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Project/Research Report

Municipalities in Fiscal Crisis

Federal Agencies Monitored Grants and Assisted Grantees, but More Could Be Done to Share Lessons Learned

by United States Government Accountability Office

This report (1) identifies challenges that selected municipalities in fiscal crisis have experienced when managing federal grants and steps those municipalities took to address the challenges; (2) reviews the internal controls, monitoring, and oversight processes that federal agencies used to oversee selected grant programs to several municipalities in fiscal crisis; and (3) examines actions the White House Working Group on Detroit and selected federal agencies took to assist selected municipalities in fiscal crisis. In conducting this work we focused on four municipalities in fiscal crisis as case examples: Detroit, Michigan; Flint, Michigan; Camden, New Jersey; and Stockton, California. Criteria for selecting these municipalities included whether they were in fiscal crisis (defined as having filed for Chapter 9 bankruptcy or being designated in fiscal crisis by their state government); amount of federal grant obligations; population; and state intervention type (e.g., assignment of an emergency fiscal manager). We selected eight federal grant programs that these municipalities received using the following criteria: dollar amount, grant type (e.g., direct or pass-through), and incidence across multiple municipalities. We focused our analysis on federal grants received by these municipalities in the 5 year period from 2009 to 2013. Findings from these cases are not generalizable to all municipalities in fiscal crisis.

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U.S. Government Accountability Office; Washington, DC

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