Drinking Water: Spending Constraints Could Affect States' Ability to
Implement Increasing Program Requirements (Letter Report, 08/31/2000,
GAO/RCED-00-199).
Pursuant to a congressional request, GAO provided information on the
amounts of funding available and expended for implementing the states'
drinking water programs, focusing on: (1) how the Environmental
Protection Agency's (EPA) budget requests for the states' implementation
of their drinking water programs compare with the amounts authorized and
estimated to be needed; (2) how much the states have spent since the
passage of the 1996 amendments to implement these programs and how the
expenditures compare with the estimated needs; (3) what effects federal
funding levels have had, and may have in the future, on the states'
ability to implement their programs; and (4) what existing practices
have the potential to help the states implement their drinking water
programs more effectively and efficiently.
GAO noted that: (1) in its budget requests for fiscal years 1998 through
2000, EPA requested about 94 percent of the $100 million authorized
annually by the Safe Drinking Water Act Amendments of 1996 for
supervision grants to the states and tribes; (2) for the same fiscal
years, EPA requested, on average, 80 percent of the amounts authorized
to capitalize the states' revolving loan fund for drinking water; (3) if
the states had made maximum use of set-asides from the revolving fund,
EPA's requested appropriations would have provided a total of $308
million in fiscal year (FY) 1999 and $318 million in FY 2000 to help the
states to meet their responsibilities under the drinking water program,
which include overseeing water systems' compliance with treatment and
testing requirements, conducting inspections, and taking enforcement
action, when necessary; (4) these amounts, when combined with required
matching funds from the states, would have exceeded the annual needs
estimated by the Association of State Drinking Water Administrators; (5)
however, information provided by EPA shows that the states generally
have not set aside nearly as much money from the revolving loan fund for
program implementation as they could have, in part because doing so
would have diverted funds from needed infrastructure improvements; (6)
according to GAO's survey, the amounts of federal funding available for
fiscal years 1997 through 1999 had less of an impact on the states'
ability to implement their drinking water programs than did the effects
of state-imposed spending constraints; (7) over 75 percent of the states
reported that their staffing levels in FY 1999 were inadequate to meet
the act's requirements in effect through that year; (8) according to
state program managers, if this situation continues, it could eventually
lead to more compliance problems and a larger enforcement workload,
especially among small water systems, which make up the overwhelming
majority of water systems; (9) over 90 percent of the surveyed states
predicted that their staffing levels would be less than adequate in the
future as a number of new program requirements and complex contaminant
regulations take effect; (10) program officials in the eight states GAO
contacted cited some management practices that could increase the
efficiency of program implementation; and (11) EPA officials pointed to
new requirements that may increase efficiency, including those designed
to assess water sources for contamination and improve the ability of
water systems to comply with drinking water regulations, but it could
take years to realize the benefits.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: RCED-00-199
TITLE: Drinking Water: Spending Constraints Could Affect States'
Ability to Implement Increasing Program Requirements
DATE: 08/31/2000
SUBJECT: Water pollution control
State-administered programs
Federal/state relations
Environmental policies
Water quality
Water treatment
Cost sharing (finance)
Potable water
Grants to states
Revolving funds
IDENTIFIER: Drinking Water State Revolving Fund
Public Water System Supervision Grant
Arkansas
Florida
Indiana
Maine
Massachusetts
Ohio
Oregon
Utah
******************************************************************
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GAO/RCED-00-199
Appendix I: Highlights of the Safe Drinking Water Act Amendments
of 1996
36
Appendix II: Association of State Drinking Water Administrators' Estimates
of State Resource Needs
39
Appendix III: Summary of States' Responses to GAO's Questionnaire
41
Table 1: Authorized Funds and EPA Budget Requests for the States'
Implementation of Their Drinking Water Programs, Fiscal
Years 1998 Through 2000 11
Table 2: Amounts Potentially Available to the States from EPA's
Budget Requests, Including the Minimum State Match,
Compared to Estimated Needs, Fiscal Years 1999 and 2000 13
Table 3: Sources and Amounts of States' Expenditures for Drinking
Water Program Implementation, Fiscal Years 1997 Through
1999 16
Table 4: Availability and Use of Drinking Water State Revolving Fund
Set-Asides, Fiscal Years 1997 Through 1999 17
Table 5: States' Use of Set-Asides From the Drinking Water State
Revolving Fund, Fiscal Years 1997 and 1998 19
Table 6: Resource Needs for Implementing the States' Drinking Water
Programs, Fiscal Years 1999 Through 2005 20
ASDWA Association of State Drinking Water Administrators
EPA Environmental Protection Agency
Resources, Community, and
Economic Development Division
B-285172
August 31, 2000
The Honorable Thomas J. Bliley, Jr.
Chairman, Committee on Commerce
House of Representatives
The Honorable Michael Bilirakis
Chairman, Subcommittee on Health and Environment
Committee on Commerce
House of Representatives
The Honorable Brian P. Bilbray
House of Representatives
The Honorable Rick Lazio
House of Representatives
Ensuring an adequate supply of safe drinking water requires investing not
only in physical infrastructure, such as water treatment and distribution
systems, but also in essential activities, such as training water system
operators and monitoring compliance with standards. In the Safe Drinking
Water Act Amendments of 1996, the Congress enacted new programs to better
protect drinking water supplies and public health. Under the act, the states
are responsible for implementing a number of programs, including those to
help ensure that the nation's thousands of drinking water systems have the
financial, technical, and managerial ability to comply with regulations and
protect sources of drinking water from contamination. In addition, the
states must oversee water systems' compliance with complex new regulations
on specific contaminants. (App. I provides an overview of some of the key
requirements of the 1996 amendments.)
To help states meet these responsibilities, the Congress, through the 1996
amendments, substantially increased the amount of funding authorized to
support drinking water programs. First, the amendments authorized an
increase in the funding for Public Water System Supervision grants from $70
million to $100 million annually through fiscal year 2003. These supervision
grants to the states are directed at program implementation activities, such
as providing technical assistance to local water systems, conducting
inspections, and overseeing water systems' compliance with requirements for
testing and treating water quality. Second, the amendments authorized $9.6
billion, to be appropriated through 2003, to establish the Drinking Water
State Revolving Fund. In its annual budgets, the Environmental Protection
Agency (EPA) requests appropriations to capitalize the states' funds and
makes specific allotments to each state for that purpose. (The states, in
turn, lend money from the funds to their local water systems for
improvements that are needed to comply with federal drinking water
regulations and protect public health. As loans are repaid, the states'
funds are replenished, enabling them to make loans for other eligible
drinking water projects.) While the state revolving funds are primarily
directed at financing local infrastructure, the states, at their option, may
reserve or "set aside" up to 31 percent of their annual allotment to help
implement their drinking water programs and to perform related activities,
such as training water system operators. The states must match a portion of
both the supervision grants and the revolving fund set-asides. Despite the
significant increases in the amount of funding the Congress has authorized
to help the states implement their programs, state representatives have
expressed concerns about whether the states have sufficient resources to
fulfill their responsibilities under the act.
In recognition of the key role that the states play in ensuring compliance
with the requirements of the Safe Drinking Water Act, you asked us to assess
the amounts of funding available and expended for implementing the states'
drinking water programs. As agreed with your offices, this report provides
information on (1) how EPA's budget requests for the states' implementation
of their drinking water programs compare with the amounts authorized and
estimated to be needed; (2) how much the states have spent since the passage
of the 1996 amendments to implement these programs and how the expenditures
compare with the estimated needs; (3) what effects federal funding levels
have had, and may have in the future, on the states' ability to implement
their programs; and (4) what existing practices have the potential to help
the states implement their drinking water programs more effectively and
efficiently.
As a measure of the amount of funding states need to implement their
drinking water programs, we used estimates developed for fiscal years 1999
through 2005 by the Association of State Drinking Water Administrators
(ASDWA) with the support and participation of EPA.1 To obtain a nationwide
perspective on the states' spending, we mailed a questionnaire to survey 49
state drinking water agencies on their expenditures for implementing their
drinking water programs since the 1996 amendments (that is, for fiscal years
1997 through 1999).2 To obtain information on the effects of federal funding
levels on the states' ability to implement their programs and the practices
or programs that might help them implement their programs, we conducted
detailed discussions with officials in eight states--Arkansas, Florida,
Indiana, Maine, Massachusetts, Ohio, Oregon, and Utah. Criteria for
selecting these states included the size of the state's drinking water
program, the program's current staffing level, and the state's use of
management strategies to implement its program more efficiently or
effectively. A detailed discussion of our scope and methodology appears at
the end of the report.
