Senate Banking, Housing and Urban Affairs Committee

Subcommittee on Housing and Transportation


Hearing on Management Challenges Facing
the Department of Housing and Urban Development


Prepared Testimony of Ms. Susan Elkins
Director
Division of Community Development
State of Louisiana


2:00p.m., Thursday, April 29, 1999

Good afternoon, Mr. Chairman and distinguished members of the Subcommittee. Thank you for the opportunity to speak before you today. My name is Susan Elkins and I am the Director of the Office of Community Development, Governor's Office Division of Administration, for the State of Louisiana. I am also a member of the Board of Directors of the Council of State Community Development Agencies (COSCDA). I am here to testify on behalf of COSCDA on HUD's Integrated Disbursement and Information System (IDIS).

COSCDA's members are state executive branch agencies responsible for a variety of housing, community development, and local economic development resources, both state and federally funded. We are interested in a broad spectrum of housing and community development issues, ranging from homelessness and affordable housing issues to job creation and local public infrastructure. All but one of COSCDA's members administer the Community Development Block Grant (CDBG) program and many members also administer the HOME Investment Partnerships Program, the Emergency Shelter Grants (ESG) program, the Housing Opportunities for People with AIDS (HOPWA) program and some of HUD's competitive McKinney homeless programs.

COSCDA recognizes the leadership shown by the Chairman and all the members of this Subcommittee on housing and community development issues. Mr. Chairman, we applaud your commitment to improving the management and operations of HUD so that we may wisely invest our time and valuable resources on improving the lives and communities of low and moderate-income people. My testimony this afternoon will focus on states' concerns with HUD's Integrated Disbursement and Information System.

States desire good and timely performance information

I would first like to make clear that states want HUD and Congress to have timely, accurate data on the many accomplishments and successes that have been achieved with the dollars received through the CDBG, HOME, ESG, and HOPWA programs. We strongly believe that Congress would be as proud as we are of how these programs have improved the quality of life for millions of low- to moderate-income persons throughout the country if you could receive accurate and timely reports which identified these accomplishments and beneficiaries. States want to see HUD have the ability to produce these accurate and timely reports, and want to be recognized by HUD as partners in the delivery of these programs that are so important to our citizens.

States and entitlement programs are very dissimilar

States have issued more objections to HUD and to Congress about IDIS than have entitlement communities because there are significant differences in the roles played by states in HUD-CPD programs, especially in regard to the CDBG program and IDIS does not recognize this. While states and entitlement cities both administer CDBG, HOME, ESG and HOPWA programs, administration of the largest of the programs, CDBG, is very different between entitlement cities and counties and states. When entitlement cities or counties receive their grants from HUD, they can immediately either administer projects and activities themselves or award contracts to another entity to conduct an activity. Entitlements are simultaneously the recipients and users of funds. States, however, accept responsibility for the overall management of funds used by local governments, playing a role much more similar to the role played by HUD as a grantor agency to entitlement communities. States receive their allocation from HUD and then make funds available through a notice of funds availability process that generates applications from local governments to the states. States must then select grantees, award grants, and sign contracts with local governments. States themselves do not undertake projects or activities as entitlements do. Entitlements can use IDIS for the consolidated plan because they know when they receive their funds what activities they plan to undertake. States, on the other hand, must receive applications from local governments, rate and rank these applications, select the local governments and enter into a contract with each. These vast differences make it very difficult for states to utilize an information system designed for the entitlements.

