National Service Programs: AmeriCorps*USA--First Year Experience and
Recent Program Initiatives (Stmnt. for the Rec., 05/21/96,
GAO/T-HEHS-96-146).

GAO discussed the Corporation for National and Community Service's
AmeriCorps*USA service program. GAO noted that: (1) for program year
1994 to 1995, the Corporation provided almost $149 million for grantee
projects; (2) about 69 percent of matching project contributions came
from public sources; (3) total resources available per participant,
exclusive of private in-kind contributions, averaged $26,654, of which
federal sources provided 74 percent, state and local governments 14
percent, and the private sector 12 percent; (4) cost data could not be
determined because most AmeriCorps programs are too new; (5) total
available resources for AmeriCorps*USA grantees averaged about $16 per
service hour; (6) grantees' projects are designed to meet unmet human,
educational, environmental, and public safety needs, strengthen
communities, develop civic responsibility, and expand educational
opportunities for program participants and others; and (7) to reduce
government costs in the 1996-1997 program year, Congress has reduced
program appropriations and prohibited federal agencies from receiving
AmeriCorps grants, and the Corporation has required certain grantees to
reduce proposed costs by 10 percent and all grantees to pay a higher
share of program operating costs.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-96-146
     TITLE:  National Service Programs: AmeriCorps*USA--First Year 
             Experience and Recent Program Initiatives
      DATE:  05/21/96
   SUBJECT:  Volunteer services
             Educational grants
             Community development programs
             Intergovernmental fiscal relations
             Appropriated funds
             Gifts or gratuities
             Cost control
IDENTIFIER:  AmeriCorps USA Program
             Volunteers in Service to America Program
             
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Cover
================================================================ COVER


Before the Committee on Labor and Human Resources, U.S.  Senate

For Release on Delivery
Expected at
9:30 a.m.  EST,
Tuesday,
May 21, 1996

NATIONAL SERVICE PROGRAMS -
AMERICORPS*USA--FIRST-YEAR
EXPERIENCE AND RECENT PROGRAM
INITIATIVES

Statement for the Record of Cornelia M.  Blanchette
Associate Director
Education and Employment Issues
Health, Education, and Human Services Division

GAO/T-HEHS-96-146

GAO/HEHS-96-146T


(104856)


Abbreviations
=============================================================== ABBREV

  FTE - full-time equivalent
  GED - general equivalency diploma
  VISTA - Volunteers in Service to America

NATIONAL SERVICE PROGRAMS: 
AMERICORPS*USA--FIRST-YEAR
EXPERIENCE AND RECENT PROGRAM
INITIATIVES
============================================================ Chapter 0

Madam Chairman and Members of the Committee: 

We are pleased to be able to provide this statement for the record to
assist the Committee in its oversight responsibilities for the
Corporation for National and Community Service (the Corporation). 

The Congress created the Corporation in 1993 to administer national
service programs and the national service trust, which pays for
participants' education awards.  For fiscal year 1996, the
Corporation's budget totaled about $600 million.  Among the programs
the Corporation administers is AmeriCorps, the largest national and
community service program since the Civilian Conservation Corps of
the 1930s.  For fiscal year 1996, the Congress appropriated $215
million for AmeriCorps grants.  The President has requested $261
million for fiscal year 1997. 

The statement presents information on the AmeriCorps*USA program--the
largest of the Corporation's programs.  First, it highlights the
major points contained in our report on AmeriCorps*USA issued last
August.\1 The report focused on the total amount of resources made
available from all funding streams to support AmeriCorps*USA in its
first year of operation (1994-95), expressed on a per-participant and
per-service-hour basis.  The report also provided comparative
information on the resources available to programs administered by
nonfederal and federal entities, and cited examples of program
benefits.  Second, it highlights some of the recent legislative,
budgetary, and programmatic changes in AmeriCorps*USA that have
occurred since we testified before the House Subcommittee on
Oversight and Investigations last October. 

