that will 
facilitate the improvement of their business operations.
    Another area that there's going to be some concrete 
benefits that will assist local income residents is--my 5 
minutes are up? [Laughter.]
    Quickly, that was a quick 5 minutes.
    Well, let me just say that my concerns have to do with 2-
year spending. Obviously, it's reasonable given the intended 
purpose, which is to jump-start the economy. But the concern is 
that, as agency heads thought about how to spend funds in 2 
years, they have been inclined to think about using the 
existing contractual relationships, which frequently don't 
include small minority-owned businesses.
    And the difficulty is trying to figure out processes that 
incorporate them quickly. And the other thing is the prevailing 
wage requirement, which is also relatively reasonable when you 
look at it on paper. But again, that has the possibility of 
limiting the incorporation of low skilled workers.
    [The prepared statement of Mr. Grannum follows:]

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    Chairman Towns. Mr. Robinson.

STATEMENT OF DAVID G. ROBINSON, ASSOCIATE DIRECTOR, CENTER FOR 
      INFORMATION TECHNOLOGY POLICY, PRINCETON UNIVERSITY

    Mr. Robinson. Chairman Towns, members of the committee, 
thank you very much for your invitation to me and holding this 
important hearing. I suppose I'm here to help you if I can, to 
bring some of the important questions that have already come up 
about Recovery.gov and use of the Internet to make the stimulus 
as transparent as possible.
    Information technology can make recovery activities more 
transparent than any government project has ever been. 
Government transparency means making all public information 
available in a way that is useful for citizens. Because we are 
starting fresh with Recovery.com, there's a rare opportunity 
here to get this right.
    What might it mean in practice? First, obviously, 
transparency can help government institutions to become more 
effective. Where there is broader abuse, public attention gets 
problems solved. Where government is working well, that same 
attention can build trust and confidence in public actions.
    Second, transparency lets people as individuals to put 
pieces together in new and unexpected ways. For example, Vivek 
Kundra ran a contest while he was serving as Washington, DC's, 
technology officer that encouraged people to take advantage of 
data being published by the city.
    Inspired citizens responded by building a dashboard and map 
that shows local demographic, transit, business and crime 
information, all in an integrated Web site.
    If the same approach were used to publish recovery related 
information, sites might emerge to highlight the benefits 
stimulus funding brings to specific communities; and by 
extension, the good work of State and local officials across 
America.
    Third, transparency can let individuals and businesses spot 
the economic opportunities that are available to them, helping 
not only themselves but also the economy as a whole. The 
Recovery Act creates so many possible grants, contracts and 
loans that it's tough to match each opportunity to really make 
the most of it.
    There is a competition among different ways of finding out 
about these stimulus opportunities. In each case, reuse is the 
key. Whatever public data is reported by States or agencies, we 
need to make it easy for innovators to get their own complete 
copy of that data in a computer-friendly way so that innovators 
can develop new tools.
    An increasing number of experts and groups have highlighted 
the importance of data reuse. The Association for Computing 
Machinery is one example. But a public policy committee that I 
served on recently issued consent recommendations for the 
government, which I've included with my written testimony.
    The most recent, as has been discussed, detailed 
information we have about transparency for the stimulus is in 
this April 3rd memo from OMB. There are some good signs, but 
also concern about the hundreds of billions of dollars that 
will be spent by States.
    They report that, at least initially, the Recovery Act will 
be able to tell people if that money was sent to a certain 
State and then to a locality, but not what ultimately became of 
the funds. The States will decide how much detail to reveal.
    The longer-term picture, though, is less clear. OMB 
reserves the right to require reporting on ``all levels of sub 
awards.'' How will they use that power? An uncertainty about 
OMB's intentions leaves States with tough choices. That's what 
the Federal Government is doing. State governments may wish to 
create new infrastructure to expose the details of their 
recovery extending to public view.
