Government Watch

Feds Spend at Least $890,000 on Fees for Empty Accounts


The Washington Post – By David A. Fahrenthold –If you are a federal worker on furlough this week — or an airline passenger delayed by federal furloughs — you might want to save your blood pressure and go read another story.This one is about all the money the U.S. government spends on . . . nothing.

It is one of the oddest spending habits in Washington: This year, the government will spend at least $890,000 on service fees for bank accounts that are empty. At last count, Uncle Sam has 13,712 such accounts with a balance of zero.

They are supposed to be closed. But nobody has done the paperwork yet.

So even as the sequester budget cuts have begun idling workers and frustrating travelers, the government is required to pay $65 per year, per account to keep them on the books.

In this time of austerity, the accounts are a reminder of something that makes austerity hard: expensive habits, built into the bureaucracy in times of plenty. The Obama administration has spent the past year trying to close these accounts, with only some success.

“If anyone had kept open a bank account with no money, and was getting a charge every month, they would do everything they could to close it,” said Thomas A. Schatz of the watchdog group Citizens Against Government Waste. But, he said, the government hasn’t shown the same kind of urgency with taxpayers’ money.

“It’s just lack of attention to detail. And poor management,” he said. “And, clearly, the fact that no one gets penalized for paying money to keep the accounts open.”

The money spent on the empty accounts is a tiny fraction of the federal budget. But, in its own way, it is something special: Washington’s waste, a rare specimen of cost untainted by any reward.

The Pentagon once paid $435 for a hammer, after all. But at least in that case it got a hammer.

Here, when the money is spent, “there’s no benefit whatsoever,” said Sen. Tom Coburn (R-Okla.), who has joined Sen. Thomas R. Carper (D-Del.) in pushing the Obama administration to close these accounts faster.

Administration officials said they’re trying. Last year, the Office of Management and Budget urged agencies to crack down on these “zero balance” accounts. And this year, it proposed a wide-scale push for better oversight.

“We have worked with agencies to improve the timely closeout of grants,” Danny Werfel, the controller at the OMB, said in an e-mail. “Agencies have made noteworthy progress so far, with the number of zero-balance accounts falling by more than 50 percent since the end of fiscal year 2011.” Back then, the total was more than 28,000.

Here is how the government winds up spending money on nothing:

First, a federal agency gives a grant. It doesn’t just write a check; it creates an account within a large, government-run depository. The grantee can draw money from it. The agency that created the account is charged a monthly fee, which goes to the government depository and is used to cover the costs of operating it.

Then, at some point, it’s over. The money runs out. Or the grant’s time limit expires. The agency is given notice: It’s time to close the account.

But that takes work. An agency is first required to audit the account, to make sure the money was spent properly. (In rare cases, some money is returned to the grantee and the dead account comes alive again.) That’s generally supposed to happen within 180 days. If it doesn’t happen, however, there is no formal consequence. So sometimes it doesn’t happen. OMB officials say some grants, such as those involving homeland security and complex building projects, could require unusually long audits.

“Construction grants, as another example, may require additional time for grantees to consolidate and submit invoicing information from multiple parties to meet agency close-out reporting requirements,” Werfel said in testimony prepared for Congress.

Right now, about 7 percent of the 202,000 government grant accounts are devoid of money. These sit on the books, costing about $5.42 per month. The service fees are the same, whether an account is full or empty.

Last year, the Government Accountability Office found that all that nothing was costing about $2.1 million a year.

“Agencies paying fees for expired accounts with [a] zero dollar balance are paying for services that are not needed,” the watchdog agency noted.

Around Washington, there are plenty of problems like this one — old bugs, built into the machine of government, that make spending money seem easier than saving it. Things such asthe red tape that delays the sale of excess government buildings, or the long-standing tolerance of duplication. Currently, for instance, six government agencies have begun separate projects to do the same thing: build a computer program to track personnel background checks.

Last summer, the Obama administration sought to fix this bug. It sent a memo to agencies that said, “Focus first on closing out expired grants that are several years past their end dates or have no remaining funds.”

In some places, it apparently didn’t work. The U.S. Agency for International Development has the same number of empty accounts now as it did in 2011. The Fish and Wildlife Service didn’t provide new numbers, despite a request from The Washington Post.

But in other places, it did. The Agriculture Department eliminated 74 percent of its empty accounts, saving $90,000 per year. The National Park Service closed all 705 of its empty accounts.

The Department of Health and Human Services also had success. It had been paying for 21,000 empty accounts but the total is now 9,286 — a major cut, but still an expense of about $604,000 per year.

Could the agency get that number lower?

Officials answered this way: They could never imagine getting it to zero. The government would always have to spend something on nothing.

“We will continue our efforts to accelerate grant closeouts,” said Nancy Gunderson, who oversees grants at HHS. “These accounts are a normal part of the grants business cycle and will never be totally eliminated.”

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8 years ago

There are thousands of programs like this in the federal government. Hundreds of billions a year are spent on them, yet all we get from the politicians and agency heads running these things is some lame excuse about how we’re trying to clean up the mess over time. Meanwhile, years and years go by and we just keep flushing more money down the rat hole.

8 years ago

I have worked for the government first as an member of the Air Force, then working for government contractors at Rocky Flats Plant in Colorado, Pantex Plant in Texas and other work at several Air Force bases in the U.S. I have seen so much waste it is shameful. Out of all of them the team at Rocky was the best, Pantex the worst. Rocky is closed now, it was a Superfund site and I worked there during their cleanup. Still a lot of money was spent trying to figure out how to clean up the nuclear waste that was created. Pantex wastes sooo much money, they have people in jobs making big bucks doing nothing all day. On plant they are known as “sacred cows”. These people have held high paying positions and have been removed from those jobs, for various reasons, can’t get along, poor managers, don’t know the job, poor performance, sexual harassment or their jobs went away. These people are put into the labor pool and given jobs at the plant, they are not fired, or laid off. One group of exempt people had their jobs go away and instead of being rifted they were given BS jobs, they basically had jobs created specifically for them. Also, a lot of government money is being wasted on overtime. I’ve seen union workers sit on their asses and do nothing Monday thru Friday so that they could get OT for Saturday and Sunday I’ve seen machine shop workers deliberately scrap a job so they could work overtime. People are spending money, wasting money, collecting outlandish wages some over 100K. We’re talking about people who make $28 dollars an hour or more, time and a half for overtime = $42 per hour, double time for Sundays = $56 per hour, triple time for holidays = $84 per hour. Plus they get 2 to 5 weeks vacation, tuition assistance, health care, flexible spending accounts, dental insurance, eye care insurance, The guards get outrageous amounts of overtime as do the firefighters, machine shop, rad techs, and the supervisors, managers, planners are all seriously overpaid for the work they do. I understand that it’s a nuke plant so there’s some risk, but too many are sitting on their butts doing nothing.

8 years ago

Maybe the fees should come out if whoever is in charge pockets.

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