Considerations for Implementing Congressionally Directed Spending: How Federal Agencies Administer Earmarks

Considerations for Implementing Congressionally Directed Spending: How Federal Agencies Administer Earmarks

July 1, 2024
Considerations for Implementing Congressionally Directed
Spending: How Federal Agencies Administer Earmarks
The Consolidated Appropriations Act, 2023 (P.L. 117-328),
submit the application by the applicable deadline to the
and the community projects detailed in the joint explanatory
federal agency for review and approval. If the recipient is
statement, provided approximately $15.3 billion for
deemed ineligible, or if the project does not comply with
community project funding (also known as congressionally
the requirements, then funding will likely not be awarded
directed spending). This funding was designated for 7,234
despite the community project funding designation.
community projects and will be administered by 19 federal
Essentially, the community project funding designation
agencies. Approximately $12 billion of the community
prioritizes the project in that specific grant program, but it
project funding provided by Congress for FY2023 was
does not relieve compliance with other requirements or
specified for tribal, state, local, and territorial governments,
guarantee that approval by the federal agency without
nonprofit organizations, and higher education institutions.
review.
According to the U.S. Government Accountability Office
Oftentimes, community project funding requirements
(GAO), once Congress appropriates community project
closely align with the requirements for projects submitted
funding, the Office of Management and Budget (OMB)
for competitive grant awards. For example, in FY2023, the
apportions funds to specific program offices, and the
FEMA Pre-Disaster Mitigation (PDM) program
program offices begin the process of obligating funds.
implemented $233 million in congressionally directed
Federal funding to recipients is generally provided through
spending projects for 32 states and two tribes. According to
grant agreements or cooperative agreements. The terms and
the FEMA PDM grant guidance issued for these projects,
conditions included in these agreements, and the process by
the community project recipients must complete several
which community project funding recipients receive
tasks to receive funding under the PDM grant program:
funding, is based on the statutory and regulatory provisions
of the grant program used to administer the funding. The
• apply for a Unique Entity Identifier (UEI)
community project funding recipients will also have to
number from the System for Award
comply with the provisions in the grant guidance for the
Management (SAM.gov);
grant program used to award the funds. Even though a
•
project may have been designated for community project
apply for an Employer Identification
funding, it is still subject to agency review in order to
Number (EIN) from the Internal Revenue
determine whether the project meets all required eligibility
Service;
criteria. The process for reviewing community project
• establish an account with SAM.gov,
funding is often similar to the process the federal agency
login.gov, and Grants.gov;
uses to award grant funding for non-community project
funding grant projects. Community projects will generally
• establish an authorized organizational
have to meet the same statutory and regulatory eligibility
representative in Grants.gov;
requirements as other grant program applications, and the
• register in MT eGrants;
community project recipients will need to comply with the
same terms and conditions of non-community projects
• submit the project application in
(including cost-share requirements, reporting requirements,
Grants.gov by the FEMA designated
and performance measurements) set forth in the specific
deadline; and
grant program.
• submit the project application in MT
Community Project Funding Pre-Award
eGrants by the FEMA designated
Requirements
deadline.
The main distinction between a grant for a project that has
These tasks can take several weeks, and FEMA
been approved for community project funding and one that
recommends the community project recipient begin the pre-
is awarded through a program’s regular competitive process
award and application process at least four weeks prior to
is that the designated recipient will be awarded the funding
the application deadline.
under the community project process as long as the
recipient is deemed eligible and the project meets all of the
Other federal agencies, including the Department of
grant program requirements. Recipients of community
Housing and Urban Development (HUD), also generally
project funding are still required to develop a grant
align the community project funding requirements with
application that includes all of the traditional components
regular grant program requirements. Notably, federal
(such as a benefit-cost analysis and any required
agencies have indicated that they do not have the authority
engineering studies or environmental impact reviews) and
to approve changes in the scope of the project that departs
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Considerations for Implementing Congressionally Directed Spending: How Federal Agencies Administer Earmarks
from the purpose set forth in the approved community
Community Project Funding Obligation
project funding description, and the grant application must
and Disbursement Timeline
include a project narrative and budget that aligns with the
As explained by GAO, once Congress appropriates
project submitted for funding. Additionally, as
community project funding, the Office of Management and
aforementioned, the recipients and subrecipients of
Budget (OMB) apportions funds to specific program offices
community project funding must be deemed eligible by the
to allow them to begin the process of obligating funds.
federal agency. Eligibility determinations may include
Congressionally directed spending provisions generally
ensuring that the recipient/subrecipient is not debarred,
include a specific period of time in which federal
suspended, or otherwise ineligible for participation in
administering agencies must obligate said funding. Funds
federal programs. As noted by GAO, this agency review
are considered obligated when a contract or a grant
can be complex:
agreement is executed. This obligation deadline is specific
to each individual community project. According to GAO,
If the laws or conditions of general applicability
for FY2023 community project funding, 71% of the funds
cast doubt on whether a particular entity is eligible
had obligation deadlines between one and five years. The
to receive funds, an agency would need to consider
remaining community projects did not have an obligation
whether the entity should nevertheless receive the
deadline, leaving this to the discretion of the administering
amount designated. Although an agency would
federal agency. GAO noted that federal agencies obligated
strive to give force to all applicable laws and
99% of FY2022 community project funding by the
conditions to the extent possible, it might give
specified obligation deadline. The remaining funds were
considerable weight to the fact that an entity is
unobligated because the recipient organization closed, or
the recipients withdrew their application for funding or
specifically designated to receive Community
otherwise declined funding.
Project Funding or Congressionally Directed
Spending. An agency might conclude that this
The timing of the disbursement of funds to the recipient,
specific designation is sufficient to overcome other
and the amount of time the recipient has to expend the
laws or conditions of general applicability that
funding (known as the period of performance), vary
might otherwise render a particular entity ineligible
depending on the terms and conditions of individual grant
to receive funding (p. 5).
award agreements. Disbursement of payments for
Consequently, the eligibility determination for both the
community projects will align with the procedures of the
recipient and the project remains an important phase in a
specific grant program. The majority of grant programs use
grant’s life cycle and requires review by the federal agency
a reimbursement process, wherein the grant recipient must
administering the funding.
expend their own funds for initial project costs and then
request reimbursement from the federal administering
Community Project Funding Post-Award agency. Recipients must expend funds within the period of
Requirements
performance set forth in the grant agreement. For example,
Once the community project funding recipient has an
the average period of performance for the community
approved grant application, the federal agency will obligate
projects under the Pre-Disaster Mitigation grant program is
funds through a grant agreement that sets forth the terms
36 months. By contrast, the average period of performance
and conditions of the grant award. Regardless of whether
for the HUD Economic Development Initiative community
the funding was provided through congressionally directed
project funding is seven years. Similar to non-community
spending or regular program appropriations, the grant
projects, all expenditures for the community projects must
award will require that the recipient comply with all of the
be made before the end of the period of performance. Any
terms and conditions of the award, including cost-share
unexpended funds will revert to the Treasury pursuant to
provisions, performance measurements, reporting
the specific grant program authorities and policies.
requirements, and monitoring and auditing requirements.
Constituents seeking community project funding should be
Natalie Paris, Analyst in American Federalism and
prepared to dedicate the same financial and administrative
Emergency Management Policy
resources to the project that would be needed if they applied
for funding under traditional competitive process.
IF12703

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Considerations for Implementing Congressionally Directed Spending: How Federal Agencies Administer Earmarks

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