816R06004
Analysis on the Use of
Drinking Water State Revolving Fund Set-Asides:

Promoting Capacity Development

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Office of Water (4606M)
EPA816-R-06-004
December 2007
www.epa.gov/safewater
                                                          Printed on Recycled Paper

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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
                                 Table of Contents

       I.      Executive Summary	1
       II.     History	1
       III.     Analysis	3
       IV.     State Program Administration	5
       V.     Uses in Capacity Development	5
       VI.     Outreach and Training	8
       VII.    Technical Assistance	9
       VIII.   Restructuring	12
       IX.     Targeted Assistance	12
       X.     Summary Analysis	14

       Appendix A: State Intended Use Plan (IUP) Summary Matrices	A-l

              Alabama	  A-2                   Nebraska	  A-52
              Alaska	  A-4                   Nevada	  A-54
              Arizona	  A-6                   New Hampshire	  A-56
              Arkansas	  A-8                   New Jersey	  A-58
              California	  A-10                 New Mexico	  A-60
              Colorado	  A-12                 NewYork	  A-62
              Connecticut	  A-14                 North Carolina	  A-64
              Delaware	  A-16                 North Dakota	  A-66
              Florida	  A-18                 Ohio	  A-68
              Georgia	  A-20                 Oklahoma	  A-70
              Hawaii	  A-22                 Oregon	  A-72
              Idaho	  A-24                 Pennsylvania	  A-74
              Indiana	  A-26                 Puerto Rico	  A-76
              Iowa	  A-28                 Rhode Island	  A-78
              Kansas	  A-30                 South Carolina	  A-80
              Kentucky	  A-32                 South Dakota	  A-82
              Louisiana	  A-34                 Tennessee	  A-84
              Maine	  A-36                 Texas	  A-86
              Maryland	  A-38                 Utah	  A-88
              Massachusetts	  A-40                 Vermont	  A-90
              Michigan	  A-42                 Virginia	  A-92
              Minnesota	 A-44                 Washington	  A-94
              Mississippi	  A-46                 WestVirginia	  A-96
              Missouri	 A-48                 Wisconsin	  A-98
              Montana	 A-50
       Appendix B: EPA DWSRF Regional Contact Information	B-l
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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development



                               Table of Exhibits

      Chart 1: Annual Assistance Provided Over the Life of the DWSRF	1

      Table 1: Financial Data for 2005 DWSRF Set-Aside Funding and Utilization ...4

      Chart 2: State Drinking Water Initiatives Funded by the Local Assistance and
      Other State Programs (15%) Set-Aside	4

      Map 1: States that Use the 10% Set-Aside to Fund Primacy Agency
      Management	5

      Map 2: States that Use Set-Aside Funds to Implement/Manage a Capacity
      Development Strategy	5

      Chart 3: Prevalence of Set-Aside-Funded Program Administration Tasks	6

      Chart 4: How DWSRF Set-Asides Promote Program Integration	7

      Map 3: States that Use Set-Aside Funds to Support Public Education Efforts ....8

      Map 4: States that Use Set-Aside Funds to Train System Personnel and
      Decision-Makers	8

      Chart 5: Use of DWSRF Set-Asides for Outreach and Training Activities	9

      Chart 6: States' Use of DWSRF Set-Asides for Technical Assistance	11

      Map 5: States that Use Set-Aside Funds for Consolidation and Restructuring
      Efforts	12

      Map 6: States that Use Set-Aside Funds to Target Small and Disadvantaged
      Systems	13
December 2007                                                                     ii

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          Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


 I.  Executive Summary

  The purpose of this document is to identify the multiple uses of the Drinking Water State
  Revolving Fund (DWSRF) set-asides in promoting capacity development efforts. This national
  "one-year snapshot" addresses the four different types of set-asides and highlights some of the
  more common applications being used by states. The body of the document includes specific
  examples of set-aside uses that states may find applicable within their own jurisdictions. In
  examining this report, states and regions can become exposed to a variety of effective and
  allowable uses of the DWSRF set-asides. These uses can be seen as potential "tools in the
  toolbox" that states may not have yet considered.

  The analysis is based on two primary sources of set-aside-related data: the DWSRF National
  Information Management System (DWNIMS) and states' DWSRF Intended Use Plans (lUPs).
  All data from state lUPs used to identify trends and set-aside uses in the body of this document
  have been summarized by state in Appendix A.

  This report cites numerous examples of state-specific set-aside  uses as illustrations. However, the
  reader should recognize that many states have comparable examples of such usages. Appendix A
  can serve as a reference for the reader to contact states for further information. It should be noted
  that this document is not intended as a report card, but merely as a review of what state co-
  regulators deem a sustainable infrastructure initiative supported by funds from the DWSRF set-
  asides. Further information can be obtained either by contacting each state's primacy agency
  directly or by contacting the EPA DWSRF Coordinator in the appropriate Region (See Appendix
  B).
                                       Chart 1: Annual Assistance Provided Over the
                                       	    	Life of the DWSRF 	  	
II.  History
   $1.8
  Since the 1996 Amendments to
  the Safe Drinking Water Act
  (SDWA) were passed, EPA and
  its state co-regulators have been
  enhancing established programs
  and implementing new ideas that
  promote sustainability in public
  water systems (PWSs). This
  programmatic approach, referred
  to as capacity development, is
  utilized by all 50 states and
  Puerto Rico.
e
—
~o
Q
*^
o
V)
c
o
m
   $0.0
      1997 1998  1999 2000 2001 2002 2003 2004 2005 2006
                           Year
  Public drinking water systems serving 10,000 or fewer customers represent over 97 percent of
  the nation's PWSs (Safe Drinking Water Information System [SDWIS] Data, 2005). Smaller
  systems often have more challenges in technical, managerial, and financial (TMF) resources than
  their larger counterparts. Many small systems were created to provide small communities or
   December 2007

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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


subdivisions drinking water when regulatory standards were less protective and less demanding.
Some PWS challenges, for both large and small systems are:
    •   The need to upgrade or replace aging infrastructure with inadequate funds.
    •   Maintaining the quantity and quality of source water.
    •   The public's increasing demands for lower utility costs.
    •   The establishment of enhanced and more protective regulatory requirements or rules.