In its budget requests for fiscal years 1998 through 2000, EPA requested
about 94 percent of the $100 million authorized annually by the Safe
Drinking Water Act Amendments of 1996 for supervision grants to the states
and tribes. For the same fiscal years, EPA requested, on average, 80 percent
of the amounts authorized to capitalize the states' revolving loan fund for
drinking water. If the states had made maximum use of set-asides from the
revolving fund, EPA's requested appropriations would have provided a total
of $308 million in fiscal year 1999 and $318 million in fiscal year 2000 to
help the states meet their responsibilities under the drinking water
program, which include overseeing water systems' compliance with treatment
and testing requirements, conducting inspections, and taking enforcement
action, when necessary. These amounts, when combined with required matching
funds from the states, would have exceeded the annual needs estimated by
ASDWA.
However, information provided by EPA shows that the states generally have
not set aside nearly as much money from the revolving loan fund for program
implementation as they could have, in part because doing so would have
diverted funds from needed infrastructure improvements. According to our
nationwide survey of state drinking water agencies, for fiscal years 1997
through 1999, the states' actual expenditures for implementing their
drinking water programs--including expenditures of both federal and state
funds--were $214 million, $237 million, and $276 million, respectively.
About 53 percent of these expenditures was funded from state sources, and,
collectively, the states' contributions exceeded the statutory matching
requirements. In fiscal year 1999, the only year for which our data permit
such a comparison, the states' total expenditures fell short of ASDWA's
estimate of the amount needed for program implementation nationwide by about
20 percent.
According to our survey, the amounts of federal funding available for fiscal
years 1997 through 1999 had less of an impact on the states' ability to
implement their drinking water programs than did the effects of
state-imposed spending constraints. Over 75 percent of the states reported
that their staffing levels in fiscal year 1999 were inadequate to meet the
act's requirements in effect through that year. The following reasons were
most frequently cited: (1) the states' authorized staffing and authorized
funding levels were too low, (2) hiring freezes prevented the states from
filling authorized positions, and (3) inadequate state salaries made it
difficult to attract and retain qualified staff. In addition, about 40
percent of these respondents indicated a reluctance to use revolving fund
set-asides to address inadequate staffing levels, citing concerns about
diverting funds from infrastructure projects and the continued availability
of the set-asides in the long term. Our discussions with drinking water
program officials from eight states disclosed that they have been able to
meet most requirements in effect through fiscal year 1999, generally by
scaling back their programs or doing the minimum amount necessary to meet
the requirements. According to state program managers, if this situation
continues, it could eventually lead to more compliance problems and a larger
enforcement workload, especially among small water systems, which make up
the overwhelming majority of water systems. Over 90 percent of the surveyed
states predicted that their staffing levels would be less than adequate in
the future as a number of new program requirements and complex contaminant
regulations take effect.
Program officials in the eight states we contacted cited some management
practices that could increase the efficiency of program implementation. For
example, some states are taking advantage of the expertise in other state
and federal agencies or associations. The states also reported the increased
use of the Internet to obtain and disseminate information. EPA officials
pointed to new requirements that may increase efficiency, including those
designed to assess water sources for contamination and improve the ability
of water systems to comply with drinking water regulations, but it could
take years to realize the benefits.
We provided EPA with a draft of this report for its review and comment. EPA
officials, including the Acting Chief of the Protection Branch of EPA's
Office of Ground Water and Drinking Water, generally agreed with the
information presented. However, EPA officials had concerns in two areas.
First, the officials said that the draft report did not sufficiently
emphasize the impact of increasing program requirements on the states'
future resource needs. We modified the report to highlight existing material
concerning the impact of increasing program requirements. Second, the
officials noted that our comparison of the funds potentially available to
the states, with the needs estimated by ASDWA, could be misleading. We
clarified our presentation of this comparison. EPA officials also provided
technical clarifications, which we incorporated as appropriate.
The Congress enacted the Safe Drinking Water Act in 1974 to protect the
public from the risks of contaminated drinking water. The act required,
among other things, that EPA establish (1) drinking water standards or
treatment techniques for contaminants that adversely affect human health and
(2) requirements for monitoring the quality of drinking water supplies and
ensuring the proper operation and maintenance of public water systems. The
act also authorized EPA to give the primary enforcement authority for the
drinking water program--commonly referred to as "primacy"--to the states
that meet certain requirements. Among the key requirements are that the
states (1) adopt drinking water regulations that are no less stringent than
EPA's national primary drinking water regulations and (2) adopt and
implement adequate procedures to carry out the program's requirements and
enforce the regulations. All states except Wyoming have assumed primacy for
managing their drinking water programs.
To assist the states in developing and implementing their own drinking water
programs, the 1974 act authorized EPA to award them program supervision
grants and provided that the federal funds would constitute not more than 75
percent of the cost of implementing state programs. Historically, the
federal share of the states' program costs has averaged about 45 percent,
with the states providing the remaining funds.
In 1986, the Congress amended the act to significantly increase the number
of contaminants to be regulated, strengthen EPA's enforcement authority, and
establish various other requirements. In the years after these amendments
were enacted, the states experienced great difficulty in meeting
increasingly complex and demanding requirements while fulfilling their basic
responsibilities. Among other things, the states' drinking water program
staffs were typically responsible for performing physical inspections of
drinking water facilities (called sanitary surveys), providing technical
assistance, ensuring the water systems' compliance with contaminant limits
and other program requirements, and taking enforcement action against
violators. Funding shortages at the state level were a major reason why the
states were having difficulties fulfilling their responsibilities.
The 1996 amendments addressed the states' financial resource problems by
increasing the authorized funding for the supervision grants, which totaled
$70 million in fiscal year 1995, to $100 million annually through fiscal
year 2003, and authorizing a total of $9.6 billion through 2003 to establish
the Drinking Water State Revolving Fund for infrastructure improvements at
local water systems. The states use their entire supervision grants for
implementation activities, such as monitoring a water system's compliance
with requirements and providing technical assistance, and are required to
provide matching funds equal to one third of the grant's amount. To give the
states more flexibility in operating their drinking water programs, the
Congress gave them the option of setting aside up to 31 percent of their
annual revolving fund allotments for certain designated activities, most of
which are related to program implementation. The states may set aside up to
� 2 percent to provide technical assistance to small water systems for such
purposes as selecting an appropriate treatment technology;
� 4 percent to administer their revolving fund programs;
� 10 percent of their annual revolving fund allotments for a combination of
the following: supervision of public water systems; technical assistance
through programs designed to protect sources of drinking water; strategies
to help ensure the financial, technical, and managerial capacity of water
systems to provide safe drinking water; and programs to certify water system
operators; and
� 15 percent for several other categories of activities, such as
establishing and implementing wellhead protection programs to protect
groundwater sources of drinking water.
The states must match the 10-percent set-aside on a dollar-for-dollar
basis,3 but they are not required to provide matching funds for the other
set-asides.
In addition to providing more funding to the states, the 1996 amendments
added a number of new responsibilities. For example, the amendments
established new programs for protecting drinking water sources and helping
to ensure the financial, technical, and managerial viability of water
systems. As these new programs are being implemented, the states will also
be overseeing water systems' compliance with complex new regulations on
specific contaminants. For example, conventional water treatment practices
require the addition of disinfectant chemicals to the water that, while
effective in controlling many harmful microorganisms, can combine with
organic and inorganic compounds in the water and form potentially harmful
disinfection by-products. The Disinfectants/Disinfection By-Products Rule
attempts to minimize risks from these by-products and still control
microbial contaminants.
Although EPA does not routinely estimate the states' resource needs for
implementing the requirements of the Safe Drinking Water Act, ASDWA has
periodically developed such estimates with the support and participation of
EPA. As the professional association serving state drinking water programs,
ASDWA is a key stakeholder in EPA's development of regulations and guidance
and periodically prepares reports on various aspects of the drinking water
program as a service to its members and EPA. Since 1988, ASDWA has prepared
three estimates of the resources the states need to fulfill their
responsibilities under the Safe Drinking Water Act. The most recent estimate
incorporated the requirements of the 1996 amendments and covers fiscal years
1999 through 2005.
