State must get control of federal grants

Be wary of what you ask for. Senate Ways and Means Chairwoman Jill Tokuda is asking the Ige administration for the grand total of unspent federal grant monies from all state agencies after hearing from three departments that have collectively amassed a backlog of at least $700 million in federal funds. 

That’s $700 million-plus in unused federal dollars, and Tokuda wants to know how much more is out there languishing. She — as well as Hawaii’s taxpayers — deserve to know that and more: why it’s gotten to this point, and how to fix a clearly broken system. 

The money committee received status reports from three state agencies on Thursday: 

>> The Transportation Department has a backlog of $656.5 million in federal funding for highway projects, which is down from a high of $940 million in 2010. The department’s Airports Division is holding onto millions more. 

>> The Department of Hawaiian Home Lands (DHHL) is having trouble expending $55 million in federal housing funds for Native Hawaiians. The U.S. Department of Housing and Urban Development has suspended funding for DHHL’s Native Hawaiian Housing Block Grant Program. 

>> The Health Department must commit $28 million in new loans and disburse $7.6 million by Jan. 29 or lose $8 million that was earmarked for repairing Hawaii’s drinking water infrastructure. The department has said it expects to meet that deadline. 

"What’s our total unexpended federal dollars that we have out there?" Tokuda said in an interview with the Star-Advertiser, a day after hearing from the three departments. "I would hope that these are isolated incidences." 

Elizabeth "Betsy" Kim, special adviser to Gov. David Ige who focuses on federal relations, said although there is much work to be done, "there’s definitely forward progress." 

The departments are having to look at the processes they are using to draw down the funds. For instance, the Transportation Department has identified that there are redundancies as it tries to expend federal funds. After getting projects approved through the state Legislature, some of those same steps that were approved by the Legislature end up going back through the agency. 

"We’re trying to see what we can do to cut out the second round of approvals," said Kim, who is working with the departments to streamline processes. "It’s easier said than done." 

Some procedural mandates from previous administrations must be rewritten and approved by the governor while other funding-related changes need legislative approval. 

Transportation Director Ford Fuchigami said that one way he is trying to get around the Federal Aviation Administration’s requirements to expend 60 percent of funds in the first year of receiving a grant is by using state money to finance the airport projects, then seeking reimbursements from the FAA. That plan to use state cash for airport improvements and seek federal reimbursements will be part of Ige’s new budget to be unveiled in December, Fuchigami said. 

Still, the department should find more ways to flatten processes so that the solution isn’t to spend state funds first when the federal funds are readily available to expend. 

Some of the explanations for why these funds have gone unspent are strikingly hollow. For example, the DHHL has said it did not have anyone managing the Native American Housing Assistance and Self Determination Act funding for about 18 months starting in 2011, which contributed to the backlog. But surely, the department knew how critical it was to expend those funds, so should have gotten someone to oversee the task in the interim. 

Tokuda said the excuses are unacceptable, and the departments need to be more proactive. "If the process is what’s killing you then you have to reengineer the process," she rightly said. Lawmakers are willing to help, whether it be in funding new positions or in passing legislation, she said, but there needs to be more open communication. 

This dysfunction would be bad enough if the state budget was overflowing — but it is not, and these are real needs that are not being met. Improving roadways, housing Native Hawaiians and upgrading airports and drinking water infrastructure are critical needs. 

The state bureaucracy’s inability to spend hundreds of millions of federal dollars to do the public’s business cannot be tolerated as business as usual.