Difference in magnitude of the programs

Other key differences between states and entitlement communities that affect state participation in IDIS are the size of programs and amount of activities funded. CDBG grant awards to states range from $84,441,000 to $1,914,000 with the average award in FY99 being $24,269,000. CDBG grant awards for entitlement cities range from $99,000 to $221,885,000 with an average award of $2,988,900. There is a very valid reason why New York City, Chicago, and Los Angeles were among the last entitlement cities to convert onto IDIS ­ it is incredibly time consuming for large programs. Due to the managerial nature of the state's program, states generally have many more open contracts and activities than do entitlement cities. One state CDBG contract with a local government can contain multiple activities. The State of Texas currently has approximately 1,000 open CDBG contracts translating into more than 3,000 activities. When accounting for CDBG, HOME, HOPWA and ESG, Ohio estimates that it has approximately 1,100 open contracts and 11,400 activities! Compare this to the average entitlement city in Ohio that has only a total of 300-500 activities per year and one can easily see the vast difference in the commitment of time that must be invested by a state to implement IDIS.

Critical IDIS issues

States' major concerns surrounding IDIS focus on the following six issues:

Despite repeated and persistent offers of involvement in better designing the system, direct state participation in designing IDIS has been minimal, as evidenced by the system's entitlement-like nature

Some key accomplishment and beneficiary data that will be generated by IDIS is still undecided. Although some states have been utilizing IDIS for over a year, HUD has not yet determined which measurements are to be used for the CDBG program to report beneficiaries and accomplishments. This is a critical issue that warrants prompt attention

Most reports which were to be generated by IDIS (one of the promised efficiencies of the system) are not yet functional

Phase one of EDI is complete and functional and we applaud HUD for this accomplishment. However, phase two is needed as much as phase one. Until phase two is complete, states will have to set up activities and projects in two separate systems

A function is needed to allow Revolving Loan Funds (RLFs) and program income to be tracked on IDIS rather than entering incorrect data and keeping separate ledgers. A resolution to this issue was proposed two weeks ago by HUD staff. It appears that if HUD will change their reporting requirements relative to program income, a solution will be near

The time and costs associated with implementing the system (prior to a fully functional EDI) are extensive

Because of these and other concerns, states asked Congress last summer to intervene in HUD's decision to force state's participation in an unworkable IDIS. In October 1998, Congress inserted language into the conference report of the FY99 VA/HUD/Independent Agencies appropriations bill stating:

The conferees agree that HUD shall not require additional states to implement the Integrated Disbursement and Information System (IDIS) until problems associated with it are corrected. The problems include, but are not limited to, the lack of a fully functioning Electronic Data Interchange, full Internet capacity, and complete reporting abilities. HUD shall report to Congress, no later than January 1, 1999, as to the specific corrective actions being taken to resolve existing system problems for current state users.

IDIS Working Group

During 1996, states continually expressed concerns to HUD about the development of IDIS. States not only questioned the complexity and detail of IDIS but were most concerned that the system was being developed without the participation of grantees, especially states. HUD has a long history of turning out products for states that either do not work well or were designed for entitlement cities and then applied to states without regard to the fundamental differences described above.

In September 1996, HUD and states agreed to convene a state IDIS working group to develop jointly the last phases of IDIS and to review the workability of the entire system. The group met several times and while states thought the group was making progress, its last meeting occurred in April 1997. In December 1997, HUD unilaterally decided to terminate the group; most states were not informed of this decision until late January 1998. Essentially, HUD had no direct discussion or meetings with states on the design and development for nine months then dismantled the conduit through which input could flow.

While a couple of states with small grant awards and few open projects went onto IDIS in late 1997 and early 1998, most states determined that IDIS was a very cost-ineffective and poorly designed system and that using it would be senseless. Consequently, at that time, and because HUD had turned a deaf ear to our concerns, states began working with Congress and others to prevent HUD from forcing mandatory state participation in IDIS until critical deficiencies were fixed.

Inaccurate accomplishment and beneficiary data

In May of 1998, the State of Louisiana asked HUD which measurements should be used to report accomplishment and beneficiary data in IDIS for the CDBG program. We expressed concerns relative to this issue and a desire to continue reporting the same measurements used by states and HUD for the last ten years. We currently provide the following information:

We also expressed a concern relative to the double counting of jobs when carrying out infrastructure projects for economic development purposes. Eleven and one-half months later, we have not been given any direction on these issues.

