Panel recommends new office to help state tap more federal funds

While Connecticut receives a greater share of federal aid than it would receive based on population alone, state government should create a new office — at no added cost — to maximize and better track efforts to secure federal assistance, according to a report from the legislature’s chief investigative panel.

The report from the Program Review and Investigations Committee concludes that state government doesn’t sufficiently track its efforts to pursue federal dollars. The work is expected to form the basis for legislation to be raised when the regular 2013 General Assembly session begins tomorrow.

“We have a decent track record, but it could still be improved with a more coordinated effort,” said Rep. Mary Mushinsky of Wallingford, the ranking House Democrat on the committee.

Connecticut received about $8.3 billion in federal grants in 2010. That’s good enough to rank 30th among all states in total federal grant funding.

But the Nutmeg State was 18th highest when federal aid is ranked on a per capita basis. And while Connecticut is home to 1.16 percent of the nation’s people, it received 1.22 percent of all federal grant dollars between 2009 and 2011, according to the report.

About $6 billion of that $8.3 billion went to state government, with the remainder divided largely among municipal governments, public colleges and universities and private, nonprofit entities.

And with pressure to eliminate federal deficit spending increasing on Capitol Hill, all states are expected to ramp up efforts to protect their respective share of shrinking federal aid.

“While optimizing federal funding has always been important to the state, Connecticut’s current fiscal climate makes securing all available dollars a high priority,” the report states.

Least dependent

Connecticut is one of the least dependent states when it comes to federal grants as a share of the state budget. It is one of just seven states with between 25 percent and 30 percent of its budget revenue coming from federal funds.

“This suggests that the state is less susceptible to changes in federal grant funding amount or policies,” the committee’s report states. But it also warns that “every state is dependent on increasingly scarce federal dollars.”

About 80 percent of federal grants are distributed through a vast and confusing array of programs and formulas typically based on population, wealth, income, poverty levels or some combination.

According to the 2010 U.S. Census, Connecticut is the 29th most populous state. And just 9.4 percent of its residents had incomes below the federal poverty level, fifth-lowest of all states. Population and wealth are two crucial factors that dominate many federal formula-based grants.

Still there are several reasons why Connecticut, despite its modest population, great wealth and low poverty ranking, outperforms many other states in terms of securing federal dollars, according to the report.

Some programs, including most transportation grants, do not consider poverty rates broadly.

Also, wealthier states have a greater ability to invest in programs with federal matching rules. Though Connecticut received the lowest federal match for Medicaid — about 50 percent — in 2010, its Medicaid spending per capita was high enough to lift the state’s federal aid ranking.

And the other 20 percent of Connecticut’s federal funding comes mostly from competitive project grants. Between the 2009 and 2011 fiscal years, the state received funding for approximately 600 different project grants, slightly above the national, per-capita average.

“State government agencies and state policymakers can do little to affect the formulas or the factors” on which many grants are based, program review staff wrote. But because many formula programs allow for waivers and rule modifications that can trigger more federal aid, “Connecticut should examine where the use of waivers could be expanded.”

Billions at stake

And because some formula grant amounts to Connecticut can reach into the billions of dollars, “even relatively minor changes through waivers, could translate to large amounts,” the report states.

But Connecticut agencies that do find a way to tap more federal aid need to do a better job sharing their strategies with other offices and departments, the report states.

Connecticut’s colleges and universities, both public and private, were particularly effective at competing for and securing federal aid. Connecticut institutions received nearly 1.7 percent of federal aid sent to colleges and universities nationwide, well above the 1.16 percent share that might be expected based on the state’s population.

Connecticut’s “decentralized system for pursuing federal grants” is necessary given the wide variety of federal grants, application processes and reporting requirements, the report states.

But it also “fosters a fragmented approach where agencies operate in an insular fashion with minimal coordination or accountability. There is no ongoing oversight to ensure better collaboration or the networking and organizational connections needed to develop high quality funding requests.”

And all agencies need to do a better job tracking their experiences pursuing federal funding.

“There is no way to discern from the available data how many project grants Connecticut did not even apply for, or which ones we sought funding for, but were not successful, and which ones where the state was not eligible to apply,” the report states.

Program review staff surveyed 83 state agencies and interviewed grants staff at the 10 departments that receive the most federal funding, as well as at several others identified as having achieved the most success.

To ensure all state agencies and departments are sharing successful strategies to tap federal aid, the committee’s chief recommendation calls for creation of a new Office for Maximizing Alternative Revenue. It would be staffed by an administrator with a high-level knowledge of program areas and funding streams.

The state Office of Policy and Management, the executive branch’s chief fiscal and policy development agency, already has been studying ways to  increase federal aid. The report recommends that the new office be funded using the existing, $800,000 per year allocation given to OPM through 2015 to enhance pursuit of federal funding.

Mushinsky said she is optimistic legislators will support creating the new office in the next session, noting that a state budget deficit of nearly $1.2 billion had been projected for the coming fiscal year.

And even though spending cuts ordered in mid-December for the current budget likely trimmed next year’s projected shortfall below $900 million, that gap still represents more than 4 percent of the next operating budget.

“We want each agency to be hustling for the federal grants,” she said, adding that federal aid to all states likely will be on the decline in the near future. “It definitely is something to worry about and it definitely is our responsibility to leave no stone unturned.”

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