The U.S. Environmental Protection Agency will allocate $8.3 million to the state for improving aging drinking water infrastructure in light of improvements that the Department of Health has made in managing its Drinking Water State Revolving Fund.

The EPA threatened last year to cut off its annual funding, or even take some of its money back, if the Health Department didn’t do a better job of spending its federal funds, which are matched 20 percent by the state.

At the end of 2014, $100 million in federal and state funds sat unspent, according to the EPA.

The state had estimated that about $1 billion in repairs is needed over the next two decades to keep Hawaii’s drinking water systems functioning and drinking water safe. The state is responsible for lending out the money to the counties to make improvements.

The balance of the fund has since been reduced to $62.7 million, according to Joanna Seto, head of the Health Department’s Safe Drinking Water Branch.

“We appreciate all the hard work of all the counties, the internal department staff, as well as the future recipients of our loans to keep us moving forward,” said Seto.

The EPA will also award $10.3 million to the Clean Water State Revolving Fund, a similar fund that’s used to provide loans to the counties for improving wastewater and stormwater systems and combating other sources of water pollution.

The funding is expected to be available next week, the beginning of the federal 2017 fiscal year.

THE TWO FUNDS were created to help states comply with the Clean Water Act and Safe Drinking Water Act, federal environmental laws passed in the 1970s and 1980s to combat water pollution, support infrastructure needs and ensure that water is safe to drink.

Last year, the EPA approved a series of corrective actions that the Health Department has to implement through July 31, 2017, to retain its federal funding for the Drinking Water State Revolving Fund and remain in good standing.

At the time, the EPA said that the Health Department was allocating funds to projects that weren’t shovel-ready; did a bad job of tracking the program’s finances, hampering long-term planning; and needed to make bigger loans. The agency also said that the department lacked adequate personnel and resources to manage the fund.

Seto said that the Health Department has since streamlined its application process and reduced its package of loan agreement documents to 15 pages from 40 pages.

The Health Department has also grouped several projects under a single loan, said Seto, helping to more quickly draw down the full loan amount.

The department disbursed about $30.2 million in loans during the state’s 2016 fiscal year, meeting the $30 million target required by federal officials, according to the department.

It also issued $55.5 million in loan agreements, exceeding its $51.8 million target.

The fund supported projects in all four counties, such as upgrades to water treatment plants and reservoir and well improvements.

“This new funding represents the progress the EPA and the Hawaii Department of Health have made to restore Hawaii’s eligibility to receive these kinds of federal investments,” U.S. Sen. Brian Schatz, a member of the Senate Appropriations Committee, said in a news release. “This significant funding will help modernize our water systems and ensure we have safe, clean drinking water for generations to come.”

THE FAILURE of several state agencies to maximize their use of federal funds became a charged issue during this year’s legislative session, which ended in May. In addition to the Health Department’s troubles, the state Department of Transportation’s Highways Division was also criticized for its federal funding backlog, which peaked at $940 million in 2010. The Transportation Department reduced this to $676 million this year and has a goal of cutting the amount to $450 million by 2018.

The Department of Hawaiian Home Lands had a backlog of $55 million in unspent federal housing funds for Native Hawaiians last November. DHHL had been receiving about $13 million a year in federal funding under the Native American Housing Assistance and Self Determination Act of 1996 for housing for Native Hawaiians and Hawaiian homelands. Federal officials withheld funding in the 2016 federal fiscal year due to DHHL’s failure to spend down the funds.