    But any new systems being deployed today could turn out to 
be a risky investment. It could become redundant or even 
obsolete if OMB later decides to centralize and standardize the 
nationwide reporting of the same information.
    Ideally, OMB would either collect detailed information 
about State stimulus spending itself, or else set a clear and 
public minimum standard of disclosure for each State to follow. 
How far will OMB's plan extend its reporting requirements for 
States? Will it collect all of the data that we need for real 
transparency, or will it cede responsibility for States to 
collect and manage the most detailed information?
    Either way, OMB should lose no time in reaching a decision, 
and clearly and publicly communicating its intention.
    Thanks for the chance to appear. I look forward to your 
questions.
    [The prepared statement of Mr. Robinson follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    Chairman Towns. Thank you very much, Mr. Robinson.
    We are joined by the comptroller of the city of New York. 
We swear all of our witnesses in. If you would stand and raise 
your right hand.
    [Witness sworn.]
    Chairman Towns. Let the record show the comptroller has 
been sworn.
    Be seated.
    Mr. Comptroller, you are allowed 5 minutes to give a 
statement; and then, of course, your entire statement will be 
included in the record. And then we'll have questions to ask.
    You may begin.

STATEMENT OF WILLIAM C. THOMPSON, COMPTROLLER, CITY OF NEW YORK

    Mr. Thompson. Thank you, Mr. Chairman. It is a pleasure 
seeing you this afternoon.
    Ranking Member Issa, members of the committee, observers, 
again, good afternoon.
    I'd like to thank you for holding this hearing and inviting 
me to discuss implementation of the economic stimulus package, 
the American Recovery and Reinvestment Act of 2009.
    As many of you know, New York City is set to receive more 
than $4.5 billion under President Obama's economic stimulus 
package, and these funds could not be more necessary.
    Our city today is facing an economic crisis unlike any 
we've seen since the Second World War. And people need help. 
We've lost over 100,000 jobs since August. Millions of New 
Yorkers are worried about skyrocketing transit and water rates, 
and families across our city are struggling just to make ends 
meet.
    Yet while the stimulus package should certainly be seen as 
a tremendous opportunity to create jobs both for our struggling 
economy and provide relief to our city's many forgotten New 
Yorkers, we should also look at the distribution of these funds 
as another kind of opportunity as well, the opportunity to put 
in place a blueprint for much-needed transparency and 
accountability reforms in city government.
    These reforms are long overdue. In fact, in the almost 8 
years now during my tenure as city comptroller, I repeatedly 
called on city agencies to improve the all-too-often opaque 
process by which taxpayer funds are disbursed. In January 2008, 
for example, I called on the administration to immediately 
implement transparency reforms at the City Industrial 
Development Agency, an agency that promotes economic 
development through disbursement of taxpayer funds to small 
businesses.
    As an IDA board member, I saw firsthand the need to shine a 
bright light on the selection process of IDA beneficiaries. I 
sent a letter to Deputy Mayor Lieber. I made 10 detailed 
recommendations toward that goal. Two months ago--let's skip 
over that.
    We must avoid these pitfalls for the stimulus moneys, and 
ensure that job creation and salary criteria are clearly laid 
out before funds are disbursed. We also sought to infuse good-
governance principles like openness, transparency and 
accountability through all my work as city comptroller.
    Last year my office introduced a new online application 
that for the first time allows vendors to track online the 
real-time payments or real time status of their payments from 
the city.
    When I took office in 2002, I insisted that every audit 
conducted be posted on my Web site. And to date, we've saved 
over $248 million in savings.
    In keeping with the principles of good governance, I 
believe that before a single stimulus dollar is disbursed, we 
must first and foremost ensure that these funds are actively 
accounted for and that outcomes are carefully measured and 
monitored. This is a job that will, in part, be undertaken by 
the authority of my office. The charter-mandated role of the 
Comptroller's Office is to ensure that all funds are tracked 
accurately and transparently. And this is a responsibility I 
take seriously.