The information contained in my statement was based on data from
several sources.  We held extensive meetings with Corporation
officials; examined legislation establishing the Corporation and
national service programs; and reviewed Corporation program policies,
guidance, and program evaluation plans.  We also examined grant files
for all grantees' programs that, according to the Corporation,
received funds from fiscal year 1994 appropriations.  Each file
typically included the application submitted by the AmeriCorps*USA
grantee, the grant award amount, and matching contributions proposed
and budgeted by the grantee.  Because the grant files did not contain
detailed information on the source of matching contributions, we
constructed a random sample of 80 of the 284 nonfederal grantees to
collect resource and participant enrollment information.\2 Finally,
we visited seven AmeriCorps*USA grantees' programs that represented a
mix of characteristics, such as mission and scale, to gain insight
into program operations, actual sources of funds, and program
benefits.  We also met again recently with Corporation officials to
determine what initiatives they have undertaken to improve the cost
and performance of AmeriCorps since last October. 

In summary, total resources available for AmeriCorps*USA programs for
program year 1994-95 included more than the Corporation's
appropriations.  Over one-third of the financial resources available
for AmeriCorps*USA grantees' programs came from sources outside the
Corporation, mostly from other federal agencies and state and local
governments.  Total resources available per AmeriCorps*USA
participant averaged $26,654, of which about $17,600 came from the
Corporation, $3,200 from non-Corporation federal sources, and $4,000
from state and local governments.  The remaining amount, roughly
$1,800, came from the private sector.  Resources available per
participant were lower for programs run by nonfederal organizations
than for programs operated by federal agencies.  Total resources
available to AmeriCorps*USA grantees' programs equaled about $16 per
service hour.  These figures represent resources available for all
program expenses and are not the hourly wages for participants. 

While we did not try to quantify the benefits of the program, our
review of activities at the seven program sites visited indicated
that a variety of initiatives have been undertaken to support
AmeriCorps*USA's goals.  The legislation establishing AmeriCorps*USA
authorizes grantees' programs to help communities address unmet
human, educational, environmental, and public safety needs.  At the
grantees' sites we visited, we found that the projects had been
designed to strengthen communities, develop civic responsibility, and
expand educational opportunities for program participants and others. 

Since our October testimony, the Congress and the Corporation have
taken steps intended to lower AmeriCorps's cost to the federal
government.  For example, the Congress recently prohibited federal
agencies from receiving AmeriCorps grants.  In another example, the
Corporation, through its grant award guidelines, now requires higher
matching contributions from grantees for certain program costs, such
as staff salaries and project supplies and equipment.  These changes
and several others only affect programs for the 1996-97 program year. 


--------------------
\1 National Service Programs:  AmeriCorps*USA--Early Program Resource
and Benefit Information (GAO/HEHS-95-222, Aug.  29, 1995). 

\2 Because there were only 13 federal agency grantees, we were able
to collect resource information from all of them. 


   BACKGROUND
---------------------------------------------------------- Chapter 0:1

With the National and Community Service Trust Act of 1993 (P.L. 
103-82), the Congress created the largest national and community
service program since the Civilian Conservation Corps of the 1930s. 
AmeriCorps*USA allows participants to earn education awards to help
pay for postsecondary education in exchange for performing community
service that matches priorities established by the Corporation. 
Participants earn an education award of $4,725 for full-time service
or half of that amount for part-time service.  A minimum of 1,700
hours of service within a year is required to earn the full $4,725
award.  The Corporation requires that programs devote some portion,
but no more than 20 percent, of participants' service hours to
nondirect service activities, such as training or studying for the
equivalent of a high school diploma.  To earn a part-time award, a
participant must perform 900 hours of community service within 2
years (or within 3 years in the case of participants who are
full-time college students).  Individuals can serve more than two
terms; however, they can only receive two education awards.  The
awards, which are held in trust by the U.S.  Treasury, are paid
directly to qualified postsecondary institutions or student loan
lenders and must be used within 7 years after service is completed. 

In addition to the education award, AmeriCorps*USA participants
receive a living allowance stipend that is at least equal to, but no
more than double, the average annual living allowance received by
Volunteers in Service to America (VISTA) participants--about $7,640
for full-time participants in fiscal year 1994.  Additional benefits
include health insurance and child care assistance for participants
who need them. 

Individuals can join a national service program before, during, or
after postsecondary education.  A participant must be a citizen, a
national, or a lawful permanent resident of the United States.  A
participant must also be a high school graduate, agree to earn the
equivalent of a high school diploma before receiving an education
award, or be granted a waiver by the program.  Selection of
participants is not based on financial need. 

