E8-5216. Proposed Information Collection; Comment Request; Revolving Loan Fund Reporting and Compliance Requirements

AGENCY:

Economic Development Administration.

ACTION:

Notice.

SUMMARY:

The Department of Commerce, as part of its continuing effort to reduce paperwork and respondent burden, invites the general public and other federal agencies to take this opportunity to comment on proposed and/or continuing information collections, as required by the Paperwork Reduction Act of 1995.

DATES:

Written comments must be submitted on or before May 16, 2008.

ADDRESSES:

Direct all written comments to Diana Hynek, Departmental Paperwork Clearance Officer, Department of Commerce, Room 6625, 14th and Constitution Avenue, NW., Washington, DC 20230 (or via the Internet at [e-mail]).

FOR FURTHER INFORMATION CONTACT:

Requests for additional information or copies of the information collection instrument and instructions should be directed to Kenneth M. Kukovich, EDA PRA Liaison, Office of Management Services, Economic Development Administration, Department of Commerce, HCHB Room 7227, 1401 Constitution Avenue, NW., Washington, DC 20230; telephone: [phone]; fax: [phone]; e-mail: [e-mail].

SUPPLEMENTARY INFORMATION:

I. Abstract

The mission of the Economic Development Administration (EDA) is to lead the federal economic development agenda by promoting innovation and competitiveness, preparing American regions for growth and success in the worldwide economy. One of EDA's seven economic development programs is the Revolving Loan Fund (RLF) Program.

Under the RLF Program, EDA's regional offices award competitive grants to units of state and local government, institutions of higher education, public or private non-profit institutions, EDA-approved economic development district organizations, and Indian Tribes to establish RLFs. Following a grant award, an RLF grantee disburses money from the RLF to make loans at interest rates that are at or below the current market rate to small businesses or to businesses that cannot otherwise borrow capital. On occasion, RLFs also make loans to finance public infrastructure. As the loans are repaid, the grantee uses a portion of interest earned to pay administrative expenses and adds the remaining principal and interest repayments to the RLF's capital base to make new loans. An RLF award that is well managed is actively used to make loans to eligible businesses and entities, continues to revolve funds, and does not have a termination date.

One of the unique features of the program is that, by law, EDA must exercise fiduciary responsibility over its RLF portfolio in perpetuity—a significant challenge since many RLF grants date back to 1979. To date, EDA has managed its RLF portfolio by requiring grantees to file the Semiannual Report for EDA-Funded RLF Grants (ED-209S) every six months. EDA has exercised its discretion to allow some grantees to file on an annual basis, and these grantees submit the Annual Report for EDA-Funded RLF Grants (ED-209A) once a year.

However, a recent Department of Commerce (DOC) Office of Inspector General (OIG) report titled Aggressive EDA Leadership and Oversight Needed to Correct Persistent Problems in RLF Program (Audit Report No. OA-18200-7-0001/March 2007; for the full report, see http://www.oig.doc.gov/​oig/​reports/​2007/​EDA-OA-18200-03-2007.pdf) found that EDA failed to exercise adequate oversight of the program. Specifically, the OIG found that EDA:

• Did not have an adequate tracking and oversight system.
• Failed to ensure grantees' compliance with critical financial and audit reporting requirements.
• Failed to ensure efficient capital utilization by grantees. Under EDA's regulations, if an RLF grantee fails to satisfy its capital utilization requirement as set out in its RLF plan for two consecutive reporting periods, EDA can require the grantee to sequester “excess funds” in a separate interest-bearing account and remit the interest earned on these funds to the U.S. Treasury. (Under 13 CFR 307.16, “capital utilization rate” is the amount of RLF capital as currently loaned out or committed to be loaned out as a percentage of the RLF's capital base and “excess funds” is the difference between the actual percentage of RLF capital loaned and the applicable capital utilization percentage.)
• EDA's failure to require sequestration of excess funds on a consistent basis has resulted in lower capital utilization rates and lower remittances to the U.S. Treasury than would be commensurate with adequate oversight of the program.
• Did not use single audits as a tool for managing the RLF program. Under OMB Circular A-133, single audits are required of most RLF grantees.