    As many of you know, I also am responsible for approving 
all contracts and agreements between the city and its many 
vendors. As a comptroller, a close inspection of these 
contracts is a priority. This focus has saved our city 
millions.
    Rest assured, I'll bring this same vigilance and attention 
to detail to my work overseeing the contracts and contract 
amendments that result from stimulus spending. Through your 
registration process, my office will continue to ensure the 
integrity of vendors and the bidding process. We're already 
moving forward on many fronts to ensure the smooth transition 
of stimulus money to job-creating, shovel-ready projects in our 
city.
    Two weeks ago my staff and the mayor met with the 
Government Accountability Office to discuss its needs, as we 
work to design a system that will track and display stimulus 
funds in real time. One potential difficulty in monitoring 
stimulus funds would likely be the need to differentiate 
stimulus moneys spent under preexisting contracts.
    For example, before stimulus funds are used to add jobs or 
benefits to existing contracts, we must first put in place a 
system that allows for the separate tracking and outcome 
monitoring of stimulus funds and funds spent under that 
preexisting contract. This will surely be a challenge. 
Fortunately, however, the city already has in place strict 
contractor integrity reviews and detailed procurement rules.
    In the end, we have to move quickly. New Yorkers deserve, 
above all, a transparent system that will by its very nature 
help ensure the taxpayer moneys are spent responsibly. Under my 
watch, New Yorkers will be afforded this right, will be able to 
see exactly how, why, when and where their hard-earned tax 
dollars are being spent.
    Thank you, Mr. Chairman.
    Chairman Towns. Thank you very much for your testimony.
    I thank all of you for your testimony.
    We move to the question and answer period. Let me begin 
with you, Mr. Robinson.
    In a recent article, you suggested that regulatory 
monitoring rules and regulations impedes modernization of 
government Web sites.
    What regulations will need to be changed to eliminate this 
problem? How should we change those regulations?
    Mr. Robinson. That is an excellent question, Mr. Chairman. 
And as I'm sure you can imagine, the answer would call for a 
great deal of detail about particular ones. But I think the 
bird's eye view--which I would be pleased to provide and to 
consult with, and I'm sure my colleagues would as well--the 
bird's eye view is that many laws that were passed before the 
Internet have unintended implications that are impeding the use 
of the Web by government.
    So, for example, if a group of citizens collaborated on a 
Web site, are they identical to an advisory committee? Or if 
people are filling out an online poll, does that raise 
paperwork-reduction issues?
    So, I would say there are probably two levels on which this 
can be addressed. One is the administration doing what it can 
through executive action or intends to do what it can. But I 
think that Congress should look at the list--the long list of 
more than 20 different regimes that current Federal Web masters 
have to comply with; and think about laws that would sweep 
those, maybe in the case of the Web, aside, in favor of clear 
guidance of designs for the Internet.
    Chairman Towns. Thank you very much. I really hope that you 
would submit some additional information in terms of the 
specifics. We'll keep talking about this for quite some time.
    Mr. Robinson. Yes, sir.
    Chairman Towns. Mr. Grannum, based on your experience, do 
you think that community organizations in general currently 
have the ability to track and audit stimulus funds for the 
city?
    Mr. Grannum. I think it depends. I think with respect to 
existing programs--for example, weatherization is an existing 
program where community-based organizations have been involved, 
in some cases, more than two decades, sometimes almost three. 
And the prophecies are longstanding and well monitored by the 
State.
    I think in some additional areas, it may be questionable. 
And I think one of the concerns is whether and how much 
administrative burden you put on not-for-profits in this 
process as well. Obviously, it's a balance. We need to be able 
to account for the funds, but at the same time, some of the 
administrative burdens that are imposed by the government make 
it very difficult for organizations to participate, not just 
not-for-profits, but small businesses.
    Chairman Towns. Let me ask you, Mr. Thompson. Based on the 
fact that this has never happened before, not in my lifetime, 
that $787 billion is given as an opportunity for the country; 
and then they are called upon to monitor this. Do you have the 
staff to make that possible, to do it within the present 
structure?
