Indiana is drawing fire for a decision to funnel half of its federal weatherization funds through a startup program that has no experience in such programs.This story highlights a problem government faces - how to distribute government grants. In the past it was a government agency designating who would receive the funds. Privatization though has often shifted that responsibility to the private sector. In Indianapolis, a web of private non-profit organizations came into being simply to to take government funds and to distribute those funds to their "stakeholders." In carrying out this responsibility, the non-profits pay their officers and employees lavish salaries and benefits, far above what government employees who used to distribute the funds received. After subtracting out administrative costs of the non-profit, very little is left from the original grant.
The Indiana Builders Association will receive nearly half of the $132 million the state is receiving through the American Recovery and Reinvestment Act to weatherize more than 30,000 households, The Journal Gazette of Fort Wayne reported.
Citizens' advocates such as Common Cause Indiana have criticized the move, saying the politically active group has been a contributor to Gov. Mitch Daniels' gubernatorial campaigns.
The builders' group says it is capable of administering the grant funds despite its lack of experience."
Common sense tells us that this program is so large that it cannot be done conventionally," president Dennis Spidel said in the group's September newsletter. "That is why it was opened up to other nonprofit organizations like us."
The association's members come from the housing industry and work to educate the public and policymakers about regulations that allow Indiana residents to own homes.
The weatherization program will provide energy-saving items such as programmable thermostats, insulation, new furnaces and hot water heaters to residents who qualify.
Mike Hannigan Jr., the Indiana Builders Association's program administrator, said the group is collaborating with experienced community action groups and expects to begin work on more than 500 homes in a few weeks.
Retiree Gerri Mann of Fort Wayne is eager to see how weatherization helps her gas bills, which had crept up to $200 a month in her mobile home.
Mann's 30-year-old furnace was replaced and new insulation was installed through a Community Action of Northeast Indiana program in August.
Mann said she was surprised how extensive the work was for the amount of money spent."I never expected it all," she said.
The stimulus program gives Indiana 11 times the amount of money normally spent on annual weatherization programs
Every time you add a level of administration, there are costs. When that level of administration is a private sector non-profit, there needs to be considerable oversight to ensure that public funds are distributed efficiently and not absorbed in unnecessary administrative costs. Unfortunately government officials often do not want to provide that oversight, especially when those non-profits are also political contributors. That is why "good government" groups like Common Cause are right to be concerned.