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WASHINGTON, DC — A new report by the Government Accountability Office (GAO) shows more evidence of what we already know: the Trump administration systematically mismanaged its pandemic response, risking public health and leaving Americans struggling to pay for food, housing, and medicine they need.

The report sheds light on some of the failures the administration has worked overtime trying to hide from the public. Here are some of the GAO’s key findings:

TESTING: 

  • The administration continues to count COVID-19 tests inaccurately, falsely inflating the number of tests that have been administered to Americans even as Trump announces plans to pull federal funding from community-based testing sites across the country.

FINANCIAL RELIEF: 

  • GAO noted that 450,000 Americans who received relief checks from the government were not given additional funds they are due for their children. The administration owes these families an additional $500 per uncounted child — a devastating financial loss, particularly for low-income and working families, amid an ongoing economic crisis that has left more than $45 million Americans out of work. (Pages 25, 220)

PAYCHECK PROTECTION PROGRAM: 

  • GAO criticized SBA’s reliance on self-certifications rather than traditional underwriting. “As we have previously reported, reliance on applicant self-certifications can leave a program vulnerable to exploitation by those who wish to circumvent eligibility requirements or pursue criminal activities.” (Page 36)
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  • GAO said the PPP program’s design and “limited safeguards” created “significant risk that some fraudulent or inflated applications were approved.” “Because of the number of loans approved, the speed with which they were processed, and the limited safeguards, there is a significant risk that some fraudulent or inflated applications were approved. In addition, the lack of clear guidance has increased the likelihood that borrowers may misuse loan proceeds or be surprised they do not qualify for full loan forgiveness.” (Page 36)
  • The GAO criticized SBA’s transparency on PPP, saying “SBA to date has failed to provide information critical to our review, including a detailed description of data on loans made.” (Page 38)
  • The 2% of PPP loans for over $1 million used up 35% of funds disbursed during the PPP program. (Page 238)
  • The SBA’s loan system was unprepared for the volume of loan requests, resulting in delays. “Information technology issues related to SBA’s loan processing system caused delays for both new and established lenders trying to access the system. SBA’s loan system for its standard 7(a) program was not built to process the volume of loans SBA received. In addition, three associations that represent lenders told us that lenders encountered delays trying to obtain access to the system for new users. According to one association, it took between 48 hours and 2 weeks for lenders to get access to the system.” (Page 241)
  • GAO criticized the number of changes made to the PPP program over time saying “the frequently updated guidance sometimes left lenders and borrowers confused.” (Page 242)
  • GAO criticized SBA for being inaccessible to both lenders and borrowers during the PPP process. GAO reports that “representatives of lender and small business associations we interviewed told us that often no one answered when members called the district office; when someone did answer, members noted that the person did not always know the answer or provided incorrect information.” (Page 243)
  • GAO criticized banks for giving preference to previous borrowers, saying, “This preferential treatment resulted in delayed participation by certain small businesses.” (Page 244)
  • GAO criticized SBA for not posting guidance for “independent contractors and the self-employed” individuals until two days before the initial funding expired. (Page 244)
  • GAO noted information was not yet available on loans going to Native American tribes, and that it took the SBA 11 days to consult with tribal leaders, limiting input. “As of June 12, 2020, lenders had made approximately 4.6 million loans totaling about $512 billion, but information is not yet available on the portion of loans that went to tribally owned businesses. In conjunction with Treasury, SBA consulted with tribal leaders about this program on April 14, 2020. However, this was 11 days after the agency started accepting applications and 2 days before the first round of funding was exhausted, which limited tribal leaders’ input on the first round of funding.” (Page 316)

TRANSPARENCY:

Coronavirus Relief Fund (CRF)

  • The GAO report confirmed that recipients of the $150 billion allocated to states, localities, and tribal governments in the CARES Act through the Coronavirus Relief Fund (CRF) will not be required to publicly report CRF fund expenditures on USASpending.gov. The administration’s reasoning, according to Treasury officials, is that “CRF payments are not subject to recipient reporting because the payments are not grants.” As a result, Treasury did not develop grant agreements with the recipients. (Page 309)
  • The GAO report states that the Department of Treasury also hasn’t produced guidelines for how CRF recipients would report expenditures to the agency and failed to offer a timeline to GAO on when those guidelines would be written. (Page 309)
    • NOTE: GAO’s findings that Treasury will not only allow CRF recipients to keep expenditures from public view, but also that it is neglecting to collect spending data for the agency, contrast sharply with assertions in the report that strong internal controls are needed in order to prevent waste, fraud, and abuse with “these kinds of extraordinary federal funding increases.” (Page 305)
    • NOTE: States have already tried to use CRF money to fund unrelated projects: Alabama proposed to put these relief funds toward rebuilding its statehouse.

EDUCATION 

  • The Department of Education’s “evolving communications may have delayed schools’ distribution of funds to students.” These funds total around $6 billion in grants to college students. (Page 181)
  • Despite the Department of Education’s suspension of interest and student loan payments, “types of involuntary collections and communications to borrowers were more challenging to address quickly.” (Page 210)
  • States’ and school districts’ “desire to spend the money quickly may increase the risks of noncompliance with spending and accountability requirements.” (Page 290)
  • Even though the Department of Education halted collections March 13th, it “reported that its designated servicer began sending notifications to employers who were garnishing wages in mid-April, after the servicer established a new automated process for notifying employers.” (Page 212)
  • Student loan servicers are failing borrowers in their implementation of relief measures. “In addition, Education identified instances in which call centers experienced high rates of dropped calls or representatives provided incorrect information. For example, three of nine servicers responded incorrectly to at least 40 percent of Education’s ‘secret shopper’ questions on April 7, 2020.” (Page 213)

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