Some states are missing opportunities to improve water system infrastructure by not fully utilizing Drinking Water State Revolving Funds (DWSRFs), according to the U.S. Environmental Protection Agency's Office of Inspector General (OIG).
An investigation of DWSRF use in five states — California, Connecticut, Hawaii, Missouri and New Mexico — showed that "unliquidated balances" exceed the EPA goal of keeping those balances below 13 percent of the cumulative federal capitalization grants awarded. OIG further found that the states were not adequately projecting the DWSRF resources that would be available in the future to enable them to anticipate the amount of projects needed to be ready for loan execution in a given year.
"As a result, $231 million of capitalization grant funds remained idle, loans were not issued, and communities were not able to implement needed drinking water improvements," OIG stated.
OIG recommended that EPA require states with unliquidated obligations that exceed 13 percent cutoff goal to project future cash flows to ensure funds are expended as efficiently as possible.