Sufficient to Cover the States' Estimated Needs
For fiscal years 1998 through 2000, EPA annually requested less than the
amounts that the Congress had authorized for the implementation of the
states' drinking water programs. However, if all of the states had chosen to
set aside the maximum allowable portion of their allotments from the
revolving fund, then EPA's budget requests would have provided them with
funding levels that--combined with their required matching
contributions--exceeded the aggregate amount ASDWA estimated the states
would need. The amount would have exceeded ASDWA's total estimate by $27
million in fiscal year 1999 and $44 million in fiscal year 2000. (ASDWA did
not estimate needs for fiscal year 1998.)
According to EPA officials, the agency's annual budget request, as reflected
in the President's Budget, indicates (1) the level of resources that agency
officials believe is needed to fulfill EPA's mission and program
responsibilities, including funding for the states' drinking water programs,
and (2) the planning ceilings and policy directives provided by the Office
of Management and Budget. Consequently, as is the case with other EPA
programs, the amounts requested by EPA may fall below the amounts authorized
by the Congress.
The two primary sources of federal funding for the states' implementation of
their drinking water programs are the supervision grants and the set-asides
from the revolving fund. Table 1 shows the differences between the amounts
authorized and requested for fiscal years 1998 through 2000 for the states'
implementation of their drinking water programs. For the purpose of this
analysis, we (1) adjusted the amounts for the supervision grants and the
revolving fund to include all states except Wyoming and (2) computed the
amount of the revolving fund allotment available for set-asides at 31
percent--the maximum amount allowed.4
Dollars in
millions
Difference
between Budget request
Fiscal year Authorized Budget authorized fundsas a percentage
fundsa request of authorized
and budget
request funds
1998
Public Water
System Supervision $90.5 $84.9 $5.6 93.8
grants
Drinking Water
State Revolving
Fund allotments 280.6 212.4b 68.2 75.7
available for
set-asides
Total $371.1 $297.3 $73.8 80.1
1999
Public Water
System Supervision $90.6 $85.0 $5.6 93.8
grants
Drinking Water
State Revolving
Fund allotments 280.0 222.7b 57.3 79.5
available for
set-asides
Total $370.6 $307.7 $62.9 83.0
2000
Public Water
System Supervision $90.6 $85.0 $5.6 93.8
grants
Drinking Water
State Revolving
Fund allotments 279.4 232.9b 46.5 83.4
available for
set-asides
Total $370.0 $317.9 $52.1 85.9
aAmounts refer to authorized appropriations under the Safe Drinking Water
Act Amendments of 1996.
bEPA did not expressly request these amounts in its annual budgets. The
amounts shown here represent 31 percent of EPA's budget request for the
revolving fund, adjusted to show what would be available to the 49 states
included in our analysis.
Source: GAO's analysis of data from EPA.
For fiscal years 1998 through 2000, on average, EPA requested about 94
percent of the funding authorized for supervision grants and 80 percent of
the funding authorized for the revolving fund, from which the set-asides are
available. As shown in table 1, EPA's requests for the supervision grants
remained constant at about $85 million during this period, while its
requests for the revolving fund allotments have increased, making more funds
available for set-aside use each year, from $212 million in fiscal year 1998
to $233 million in fiscal year 2000. (During this period, EPA received the
amounts it requested for the supervision grants and the revolving fund,
except for fiscal year 2000, when the appropriation for the revolving fund
was $5 million less than requested.)
In addition to the supervision grants and the revolving fund, the 1996
amendments authorize other appropriations for specific activities, which
could provide additional funding to the states. These include $30 million in
authorizations for grants to establish wellhead protection areas, $5 million
to establish a source water petition program,5 and $30 million to provide
the states with funding for training and certifying water system operators.6
Of these activities, EPA has only reserved funds in fiscal years 1999 and
2000 to provide the states with funds for the costs of training water system
operators. According to EPA's Chief, Budget and Accountability, Office of
Ground Water and Drinking Water, the agency did not request funds for
wellhead protection because almost all of the states already had wellhead
protection programs or for a source water petition program because of higher
priorities in the drinking water program. She explained that EPA did not
reserve funds for training water system operators in fiscal year 1998
because the final guidelines on operator certification training were not
issued until February 1999.
From the States, Were Adequate for Estimated Needs
According to ASDWA, the total estimated needs for the states' programs in
fiscal years 1999 and 2000 were $345 million and $339 million,
respectively.7 The amounts EPA requested during those years would have been
more than enough to meet the states' annual needs as estimated by ASDWA if
� the states took full advantage of the available set-asides--that is, if
each state set aside the maximum 31 percent for state implementation
activities and provided the required matching funds--and
� the supervision grants and the minimum required matching contributions
were included in the total.
As indicated in table 2, the funds potentially available to the states from
EPA's budget requests, when combined with the states' required matching
contributions, would have exceeded the states' collective estimated needs
for fiscal years 1999 and 2000 by about $27 million and $44 million,
respectively. The matching contributions potentially add a significant
amount of funds to the total amount available for state
implementation--about $65 million or more per year.
Dollars in millions
Source of funds Fiscal year Fiscal year
1999 2000
Public Water System Supervision Grantsa $85.0 $85.0
Minimum state match to Public Water System
Supervision Grantsb 28.3 28.3
Drinking Water State Revolving Fund
allotments available for set-asidesa, c 222.7 232.9
State match to state program management 35.9 37.6
set-asidesd
Total funds potentially available $371.9 $383.8
Estimated needs $345.1 $339.4
Amount above needs $26.8 $44.4
aWe did not include the amounts allocated for Wyoming, the District of
Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American Samoa, the
Commonwealth of the Northern Mariana Islands, and the Indian Tribes. In
addition, the supervision grant funds do not include amounts allocated for
the former Trust Territories.
bAmounts are equal to one-third of the supervision grants, the minimum state
match.
cStates are actually setting aside much less than the maximum 31 percent
allowed.
dWe estimated the match as 5 percent of the total revolving fund allotments
to the 49 states. The state program management set-aside of 10 percent
requires a dollar-for-dollar match but allows 50 percent of the match to
come from a state's 1993 match to the supervision grant. Consequently, we
assumed that a state would only have to provide 50 percent of the required
match.
Source: GAO's analysis of data from EPA and ASDWA.
ASDWA developed an aggregate national needs estimate; it did not estimate
each individual state's needs. The Association developed a model that
outlined the activities required to implement each regulation or program and
estimated the cost of these activities for fiscal years 1999 through 2005.
The activities were identified by state, ASDWA, and EPA officials, and the
state representatives developed the average costs for the program activities
identified in the model. Nine states tested the model, which was then
revised and used to project a national total. The estimated costs varied,
depending on the size of a state's program, with each state categorized as
small, medium, or large on the basis of its full-time equivalent staff
levels and other considerations. See appendix II for more information on
ASDWA's estimates.
We asked the drinking water program officials in our eight case study states
to review ASDWA's model and comment on the reasonableness of the values used
for estimating costs. These officials said that, overall, the cost and staff
estimates used in the model were "somewhat reasonable" (seven states) or
"very reasonable" (one state), although some questioned specific elements of
the estimates. For example, some officials commented that the cost estimates
for technical or clerical staff were either too high or too low, especially
for technical staff. The director of the drinking water program in
Massachusetts remarked that, because of the higher cost of living in that
state, the average cost for a technical staff year is $80,000--much higher
than the $50,000 technical staff year estimated by the model.8 Some
officials also noted that, due to unique features within their programs or
their states, the model did not exactly fit their situation. For example,
the director of the drinking water program in Arkansas commented that his
state has an extensive program for collecting and analyzing drinking water
samples for compliance with standards, whereas most other states rely upon
the water systems to do this. Officials in Arkansas, Florida, Ohio, and Utah
noted that there were some discrepancies between elements of the model and
their particular situations, but these discrepancies seemed to balance each
other out, so that the overall estimates were acceptable. In two states, the
model's projected staff needs were considered high. In Maine, for example,
the program director believed that the state could have operated with 8 to
13 fewer staff years to implement the program in 1999 than the model
projected. Indiana's program director believed that the model's staff year
estimates were overstated by about 10 percent.
ASDWA officials acknowledge that the model might not be reflective of the
needs of individual states or specific aspects of their programs. The
officials explained that the model was designed to develop a national
projection of resource needs, based on a composite model of small, medium,
and large states' needs. Because the model was developed and tested by
almost 25 percent of the states, ASDWA officials believe that the projected
national need is reasonable. Our review of the methods used to develop the
model indicates that the Association took reasonable measures to derive and
validate its cost estimates and confirms its contention that the model could
be used to develop national estimates. Thus, we believe that using ASDWA's
estimates as an approximation of future costs is reasonable.