In the mid-1980s, COSCDA and state representatives met with HUD staff for nearly a year to arrive at a mutual conclusion of how to report accomplishments. Without explanation, IDIS has abandoned these reporting criteria. The resulting IDIS system is one that allows the individual entering the record to decide whether to report in units of households, people, or feet of public utility as the accomplishment. There are 13 measurement options in IDIS from which to choose. For example, if Louisiana, Texas and Colorado all fund water line projects, Louisiana could report the number of people who benefit from the project, Texas could report the number of households benefiting from the project, and Colorado could report the number of feet of water line installed. It would be impossible for even the most advanced system to aggregate meaningfully this data for reporting purposes.

Furthermore, IDIS as presently configured can double or triple count the number of jobs resulting from an infrastructure project being implemented for economic development purposes. For example, the State funds the Town of Leonville, population 900, in the amount of $500,000 for the extension of a water, sewer, and gas lines to Grant Company. Grant Company has committed to creating 200 jobs and will hire low- to moderate-income persons to fill these jobs. Instead of showing 200 jobs created for this project, IDIS will show 200 jobs for the water line, 200 jobs for the sewer line, and 200 jobs for the gas line for a total of 600 jobs. If this particular town was in your district and you received information showing 600 jobs created in a town of 900, would you not wonder about the validity of the entire information system? States do not believe that this represents the kind of information Congress is seeking.

Reports

States believed that the major purpose of IDIS was to provide timely and accurate reports to Congress relative to the expenditures and accomplishments of these programs. Grantees were promised that all reports needed by HUD and provided to Congress and the public would be available from IDIS. The September 1997 edition of the IDIS User Manual instructed users on how to generate 20 different predefined standard management reports. In February 1998, Assistant Secretary Ramirez issued a procedural memo listing 10 reports that grantees must produce and submit via IDIS. As of September 1998, members of the IDIS Entitlement Advisory Group reported that only 5 of those reports could be accurately produced. According to those who utilize IDIS, as of April 21, 1999:

If states and entitlements are expected to invest significant manpower and financial resources in IDIS, the least they should be able to expect from it is usable reports.

Electronic Data Interchange (EDI)

A fully functioning EDI is very important to states. Many states have sophisticated management information systems (MIS) to track every variable required by regulation and statute to be reported. Other states have nothing more than a personal computer-based spreadsheet by which to track their grants and were looking forward to having IDIS as a base from which to build. The 100 different screens in IDIS collect data far beyond what is required by regulation and statute.

HUD has made great strides toward offering EDI. The state of Louisiana, which has a sophisticated MIS, acted as the pilot for the first phase of EDI. As of mid-February, HUD announced the phase one pilot to be complete and now available for other states to use. From Louisiana's standpoint, phase one of EDI reduces by approximately 35 percent the initial workload created by IDIS and has helped the state tremendously.

However, it should be noted that EDI does not come inexpensively. In order to implement EDI, many staff-hours must be spent in data mapping and programming. The state of Louisiana spent $56,000 in staff time to implement IDIS using EDI. Within our state government, we had the type of software necessary to perform EDI; however, for those states without the appropriate software, its price tag could range from $25,000 to $75,000 depending on whether the system is PC-based or mainframe-based. In addition, Louisiana must pay a monthly access fee of $180 for the value-added network. Since Louisiana was a pilot state, it will be reimbursed $43,000 from HUD for the associated expenses of testing the system. As a pilot, we had the benefit of HUD's designers assisting with implementation. Other states will not be this fortunate; their costs will be significant. Hopefully, future cost savings from EDI will offset its start-up costs.

