Uncommitted State Revolving Funds

Recommendations:

1. Set and track goals for the allocation of funds. The EPA should encourage allocation to keep pace with available funds; states should try to commit near or above 100 percent of available funds. Congress should require reports on uncommitted funds.

2. Stimulate demand for funds. SRF administrators should stimulate demand for SRFs by providing more technical assistance, awarding more planning and development grants, making the application process easier, and awarding more principal forgiveness. States need to be proactive, use available set-asides, subsidize assistance from experts, and rely on intermediaries to help to provide more technical assistance. SRF state administrators should make the application process easier by assessing likeliness of support before water system decision makers start planning and developing projects and adopting rolling acceptance windows. 

EPA and state legislatures can also help. EPA should stimulate demand for funds by encouraging states to provide on-the-ground technical assistance as well as providing training and sample outreach messaging. EPA should also issue guidance on contracting intermediaries to distribute predevelopment funds and create prototype online application portals. State legislatures should stimulate demand by committing to maintain low interest rates and expressly authorizing the use of more additional subsidies. 

3. Enhance effective administrative practices. SRF state administrators should hire more staff and use cash flow models to make commitments that keep pace with available funds. States can also require borrowers to submit invoices on a quarterly basis to help with cash flow. EPA should continue to study, provide training, and share best practices on how states allocate SRF awards. EPA can provide training on cash flow modeling and track who attends as well as find and feature the best administrative practices. Congress and state legislatures can set targets and establish incentives to reduce the amount of uncommitted funds.