Recovering from the Recovery Act (Part 5)

Congress is considering expanding the transparency provisions first developed for the Recovery Act to all federal spending. A new report looks back at states’ experiences in implementing the federal reporting requirements and offers insights for the potential of extending such requirements.

Since 2009, the public has been able to track the outlay of more than $275 billion in federal contracts, grants, and loans as a result of the unprecedented transparency and accountability provisions included in the American Recovery and Reinvestment Act (Recovery Act), part of the federal economic stimulus program.

Three years into the program, over 276,000 prime and sub-recipi­ents of funds had submitted quarterly reports to the Recovery Board to capture project spend­ing, completion status, and employment outcomes. All of these reports are public information, accessible online by anyone at any time.

A new IBM Center report by Dr. Francisca Rojas, the research director of Harvard University’s Transparency Policy Project, examines the Recovery Act’s transparency requirements to understand what the disclosure of spend­ing data accomplished, who used the available information, and how it was used. States were key conduits for Recovery Act expenditures.

Research Focus. Dr. Rojas’s report focuses on the implementation of the Recovery Act’s transparency requirements at the state-level, drawing lessons from the experiences of six states: Colorado, Maryland, Massachusetts, Mississippi, Texas, and Washington.

In particular, the report focuses on the relationship between the disclosure of federal spending and the responses to that information from a range of users: individual cit­izens, media organizations, advocacy groups, and the government itself. The objective of this report is to identify the effects of such disclosure and what can be learned for future efforts to strengthen public spending transparency systems.

Findings. She found that the Recovery Act transparency provisions resulted in the following:

1. State compliance with federal spending disclosure requirements was very high. States exceeded the Recovery Act’s transparency requirements in building comprehensive online portals for the data.
2. Transparency requirements served as a deterrent which contributed to low rates of fraud, waste, and abuse of funds.
3. The quality and timeliness of transparency data improved over the course of implementation. There was, however, a lack of consensus on performance metrics, particularly with respect to job creation.
4. Spending transparency became institutionalized in some states and at the federal level.

She also found that three key stakeholder groups used Recovery Act data differently:

1. State officials were the principal users of Recovery Act data as it allowed them to manage and track federal spending in near-real time.
2. There was high, but uneven, use of data by journalists and advocates due to uneven data quality and lack of context for understanding the impacts of spending.
3. Individual citizens were less interested in using the website for accountability. Rojas found a mismatch between the kinds of data provided by Recovery Act websites and their main interest: finding a job supported by the Recovery Act or applying for a grant or contract funded by the Recovery Act.

Overall, the most significant effect of Recovery Act spending transparency was an improved capacity by state officials to manage the disbursement of federal funds.

Advocacy groups and journalists contributed to government efforts to improve the quality of disclosed information. But their attempts to extract meaning from the data show mixed results, depending partly on their capacity to decipher patterns from complex data sets. Inherent problems with newly-cre­ated metrics for transparency limited such efforts. While the Recovery Board and many state websites aimed to engage individual citizens with data on federal spending, this task proved

Recommendations. In expanding the scope of fiscal transparency – which is being proposed by Congress legislatively and the Administration administratively – Rojas proposes that policy-makers pay special attention to the challenges faced by interest groups, individual citizens, and journalists in using data. She offers seven specifics to improve the design and implementation of such initiatives, such as being clear about intended users and working with stakeholders to develop consensus on performance metrics to be reported.

Rojas concludes that, through consultation with user groups and others, government at all levels should develop transparency systems for public spending that are more accessible, actionable, and ultimately more valuable in the years to come.

Previous Blog Posts. This is the last in a series of blog posts about the implementation of the Recovery Act. Following are links to earlier posts:

Part 4: How Federal Agency Managers Implemented Recovery Act Programs

Part 3: The Role of the Government Accountability and Transparency Board

Part 2: The Story from the Top: The Recovery Implementation Office

Part 1: The Story from the Bottom: Cities’ Experiences Implementing Recovery