But Overall Spending Has Fallen Short of Estimated Needs
A significant share of the states' collective expenditures to implement
their drinking water programs has been funded from state sources. In the
aggregate, this state funding has exceeded the statutory matching
requirements for (1) supervision grants and (2) the revolving loan fund
set-asides. However, some states have not set aside all of the revolving
loan funds that they could have, at least in part because doing so would
have diminished the amount of funds available to lend to water systems for
infrastructure improvements. The states' collective spending has fallen
short of the needs estimated by ASDWA.
Matching Requirements
States are required to match funds equal to one-third of their supervision
grants and to match dollar-for-dollar any funds obtained under the
10-percent set-aside for managing various program activities. According to
the results of our nationwide survey, the states are contributing a
significant share of the funding for their programs and are contributing
more funding than required to meet these statutory matching provisions.
During fiscal years 1997, 1998, and 1999, state funds were the source of 53
percent, on average, of the states' total expenditures for implementing
their drinking water programs. Of the expenditures that came from the
states' funding, 30 percent was provided to match federal funds, and 70
percent consisted of other state funds for implementing state drinking water
programs. Table 3 provides a breakdown of the funding sources for the
states' spending and shows that the states contributed about half of the
total expenditures, on average, over this 3-year period.
Dollars in
millions
Funding source
Federal funds State funds
Amount and Drinking Funding
percentage ofPublic Water Water State Total Required from Total
total System Revolving federal matching other state Grand
expenditures Supervision Fund funds contributions state funds total
by year grants set-asides sourcesa
1997
Expenditures $82 $8 $90 $35 $89 $123 $214
Percentage of
total 38.4 3.9 42.3 16.2 41.4 57.7 100.0
expenditures
1998
Expenditures $82 $26 $108 $37 $92 $129 $237
Percentage of
total 34.6 11.2 45.8 15.4 38.8 54.2 100.0
expenditures
1999
Expenditures $84 $57 $141 $43 $91 $134 $276
Percentage of
total 30.5 20.8 51.2 15.8 33.0 48.8 100.0
expenditures
3-year
average
Expenditures $83 $31 $113 $38 $91 $129 $242
Percentage of
total 34.2 12.7 46.8 15.8 37.4 53.2 100.0
expenditures
aThe majority of states (57 percent) reported that less than 10 percent of
their funding from other state sources, if any, was used to implement
activities that are in addition to those required under federal drinking
water regulations.
Note: Some totals do not add due to rounding.
Source: GAO's survey of 49 state drinking water programs.
Set-aside activity varied significantly from fiscal years 1997 through 1998,
the only years for which complete information on set-asides is available.9
Table 4 shows how much of the available set-asides the states reserved and
expended during those years and provides partial data for fiscal year 1999.
Dollars in millions
Set-asides Fiscal year Fiscal yearFiscal year
1997 1998 1999
Authorized by the 1996 amendments $274.1 $280.6 $280.0
Requested in EPA's budget (amount
potentially available) 376.3a 212.4 222.7
Reserved by states from amount
potentially available 238.4b 95.7 83.8c
Expended by states $8.0 $26.0 $57.0
aAmount includes fiscal year 1997 budget request of $151.6 million plus 31
percent of the funds appropriated for the revolving fund in fiscal years
1995 and 1996 of $225 and $500 million, respectively.
bAmount includes set-asides available from the fiscal year 1995 and 1996
appropriations of $225 million and $500 million, respectively, because these
funds were not available to the states until the revolving fund was
established in fiscal year 1997.
cStates have 2 years, or until September 30, 2000, to reserve the fiscal
year 1999 set-asides. Amount shown represents the total set-asides reserved
as of August 2000.
Source: GAO's analysis of data from EPA and GAO's survey of state drinking
water programs.
During fiscal year 1997, the states had a one-time opportunity to set aside
up to 10 percent of their revolving fund allotments for source water
delineation and assessment activities,10 and every state took advantage of
this opportunity to some extent. Although this set-aside was available only
in fiscal year 1997, the states have up to 4 years to obligate these funds.
In fiscal year 1998, however, the states set aside, on average, less than
half of the revolving fund allotments they could have for program
implementation, in part, because doing so would have diverted funds from
needed infrastructure improvements. According to EPA's most recent survey of
drinking water infrastructure needs, for the 20-year period from 1995
through 2014, a total of $138.4 billion (in 1995 dollars) will be needed to
build new, and upgrade the existing, infrastructure of the nation's water
systems.11 The states spent considerably less than the amounts they reserved
from the available set-asides because it took some time for them to get new
activities, such as the revolving loan fund, underway. In addition, the
states can spend the funds they have reserved over a number of years, in
accordance with work plans approved by EPA.
While set-aside usage varied by state, most states did not take full
advantage of the allowable set-asides. During fiscal years 1997 and 1998, 11
and 8 states, respectively, used the full 31 percent set-aside allowed by
law. The most frequently used set-asides were the 4-percent administrative
set-aside and the 2-percent set-aside for technical assistance to small
public water systems. Table 5 shows the extent to which the states used each
type of set-aside.
States taking States taking less
Set-aside category maximum than the maximum States taking
set-aside set-aside no set-aside
1997
4-percent
administrative 47 2 0
2-percent technical
assistance 37 9 3
10-percent state
program management 14 22 13
15-percent local
assistance 17 32 0
Full 31 percent 11 38 0
1998
4-percent
administrative 46 2 1
2-percent technical
assistance 41 2 6
10-percent state
program management 16 21 12
15-percent local
assistance 10 21 18
Full 31 percent 8 41 0
Source: GAO's analysis of data from EPA.
Although they have contributed more funds than required by the federal
matching provisions, according to the state expenditure data obtained in our
survey, the states collectively may be spending less than the nationwide
amounts that ASDWA estimates are needed. For example, in fiscal year
1999--the only year for which our data permit a direct
comparison--collective state expenditures, including funds from both state
and federal sources, were about 80 percent of the amount estimated to be
needed for program implementation.12 If recent trends continue over the next
several years--that is, if EPA's appropriations for supervision grants and
the state revolving fund remain at about their existing levels relative to
the amounts authorized and the states collectively continue to make use of
only about half of the available set-asides--then the gap between the
amounts expended and estimated to be needed could grow larger. According to
ASDWA, by fiscal year 2005, the states will need an estimated $449 million
to implement their drinking water programs, an increase of about 30 percent
from fiscal year 1999. Table 6 shows the projected resource needs for
implementing the states' oversight programs, by year, from fiscal years 1999
through 2005.
Dollars in millions
Year Full-time equivalent Funding
staff
1999 4,911 $345
2000 5,020 339
2001 5,190 362
2002 5,208 374
2003 5,588 414
2004 5,755 439
2005 5,252 $449
Note: The estimates do not include Wyoming or the District of Columbia. In
addition, we adjusted ASDWA's estimates to exclude Puerto Rico, the U.S.
Virgin Islands, American Samoa, Guam, and the Commonwealth of the Northern
Mariana Islands.
Source: GAO's presentation of data from ASDWA.
Ability to Implement Their Drinking Water Programs
According to our nationwide survey and more detailed discussions with
drinking water officials in eight states, for fiscal years 1997 through
1999, factors other than federal funding levels affected their ability to
implement their drinking water programs. These factors include less than
adequate authorized staffing and funding at the state level (while exceeding
statutory matching requirements, the states spent less than the amount ASDWA
had estimated was needed), state-imposed hiring freezes, and inadequate
state salaries, which made it difficult to attract and retain qualified
staff. Other factors, such as concerns about using revolving fund money for
program implementation instead of infrastructure projects, made it difficult
for some states to use all of the available federal funding. Despite these
factors, program officials from all eight states told us they were able to
meet most program requirements in effect through fiscal year 1999, largely
by scaling back their programs and doing the minimum amount of work to meet
requirements. As program responsibilities increase over the next 5 years,
the state program officials indicated that these factors will likely play a
greater role in their ability to implement their programs.
