FEDERAL AUDITORS RELEASE REPORT ON MUNICIPALITIES IN FISCAL CRISIS IN RESPONSE TO CONYERS AND PETERS REQUEST

Report Finds Significant Loss Of Federal Grant Funding Due To Reduced Personnel Levels

DETROIT –On March 20, 2015, the Government Accountability Office (GAO) issued a report in response to a request from Congressman John Conyers, Jr. (MI-13) and Senator Gary Peters (D-MI) to analyze the impact of financial distress on the ability of municipalities, such as Detroit, to obtain and manage federal grant programs.  The study focused multiple cities undergoing bankruptcy, including Detroit and Flint in Michigan, as well as Camden, NJ and Stockton, CA.  The GAO found that budget cuts forced reductions in personnel which led to loss of skilled and experienced staff in Detroit.  In turn, this significantly undermined the City’s ability to effectively obtain and manage federal grants and “caused some [federal] grant funds to remain unspent.”  

Federal grant programs are used by cities across the United States to fund vital services, such as public health and safety, police and firefighting services, education, health care, job training and environmental protection.  These programs, however, are typically subject to extensive accountability requirements that must be satisfied prior to funding distribution to municipalities. 

Among its other findings, the GAO cited a “decrease in state revenue” as one of the “key” sources of Detroit’s fiscal crisis.  As Rep. Conyers previously observed, the failure of the State of Michigan to honor its revenue sharing commitment with municipalities caused cities such as Detroit and Flint to lose millions of dollars in state funding that they could have used to retain critical personnel necessary to manage federal funding programs for the benefit of our citizens. 

Dean of the U.S. House
of Representatives
John Conyers, Jr.

The GAO also found that the White House Working Group on Detroit, an interagency group comprised of staff from multiple federal agencies, provided important assistance to Detroit.  The Working Group helped to facilitate better coordination between federal agencies and Detroit officials to enable the city to address its fiscal issues by meeting with senior city leaders to learn their priorities and then connecting these officials with available resources and experts.  For example, the Working Group helped to redirect $100 million in federal grant funds to address urban blight in the City of Detroit.

“I applaud the invaluable assistance that the White House Working Group on Detroit provided to the City.  And, it is my hope, that the Administration will document good practices derived from these efforts so other municipalities that encounter fiscal distress in the future will benefit from lessons learned, as recommended by the Government Accountability Office in the report it issued today,” said Rep. Conyers.

GAO Audit of MUNICIPALITIES IN FISCAL CRISIS Federal Agencies Monitored Grants and Assisted Grantees, but M...

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