Program Income and Revolving Loan Funds (RLFs)

As originally designed and until last week, IDIS had no legitimate method of accounting for program income or Revolving Loan Funds. According to Treasury, cash-on-hand (unless in a protected Revolving Loan Fund) must be spent before drawing down any additional funds. However, this often does not correspond with a grantee's contractual obligations or HUD's reporting requirements relative to program income. Therefore, states and entitlements were told to keep a separate ledger for program income. When program income is needed for contractual obligations, it is entered as a receipt on IDIS and then immediately drawn upon. Revolving Loan Funds caused similar problems with IDIS. Contracts awarded from a state's RLF cannot be entered onto IDIS since IDIS will not allow projects to be entered in excess of the amount of a state's grant award. Because of this, RLF's records must also be kept off the system on a separate ledger.

Keeping two sets of books is not considered a generally accepted accounting practice. Auditors have warned states and entitlements that this is not acceptable; however, until HUD resolves this IDIS issue, separate records must be kept.

Time and Costs

IDIS is a complex, detailed computer system. It is written in the decades-old COBOL computer language, and connects via 9600 baud modem (as opposed to 56,000 baud which is state-of-the-art) to a mainframe computer at HUD. Most state and local government employees comfortably utilize personal computers with a Windows-based operating system. As I mentioned earlier, IDIS is comprised of over 100 different screens. As this is not designed in a windows environment, the user can only move from one screen to the next to the next. Multiple screens cannot be opened simultaneously nor is it simple to get from one task to another non-associated task. Features as common as "word-wrap" are not available in IDIS; rather, like a typewriter, the user must hit "return" at the end of each line of text.

Lack of Communication and a History of Unmet Deadlines

In December 1995, in a letter to HUD, the State of Ohio first expressed its concern regarding IDIS. In July 1996, states attended their first training session on IDIS. Specific state concerns with the system were transmitted in writing to HUD on August 5th of the same year. At that point, HUD's stated goal was to have all states converted to the system by February, 1997. Deadlines have come and gone since 1996 and, as you have heard today, the system has not been fully stabilized nor fully tested. There are still many remaining issues to be solved.

Louisiana submitted written questions to HUD on May 19, 1998; COSCDA transmitted 25 critical issues to HUD on August 18, 1998; on September 28, 1998, COSCDA and other public interest groups met with HUD and members of the IDIS Entitlement Advisory Group that also identified a list of priorities that needed to be fixed in the following 60 days and over a longer time frame. On January 14, 1999, COSCDA was provided with a 20-page consolidated list that categorized the issues from the above three lists plus added additional concerns from other sources. This consolidated list did not, however, identify who was responsible for resolving the problem or a date by when each would be solved. At an April 14, 1999, meeting with HUD officials, COSCDA was told a work plan exists, but that it has not yet received all the internal signatures of commitment. As of April 27, 1999, the work plan still has not been made public.

On March 10, 1999, states were told indirectly, through a letter to COSCDA, that all states would be using IDIS by December 31, 1999. This again seems like an unrealistic goal considering the great volume of work to be accomplished by HUD and the states. States believe HUD should first provide the items mandated by Congress ­ Internet capacity, a fully functional EDI, resolution of major issues, and complete and accurate reporting capabilities ­ prior to states implementing IDIS. With these issues resolved and tested, states would then be able and willing to quickly adopt IDIS.

Where are we now & where do we go from here

As I mentioned, on April 14, 1999, William Shelton, Director of Housing and Community Development for the State or Virginia, COSCDA staff, and I met with HUD officials to discuss our concerns. We offered to work with HUD on resolving the outstanding issues in IDIS. We were assured that HUD wanted very much to work with states however, no solid, specific commitment for next steps were made.

As I said when I opened Mr. Chairman, states want to work with HUD to produce the best system possible so that Congress will have timely, accurate information about the programs you fund. However, we believe it is premature to set a deadline for conversion until:

CDBG, HOME, ESG, and HOPWA are programs that make a real and significant difference in the lives of millions of low- to moderate-income people in this country. States do not want these programs to be a best-kept secret. Let us become partners with HUD to achieve the worthy goal of having a system which will allow accurately and timely reporting of these achievements.



Home | Menu | Links | Info | Chairman's Page