State-Imposed Spending Constraints
In responding to our nationwide survey, 76 percent of the states reported
that their current staffing levels were less than adequate, or much less
than adequate, to implement their programs. Among these states, the most
frequently cited "major" or "moderate" reasons for not having an adequate
staffing level were inadequate authorized state staffing levels (76
percent), inadequate authorized state funding levels (60 percent),
state-imposed hiring freezes that prevented program offices from filling
authorized positions (41 percent), and inadequate state salary structures,
which made it difficult to attract and retain qualified staff (49 percent).
To obtain more detailed information on factors that affected the states'
ability to implement their programs, we conducted in-depth interviews with
drinking water program officials from eight states. In general, we were told
that state legislatures authorize the number of staff that state drinking
water programs can hire and/or the amount of state funding the programs can
receive. This can create situations in which some states have adequate
authorized staffing levels to carry out program responsibilities but not
enough funding to hire all of the authorized staff. Other states may have
adequate funding but cannot hire anyone because they have inadequate
authorized staffing levels or because there is a hiring freeze in effect.
Program officials from five of the eight states that we contacted raised
concerns about the impact of inadequate state staffing and funding or hiring
freezes. For example:
� Officials from Maine said that they do not currently have adequate
authorized staffing or funding levels and they have an informal hiring
freeze in effect. They commented that, even if they did receive additional
federal funds, unless the authorized state staffing level is increased, they
would not be able to hire new permanent staff and would have to use
contractors to perform program responsibilities.
� An official from Indiana said that the state's drinking water program has
a serious funding shortage and estimated that it needs to increase its total
resource level by at least 50 percent. This official explained that the
authorized state funding level for the program is only enough to meet the
match required to obtain federal funds.
In addition to the factors mentioned above, program officials from two of
the eight states that we contacted partly attributed inadequate staffing
levels to an inability to pay staff competitive salaries. These officials
explained that inadequate salaries have made it difficult to attract and
retain qualified staff. For example, Arkansas officials told us that the
state's program had several vacancies because the low salaries it must offer
prospective employees made it noncompetitive in the labor market. They
explained that, even for entry-level positions, the applicants expected
salaries much higher than the state could offer; moreover, many of the staff
that they hired have used the state as a training ground and often take
positions in private consulting firms. The officials said that they simply
cannot retain qualified staff for the long term.
Recently, an ASDWA representative raised concerns during a congressional
hearing about the effects of hiring freezes and inadequate staffing on the
states' ability to implement their programs. During a March 1999 hearing
before the Senate Committee on Environment and Public Works, Subcommittee on
Fisheries, Wildlife, and Drinking Water, an ASDWA representative said a
number of states were facing the challenge of trying to implement their
programs with limited personnel because of hiring freezes and staff ceilings
at the state level. The representative said that the states were being asked
to do more and more with no new staff or limited staff. This official
acknowledged that additional federal funding would not necessarily help
those states that have been experiencing these challenges.
After the Safe Drinking Water Act was amended in 1986, the states' overall
fiscal conditions were not favorable and funding shortages affected their
ability to implement their programs.13 However, the states' fiscal
conditions have improved considerably since then. According to the National
Conference of State Legislatures, in fiscal year 2000, the states were
generally in their best financial condition in decades. Furthermore, in
fiscal year 2000, favorable fiscal conditions prompted 31 percent of the
states to cut taxes specifically to reduce excess revenues.14
The Director of EPA's Drinking Water Protection Division does not believe
that the Congress intended that the federal government would provide all the
funding for state drinking water programs. He pointed out that, over time,
the amount of federal funding has increased, particularly in recent years,
with the authority for the states to use set-asides from the revolving fund
to implement their programs. The Director acknowledged that many state
drinking water programs are facing challenges, including state-imposed
staffing limitations and opposition from state governors and legislatures to
diverting too much funding from needed infrastructure projects.
Nevertheless, he believes that when the states assume primacy for their
drinking water programs, it is their responsibility to ensure that they
spend the amounts necessary to adequately implement them.
Set-Asides
Several of the states that did not have adequate staffing levels attributed
this problem to factors that can limit their use of the revolving fund
set-asides to help implement their drinking water programs. About 41 percent
of these states said that their programs' inadequate staffing levels were
due to concerns about using the revolving fund to implement drinking water
programs instead of using the money to fund infrastructure projects.
Officials from three of the eight case study states voiced similar concerns,
for example:
� An Indiana official said that taking set-aside money from the revolving
fund for program activities is very difficult because the attitude of the
state budget agency is that as much of the revolving fund money as possible
should be used to finance infrastructure projects. As a result, the
set-asides are not as helpful as they could be.
� Αn Oregon official acknowledged that the committee that advises the
state's drinking water program is concerned about using set-aside money from
the revolving fund for program implementation. According to this official,
while supporting the use of some set-aside money for program implementation,
the committee has made it clear that financing infrastructure is the main
priority in Oregon. The committee is supportive of using set-aside money to
maintain the current level of program services; the committee is reluctant
to use the revolving fund money to expand the program.15
The Safe Drinking Water Act Amendments of 1996 authorized funding for the
revolving fund at a level of $9.6 billion through 2003. Of the states
reporting inadequate staffing levels, approximately 43 percent cited concern
about the continued availability of the set-aside money after the fund's
authorization expires as a "major" or "moderate" reason for their inadequate
staffing levels. Program officials from four of the eight states that we
contacted were concerned about impacts to their state's programs if this
fund is not reauthorized, for example:
� According to a Utah official, the key reason the state has been able to
meet statutory requirements has been because it has taken almost all of the
available set-aside money from the revolving fund. Thus, if set-aside money
from the fund does not continue to be available, a major source of funding
for Utah's program would be eliminated.
� An Oregon official was concerned about the long-term availability of the
set-aside money from the revolving fund. This official said he uses
set-aside money to replace another funding source and to help offset the
effects of inflation. He added that if the revolving fund were not
reauthorized, then the state might have to reduce the program's staffing
level.
Program managers from both Ohio and Utah believe that the additional funding
the states need to meet program requirements should come from an increase in
the general supervision grants, rather than the revolving fund set-asides,
so the states would not be forced to make a choice between program
implementation and infrastructure construction. Four of the eight states we
contacted said that an increase in federal supervision grant funding might
prompt their legislatures to approve additional state funding since a small
increase in state funding could be used to match a larger amount of federal
dollars. About 30 percent of the states we surveyed said that an
insufficient level of funding for the supervision grant contributed to their
inadequate staffing levels.
Resources
Program officials in all eight states we contacted maintain that they have
been able to meet most of the program requirements in effect through fiscal
year 1999, despite seven of the eight states having less than adequate
resources. The states used a variety of strategies to compensate, including
scaling back their programs, doing the minimum necessary to meet
requirements, and setting formal or informal priorities among their
responsibilities.
Six of the eight states said they have had to scale back their programs by
providing less technical assistance to water systems, particularly small
water systems, which make up the overwhelming majority of all public water
systems. According to EPA, small systems often lack sufficient resources and
expertise to comply with complex regulations and many are not financially
healthy. As a result, these systems often need help to comply with the
regulations. Drinking water officials in both Oregon and Ohio told us that
they have less time and resources to devote individual attention to small
water systems and still meet their responsibilities under the 1996
amendments. Ohio officials commented that ultimately, this will have an
impact on compliance. They said that investing resources in technical
assistance initially is much more effective than having to pay for increased
enforcement activity later. In addition to cutting back on technical
assistance, states have scaled back their programs in other ways. For
example, Florida officials said they have reduced their permitting
activities, and the state no longer regularly analyzes follow-up checks on
water samples to determine the quality of water analyses performed at the
200 laboratories in the state.
Officials from most of the eight states we contacted acknowledged doing the
minimum amount necessary to meet program requirements. For example,
officials from four states told us that they have reduced the frequency with
which they conduct comprehensive inspections of water systems, called
sanitary surveys.16 Among other things, the surveys are intended to help
ensure compliance and correct problems before they become serious. Maine
officials said they have cut back on sanitary surveys to the minimum levels
required by EPA and have reduced bacteriological sampling at transient
noncommunity systems. Although normally required on a quarterly basis, the
sampling may be done annually if a noncommunity water system is free of
sanitary defects, which, for Maine's transient noncommunity systems, means
having three consecutive good samples. However, program officials said that
they have been performing annual coliform sampling at the state's 900
transient systems even though the three `good' samples were taken 10 to 20
years ago.17 The officials acknowledged that they should take the samples
for these systems quarterly but said that the workload associated with this
would be overwhelming.