In its fiscal year 1994 appropriations, the Corporation anticipated
fielding about 18,350 full- and part-time AmeriCorps*USA
participants.  The Corporation's budget for AmeriCorps*USA grants and
national service education awards was about $249 million in fiscal
year 1994.  The Corporation used about $149 million of its fiscal
year 1994 appropriations to make about 300 grants to nonprofit
organizations and federal, state, and local government agencies to
operate AmeriCorps*USA programs. 

Grant recipients use grant funds to pay up to 85 percent of the cost
of participants' living allowances and benefits (up to 100 percent of
child care expenses) and up to 75 percent of other program costs,
including participant training, education, and uniforms; staff
salaries, travel, transportation, supplies, and equipment; and
program evaluation and administrative costs.  Grants are based in
part on the number of participants the program estimates it will
enroll during the year.  If participants leave the program during the
year, the Corporation may either allow the program to redirect
participant stipend and benefit funds to other program expenses or
take back any unused portion of the grant. 

To ensure that federal Corporation dollars are used to leverage other
resources for program support, grantees must also obtain support from
non-Corporation sources to help pay for the program.  This support,
which can be cash or in-kind contributions, may come from other
federal sources as well as state and local governments, and private
sources.  In-kind contributions include personnel to manage
AmeriCorps*USA programs as well as to supervise and train
participants; office facilities and supplies; and materials and
equipment needed in the course of conducting national service
projects. 

Consistent with AmeriCorps's enacting legislation, some federal
agencies received grants during the initial 2 program years to
support AmeriCorps*USA participants who performed work furthering the
agencies' missions.  Federal agency grantees could use their own
resources in addition to the Corporation grant to integrate national
service more fully into their mission work. 


   AMERICORPS*USA PRIMARILY
   SUPPORTED BY PUBLIC RESOURCES
---------------------------------------------------------- Chapter 0:2

In its first program year, AmeriCorps*USA relied heavily on public
support.  The Corporation's appropriations accounted for almost
two-thirds of resources available for AmeriCorps*USA grantees.  When
Corporation appropriations were combined with resources from other
federal agencies and state and local governments, the public sector
provided about 88 percent of the $351 million in total program
resources available.  Federal resources accounted for 74 percent
(about $260 million), while state and local government contributions
made up 14 percent ($50 million).  Private cash and in-kind
contributions constituted the smallest share of resources, amounting
to about 12 percent (or about $41 million). 

Most of the Corporation's funding for AmeriCorps*USA projects went to
providing operating grants and education awards.  Of the
Corporation's funding, 61 percent financed operating grants. 
Slightly over one-quarter supported participants' education awards,
while the remainder went toward Corporation program management and
administration. 

Most of the matching contributions AmeriCorps*USA programs received
came from public as opposed to private sources.  About 69 percent of
all matching resources came from either a federal or a state or local
government source, with the split between cash and in-kind
contributions being about 43 percent (about $57 million) and 26
percent (about $34 million), respectively.  The remaining 31 percent
of matching resources were from private sources, with cash and
in-kind contributions accounting for 17 percent (about $23 million)
and 14 percent (about $18 million), respectively. 

In calculating resources available on a per-participant and
per-service-hour basis (see table 1), we found that the average from
all sources per AmeriCorps*USA participant was about $26,654
(excluding in-kind contributions from private sources).  This
amounted to about $16 per service hour or about $20 per direct
service hour, assuming 20 percent of the 1,700 hours of total service
was nondirect service time.\3 These figures represent resources
available for all program expenses and are not the equivalent of
annual salaries or hourly wages for participants. 



                                Table 1
                
                  Per-Participant and Per-Service-Hour
                Resources Available for AmeriCorps*USA,
                               by Source


                                                                   Per
                                                           Per  direct
                                                   Per  servic  servic
                                                   FTE  e hour  e hour
----------------------------------------------  ------  ------  ------
Corporation for National and Community Service
----------------------------------------------------------------------
Resources                                       $17,62  $10.37  $12.96
                                                     9

Other federal
----------------------------------------------------------------------
Cash                                             2,247    1.32    1.65
In-kind                                            930    0.55    0.68

State and local government\a
----------------------------------------------------------------------
Cash                                             2,272    1.34    1.67
In-kind                                          1,756    1.03    1.29

Private
----------------------------------------------------------------------
Cash                                             1,819    1.07    1.34
Total                                           $26,65  $15.68  $19.60
                                                     4
----------------------------------------------------------------------
Notes:  Items may not sum to totals because of rounding. 