    Mr. Thompson. I believe that we have the staff in this 
current environment to be able to monitor and oversee this; 
yes, I do. I think that the changes that have been made over 
the last 7 or 8 years, the growth of use of technology, some of 
these are the foundation that we have established already, as 
well as new data bases will allow us to be able to do that. 
Again, obviously, it will take not just my office but working 
in conjunction with the mayor's office and others, the ability 
to get that done.
    I believe that we should be able to track this money, 
follow it, and make sure that we can account for every dollar. 
And that is the mandate. I think that is something that we 
should be able to do. Obviously, if this were 10 years ago, I 
wouldn't be able to make that representation. But I think that 
now, given the use of technology and other things, we should be 
able to do that.
    Chairman Towns. The reason I raised that question with you 
is that Mr. Delaney, who is the superstar inspector general, 
has indicated to us that even if we are aggressive, out of the 
$787 billion, $55 billion would go to waste, fraud and abuse.
    So that's the reason why I raise the question. To me that's 
a shocking number. I think that's a lot of money that can be 
used to really turn things around in a positive way. And it 
will end up in somebody's pocket in the wrong way.
    Mr. Thompson. Mr. Chairman, I couldn't agree with you more. 
I think in this current economic environment that we are in, 
every dollar needs to be well spent; and to go over the 
purposes of the vendors that the Houses, as well as the 
President, has determined what it should be used for.
    So I think it is important that government be pushed on to 
its limit to be able to oversee, make sure every dollar is well 
spent and that there is no waste. And given that, I think it is 
an excellent opportunity for government in the future to make 
sure there is less waste as we move forward, not just in these 
dollars, but all other dollars being spent.
    Chairman Towns. The gentleman from California.
    Mr. Issa. Thank you, Mr. Chairman. That question leads 
right into my question.
    You believe that you can oversee the stimulus funds in 
order to minimize waste, fraud, abuse; right?
    Mr. Thompson. Yes.
    Mr. Issa. Do you surf the Net using Google or Yahoo or any 
of the other search engines?
    Mr. Thompson. Sure.
    Mr. Issa. Can I search your data the same way by going in, 
clicking on it and finding relevant information so that I can 
look over your shoulder?
    Mr. Thompson. Absolutely.
    By the time we put in place, along with the mayor's office, 
certain data bases, yes, you should be able to surf the Web to 
be able to visit specific Web sites, whether it's mine or 
others.
    Mr. Issa. No, that wasn't my question.
    I want to be able to second-guess your oversight for waste, 
fraud and abuse, contract pricing, who is the sub and the sub 
of a sub, and whether qualified as a minority, woman-owned or 
business. I want to know how much they would disburse or what 
on a given day.
    Will I be able to do that?
    Mr. Thompson. You should be. I'm not sure how many levels 
down, but you should be able to do so.
    Mr. Issa. Do you have that? Is that technically public data 
would be available under normal freedom of information?
    Mr. Thompson. Yes, it is.
    Mr. Issa. OK.
    Mr. Thompson. It is available under freedom of information.
    Mr. Issa. And I'm playing devil's advocate for a reason: 
Because the chairman and I have, on a very public joint agenda, 
to try to make that possible.
    Today the Federal Government is not giving you any money 
for that; is that correct?
    Mr. Thompson. Correct.
    Mr. Issa. And according to Mr. Robinson's testimony, today 
we are not giving you standards so that searchability engines 
could search more easily by having common data base rules and 
terms; right?
    So, that leads me to the question, and I'll go to Mr. 
Robinson in just a second; and this is from your response.
    Do you believe that either with existing funds it can be 
redeployed or with new funds, that the Federal Government 
should be tasked to nominally set those standards but then 
facilitate that on an ongoing basis so that the public can in 
fact search any use of Federal funds, whether directly by the 
Federal Government or all the way down to this spending of it 
for the sub of a sub, if that information is technically public 
information?