Officials from six of the eight case study states said they currently engage
in some form of priority-setting. For example, an Oregon official said that
the state's program activities have been divided into two groups--those that
are considered critical tasks and those that are considered important, but
less critical. The other five states currently set priorities in a less
formal fashion on the basis of such criteria as the size of the water
system, the size of the population at risk, the potential health effects of
a violation, and the potential loss of federal funding if the state does not
perform an activity. For example, Indiana officials said they do not have
the resources to take enforcement actions against all violations and
consider such factors in deciding which violations to pursue. Several state
officials told us transient noncommunity water systems--such as systems at
rest areas or campgrounds that cater to tourists or other short-term
visitors--are most likely to get the least attention. Officials from EPA's
Office of Ground Water and Drinking Water acknowledged that some states are
struggling to meet the requirements of the 1996 amendments, but the agency's
position is that the requirements are congressional mandates and it is not
appropriate for EPA to set priorities among them.
Responsibilities Expand Through 2005
The results of our nationwide survey indicate that 94 percent of the states
expect that their staffing levels will be less than adequate or much less
than adequate as new program requirements and complex contaminant
regulations take effect over the next 5 years. Program officials from seven
of the eight states indicated that the state-imposed constraints that
currently affect their ability to implement their programs--such as
inadequate state staffing and funding levels, hiring freezes, and inadequate
state salary levels--will continue to compromise their programs if not
addressed. In light of ASDWA's estimate that the states' resource needs will
increase by about 30 percent between fiscal years 1999 and 2005, the effects
that the states have experienced thus far could be exacerbated in the
future.
Program officials from six of the eight states that we contacted said that
increasing federal funding to the authorized levels (i.e., an increase of
about 7 percent for the supervision grants and 20 percent for the state
revolving funds) would make very little difference in their ability to
implement program requirements. Some of these officials also said that even
if federal funds were increased, it would be difficult to obtain additional
state funding to match the federal funds. Moreover, some of them pointed out
that the increase in the supervision grants would be cancelled out by
inflation in just a couple of years. For example, Ohio officials said that
funding increases would just help maintain the status quo, which does not
include the cost of implementing new rules.
In six of the eight states, program officials indicated that the same
factors that have made it difficult to use set-aside money from the
revolving fund could hinder their use of these funds in the future. In
addition, officials from five of the eight states said they would find it
very difficult to get their legislatures to provide more matching funds to
obtain additional set-aside money. In Ohio, for example, a program official
said the state's program has gone as far as it can in using the set-asides
because local infrastructure needs far exceed the current resources.
According to a program official from Indiana, even if the political
sensitivities associated with using revolving fund money for program
implementation--and concerns about the continued availability of this
money--did not exist, inadequate state funding would make it difficult for
Indiana to provide the additional matching funds.
Officials from five of the eight states also reported that determining the
extent to which future funding levels would affect their programs is
difficult because the details of certain rules, and hence the resulting
workload on their programs, are unclear. For example, the Ohio official
pointed out that the cost of implementing the arsenic rule depends on where
EPA sets the standard for this contaminant. This official said that 225
public water systems in Ohio would be affected by this rule if the arsenic
standard were set at 10 milligrams per liter, while 500 systems would be
affected if the standard were set at 5 milligrams per liter. Similarly, a
Florida official said if the limit for the acceptable amount of radon in
drinking water were set at 300 picocuries, about 40 to 50 percent of the
systems in Florida would fail.18 If the standard were lowered to 1,000
picocuries, about 1 percent would fail.
Efficiency and the Effectiveness of States' Drinking Water Programs
Beyond adding more funding, one potential solution to the states' increasing
responsibilities under the Safe Drinking Water Act is the adoption of
management practices that improve efficiency or otherwise enhance the
states' ability to implement their programs. Officials in the eight case
study states cited efforts to improve program efficiency by adopting new
management practices. Also, the EPA officials we interviewed emphasized that
new requirements to develop statewide programs for assessing source waters
and to improve the water systems' ability to comply with drinking water
regulations, which were mandated in the Safe Drinking Water Act Amendments
of 1996, would likely increase the efficiency of state programs over the
long term.
Programs' Efficiency and Effectiveness
Although no one reported any substantively new initiatives, officials from
all eight case study states cited some management practices they are using
that could increase the efficiency and effectiveness of their drinking water
programs. These officials told us that their states are taking advantage of
the expertise in other state and federal agencies or associations through
contracts, interagency agreements, and partnerships. For example, according
to Massachusetts officials, the state program contracts with a consortium of
four organizations that provide technical assistance for small water systems
to improve their level of compliance with federal requirements.19 Arkansas
has a formal cooperative agreement with the U.S. Geological Survey to
conduct source water assessment activities. Program officials in both Utah
and Oregon reported that partnerships with other agencies and organizations
have assisted them in implementing their programs. When initiating their
capacity development activities, officials in both states found partnerships
with the Environmental Finance Center at Boise State University to be very
helpful.
Nationwide, more than 70 percent of the states we surveyed reported using
third-party assistance.20 Of the states that used third-party assistance and
reported inadequate staffing levels, 20 percent also reported that using
contractors allowed them to meet half or more of their programs' needs. The
eight states that we contacted all used contractors to some extent, and four
said contractors allowed them to meet half or more of their program needs.
However, in Oregon, where contractors meet about half of the program's
needs, an official explained that he does not hire contractors to supplement
state staff. Instead, Oregon chooses to contract out services that can be
performed more efficiently by another organization. Arkansas officials also
explained that even if the state's drinking water program were operating at
its fully authorized staff level, the state would, for the sake of
efficiency, continue to contract with third parties that have specialized
expertise.21
Most of the officials we contacted also reported an increased use of
technology. They mentioned using the Internet and developing or improving
electronic records management systems as efficient practices. For example,
in Indiana, some laboratories submit data electronically, which, according
to state officials, allows program staff to react quickly when contaminants
are present in water samples. Officials in half of our case study states
specifically reported using the Internet as a means of readily obtaining and
disseminating information.
Effectiveness, But It May Take Years to Realize Benefits
The Safe Drinking Water Act Amendments of 1996 included requirements for
state programs to assess drinking water sources for vulnerability to
contamination and improve water systems' capacity to comply with federal
drinking water regulations. Although these new requirements necessitate the
states' investing substantial resources in the short term, according to EPA
officials, they will eventually improve both the efficiency and
effectiveness of the states' programs.
An assistant branch chief in EPA's Office of Ground Water and Drinking Water
noted that the requirement to assess drinking water sources challenges the
states to enhance their programs' long-term effectiveness by investing in
increased public involvement, concentrating financial resources in
identified drinking water protection areas, and emphasizing environmental
threats requiring protective measures. By incorporating a public review of
the assessment program's design and results, as the statute requires, the
states are more likely to raise the public's interest so that the
information will be used to improve the quality of drinking water, the
official noted. In addition, that official noted that the amendments'
requirement for designating drinking water protection areas encourages the
states to maximize resources by focusing their efforts intensively within
those areas most influential to the quality of water at wells and intake
locations. Finally, the assessment requirement emphasizes the identification
of contamination threats to all sources of public drinking water.
Ultimately, this requirement might reduce the need to monitor and treat
supplies, and it is widely recognized as the most cost-effective approach to
protecting drinking water.
The Small Systems Coordinator in EPA's Office of Ground Water and Drinking
Water anticipates that the requirement to improve local water systems'
capacity will also help the states incur long-term benefits while improving
public health by reducing the amount of resources they spend on oversight,
assistance, and enforcement. Among the amendments' requirements addressing
issues associated with small systems' capacity were provisions to help
ensure that drinking water systems meet federal regulations. Specifically,
the amendments require the states to help existing water systems become more
efficient and effective and to ensure that new systems demonstrate the
financial, technical, and managerial capability to comply with drinking
water regulations. As a result, systems will eventually require less
attention from the states, which will free their resources to address other
needs. An official we interviewed in Utah provided an example of how a state
might address the regulatory compliance needs of existing systems. Utah has
developed an Improvement Priority System to evaluate and score each water
system in several areas relating to condition and performance. This allows
water systems to address and resolve existing or potential problems in order
of their significance and helps the state concentrate its resources on those
systems that need the most assistance.
Our survey of officials from state drinking water programs shows that in
implementing these programs, the states have funded a significant portion of
their expenditures from their own sources. Nevertheless, the states'
collective expenditures have fallen short of the needs estimated by ASDWA.
