Accounting Office Washington, D.C. 20548 Resources, Community, and Economic Development Division B-217782 January 19, 1989 The Honorable E. Thomas Coleman Ranking Minority Member Subcommittee on Conservation, Credit, Dear Mr. Coleman: In a February 18, 1987, letter, you asked us to review all federal programs to determine those that are essentially rural and to recommend which of those programs could be made more productive by being relocated in a new Rural Development Administration. The Rural Development Reorganization Act (H.R. 2026), which you proposed in the 100th Congress, but which had not been acted on at the time the Congress adjourned, would have established such an agency within the U.S. Department of Agriculture (USDA). Subsequent to your request, we agreed with your office to provide information on three questions: (1) What is rural America? (2) What is the rural share of federal funding? and (3) What are rural development-type programs? This briefing report contains the results of our work, which we presented to your office in a series of briefings. To respond to the questions, we reviewed descriptive information and financial data on federal programs and, in consultation with your office, developed definitions of "rural" and "rural development-type programs." According to these definitions, rural refers to counties with urban populations of less than 20,000 and rural development-type programs are those that pursue economic development purposes and/or that have an apparent rural focus. RESULTS IN BRIEF - - About two-thirds of all U.S. counties (2,097 of 3,096) met our definition of rural, i.e., counties that have urban populations of less than 20,000. About 16 percent of the U.S. population lives in these counties. For the programs for which data were reported, about 17 percent of federal domestic funding went directly to rural counties. The percentages of such funding, however, varied widely among the various federal agencies. For example, USDA programs had the highest average of program funds going directly to rural counties--50 percent, while Department of Housing and Urban Development programs and Department of Energy programs had the lowest averages--4 percent and less than 2 percent, respectively. We placed each of the approximately 800 federal domestic assistance programs we identified into one of six categories based on our assessment of the extent to which it met development objectives. The four categories containing the principal rural development-type programs include (1) economic development, i.e., programs that assist business and industry, (2) agriculture and natural resources, i.e., programs that assist food and fiber producers, (3) infrastructure, i.e., programs that help states, communities, and others construct and maintain community facilities, transportation systems, utilities, and public works, and (4) human resources, i.e., programs that provide education, employment and job training, health services, community services, and housing. We identified 88 programs in these four development categories that met the definition of rural developmenttype programs. The 88 programs provided total funding to both rural and nonrural counties of about $29 billion in fiscal year 1987. Rural share data for fiscal year 1985 were available for 48 of these 88 programs (or parts of programs). The 48 programs provided about $17 billion, of which about 21 percent went directly to rural counties. OBSERVATIONS Regarding the proposed Rural Development Administration, our review of federal program descriptions showed that few programs have specific rural development objectives. If a rural development focus is desired at the federal level, it could be created by restructuring and supplementing existing programs, such as those described as rural development-type programs in this briefing report. Among the federal agencies, USDA administers the greatest number of rural development-type programs, is the only agency with programs in all four rural development 2 categories, and provides the highest percentage of funding to rural counties. Thus, USDA would be the federal agency with the broadest experience base for implementing a rural development policy via the proposed Rural Development Administration. SCOPE AND METHODOLOGY We performed our work primarily between August 1987 and June 1988 in Washington, D. C., with updates as appropriate through October 1988. In consultation with your office, we developed definitions of "rural" and "rural development-type programs." We applied these definitions to data from two nationwide federal information systems--the Bureau of the Census' Consolidated Federal Funds Report and the General Services Administration's Catalog of Federal Domestic Assistance. We integrated data from these two systems and conducted extensive computer analyses to develop lists and descriptions of rural development-type programs. In addition, we conducted an extensive literature search, interviewed rural development and public administration experts, interviewed those who maintain and use the two information systems, and reviewed existing laws and legislative proposals relating to rural development. More details on the objective, scope, and methodology of our review are in section 1. Sections 2, 3, and 4 provide additional details on the three questions we addressed, and section 5 presents observations based on our work. appendixes provide (1) information on the rural/nonrural classification of all U.S. counties (app. I), (2) lists of federal domestic assistance program funding for fiscal years 1985 and 1987 and rural shares, by agency (app. II) and development category (app. III), and (3) information, such as objectives, types of assistance, and eligibility requirements, for the programs we identified as rural development-type programs (app. IV). The USDA officials reviewed a draft of this briefing report for technical content. Their comments have been incorporated where appropriate. However, at your request, we did not obtain formal agency comments. As arranged with your office, unless you publicly announce the contents earlier, we plan no further distribution of this briefing report until 30 days from the date of this letter. At that time, we will send copies of this report to various committees, subcommittees, and Members of Congress; the heads of pertinent federal departments and agencies; and other interested parties. Copies will be made available to others on request. Major contributors to this briefing report are listed in appendix V. Sincerely yours, Ist Harmon John W. Harman Associate Director |