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New Robert S. Bennett Report on D.C. Council Earmark Grants et al.
Thursday, February 18th, 2010
Robert Wechsler
Special Counsel Robert S. Bennett's
report
on the District of Columbia council's earmark grants and personal services
contracts was made
public yesterday by the Washington City Paper. Before discussing
Bennett's recommendations, I should disclose that City Ethics was asked
by the D.C. council to advise them on related ethics issues, and we met
shortly with two of Mr. Bennett's associates, but were not involved in
any way in the investigation or preparation of the Bennett report.
It's an excellent report, and its recommendations, especially regarding council earmark grants, are must reading in any city that allows or is contemplating this sort of grant. The earmark recommendations start on p. 97 of the report (p. 100 of the PDF file).
An earmark grant is defined on p. 45 of the report as “an approved measure by the Council, which results in the appropriation of funds for a specific purpose . . . . direct[ly to] organizations, institutions, and private sector entities.” It should be added that these organizations must be nonprofit organizations, and that the source of the grants is one or two council members, and/or the mayor.
Bennett notes that the current earmark process "effectively permits each Member to designate individual programs for funding on an ad hoc basis without prudently establishing spending priorities. Council Members, moreover, are understandably not equipped to fully and carefully vet individual grantees, and the legislative 'logrolling' inherent in the earmark appropriations process inhibits thorough scrutiny of proposed grant recipients. The informal method by which grantees are selected clearly does not ensure that public funds go to the best or most effective organizations to deliver the intended services or accomplish the stated goals of the grant."
On p. 75, Bennett also points out that "an inherent feature of the earmark process is the mutual support between the Mayor and the Council, and among the Council Members themselves, for each other’s earmarks. Because of this mutuality of interest, there is little incentive for a Council Member to closely scrutinize or oppose another’s earmarks." This is the problem I identified in a blog post on a proposal to get the approval of three Dallas council members on zoning decisions, decisions that in the past have been made by the local council member alone.
Despite the fact that the D.C. council has greatly reformed the earmark process since last year, Bennett recommends that the making of earmark grants be discontinued. "The rules, policies, and procedures currently in place have not and will not prevent conflicts of interest, waste, fraud, or abuse. Further, the Council’s rules do not ensure that earmark grants are thoughtfully awarded or subject to effective oversight by professional grant managers."
But Bennett recognizes that this may not happen, even though earmarks increased 38 times between the 2005 and 2009 fiscal years, according to a chart on p. 46 of the report (from $1.25 million to $47.9 million). Therefore, he makes detailed recommendations for ensuring accountability to as great an extent as possible.
Bennett's principal recommendation is that earmarks be competitively bid. He feels that competitive bidding would make it "substantially more likely that tax dollars will go to programs that are sufficiently well-managed and competent to satisfy the requirements of a competition, and that grant recipients are vetted by experienced grant managers prior to receiving a grant. The additional time and effort involved in awarding a grant through competition is worth the investment because it is more likely to result in the award of public funds to capable and effective organizations. It would also minimize the duplication and misapplication of funds inherent in the earmark process."
If the council were to reject competitive bidding of earmarks, Bennett has a number of other recommendations:
1. Eliminate new organizations' fiscal agents, which not only have failed to ensure proper management, but have sometimes themselves been a source of waste and abuse of public funds.
2. Limit earmarks to §501(c)(3) charitable organizations that have been incorporated for at least three years, excluding unproven organizations. This prevents not only incompetent use of earmarks, but also the creation of organizations specifically to get earmark grants.
3. Require formal grant requests to the council committee charged with the subject of the grant, including testimony before the committee. This helps set funding priorities, vet grantees, and provide transparency.
4. Limit the percentage of budget dollars that can be allocated to earmarks, so that they do not continue to increase.
5. Extend the current ban on consecutive annual earmarks to a ban on more than three earmarks to any entity.
6. Require disclosure by council members and staff, as well as by officers and directors of grantees, of any personal, familial, or financial relationships between them.
7. Inform grantees that they are subject to oversight and to the guidelines set forth in the new (December 2009) grants services sourcebook.
8. Require that council members and staff not interfere in any way in the grant administration process, especially in grant manager enforcement of the grant guidelines.
9. Provide more resources to agencies charged with monitoring earmarks, so that they can provide effective oversight (unbid grants are far harder to monitor than bid grants).