Furthermore, our survey suggests that a number of state-level spending
constraints, including inadequate state staffing and funding levels,
state-imposed hiring freezes, and inadequate state salaries, could impair
the states' ability to meet future program requirements. An important factor
affecting the level of funding used to implement the states' program is
their decision regarding the use of their revolving fund allotments. A
decision to use a portion of this money to help pay for program
implementation can be difficult because the states' needs for infrastructure
are very high.
The eight states we contacted maintain that they have been able to implement
almost all statutory program requirements in effect through fiscal year
1999, although only by scaling back their drinking water programs and doing
the minimum amount of work necessary. Among other things, the states are
cutting back on the technical assistance they provide to local water systems
and reducing the frequency of sanitary surveys. However, state officials
point out that decreasing the technical assistance and the frequency of
sanitary surveys could lead to increased compliance problems in the future,
especially among small water systems. As the needs of these programs
increase along with the growth in their responsibilities, it will become
imperative to address the factors that have thus far affected the states'
ability to implement their programs.
We provided EPA with a draft of this report for its review and comment. We
met with EPA officials, including the Acting Chief of the Protection Branch
from EPA's Office of Ground Water and Drinking Water. The officials
generally agreed with the information presented in our draft report;
however, they expressed concerns in two areas. First, the officials said
that the draft report did not sufficiently emphasize the impact of the
increasing program requirements on the states' future resource needs. We
made several changes to highlight material already in the report concerning
the impact of potential state resource shortfalls on their future program
implementation. Second, the EPA officials noted that our comparison of the
funds potentially available to the states with the needs estimated by ASDWA
could be misleading because, as our draft report indicated, most states (1)
do not take the maximum amount allowed for the revolving fund set-asides and
(2) actually have contributed much more than the minimum amounts required
for matching the EPA-provided funds. We clarified our presentation of this
comparison. The EPA officials also provided technical clarifications, which
we incorporated into the report as appropriate.
To conduct our work, we interviewed officials in EPA's Office of Ground
Water and Drinking Water and obtained and reviewed related legislation and
program regulations, guidance, and reports. We also interviewed drinking
water officials in each of the 10 EPA regional offices and managers of
drinking water programs in eight states--Arkansas, Florida, Indiana, Maine,
Massachusetts, Ohio, Oregon, and Utah. Criteria for selecting these states
included the size of their drinking water programs, current staffing levels,
and their use of management strategies to implement their programs more
efficiently and effectively. We also obtained information on our objectives
from officials of key environmental, trade, and state associations involved
in drinking water issues. These groups included ASDWA, the American Water
Works Association, the Association of Metropolitan Sewerage Agencies, the
Association of Metropolitan Water Agencies, the Council on Infrastructure
Financing Authorities, the Council of State Governments, the Environmental
Council of the States, the National Conference of State Legislatures, the
National Drinking Water Advisory Council, the National Rural Water
Association, the Rural Community Assistance Program, and the Natural
Resources Defense Council.
To provide information on how EPA's budget requests for program
implementation compare with the amounts authorized and estimated to be
needed, we obtained information on EPA's budget requests by statutory
authorization from officials in the Budget and Accountability section of
EPA's Office of Ground Water and Drinking Water. We compared these amounts
with the amounts authorized for the states' implementation of drinking water
programs, including the amounts authorized for the Public Water System
Supervision grants and the Drinking Water State Revolving Fund. We were
unable to obtain from EPA an overall estimate of the resources the states
need to implement their drinking water programs. EPA does not have, and does
not routinely prepare, such estimates. However, in fiscal year 1999, ASDWA,
with the support and participation of EPA, estimated the resources needed by
the states to implement the requirements of the Safe Drinking Water Act
Amendments of 1996 from fiscal years 1999 through 2005. We discussed the
methodology used in this analysis for estimating state needs with officials
from EPA, ASDWA, and the contractor who helped prepare the needs analysis
for ASDWA. We interviewed EPA officials from the Office of Ground Water and
Drinking Water and program officials from the eight states that we contacted
on the reasonableness of these estimates.
To provide information on how much the states have spent since the 1996
amendments to implement their drinking water programs, we surveyed program
administrators in 49 states. We did not include Wyoming and the District of
Columbia in the survey because they do not have primacy for their drinking
water programs; instead, EPA directly implements their programs. We also did
not include Puerto Rico, the U.S. Virgin Islands, American Samoa, Guam, and
the Commonwealth of the Northern Mariana Islands in the survey. We pretested
our questionnaire with officials in California, Ohio, and Oregon and
obtained comments from ASDWA. We received survey responses from all 49
states (a 100-percent response rate). The survey, with summary responses,
appears in appendix III.
To address the effects federal funding levels have had, and will have, on
the states' ability to implement their drinking water programs and to obtain
information on practices that might help states implement their programs, we
relied on in-depth interviews with program officials in the eight states.
Our work was conducted from November 1999 through August 2000 in accordance
with generally accepted government auditing standards.
As arranged with your offices, unless you announce its contents earlier, we
plan no further distribution of this report until 30 days after the date of
this letter. At that time, we will make copies available to interested
congressional committees; the Honorable Carol M. Browner, Administrator,
Environmental Protection Agency; and the Honorable Jacob J. Lew, Director,
Office of Management and Budget. We will also make copies available to
others on request.
If you have any questions regarding this report, please contact me at (202)
512-6878. Key contributors to this report were Ellen Crocker, Terri Dee,
Carolyn Hall, Luann Moy, and Lisa Pittelkau.
David G. Wood
Associate Director, Environmental
Protection Issues
Highlights of the Safe Drinking Water Act Amendments of 1996
Under the Safe Drinking Water Act, EPA is authorized to grant primary
enforcement responsibility, commonly referred to as "primacy," for the
drinking water program, to the states that meet certain requirements. Among
the key requirements, the states must
� adopt drinking water regulations that are no less stringent than EPA's
national primary drinking water regulations and
� adopt and implement adequate procedures to carry out the program's
requirements and enforce the regulations.
The 1996 amendments include a number of key provisions.
All states (and Puerto Rico) can establish Drinking Water State Revolving
Funds, using federal capitalization grant money, to make loans to public
water systems to finance projects needed to comply with drinking water
regulations. Loan repayments to states are deposited in this fund for future
loans. The program also allows states to reserve a portion of their grant to
fund activities needed to protect source waters and enhance water system
management.
As EPA promulgates drinking water contaminant rules, states educate water
system operators about the new requirements and ensure that water quality
testing, treatment, and reporting requirements are met. The new rules
include the following:
� Arsenic Rule −EPA must revise the existing arsenic standard and
promulgate a national primary drinking water regulation by January 1, 2001.
EPA is proposing to reduce the current arsenic standard from 50 parts per
billion to 5 parts per billion.
� Consumer Confidence Report Rule − Community water systems must
prepare annual water quality reports (consumer confidence reports) for their
customers. The reports include information on the source of the drinking
water, violations of any federal drinking water standards, and contaminants
that were detected and their related health effects.
� Regulations on Microbial Contaminants, Disinfectants, and Disinfection
By-Products − EPA must promulgate several regulations concerning
microbial contaminants, disinfectants, and disinfection by-products. For
example, EPA was required to (and did) promulgate a stage 1 disinfectants
and disinfection by-products rule, which establishes maximum residual
disinfectant goals and levels for three chemical disinfectants. According to
an official with the Association of State Drinking Water Administrators,
these regulations will require monitoring and adjustments of the treatment
process to balance the control of microbial contaminants and the
disinfection by-products, and thus, states will have to work closely with
water systems and provide more technical assistance.
� Monitoring for Unregulated Contaminants − Starting in 1999, and
every 5 years thereafter, EPA must issue a list of no more than 30
unregulated contaminants that public water systems must monitor. The
frequency and the schedule of these monitoring requirements will vary
according to the number of persons served by the system, the source of
supply, and the contaminants likely to be found, ensuring that only a
representative sample of small systems are required to monitor.
� Radon Rule − EPA must withdraw the regulations previously proposed
for radon and promulgate new regulations by August 6, 2000. Under the new
proposed regulations, states have the option of developing enhanced state
programs to address the health risks from radon in indoor air (called
Multimedia Mitigation Programs) as an alternative to requiring individual
water systems to meet a more stringent standard for radon in drinking water.
States choosing this option would be required to develop programs that
include public involvement in the development of the mitigation plan,
quantitative goals for reducing radon in new and existing homes, strategies
for achieving these goals, and a plan for tracking and reporting results.
