news-record.com

State government doesn't provide enough accountability for hundreds of millions of dollars doled out each year to nonprofit agencies -- and that concern intensifies with even more money in federal stimulus funds coming to North Carolina.

Those conclusions come from a report issued this month by the General Assembly's Program Evaluation Division. The assessment is bold because it finds particular fault with grants awarded by the legislature itself.

These are no small sums. During fiscal 2007-08, the state distributed $694 million to nonprofit organizations in all 100 counties. Among the largest recipients were economic development corporations; private colleges and universities; care centers for children and older adults; children's and youth services providers; hospitals and health services organizations; housing and community development programs; and conservation agencies.

The grants are meant to pay for services of benefit to the public that state government can't or doesn't provide itself. How well do they deliver? According to the Program Evaluation Division, it's often hard to tell.

Among problems cited: Organizations that receive grants are required to report financial information, but most don't have to document their spending or submit audits. Because of reporting lag time, some agencies that should be cut off for violations still can receive funding. And contracts often don't include clear goals or evaluation criteria. It's not spelled out in enough detail what they're supposed to do or how results should be measured.

The Program Evaluation Division recommends awarding grants on a competitive basis whenever possible and funding by reimbursement rather than paying up front. Reporting should be faster, and performance-based contracting should be implemented.

While some state agencies -- the report names the Department of Health and Human Services -- do employ good accountability practices, the General Assembly doesn't. So the report recommends limiting the number of grants awarded directly by the legislature -- a practice sometimes known as putting earmarks in budget bills or pork-barrel appropriations. When the legislature makes those grants anyway, it should "specify expectations for outputs and outcomes."

Those and other recommendations are right on target. They were endorsed by Gov. Bev Perdue's budget director, Charles Perusse, who said his office will consider making several changes in how state agencies administer grants. That should be a priority. All state funds, including massive amounts of federal stimulus money channeled through the state, must be spent effectively.

Whether the legislature will act is another matter. Handing out grants to agencies in their home districts is a favorite practice of legislators. But taxpayers should demand that those agencies provide value for the money they get. If they don't, voters should hold the politicians accountable.