The recommendations for personal services contracts, that is, contracts for services given directly to council members, can be found at p. 96ff of the report. And the findings regarding council member Marion Barry's earmarks and personal service contracts, which led to the hiring of Mr. Bennett, can be found throughout the report.
Robert Wechsler
Director of Research-Retired, City Ethics
---
It's an excellent report, and its recommendations, especially regarding council earmark grants, are must reading in any city that allows or is contemplating this sort of grant. The earmark recommendations start on p. 97 of the report (p. 100 of the PDF file).
An earmark grant is defined on p. 45 of the report as “an approved measure by the Council, which results in the appropriation of funds for a specific purpose . . . . direct[ly to] organizations, institutions, and private sector entities.” It should be added that these organizations must be nonprofit organizations, and that the source of the grants is one or two council members, and/or the mayor.
Bennett notes that the current earmark process "effectively permits each Member to designate individual programs for funding on an ad hoc basis without prudently establishing spending priorities. Council Members, moreover, are understandably not equipped to fully and carefully vet individual grantees, and the legislative 'logrolling' inherent in the earmark appropriations process inhibits thorough scrutiny of proposed grant recipients. The informal method by which grantees are selected clearly does not ensure that public funds go to the best or most effective organizations to deliver the intended services or accomplish the stated goals of the grant."
On p. 75, Bennett also points out that "an inherent feature of the earmark process is the mutual support between the Mayor and the Council, and among the Council Members themselves, for each other’s earmarks. Because of this mutuality of interest, there is little incentive for a Council Member to closely scrutinize or oppose another’s earmarks." This is the problem I identified in a blog post on a proposal to get the approval of three Dallas council members on zoning decisions, decisions that in the past have been made by the local council member alone.
Despite the fact that the D.C. council has greatly reformed the earmark process since last year, Bennett recommends that the making of earmark grants be discontinued. "The rules, policies, and procedures currently in place have not and will not prevent conflicts of interest, waste, fraud, or abuse. Further, the Council’s rules do not ensure that earmark grants are thoughtfully awarded or subject to effective oversight by professional grant managers."
But Bennett recognizes that this may not happen, even though earmarks increased 38 times between the 2005 and 2009 fiscal years, according to a chart on p. 46 of the report (from $1.25 million to $47.9 million). Therefore, he makes detailed recommendations for ensuring accountability to as great an extent as possible.
Bennett's principal recommendation is that earmarks be competitively bid. He feels that competitive bidding would make it "substantially more likely that tax dollars will go to programs that are sufficiently well-managed and competent to satisfy the requirements of a competition, and that grant recipients are vetted by experienced grant managers prior to receiving a grant. The additional time and effort involved in awarding a grant through competition is worth the investment because it is more likely to result in the award of public funds to capable and effective organizations. It would also minimize the duplication and misapplication of funds inherent in the earmark process."
If the council were to reject competitive bidding of earmarks, Bennett has a number of other recommendations:
1. Eliminate new organizations' fiscal agents, which not only have failed to ensure proper management, but have sometimes themselves been a source of waste and abuse of public funds.
2. Limit earmarks to §501(c)(3) charitable organizations that have been incorporated for at least three years, excluding unproven organizations. This prevents not only incompetent use of earmarks, but also the creation of organizations specifically to get earmark grants.
3. Require formal grant requests to the council committee charged with the subject of the grant, including testimony before the committee. This helps set funding priorities, vet grantees, and provide transparency.
4. Limit the percentage of budget dollars that can be allocated to earmarks, so that they do not continue to increase.
5. Extend the current ban on consecutive annual earmarks to a ban on more than three earmarks to any entity.
6. Require disclosure by council members and staff, as well as by officers and directors of grantees, of any personal, familial, or financial relationships between them.
7. Inform grantees that they are subject to oversight and to the guidelines set forth in the new (December 2009) grants services sourcebook.
8. Require that council members and staff not interfere in any way in the grant administration process, especially in grant manager enforcement of the grant guidelines.
9. Provide more resources to agencies charged with monitoring earmarks, so that they can provide effective oversight (unbid grants are far harder to monitor than bid grants).
The recommendations for personal services contracts, that is, contracts for services given directly to council members, can be found at p. 96ff of the report. And the findings regarding council member Marion Barry's earmarks and personal service contracts, which led to the hiring of Mr. Bennett, can be found throughout the report.
Robert Wechsler
Director of Research-Retired, City Ethics
---
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