Federal stimulus money targeted for weatherization goes unspent

LINCOLN, Neb. -- Jackie Harpst expected a busy summer at her not-for-profit housing agency, as work crews backed by Nebraska's share of $5 billion in federal stimulus money headed out to seal windows and spread insulation.

Months after Harpst, housing director of the Community Action Partnership of Mid-Nebraska, thought work would begin, not a single window has been caulked. And she's still not sure if her team will be able to get to work adding insulation before the summer heat passes or winter sets in.

Harpst is among the state and local officials nationwide who are sitting on millions in stimulus money targeted for weatherization, worried about running afoul of arcane federal rules governing how much workers should be paid for making energy-saving home improvements.

They blame months of mixed signals sent by federal officials, whom they accuse of fumbling the effort to spend money designed to give a languishing economy a boost by lowering utility bills and employing construction workers idled by the housing slump.

More than 40 states have received about half of the $5 billion allotted for weatherization efforts in the $787 billion stimulus package, according to the Department of Energy. Because that money was sent to not-for-profit groups scattered across the country, there isn't a clear estimate of how much has been spent so far.

But several local and state officials interviewed by The Associated Press said they are holding back. David Bradley, executive director of the National Community Action Foundation, said the "vast majority" of states aren't spending the money. The U.S. Department of Energy official in charge of the weatherization program also acknowledged there has been confusion "across the board."

"We have been told by a number of states and local agencies that they have delayed spending recovery-act money," said the official, Gilbert Sperling.

The $5 billion set aside in the stimulus package is a massive influx of money into an old program aimed at reducing energy costs. For more than 30 years, the federally funded, state-run programs have used a broad range of work, such as spreading insulation and installing new heating and cooling systems, to make the homes of low-income people more energy efficient.

Sperling and others responsible for overseeing the program maintain that as early as March, they clearly said that money for weatherizing should be spent in spite of any uncertainty created by the Davis-Bacon Act. The Depression-era law requires contractors to pay wages equal to those prevailing locally for public works projects, and the stimulus law applied it to weatherization projects for the first time.

"I'm satisfied we have communicated as clearly as we can to the states and the agencies that we want them to move forward spending recovery funds even before (the U.S. Department of Labor) issues new wage determinations," Sperling said.

Those who oversee the not-for-profit groups and agencies that states have used for years to perform the weatherization work tell a different story, saying that Sperling and others flip-flopped in recent months. Zamora and others said federal officials first said the weatherization work could begin in April, then cautioned in June that the Davis-Bacon Act would apply and the spending should be put on hold.

Federal officials said at a July meeting attended by state and local weatherization workers to go ahead and start the work without the wage rules in place. The same advice came in letters sent July 10 and July 24.

"They go back and forth and it makes me nervous," Zamora said. "There's been a lack of clarity."

Tom Markey, a stimulus coordinator at the U.S. Department of Labor, said there is no reason to wait. The Departments of Energy and Labor said in their July 24 letter to states and nonprofits receiving the money that "state and local agencies should be weatherizing homes now."

"Davis-Bacon prevailing wage rates for residential construction exist in just about every part of the country, therefore, any state or community-action agency could have begun work as soon as they received their funds by paying these existing prevailing wage rates," Markey said.

Several recipients of that letter told the AP said they are wary of following such advice because, they say, federal officials have previously been unclear on whether existing wage levels for other occupations would apply to weatherization work. They also reject the suggestion from federal officials they could simply issue back pay should the weatherization rates eventually be set at a higher wage, saying it could cause an administrative mess.

"They've been saying since April they'd have things straightened out and we'd be able to spend the money. Why we would we go forward now without the rules in place? So far nothing they've said ... has come to fruition," said Jim Crisp, executive director of the Michigan Community Action Agency Association.

And so, they're waiting for wage rules that are now expected Friday in 15 states. The rest are due at the end of the month.

Crisp's group is one of 30 agencies in Michigan given $195 million to weatherize homes, and none of that money has been spent so far on the actual act of weatherization. As in other states, only a small percentage of the money has been spent to buy equipment, perform training and otherwise prepare for the work.

In Nebraska, that amounts to about $1.5 million of $41.6 million in weatherization stimulus money. The community-action programs Zamora oversees in Idaho have spent just $700,000 of that state's $30 million pool, none on actual weatherization work.

Sperling said many states have compensated for the delays by spending money already budgeted for 2009 weatherization more quickly than usual. And the Department of Energy, he said, will have a better grasp of how much stimulus money has been spent when quarterly reports start coming in at the end of August.

But in the places where workers were hired months ago in anticipation of an influx of stimulus money, some nonprofits are running out of cash diverted from other places to make that payroll.

"They've basically been compensating people with money they don't have," Crisp said.

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Associated Press writer Sam Hananel reported from Washington.

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On the Net:

U.S. Department of Energy: http://www.energy.gov/

U.S. Department of Labor: http://www.dol.gov/