WASHINGTON — For a woman who is about to have an unprecedented federal windfall land in her lap, Amy Hollander could be happier.
The director of a local Boulder agency that weatherizes low-income homes, Hollander and the nonprofit she directs — Longs Peak Energy Conservation — will be a major beneficiary of the new federal stimulus package, receiving a budget bump of more than $1 million.
The problem is that the money is too much, too fast, Hollander said. And it goes away too soon.
“We’d prefer to have this money over five years and less of it,” Hollander said. “We don’t want to be wasteful by saying, ‘Sure, give us the money,’ and then we can’t produce because things have gotten so chaotic.”
At the heart of the nearly $900 billion federal stimulus is a little-talked-about but critical compromise: In order to avoid a nasty political fight over how to divvy up money among the states, the package uses existing programs and their funding formulas — some small or little-known — as mechanisms to channel massive new federal spending.
Some economists say this could be an Achilles’ heel for the stimulus, potentially swamping ill-prepared agencies with big short-term increases that quickly disappear just two years later.
“I think the whole thing has a very high probability of turning into a fiasco similar to the Katrina rescue effort,” said Rudolph Penner, an economist at the Urban Institute in Washington. “It could be a management nightmare.”
Examples abound.
Because of the push to get the money quickly into the economy, transportation officials will have to make decisions with major long-term impacts in as little as 180 days, straining the capacity of government planners.
Renewable-energy researchers will see budgets increase significantly but over a term so short that some experts think it could be counterproductive.
And the bump spending for Title I (a program designed to help poor school districts) could be used to hire teachers, but only through 2010 — and some districts say the money might be better spent on training instead.
In other cases, these programs are cozy corners of the bureaucracy about to be handed a large pot of gold but without the management capacity to spend the money effectively.
Take the weatherization program, which installs weatherproofing and replaces old furnaces and windows in low-income homes.
Lawmakers say a big bump in funding for the program — $6.2 billion in the House stimulus bill — is an ideal stimulus because it will get the money into the economy quickly, as legions of contractors blow insulation into the attics of 2 million homes and manufacturers sell new energy-efficient windows by the truckload.
Right now, it is managed in Colorado by eight small county agencies and nonprofits — largely based on a 3-decade-old social service delivery model and laden with federal quality-control standards and audit requirements. Under the current version of the stimulus plan, those Colorado agencies will get a 600 percent budget increase over two years, officials estimate, requiring them to quickly ramp up capacity then quickly ramp it down again.
Hollander, the director of the Boulder nonprofit, said that it takes at least six months to train the auditors who understand the state standards and evaluate homes for the program, a major time lag.
And even under the best scenario, she thinks she can put on just three more crews, or about nine people, and will have to hire much of the rest of the work out to contractors — if she can find ones willing to go to the expense of learning the federal and state standards.
And Hollander isn’t sure that her agency won’t have to give back some of the money, because she just can’t spend it within the short time frame the stimulus package envisions.
“There is a training piece for contractors. There is an inspection piece on the side of the agencies. Overall, there is just a difficulty in learning the state standards,” Hollander said.
The Obama administration has vowed to make sure the stimulus — the biggest single government expenditure in history — isn’t squandered on waste and inefficiency. Officials say every project will be tracked online, so taxpayers can judge for themselves their status and effectiveness.
And in Colorado, officials say they are working hard to make sure the money isn’t wasted and to address problems before they occur.
Tom Plant, head of the state energy office, said the state is working with Colorado’s delegation to change federal rules governing the weatherization program, so that private-sector contractors can be included in the program more quickly and easily.
Although those changes aren’t in the current stimulus, they could be added later, in an energy bill expected to be taken up this spring, Plant said.
Still critics say that while using existing programs solves some problems — especially the need to act fast — it will create others.
The millions of dollars in supplemental Medicaid funding, for example, will go disproportionately to states with lower per-capita income, even though many — like North Dakota — have budget surpluses because of mineral production and other factors.
And the potential for other waste is dangerously broad, said Penner, the Urban Institute economist.
“I don’t think the federal government will have the capacity to track all this money going to some many different states,” Penner said.
“The thing that the economy suffers from most these days is a total lack of confidence in our financial institutions and not all that much confidence in government. If you do have a lot of scandals and waste, you’re just going to hurt that confidence more,” he said.
