Doubling Your “IT System” Pleasure

In December 2012, the U.S. Air Force canceled an Information Technology (IT) program that it had been working on since 2005. The Expeditionary Combat Support System (ECSS) was an U.S. Air Force Enterprise Resource Planning (ERP) system that was designed to merge base level and wholesale logistics systems, and to deliver hard net-savings for the USAF. The Air Force scrapped the program after dumping $1 billion into the project, with no identifiable benefit to the military or to the taxpayer. Furthermore, the project would have required an additional $1.1 billion to fix and the system would not have been completed until 2020.

Why settle for one IT system when you can have two that do the same thing? According to the Government Accountability Office (GAO), that is the practice at several federal agencies, which are administering overlapping and duplicative IT systems. The federal government spends more than $82 billion on IT each year, but according to a recent GAO report three agencies have spent $321 million for overlapping IT purposes over the past several years.

The Department of Homeland Security (DHS) spent over $30 million on two IT programs, both of which supported “immigration enforcement booking management, which includes the processing of apprehended illegal aliens suspected of committing criminal violations of immigration law.” The two systems identified by GAO are used by Customs and Border Patrol (CBP) and Immigration and Customs Enforcement (ICE), but both collect nearly identical biographical data on illegal aliens arrested for committing crimes. However, DHS said it has no plans to address the duplicative expenditures.

Four duplicative IT systems were identified at the Department of Defense (DOD) with a price tag of $30.6 million. Two of these systems were in “Health Care Tracking” and two were in “Dental Management.” Unlike DHS, DOD agreed to work to eliminate the duplicity, but the results are yet to be seen. The most costly duplicative IT systems GAO found are maintained by the Department of Health and Human Services (HHS) totaling $260.38 million. Four of HHS’s systems related to “Enterprise Information Security,” meaning the systems were used to “maintain and secure the operations and assets of HHS and its components.” Two other duplicative IT systems were used for Medicare coverage and contained similar information by the same contractor. While HHS was reviewing whether it could consolidate the four systems related to Enterprise Information Security, it stated it was too costly to consolidate two systems related to Medicare coverage.

Information found for this “Your Tax Dollars @ Work” post was done by using a Google search. Information compiled from multiple public websites & media outlets.

Why Didn’t I Move To Hawaii

Ever dream of escaping it all and owning a dream home on a remote island paradise? Didn’t think you could afford it? Think again. There is now a U.S. Department of Agriculture (USDA) home loan program here to help you. Created to assist those with low and moderate incomes in rural areas obtain safe and sanitary dwellings, the program has expanded to cover “mortgages for millionaires” and homes in suburban and urban areas, as well as seaside resort communities. This year more than 100 individuals or families received loan guarantees for $500,000 or more from the U.S. Department of Agriculture to purchase a residence in Hawaii. If these new homeowners later cannot afford their new homes, it’s no problem; the federal government will protect the banks from losses by repaying 90 percent of the loans.

These and thousands of other loan guarantees were issued this year by the USDA Rural Housing Service (RHS) Section 502 loan programs. The Section 502 guarantee program and Section 502 direct loan program provide loans to low and moderate income individuals for the purchase of modest housing in a rural area. The programs had authority to guarantee $24 billion in privately sourced loans and make $900 million in new direct loans for FY2013. There is no down payment requirement for the loans, no maximum purchase price, and—according to USDA—the government is required to serve all borrowers who meet eligibility requirements and seek to purchase homes in eligible areas. And despite the name of the program, it serves more than just rural areas. An independent analysis found that, today, the program covers nearly the entire U.S. land mass. That has helped turn the program into one of the sweetest deals available.

The program issued nearly 166,000 loan guarantees in FY 2013 and more than 100 of those were for amounts greater than, or equal to $500,000. Nearly all of these half-a-million dollar home loans were in Hawaii. Many of the most scenic parts of Hawaii, including Maui and Kauai, are eligible areas for USDA rural loan assistance. Maui has been selected as the top island in the world for 20 consecutive years in the annual Condé Nast Traveler Readers’ Choice Awards. Providing a combination of tropical ambience and American comforts, this island paradise offers an abundance of activities offered, from whale-watching to nature hikes to watersports with unending natural beauty. The entire island of Kauai, described as “a little slice of heaven, is considered rural by USDA.

Since property values in Hawaii exceed the national average, buying a home there may seem to be out of reach for most, but everyone from risky borrowers to the wealthy are benefitting from this USDA loan program. The USDA rural housing program’s income guidelines are generous, notes a senior loan officer in Hawaii. Likewise for those with more modest incomes, the Federal Government will reimburse up to 90 percent of the original loan amount to the lender if a borrower defaults on a loan. Thousands of borrowers do foreclose every year, costing the federal government hundreds of millions of dollars, and the number and cost have skyrocketed over the past five years. In 2008, the program had 3,369 foreclosures costing in $103 million in loss claims paid. By 2011, there were 18,808 foreclosures costing $295 million. Last year, the program paid $496 million in loss claims, according to the USDA Office of Inspector General. If trends continue, this loss will have exceeded half-billion dollars in 2013.

The department acknowledges default rates vary throughout the year and during 2012, the delinquency rate for loans 30 or more days past due ranged from 7.65 percent to 10.44 percent. By comparison, the delinquency rate in a typical housing market is around 3 percent. While designed to operate off of loan fees, the program’s delinquency rates make a taxpayer bailout more likely according to experts who predict it’s likely the program isn’t covering its costs and will probably require taxpayer funding. While USDA was putting taxpayers on the hook for generous and increasingly risky loan guarantees, housing assistance to low-income individuals across the country, including in Hawaii, was being cut. In March, USDA threatened the elimination of rental assistance for more than 10,000 very low income rural residents, generally elderly, disabled, and single female households. In July the Department notified hundreds of borrowers that their contracts would be cut off before the end of FY 2013, 90 including a housing unit for disabled elderly in Kailua-Kona, Hawaii.

And while USDA is quick to threaten assistance for the poor, elderly and disabled, the Inspector General found the Rural Development program did not identify and review loss claims from loans with questionable eligibility prior to payment, resulting in millions of dollars in improper payments. Before USDA kicks out low income elderly and disabled from rural housing, the department should first discontinue its risky loan practices that are costing nearly half-a-billion dollars a year in loss claims. This really has me wondering why I didn’t move to Hawaii.

Information found for this “Your Tax Dollars @ Work” post was done by using a Google search. Information compiled from multiple public websites & media outlets.