    Mr. Robinson.
    Mr. Robinson. I think that, yes, absolutely.
    Mr. Issa. And is that technology, as I used the example, 
technically available, but not implemented?
    Mr. Robinson. There is a question here about how much of 
the presentation of the data should be the government's task. 
And I think we would all agree that it would be ideal for 
Recovery.gov that we would go out and perhaps cover the local 
areas to be user-friendly and to be able to be used.
    But at the same time, it would ideal if the data itself 
that underlies such a site were published, so that there could 
be many different ways to search. So if you like to Google and 
have a copy, and Yahoo can have a copy, probably it might, as 
well. And compete to show us the data most clearly. These are 
technically possible things, but I think they do require a 
considered commitment to implement.
    Mr. Issa. This committee, under the chairman's leadership, 
has been quoted by Mr. Devane and rightfully so, that the 
expectation is that if the government does a good a job and 
there is no more waste than other comparable programs, that we 
will waste or lose or misallocate at least $55 billion.
    I'm going to ask each of you whether, no matter where the 
funds come from, if we find a way to make available, both in 
Federal implementation and particularly at your levels, 2 
percent--that would be about $15 billion--to help in that 
implementation standard setting, modernization of equipment, so 
that either through your own engines or, as Mr. Robinson said, 
through competition within the search engine community, this 
information that you pore through every day could also be pored 
through by the public who pays their taxes; would that be a 
fair investment?
    Mr. Thompson. It would be both a fair and a good 
investment, yes.
    Mr. Issa. Mr. Robinson, would it be fair and good and is it 
enough?
    Mr. Robinson. It would be fair and good. Let me stop at 
that. In addition to helping government, I would hope some 
fraction of it could be used to incentivise the third parties 
who also would go to the work of oversight. And I think that 
would also be highly effective.
    Chairman Towns. Mr. Grannum.
    Mr. Grannum. I think that's right. I think that there are 
lots of stakeholders who are interested in the information, 
even from the perspective of whether people are receiving fair 
treatment with respect to the allocation of funds.
    Mr. Issa. And I would assume that data base was effective 
and competition was there so that searches became better and 
easier; as most of us would use Google or Yahoo or MSN Search, 
that your organization would then have an easier time doing its 
task, because that would be the resource for you.
    Mr. Grannum. That's correct.
    Mr. Issa. Thank you.
    Mr. Grannum. Thank you, Mr. Chairman.
    Chairman Towns. Thank you very much. And now we yield to 
the gentleman from Ohio, Mr. Kucinich.
    Mr. Kucinich. Thank you very much, Mr. Chairman. I voted 
for the stimulus in the hopes that the money is going to get to 
help the people for whom it is intended. After witnessing many 
years of trickle-down economics, I understood that the trickle 
seldom gets down. [Laughter.]
    Now, I want to find out about, does the torrent of money 
that is going through this, and that's a trickle of more than 
$787 billion, how does it get down? Now, Mr. Grannum, in your 
work, your Bedford Stuyvesant restoration, are you concerned 
that this great amount of money that you see coming is not 
going to get to the people who really need it?
    Mr. Grannum. I think I have to make a distinction right 
there. There are two categories. So, the social safety net 
money, I think I have little concern, will get there; I believe 
it will.
    I think that the money that could stimulate business in 
communities like Bedford-Stuyvesant, I have greater concern, 
because unless there is some intentional mechanism to open up 
avenues that have been previously been closed, the money is 
going to flow as it has in the past.
    And so, that is a major concern. I think one of the things 
is that we want to break away from having the proportion of 
funds that go to communities like this be funds that are 
subsistence, and have a greater amount of those funds be funds 
that generate enterprise and work.
    Mr. Issa. Mr. Thompson, do you agree with that?
