06.11.14

Sessions Opening Statement At Hearing On The Nomination Of President’s Budget Director

WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following prepared remarks today regarding the nomination of Shaun Donovan to be Director of the Office of Management and Budget:

“Secretary Donovan, thank you for joining us here today.

You will get a fair hearing, and I will carefully consider your record and your testimony here today in reaching my decision about whether to support your confirmation.

The Director of the Office of Management and Budget is one of the most important positions in our government, entrusted to oversee our massive federal budget during a time of great financial danger. The President is the chief executive, and the OMB Director is his chief executive for management, integrity, efficiency and productivity in all that you do.

Only weeks ago, the Director of the Congressional Budget Office reaffirmed in testimony before Congress that we are on an ‘unsustainable path’ financially and face the ‘risk of a fiscal crisis’ as a result of our debt.

Whoever holds this job must be one of the toughest, strongest, most disciplined managers we have in America. So that is the question before us today: is Mr. Donovan that man?

The fact is that the OMB has consistently failed to meet many of its most basic obligations. Time and again, OMB has missed deadlines, ignored legal requirements, violated Congressional spending caps, and misrepresented financial data to Congress.

So that is why I feel we must carefully examine Mr. Donovan’s qualifications. All of us have a deep responsibility to the American people for every dollar, every expenditure, every program that we fund.

I must therefore express some concerns about Mr. Donovan’s time at the Department of Housing and Urban Development. First, HUD has never been known as the best run agency in Washington.

His time at HUD was Mr. Donovan’s only real experience managing a budget. But there is nothing in his track record there, or anywhere else, demonstrating a strong commitment to financial discipline, a particular skill in managing taxpayer dollars, or a passion for saving money. To my knowledge, Mr. Donovan has nothing in his background that would suggest that he has either a desire or a plan to confront our fast-rising entitlement program expenditures as they near insolvency.

Indeed, Mr. Donovan’s time at HUD was marred by a series of Inspector General reports raising questions about his management of even this small department.

One would want to see a sterling record of saving taxpayer dollars, finding new efficiencies, and streamlining government.

But the record shows concerning failures.

In regards to the American Recovery and Reinforcement Act, the Inspector General of HUD found: “HUD did not enforce the reporting requirements of the Section 3 program for ARRA Public Housing Capital Fund recipients. Specifically, HUD failed to collect Section 3 summary reports from all housing authorities by the required deadline and verify their accuracy and did not sanction housing authorities that failed to submit the required reporting information. As a result, 1,650 housing authorities did not provide HUD and the general public with adequate employment and contracting information.”

The Inspector General provided this summary of HUD’s record with the Homeless Prevention and Rapid Re-Housing Program: “Community Advocates did not properly administer its Supportive Housing Program and ARRA grant funds. Specifically, it did not (1) ensure that Supportive Housing Program funds were used for eligible activities and (2) maintain documentation to support required match contributions. It also failed to maintain a financial management system that separately tracked the source and application of ARRA funds and lacked sufficient documentation to support the allocation of operating costs.”

The Inspector General further questioned the quality of the data provided about the $800 billion stimulus package, writing: “Our limited review of the jobs data and calculations of the five selected HUD recipients disclosed inconsistencies in the methodology of counting the quarterly hours worked and various discrepancies between the hours recorded on time and payroll records and the hours included in Section 1512 reporting. We question the accuracy of the job calculations and, in some instances, the accuracy of the data used in these calculations.” 

The Inspector General also conducted a review of HUD’s toll free phone lines where citizens call to get information on HUD programs. The summary of that report explains: “We conducted an evaluation of [HUD’s] toll free phone lines…Our review disclosed that HUD could not determine (1) whether its toll free phone lines were functioning at an optimal level and (2) the level of service provided to its customers…we also identified numbers that were either disconnected or not HUD numbers that were advertised on HUD’s Web site.”

In its report on Multifamily Project Refinances, the IG found:

HUD did not have adequate controls to ensure that all Section 202 refinancing resulted in economical and efficient outcomes. Specifically, (1) HUD did not ensure that at least half the debt service savings that resulted from refinancing were used to benefit tenants or reduce housing assistance payments, (2) consistent accountability for the debt service savings was not always maintained, and (3) some refinancing were processed for projects that had negative debt service savings, which resulted in higher debt service costs than before the refinancing. These deficiencies were due to HUD’s lack of adequate oversight and inconsistent nationwide policy implementation regarding debt service savings realized from Section 202 refinancing activities. As a result, millions of dollars in debt service savings were not properly accounted for and available, the savings may not have been used to benefit tenants or for the reduction of housing assistance payments, and some refinanced projects ended up costing HUD additional housing assistance payments because of the additional cost for debt service.

This apparent record of mismanagement is ironic given Mr. Donovan’s faith in the government. Mr. Donovan once said: “I would never believe that the private sector, left to its own devices, is the best possible solution. I’m in government because of the role of government in setting rules and working in partnership with the private sector.”

You’re seeking an exceedingly important job, Mr. Donovan. There have been problems in HUD—have been for a number of years. You’ve been there quite a number of years. I don’t know that we’ve seen yet the commitment, the dedication, the drive, the real imperative to get this government under control.

Thank you Madame Chairman.”