Managing a stimulus windfall

Several federal agencies are seeing a huge infusion of cash. Can they spend the money wisely?

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By Steve Hargreaves, CNNMoney.com staff writer

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Get stimulated! Your questions answered
President Obama signed the stimulus bill on Feb. 17. Now the hard part begins: implementation. We asked readers for their questions and then got experts to answer the most common queries.

NEW YORK (CNNMoney.com) -- It's like winning the lottery, then being told you have just a week to spend it. And, oh yeah, don't waste any of it.

Under the nearly $800 billion stimulus package signed last week, some federal programs are set for an unparalleled increase in funding.

The example people usually cite first is the Energy Department's Home Weatherization Program, which is expecting a tenfold increase to its budget - with the stimulus package dumping $5 billion on a program that's currently running on $500 million a year.

But the weatherization program is hardly the only example. From the National Park Service to the Health Department to the Army Corps of Engineers, several agencies are getting a huge infusion of cash and a mandate to spend it quickly.

And that's got a lot of people nervous.

"'The federal, state and local bureaucracy just doesn't have the capacity to handle that decision making," said Rudy Penner, a senior fellow with the Urban Institute and a former director of the Congressional Budget Office. "There's going to be a lot of waste."

The Obama administration - which is responsible for managing the stimulus money - seems to understand the potential for waste.

They are promising an unprecedented level of transparency in doling out the money, and have created a board to oversee the process and a novel Web site - www.recovery.gov - that's supposed to allow citizens to track every dollar.

But experts say many of the federal agencies simply don't have the manpower or procurement procedures in place to oversee such a huge amount of money.

It's a shortcoming the Obama team itself acknowledges.

Pre-Sept. 11, 2001, the government awarded about $200 billion worth of contracts a year, Earl Devaney, head of the Recovery Act Transparency and Accountability Board, said at a press conference earlier this week.

Now the government doles out more than $500 billion a year, but the number of procurement staff has stayed the same, said Devaney.

"That will be a major challenge for all of the (cabinet) secretaries to address," he said, "to make sure that the staff is available to make this happen quickly and to monitor it once it goes out."

Who may have trouble

Government programs that aren't used to handing out grants and don't have the staff or experience in place are most at risk of fumbling the money, said Paul Verchinski, a former official at the Federal Transit Administration.

This is by no means an exhaustive list, but these agencies came up in conversation with various experts.

The Transportation Department: The agency is slated to get some $45 billion, but shouldn't have too much of a problem with the cash, said Verchinski. That agency is used to giving grants, has a backlog of projects that have already been vetted that need funding, and has many local partners in the form of the state transportation departments that can provide more localized oversight.

The Department of Energy: Other experts worry about this agency's ability to distribute funds efficiently and effectively.

In addition to the tenfold increase in the weatherization program, the department is also tasked with handing out billions to support renewable energy and an additional $25 billion to help automakers transition to more fuel-efficient vehicles.

The money for the automakers, approved in 2007, is still in coffers at DOE, although to the agency's credit it didn't actually get the money until this past fall, The New York Times reported Friday.

A spokeswoman at DOE said the agency is prepared to handle the influx of money, although she couldn't detail any plans as they are still being finalized.

The Army Corps of Engineers: Tasked with dredging the nation's harbors and building dams and levies, among other things, the Corps is set to get an additional $4.6 billion as part of the stimulus package. That amount would nearly double its annual budget, causing it to come up as a potential trouble spot.

Corps spokesman Gene Pawlik said the agency has an experienced contracting staff, although they realize they'll have to bring in more people to manage the influx of money.

Particularly challenging, said Pawlik, is figuring out how to ramp up staff for just two or three years, as the stimulus money won't last forever.

Bringing in temporary workers or enticing former workers out of retirement are two ideas the Corps has been floating around so far, he said.

The National Institutes of Health: The Institutes, which funds medical-related research, is getting an $8 billion boost to its normal budget of about $29 billion.

The size of the budget increase worries some policy experts, but with some 60,000 grants currently under management, NIH spokesman John Burklow said the agency is in a good position to handle the extra money.

Burklow said the stimulus cash will be split between funding previous requests that were good but turned down for lack of funds, increasing the funding for some existing grants, and funding new requests.

The National Park Service: Even parks are getting more money. Some $50 million has been slated for a division that cleans up old mines in the West, according to an industry newsletter.

"It's a huge infusion [of money], like we've never seen before," John Burghardt, coordinator of the program, told the Land Letter weekly report.

There's no doubt many other agencies will see a huge infusion of cash.

While hardly anyone is naive enough to think there will be zero waste, experts are holding out hope that the programs can be managed effectively.

"There's always the chance of waste," said Mike McNamara, head of the public law and policy group at the law firm Sonnenschein Nath & Rosenthal. "What you have here is a heightened attempt to diminish the waste and get the money flowing quickly."

Talkback: Are you living on your unemployment check? How are you making ends meet? What bills are you paying - and which ones are sliding? E-mail your story to realstories@cnnmoney.com and you could be part of an upcoming article. To top of page

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