In fiscal year 2023, the Biden administration expects to spend $1.0 trillion – the equivalent of 4.1 percent of estimated GDP – on grants to state, local, territorial, and tribal governments. With so much money being distributed, there is a risk of significant waste, fraud, and abuse. To root out grant mismanagement, Congress should build on existing laws to improve oversight.
The most notorious recent case of federal grant misappropriation occurred during the pandemic, when states paid an estimated $163 billion of federal funds to unqualified beneficiaries, mostly due to fraud. Another high-profile case of grant abuse occurred in 2019 when Puerto Rico’s former Education Secretary and former Health Insurance Administrator were arrested for mishandling $15.5 million of federal funds. But, in most cases, finding problems with grant management is like looking for needles in a haystack.
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