We calculated available resources per participant on a
full-time-equivalent (FTE) basis. 

\a State and local contributors included state and city departments,
such as police forces and school systems, and public 2- and 4-year
postsecondary institutions. 

It is important not to equate our funding information with cost data. 
Because most AmeriCorps*USA programs were still implementing their
first year of operations, actual cost could not be determined. 
Funding and in-kind contributions from sources other than the
Corporation were reported to us in May 1995 as resources already
received or those that program directors were certain of receiving by
the end of their current operating year.  Therefore, actual resource
and expenditure levels could be higher or lower than indicated by the
estimates reported to us. 


--------------------
\3 In establishing the national service program, the Congress wanted
participants to engage in activities that benefit communities (direct
service) and the program participants themselves (nondirect service). 
Direct service activities include those that address unmet human,
educational, environmental, or public safety needs.  Nondirect
service activities include training participants to carry out
national service projects and assisting them in making the transition
to other educational and career opportunities after they complete
national service. 


   FEDERAL AGENCY PROGRAMS ARE
   MOST RESOURCE INTENSIVE
---------------------------------------------------------- Chapter 0:3

We found significant differences in levels of resources available for
nonfederal versus federal programs (see table 2).  On average,
AmeriCorps*USA programs operated by nonprofit organizations and state
and local agencies received about $25,800 in cash and in-kind
contributions per participant.  In contrast, programs sponsored by
federal agencies received about $31,000 in cash and in-kind
contributions per participant--about 20 percent more than programs
administered by nonfederal grantees.  In addition, federal agencies
relied far more on non-Corporation federal resources than their
counterparts.  On average, federal agency grantees had about $15,500
in cash and in-kind contributions available per participant from
federal sources other than the Corporation.  Non-Corporation federal
funds accounted for about 50 percent of total resources available to
federal grantees.\4

Nonfederal AmeriCorps*USA grantees received resources of less than
$800 per participant from non-Corporation federal sources, or about 3
percent of their total resources.  The appendix contains more
detailed program resource information by sponsoring agency. 



                                Table 2
                
                 Comparison of Resources Available for
                 Federal and Nonfederal AmeriCorps*USA
                                Programs

                                                Nonfed  Federa
                                                  eral       l     All
                                                progra  progra  progra
                                                     m       m       m
                                                resour  resour  resour
Source of contribution                             ces     ces     ces
----------------------------------------------  ------  ------  ------
Corporation for National and Community Service
----------------------------------------------------------------------
Resources                                       $18,60  $12,66  $17,62
                                                     2       5       9

Other federal
----------------------------------------------------------------------
Cash                                               493  11,187   2,247
In-kind                                            261   4,338     930

State and local government
----------------------------------------------------------------------
Cash                                             2,607     564   2,272
In-kind                                          1,880   1,126   1,756

Private
----------------------------------------------------------------------
Cash                                             1,953   1,136   1,819
Total                                           $25,79  $31,01  $26,65
                                                     7       7       4
----------------------------------------------------------------------
Note:  Items may not sum to totals because of rounding. 


--------------------
\4 Almost all of the non-Corporation federal cash and in-kind
contributions came from the sponsoring federal agencies themselves. 


   PROGRAM INITIATIVES SUPPORT THE
   VARIED GOALS OF AMERICORPS*USA
---------------------------------------------------------- Chapter 0:4

In its mission statement, the Corporation had identified several
objectives that spanned a wide range of accomplishments, from very
tangible results to those much harder to quantify.  During our site
visits, we observed local programs helping communities. 
AmeriCorps*USA has also sponsored an evaluation of its own that
summarized results at a sample of programs during their first 5
months of operation and identified diverse achievements related to
each service area. 


      MEETING UNMET NEEDS
-------------------------------------------------------- Chapter 0:4.1

One of AmeriCorps*USA's objectives was to help the nation meet its
unmet human, educational, environmental, and public safety needs, or
as the Corporation states it, "getting things done." In our visits,
we observed participants renovating inner-city housing, assisting
teachers in elementary schools, maintaining and reestablishing native
vegetation in a flood control area, analyzing neighborhood crime
statistics to better target prevention measures, and developing a
program in a community food bank for people with special dietary
needs. 