The OIG recommended that EDA develop an Action Plan to rectify these deficiencies and a “standard grantee reporting and monitoring system that provides the critical information EDA needs to manage the RLF program and protect its assets.” The OIG also recommended that EDA “ensure that all RLF grant recipients undergo required single audits and file reports with the Federal Audit Clearinghouse.”

EDA agreed to implement the recommendations. As part of its implementation, EDA committed to reviewing the RLF reporting forms to: (a) Ensure all information needed to manage the RLF program and protect EDA assets is collected, (b) ensure that the form is suitably integrated into an automated RLF reporting, tracking, monitoring, and management system, and (c) to the extent possible, minimize the paperwork burden on RLF grantees.

In addition, EDA will update its regulations to reflect these changes to the RLF program and to ensure effective management of federal funds.

Through this review, EDA determined the following:

• The use of both annual and semi-annual reports is sub-optimal. In terms of providing valuable information to EDA for program monitoring purposes, the ED-209A is not as useful as the ED-209S. Also, the lack of identical fields on the two reporting forms makes it difficult, if not impossible, to report on the status of the portfolio as a whole. Having different RLF grantees fill out either the ED-209A or the ED-209S effectively separates RLF grantees into two groups, with two different sets of reporting requirements and reporting dates, which contributes to the large number of missing or late reports highlighted by the OIG. For these reasons EDA has determined that all RLF grantees will report semi-annually using Form ED-209S.
• The fact that neither of the current reporting forms collects grantee EIN numbers makes it difficult, if not impossible, for EDA to determine whether a grantee has filed its single audit report with the Federal Audit Clearinghouse. Searching by EIN number is the most reliable way to locate single audit reports in the Clearinghouse database.
• EDA needs to begin collecting e-mail addresses to facilitate communication with grantees.
• Many of the fields of the current RLF reporting forms are duplicative, and therefore contribute to reporting inconsistencies and errors. Some fields should not change from reporting period to reporting period (e.g., amount of EDA investment assistance provided), but are still requested each and every time. Many others are calculated fields, for example the “RLF income” field (line B.8 of the current ED-209S) is calculated as interest earned plus earnings from accounts plus fees earned (lines B.5, B.6, and B.7). The use of a hardcopy form with a large number of fields that must be calculated by the grantee has led to a significant amount of mathematical errors.

EDA addressed the issues highlighted above by creating a web-based grantee reporting system that eliminates all duplicative and calculable fields. This system is designed to allow grantees, if they so choose, to upload data directly from their accounting software into the Web-based system, thus eliminating time-consuming data entry. Alternatively, grantees have the option of manually entering data into the Web-based system. All grantees will be provided with a unique user id and password, and the system will meet all NIST information technology security controls. All grantees will be required to report on a semi-annual basis and to provide e-mail contact information, as well as EIN and DUNS numbers. This system is expected to “go live” at the beginning of fiscal year 2009.

II. Method of Collection

The report will be submitted electronically.

III. Data

OMB Control Number: 0610-0095.

Form Number: ED-209 (replaces ED-209S and ED-209A).

Type of Review: Regular submission.

Affected Public: Not for-profit institutions; state, local or tribal government.

Estimated Number of Respondents: 1,168.

Estimated Time per Response: 3 hours.

Estimated Total Annual Burden Hours: 3,504.

Estimated Total Annual Cost to Public: $0.

IV. Request for Comments

Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden (including hours and cost) of the proposed collection of information; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques or other forms of information technology.

Comments submitted in response to this notice will be summarized and/or included in the request for OMB approval of this information collection; they also will become a matter of public record.

Dated: March 11, 2008.

Gwellnar Banks,

Management Analyst, Office of the Chief Information Officer.