Why State and Local Governments and Nonprofits Need to Care About the DATA Act

Introduction and Main Points

Because of the DATA Act, the federal government will have a lot more transparency into its spending habits. This new reality should make state and local governments as well as nonprofits receiving federal dollars take stock fast. Why? Because if the federal arm knows more about state and local government data better than the state and local agencies themselves, it can create a costly disconnect.

For example, federal reporting requirements are changing and becoming more complex. These requirements aren’t even established yet and could conceivable go through a number of revisions before anything close to a standard is created.* If the state and local agencies can’t keep up with changing requirements, future funding could be at stake.

DATA Act Summary

Digital Accountability and Transparency Act of 2011 or DATA Act - Requires each person, state, local, or tribal government (recipient) that receives federal appropriated funds, either directly or as a subcontractor or subgrantee, to report at least once quarterly each receipt and use of such funds to the Federal Accountability and Spending Transparency Board established by this Act.

Requires each executive agency to report all federal obligations and expenditures to the Board.

Exempts an individual recipient from such reporting requirements if: (1) the total amount of federal funds received does not exceed $100,000 in the current calendar or fiscal year; and (2) no transaction in which the recipient has received federal funds during the current calendar year or fiscal year has exceeded $24,999. Authorizes the Board to grant additional exemptions for classes or categories of recipients.

Requires the Board to designate: (1) common data elements for information required to be reported, and (2) data reporting standards.

Requires the Board to establish one or more websites for the publication of all information submitted by recipients and agencies to serve as a public portal for federal financial information.

Requires the Board to establish a federal accountability portal (an integrated Internet-based system, consisting of one or more websites) to: (1) combine information submitted by recipients and agencies with other compilations of information; (2) permit executive agencies to verify the eligibility of recipients to receive federal funds; and (3) permit executive agencies, Inspectors General (IGs), and law enforcement agencies to track federal awards to find waste, fraud, and abuse.

Establishes the Board in the executive branch. Transfers all functions of the Recovery Accountability and Transparency Board to the Board, including its employees.

Makes conforming amendments to the American Recovery and Reinvestment Act of 2009 (ARRA) to terminate the Recovery Accountability and Transparency Board on October 1, 2013.

Repeals the Federal Funding Accountability and Transparency Act of 2006.

A Cautionary Tale: How NOT to Spend Federal Dollars

The Government Services Administration (GSA) is a $26 billion administrative arm of the government that helps support other government agencies. They do things like manage office space in their 8,300 leased or owned buildings and run a 210,000 vehicle motor pool. In 2010, the GSA was enmeshed in a scandal that involved the spending of around $835,000 in taxpayer funds for a 300 person training conference in Las Vegas that featured a clown, mind reader and comedian. They should have swapped the mind reader for a fortune teller because maybe then they could have predicted the enormous backlash of their extravagant outing.

According to Ellen Miller, executive director of the watchdog group Sunlight Foundation “The DATA Act will transform how we are able to monitor government spending online.”  She goes on to explain “The DATA Act will increase transparency for federal spending data and expand when, where and how it is available online.” While the DATA Act received bi-partisan support and earned the praises of groups that advocate for open government (including the Sunlight Foundation), there is also cause for concern.

Trying to Prepare for the Unknown

State and local organizations claim the DATA Act doesn’t provide them with the funds needed to cover the costs of the new and more complex reporting requirements. But as this Government Technology article written by Ryan Holeywell points out there’s some debate over these costs. The Congressional Budget Office claims the DATA Act will have no financial impact on state and local governments. Others aren’t convinced. “We don’t have the capacity, at this time, to implement this,” said Cornelia Chebinou, head of the Washington office of the National Association of Auditors, Comptrollers and Treasurers. “Without funding, it’s just not a possibility.” Holeywell’s article points out that “State and local governments haven’t been able to quantify exactly how much the changes may cost them. But whatever that figure may be, says Lars Etzkorn of the National League of Cities, it comes at a time when state and local governments are still struggling financially.”

Taking a Proactive Approach

State and local governments may have the advantage of being a bit more nimble than their Federal counterpart. Adopting tools and processes that streamline administration and aid in transparency can help thwart compliance and governance issues. It’s a bit like driving down the street with a burned out tail light. Even though you might not know the bulb is shot, you’re still accountable for potential fines if you get pulled over by the police. Even though Federal reporting requirements aren’t set in stone, it’s clear they’re changing and increasing in complexity. The following chart is taken from the white paper "The Complex State of Grant Management: Adopting New Strategies for Success."

federal funding

State and local agencies will need to stay a step ahead of the Feds when it comes to transparency, otherwise they may be forced to play a very expensive game of catch up.     

To learn more, please read our white paper "The Complex State of Grant Management: Adopting New Strategies for Success."

Download the White Paper

 *StreamLink Software is currently involved with a federal pilot program called GRIP (Grants Reporting Information Pilot). GRIP is coordinated by the Recovery Accountability and Transparency Board, and aimed at creating standards and improving efficiencies for state and local governments and nonprofits that receive federal funding. Information about this pilot will be published as soon as possible.