      STRENGTHENING COMMUNITIES
-------------------------------------------------------- Chapter 0:4.2

AmeriCorps's legislation identified renewing the spirit of community
as an objective, and the program's mission includes "strengthening
the ties that bind us together as a people." We observed several
projects focused on rebuilding communities.  For example, a
multifamily house being renovated was formerly a congregating spot
for drug dealers.  Program officials believe that after completion,
it will encourage other neighborhood improvements.  Another team
built a community farm market and renovated a municipal stadium, both
of which a town official said will continue to provide economic and
social benefits to the community. 

Another way to meet this objective was to have participants with
diverse backgrounds working together.  Participants of several
programs we visited spanned a wide age range, from teenagers to
retirees.  Teams also showed diversity in educational, economic, and
ethnic backgrounds.  Participants said that a valuable aspect of the
program was working with others with different backgrounds and
benefiting from their strengths. 


      FOSTERING RESPONSIBILITY
-------------------------------------------------------- Chapter 0:4.3

Another of AmeriCorps*USA's program objectives was to foster civic
responsibility.  We saw evidence of this at programs such as one
where participants devoted half of each Friday to working on
community service projects they devised and carried out
independently.  Participants at another program, in which they
organized meetings to establish relationships between at-risk youth
and elderly people, commented that this work had taught them how to
organize programs, experience they believed would be helpful as they
took on roles in their communities.  Training periods included
conflict resolution techniques and team-building skills. 


      EXPANDING OPPORTUNITIES
-------------------------------------------------------- Chapter 0:4.4

Both the AmeriCorps legislation and the Corporation's mission
identified expanding opportunities as an objective.  In practice,
individuals who participate in national service have their
educational opportunities expanded by the education awards, which
help them pursue higher education or job training.  At the sites we
visited, participants indicated that the education award was an
important part of their decision to participate in AmeriCorps*USA. 
Programs also supported participants in obtaining high school
diplomas or the equivalent.  According to Corporation regulations, a
full-time participant who does not have a high school diploma or its
equivalent generally must agree to earn one or the other before using
the education award.  In one program, a general equivalency diploma
(GED) candidate was receiving classroom instruction and individual
tutoring.  She had recently passed the preliminary GED test after
failing the GED test five times.  After doing some extra preparation
for the math portion, she will take the actual GED test again.  A
larger program that recruited at-risk youth, most of whom do not have
high school diplomas, provided classroom instruction related to the
service that participants performed, such as a construction-based
math curriculum.  Program officials said most of the participants are
enrolled in high school equivalency courses and that at least five
have already passed the GED test. 

We also saw programs that offer participants the chance to get
postsecondary academic credit.  One such program, affiliated with a
private college, offered participants the option of pursuing an
environmental studies curriculum through which they can earn up to
six upper-level credits at a reduced tuition.  Half of the
participants have chosen to do so.  A second program allowed
participants to earn 36 credit hours toward an associate's degree in
the natural sciences through their service, which can lead to state
certification as an environmental restoration technician. 


   INITIATIVES TO REDUCE
   AMERICORPS COSTS
---------------------------------------------------------- Chapter 0:5

Since we reported on the program last October, both the Congress and
the Corporation have implemented measures aimed at lowering
AmeriCorps's cost.  On the legislative side, the Congress mandated
new funding restrictions for the Corporation.  On the programmatic
side, the Corporation, after consulting with Members of Congress, has
revised its grant guidelines.  These new measures will only affect
programs receiving grants for the upcoming 1996-97 program year. 


      LEGISLATIVE MANDATES
-------------------------------------------------------- Chapter 0:5.1

In addition to reducing AmeriCorps grant funding by $4 million (from
$219 million in fiscal year 1995 to $215 million in fiscal year
1996), the 1996 fiscal year appropriations act (P.L.  104-134) put
into place requirements for the 1996-97 AmeriCorps program year.  One
requirement renders federal agencies ineligible to receive AmeriCorps
grants.\5 The law also requires that to the maximum extent possible,
the Corporation (1) increase the amount of matching contributions
provided by the private sector and (2) reduce the total federal cost
per participant in AmeriCorps programs.  As part of the fiscal year
1996 appropriations act, the Congress also mandated that GAO further
study the Corporation's operations.  We expect to complete our study
by the end of this fiscal year. 