    Mr. Thompson. I would say that is one of the challenges, in 
making sure these funds don't necessarily just go to the same 
old places.
    Mr. Kucinich. That's the point I'm asking all around the 
country, because it's like not only do we often have two 
classes of society in terms of where the income goes, but 
structure of businesses in any community, the fact that some 
people are getting the money all these years, they tend to just 
keep getting it; instead of the new entrepreneurs who are in 
the minority and miss the opportunities. So, what should we be 
doing to make sure?
    Mr. Grannum. Well, transparency has a lot to do with it.
    Mr. Kucinich. I will address that and I know that Mr. 
Robinson, you're from Princeton, you're involved in information 
technology and that's very good. Now, but according to the 
CIA's Factbook, it has all kinds of information that is 
sometimes useful. And one of the bits of information they say 
is that in America, there's approximately 223 million users of 
the Internet.
    Now, for those who are aware of the population statistics, 
the population right now is over 300 million. So it's quite 
possible that some poor people in this country do not use the 
Internet.
    Now, we're talking about the trickle getting down, it is 
most likely--and I'm just guessing at this--but it's most 
likely that people who don't use the Internet happen to be in 
neighborhoods where there's a lot of poverty, social 
disorganization and such things. They can't afford either the 
Internet connection, or they can't afford the terminal, 
whatever.
    How do we make sure that people still know about these 
programs? If you have to go to the Web site to apply, how do 
you get the information?
    Mr. Robinson. Not only is it a good question but it is an 
absolutely salient question and one, in fact, that we have 
studied. I would say that--the analogy I might use is the 
computers in the classroom. There are some kinds of some 
programs for Washington, Maryland public schools, one computer 
in every classroom; and it's just for the teacher, we thought 
at the time. So it will just be one, you can't help all the 
students, you think 30 students using one computer, and that 
was true.
    But what turned out to happen was that the teacher would 
use the computer to get in the new lesson plans and other new 
information.
    Mr. Kucinich. How will he get the information through?
    Mr. Robinson. And that's a question for the rest of us. And 
so what I would say about the Internet is, if the information 
about what is available to disadvantaged communities is itself 
public instead of being buried in some file somewhere, that 
means that people who are engaged in the work of trying to lift 
up those communities, people like Mr. Grannum and his 
colleagues and others around the country, are better able to 
assist their communities in need, even if the people they are 
helping are not online, it is still the case that the Internet 
could help them.
    Mr. Kucinich. Thank you.
    Here is what I'm getting at. As it is apparent, I just want 
to conclude with this. With all this money being available, it 
seems to me we should be able to hire people to knock on doors 
to tell people what programs are available.
    [Applause.]
    Mr. Kucinich. And that's all I have to say.
    Thanks.
    Chairman Towns. Thank you very much. We'll continue with 
the gentleman from Pennsylvania, Mr. Platts.
    Mr. Platts. Thank you, Mr. Chairman, and my thanks to all 
three of the witnesses for your participation here today.
    Mr. Grannum, I've more of a comment and then a thanks and a 
question. And that is, just your concluding in your testimony 
the comments about the prevailing wage and the impact on job 
creation and who will be able to participate.
    I'm one of those who believes that, unfortunately, the 
prevailing wage, which was well-intended when it was initially 
created, has resulted today in negative consequences. I say 
that as a former Teamsters Union member. I know there are union 
colleagues who will support the minimum wage.
    But you well lay out in your testimony that the prevailing 
wage requirements in this bill will likely lead to fewer jobs 
being created because of the inflated costs associated with the 
minimum wage, as well as making it harder for small business 
owners and minority-owned business owners to participate in 
them because of the regulations that go with prevailing wage.
    And so, I want to thank you for including that, as well 
that we need to be aware of the fact that while that may be 
well-intended, at the end of the day it may be hurting more 
people than helping with their prevailing wage.
    If you want to comment?