To receive the full allotment of funds for the Drinking Water State
Revolving Fund to which states are entitled, states must implement programs
to certify operators of drinking water systems. This requirement includes
specifying standards for the certification and the recertification of
operators of community and nontransient noncommunity water systems in
accordance with EPA's guidelines.
To receive the full allotment of funds for the Drinking Water State
Revolving Fund to which states are entitled, among other things, states must
(1) prepare, periodically update, and submit to the EPA Administrator a list
of water systems with histories of significant noncompliance; (2) have the
legal authorities and other means to ensure that new water systems have the
technical, financial, and managerial capability to comply with drinking
water regulations; and (3) develop and implement a strategy for capacity
development to assist existing systems in acquiring and maintaining
capacity.
States must assess their sources of drinking water (rivers, lakes,
reservoirs, springs, and groundwater wells) to identify significant
potential sources of contamination and to determine how susceptible the
sources of drinking water are to these threats. Thus, at the nation's more
than 170,000 water systems, the states must inventory the contaminants and
prepare "susceptibility determinations" that evaluate and rank the threats
that the inventoried contaminants pose to the water sources.
Association of State Drinking Water Administrators' Estimates of State
Resource Needs
To estimate the resources the states need to fulfill their responsibilities
in the nation's drinking water program in 1999, the Association of State
Drinking Water Administrators (ASDWA) developed a model detailing the
activities required by both existing and anticipated regulations and
estimated future program costs for fiscal years 1999 through 2005. The
activities were identified by a group of state, association, and EPA
officials and the state representatives developed the average costs for the
program activities identified in the model. These costs were based on the
size of a state's program, with all the states grouped into the categories
of small, medium, or large according to their full-time equivalent staff
levels as well the amount of their supervision grant and the number of water
systems in the state. The state members of the work group included a
representative from each size category.
After the ASDWA model was developed, nine pilot states (three in each size
category) reviewed and validated the model and its assumptions. Each pilot
state had an opportunity to either accept the default values or enter an
alternate value in the model for each program activity. The model was
modified in response to the comments from the pilot states and then used to
project the total costs for fiscal years 1999 through 2005 for all states
(excluding Wyoming), Puerto Rico, the U.S. Virgin Islands, American Samoa,
Guam, and the Commonwealth of the Northern Mariana Islands.
ASDWA's estimates of available financial resources consist of both federal
and state funds and include Public Water System Supervision grants, funds
available from allotments to the Drinking Water State Revolving Fund for
set-asides, and state funding through appropriations from tax revenues or
fee programs. The estimates of available resources are based on the
following assumptions:
� a 1-percent per year increase from fiscal years 1999 through 2005 for the
Public Water System Supervision grants,
� a 3-percent per year increase from fiscal years 1999 through 2005 for the
allotments for the Drinking Water State Revolving Fund,
� an 8.6-percent set-aside for fiscal years 1999 through 2005 from the
Drinking Water State Revolving Fund,
� equal expenditures of the $110.8 million set-aside funds taken in fiscal
year 1997 for source water protection expended in equal amounts over a
5-year period from fiscal years 1998 through 2002, and
� a 1-percent per year increase in the states' 1999 aggregate contribution
of $99 million. ASDWA developed the $99 million estimate by collecting data
from the states for program activities in fiscal year 1997 and adjusting it
for inflation.
Summary of States' Responses to GAO's Questionnaire
(160510)
Table 1: Authorized Funds and EPA Budget Requests for the States'
Implementation of Their Drinking Water Programs, Fiscal Years 1998 Through
2000 11
Table 2: Amounts Potentially Available to the States from EPA's Budget
Requests, Including the Minimum State Match, Compared to Estimated Needs,
Fiscal Years 1999 and 2000 13
Table 3: Sources and Amounts of States' Expenditures for Drinking Water
Program Implementation, Fiscal Years 1997 Through 1999 16
Table 4: Availability and Use of Drinking Water State Revolving Fund
Set-Asides, Fiscal Years 1997 Through 1999 17
Table 5: States' Use of Set-Asides From the Drinking Water State Revolving
Fund, Fiscal Years 1997 and 1998 19
Table 6: Resource Needs for Implementing the States' Drinking Water
Programs, Fiscal Years 1999 Through 2005 20
1. EPA does not routinely estimate the total amounts needed by the states.
ASDWA is the professional association serving state drinking water programs;
its members are generally the administrators of drinking water programs in
the 50 states.
2. We did not include Wyoming and the District of Columbia in the survey
because they do not implement their own drinking water programs; instead,
EPA directly oversees their programs. We also did not include Puerto Rico,
the U.S. Virgin Islands, American Samoa, Guam, and the Commonwealth of the
Northern Mariana Islands. All 49 state agencies responded to our survey. For
the purposes of this report, "all states" refers to these 49 states.
3. Up to 50 percent of the required matching funds for the 10-percent
set-aside may consist of the state's match to the supervision grant in 1993.
Therefore, some states are only required to provide half of the match in
"new" money.
4. We did not include Wyoming in the analysis because it does not have
primacy for the drinking water program. In addition, we did not include the
District of Columbia, Puerto Rico, the U.S. Virgin Islands, Guam, American
Samoa, the Commonwealth of the Northern Mariana Islands, and the Indian
Tribes. The former Trust Territories were also excluded from the supervision
grants.
5. Sections 1452 and 1453 of the Safe Drinking Water Act authorize funding
for state programs that establish local voluntary incentive-based
partnerships for source water protection and remediation.
6. The 1996 amendments allow EPA to reserve funds from the overall
appropriation for the revolving fund for several purposes, including $30
million for reimbursement for operator training and certification costs, $10
million for health effects studies, $2 million for the costs of monitoring
for unregulated contaminants, and $15 million for technical assistance to
small water systems. To the extent EPA opts to take these set-asides, the
amount of funds available for allotments to the states is reduced.
7. ASDWA's estimates exclude Wyoming, the District of Columbia, Puerto Rico,
the U.S. Virgin Islands, Guam, American Samoa, the Commonwealth of the
Northern Mariana Islands, and the Indian Tribes. ASDWA did not estimate the
needs for fiscal year 1998.
8. Staff-year costs include salary and benefits.
9. Grants to the states are available for obligation in the fiscal year for
which the funds are authorized and the following fiscal year. This means
that states have until September 30, 2000 to obligate their fiscal year 1999
grants.
10. Section 1453 of the Safe Drinking Water Act, as amended, requires that
the states delineate the boundaries of areas from which public water systems
receive supplies of drinking water and within each delineated area determine
the susceptibility of the public water system(s) to contamination.
11. Drinking Water Infrastructure Needs Survey: First Report to Congress,
EPA 812-R-97-001, Office of Water (Jan. 1997).
12. We collected data on how much the states spent to implement their
drinking water programs for fiscal years 1997 through 1999 only; ASDWA
estimated the amount of funding the states would need to implement their
programs for fiscal years 1999 through 2005 only.
13. See Drinking Water: Widening Gap Between Needs and Available Resources
Threatens Vital EPA Program (GAO/RCED-92-184, July 6, 1992).
14. State Budget and Tax Actions 2000, Preliminary Report: Executive
Summary, National Conference of State Legislatures. This information is
based on 49 states. Massachusetts had not passed its budget by the time this
report was issued.
15. Officials from two other states raised concerns about their
legislature's policies against expanding state programs as affecting the
amount of resources available for their programs.
16. Only one of the four was not meeting EPA's minimum requirements for
conducting sanitary surveys, in particular, the requirement to perform
sanitary surveys at transient noncommunity systems every 5 years. Transient
noncommunity water systems cater to transitory customers in nonresidential
areas such as campgrounds, motels, and gas stations.
17. Coliform is a group of related bacteria whose presence in drinking water
may indicate contamination by disease-causing microorganisms.
18. A picocurie is the standard measurement of radioactivity.
19. These include the New England Water Works Association, the New England
Rural Water Association, the Rural Community Assistance Program, and the
Massachusetts Water Works Association.
20. Thirty-seven percent of the states using third-party assistance reported
contracting for at least 5 full-time staff years.
21. For example, Arkansas uses money set-aside from the state's drinking
water revolving fund to contract with the Arkansas Rural Water Association
and the Community Resource Group, Inc. (the Southern Rural Community
Assistance Program affiliate) to provide technical assistance for water
systems.
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