--------------------
\5 The Corporation's new grant guidelines, however, do allow local
nonfederal programs that were formerly subgrantees of federal agency
AmeriCorps grants to reapply for a 1-year renewal grant for program
year 1996-97. 


      CORPORATION INITIATIVES
-------------------------------------------------------- Chapter 0:5.2

In recent months, the Corporation has worked with Members of Congress
to identify ways to reduce AmeriCorps's program costs.  Subsequently,
the Corporation has revised its grant application guidelines for
programs receiving funding in the upcoming 1996-97 program year.  For
example, in response to congressional concerns over the cost of
mandating the purchase and use of uniforms, the AmeriCorps*USA
uniform package (t-shirt, sweatshirt, button, and so on) is no longer
a program requirement.  The Corporation also has directed grantees
exceeding a program year 1995-96 cost per participant of $13,800 to
reduce their proposed program year 1996-97 per-participant costs by
an overall average of 10 percent.\6

The Corporation has also increased the grantee's share of total
program operating costs from 25 to 33 percent for grants awarded for
the 1996-97 program year.\7 The Corporation's revised grant
guidelines also seek to reduce costs by encouraging a program
requesting increased funding to add additional participants, thereby
reducing its cost per participant.  The guidelines also encourage
programs to seek additional funding only for education awards. 


--------------------
\6 The Corporation, in its 1996 guidelines, calculates the "per
member cost" as the total Corporation grant award divided by the
number of full-time equivalent AmeriCorps participants.  The $13,800
per-participant figure is a baseline amount of Corporation funding
and excludes the $4,725 education award and Corporation overhead. 

\7 Program operating costs include training and education of
AmeriCorps participants, program staff salaries, supplies and
equipment, and evaluation costs.  Program operating costs exclude
AmeriCorps participant support costs (stipend per full-time
participant of at least $7,945 for program year 1996-97 and health
insurance for each participant), child care costs, and an education
award of $4,725.  These costs can be covered, either fully (for
education awards and child care) or up to 85 percent (for participant
support), with Corporation funds. 


   CONCLUDING REMARKS
---------------------------------------------------------- Chapter 0:6

In summary, I would like to reemphasize what our AmeriCorps*USA
review addressed.  We determined, on a national scale, the total
amount of resources available to AmeriCorps*USA programs to--in the
Corporation's words--"get things done." Total resources available
means many things.  It means cash and in-kind contributions that pay
participants' living allowances, social security taxes, health
insurance, child care, and the education awards they earn in exchange
for their service.  It means resources available to pay local program
staff who manage operations and supervise staff; to pay rent for
office space and purchase supplies; to pay for travel and
transportation for program staff and participants; and to pay for
materials needed to conduct national service projects.  It means
resources available to pay for planning grants used to design and
formalize future national service programs.  And it means resources
available to pay for the staff and operations of the Corporation for
National and Community Service. 

Our objective was not to draw conclusions about whether
AmeriCorps*USA was cost-effective.  Rather, it was to gather
information on the total amount of resources available to
AmeriCorps*USA programs nationwide and to provide this information by
resource stream--that is, by federal, state, and local government and
private sources.  Though not precise cost data, this information
illustrated the funding levels that may be needed to support new
program endeavors of similar scale in the future.  It also indicated
the degree of partnership between the public and private sectors. 

Since we completed our review, the Congress and the Corporation have
undertaken a number of measures that are intended to reduce the costs
of AmeriCorps.  Because many of these initiatives will not take
effect until the upcoming 1996-97 program year, it is too early to
determine their impact. 


-------------------------------------------------------- Chapter 0:6.1

Madam Chairman, that concludes my statement for the record. 


   CONTRIBUTORS
---------------------------------------------------------- Chapter 0:7

For more information about this testimony, please call Wayne B. 
Upshaw at (202) 512-7006 or Carol L.  Patey at (617) 565-7575.  Other
major contributors to this testimony included C.  Jeff Appel, Nancy
K.  Kintner-Meyer, and James W.  Spaulding.