    Mr. Grannum. I would say that it is certainly uncomfortable 
for me to criticize the prevailing wage. I'm from a union 
family, as well. But on the other hand, there are many projects 
that are getting done in communities like Bedford-Stuyvesant 
that would not get done if the prevailing wage were required in 
all of them. It would just not be feasible to do the projects.
    Mr. Platts. And I think that's the issue here, as we know. 
We recognize perhaps some of the merits of that law but know 
that there should be limitations in store in how we impose that 
law. So, I appreciate you including that in your testimony.
    Mr. Robinson, this next question is for you. What would you 
identify in your written testimony to address the concerns 
about the administration's guidance thus far? I sought to raise 
that with State and existing local officials in previous 
panels.
    What do you see as the most glaring shortcomings of the 
administration's guidance to State and local governments and 
other recipients of these funds thus far?
    Mr. Robinson. I understood, at the earlier panel in 
response to your question, Mr. Skyler had indicated that they 
haven't received contradictory guidance from these variety of 
sources from different agencies of the Federal Government, the 
OMB and so on.
    And I suppose that is a cause for comfort; but at the same 
time, I think part of the reason that there haven't been any 
contradictory things is that they had just been so vague in 
some respects that there hasn't really been the kind of 
guidelines that really could make things absolutely clear.
    So, the guidance that was issued April 3rd says that the 
OMB intends to give States the option of either reporting 
directly into a Federal Web site, or else compiling reports at 
the State level and submitting those. I'm not sure that having 
a diversity of approaches among States--I'm not sure what that 
would do necessarily for uniformity.
    But in any case, the question of how data is submitted is 
only half of the puzzle. The other half is, what data do they 
have to submit?
    And on that, I would submit that the guidelines that were 
released on April 3rd is less than totally clear. It's clear 
that they intend to require some additional information besides 
what is presently required in the future.
    They talk about expanding the reporting model. But the 
question is how far it will be extended and whether or not when 
they're done extending it, it will still be the case that we 
need extra information that has to come from the States because 
the ultimate OMB requirements don't include the guidelines. 
That remains to be seen.
    Mr. Platts. And the possible negative result of that is 
that States may spend a lot of money on information technology 
in designing these reporting systems; and then months from now, 
2 years from now, they will actually want it in this initial 
form or initial information, not that information. And then we 
have a new expenditure.
    And so, that is the concern, that we need to get it right, 
the sooner the better, for a complete and better uniform bill.
    Mr. Robinson. Absolutely. One concern is obsolescence. The 
other is a wait-and-see attitude, where they're saying is, ``I 
don't know what the OMB is going to do so I'll wait.'' 
Meanwhile, the money isn't being spent.
    Mr. Platts. Either way, there's a risk that OMB has to make 
a decision, and hopefully it's a decision that is uniform for 
all agencies that are involved in disbursing the funds; rather 
than in a hodgepodge approach.
    Mr. Chairman, thank you; and again, my thanks to the 
witness.
    Chairman Towns. Thank you. Thank you for everything that 
you've said. And I know that talk about prevailing wages, I 
think if we get rid of the waste and abuse, there will be no 
problem. [Laughter.]
    Let me thank all the witnesses today and the Members who 
attended this hearing today. Before we adjourn, let me say that 
America demands that all stakeholders under the Recovery Act 
work in good faith to protect the public and safeguard our 
unprecedented investment in America's future.
    I want to be clear, and be crystal clear, that this 
committee will be watching and working furiously to ensure 
accountability and transparency over the funds.
    Let me also thank the ranking member, Mr. Issa, for his 
leadership in standing up with me to demand the strictest 
oversight.
    Finally, please let the record demonstrate my position of 
abiding with documents relating to this hearing.
    And of course, I want to conclude by saying to all of you, 
I appreciate your coming out. You can see that we have a lot to 
do.
    And without objection, the committee stands adjourned.
    [Whereupon, at 12:39 p.m., the committee was adjourned.]
    [The prepared statement of Hon. Diane E. Watson follows:]

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