In recognition of the challenges facing smaller PWSs, Congress established several provisions of
the 1996 SDWA Amendments with a small system focus, including the implementation of
capacity development programs. This provision places a significant emphasis on assisting PWSs
of all sizes in acquiring and maintaining their TMF capacity. TMF capacity is the ability to plan
for, achieve, and continually provide safe and affordable drinking water to customers.

As part of the 1996 SDWA Amendments, the DWSRF was  established to provide states with a
financing mechanism to ensure the delivery of safe drinking water to the public. Since 1997,
states have been able to use federal capitalization grant money to create funding accounts from
which PWSs can borrow money to finance infrastructure improvements. States have the
flexibility to target certain percentages of these capitalization grants, in the form of set-asides, for
different activities that can help implement and expand their drinking water programs.

These set-asides enable states to address specific aspects of water system operation and
management and emphasize enhanced institutional capacity as a means of better achieving
sustainability. This analysis summarizes the use of DWSRF set-aside funds by the states and
Puerto Rico.

The assessment and tabulation of set-aside-funded activities cuts across the four individual set-
asides as noted below:

•   Small System Technical Assistance (2%)
    Up to 2 percent of the federal capitalization grant may be set aside to provide technical
    assistance to small community water systems (CWSs) serving  10,000 or fewer persons. All
    but two states have taken advantage of this set-aside. Activities paid for with these funds
    include project planning, circuit riders, and special small system training.

•   Administration and Technical Assistance (4%)
    Up to 4 percent of the capitalization grant may be set aside for costs associated with
    administering state DWSRF programs. Every state sets aside some portion of its annual
    DWSRF allotment to administer its DWSRF program and/or to provide technical assistance
    to PWSs.
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            Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


   •   State Program Management (10%)
       This set-aside allows states to use up to 10 percent of their annual allotment to develop and
       implement capacity development and operator certification programs, administer source
       water protection programs (which includes technical assistance to prevent contamination of
       sources), or fund a portion of their public water supply supervision (PWSS) programs. The
       state must provide a 100 percent match for this set-aside with either a 1:1 dollar match, an
       "in-kind" match, or a combination of the two.

   •   Local Assistance and  Other State Programs (also called 1452(k) Activities) (15%)
       States may use up to 15 percent of their annual allotments to  fund a variety of activities and
       assistance associated with efforts such as source water protection, wellhead protection, and
       capacity development.  A maximum of 10 percent of funds set aside can be spent on any
       single effort.
III.  Analysis

   The following analysis is based on two primary sources of set-aside-related data: DWNIMS and
   states' DWSRF lUPs, which are submitted individually as a condition of receiving the DWSRF
   capitalization grant. These two sources are different in scope and purpose and, as such, present a
   number of minor inconsistencies in examining each of the four set-asides. While DWNIMS data,
   compiled at a national level, provide an authoritative accounting of set-aside funding and
   utilization, it offers little detail on how, or in what context, funds are actually spent. State lUPs,
   on the other hand, provide greater detail on how states are planning to use their set-asides, but
   vary in the amount of available information they contain due to  a lack of standardized format and
   level of content. For instance, many states did not include information regarding the
   Administrative and Technical Assistance (4%) set-aside in their IUP. As a result, where this
   report describes state activities funded by set-asides as reported  in lUPs, these descriptions
   should not be considered comprehensive accounts of all state activities. Additionally, this
   analysis does not take into account the specific use of set-aside funds by Illinois, which only uses
   its 4% Administrative set-aside, and Wyoming, since they do not use DWSRF set-asides.
   Discrepancies that arise from inconsistent data will be appropriately qualified. Therefore, 49
   states use the 4% set-aside, while all states, except for Wyoming and Illinois, use the 15% set-
   aside to assist them in their capacity development program initiatives and efforts.

   The same data show that the Small Systems Technical  Assistance (2%) set-aside is nearing full
   participation, with 48 states making use of these funds. Participation in the State Program
   Management (10%) set-aside is lowest at 44 states. Several states in the past have indicated that
   they are unable to obtain the dollar-for-dollar match funds that are required for this type of set-
   aside.

   In terms of overall funding, the total amount set aside within all four categories since their
   inception in 1996 is $1.049 billion. As of June 30, 2005, cumulative set-aside expenditures
   totaled slightly more than $699 million, leaving a cumulative balance for all four set-asides of
   approximately $349.8 million.
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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
Table 1 presents set-aside award and utilization data for the four set-asides as of June 30, 2005.
These data represent the use of respective set-aside funds by all participating states (source:
DWNIMS).

    Table 1: Financial Data for 2005 DWSRF Set-Aside Funding and Utilization
                                  (in Millions of Dollars)
DWSRF Set-Aside
Admin, and Technical Assistance
Small System Technical Assistance
State Program Management
Local Assistance and State Programs
Total
Set-Aside
Awards
$28.4
$15.1
$44.9
$36.5
$123.9
Set-Aside
Expenditures
$26.8
$13.4
$38.3
$26
$104.5
Set-Aside
Balance
$1.6
$1.7
$6.6
$10.5
$19.4
The level of variability in how states use funds from the individual set-asides differs for each set-
aside. For example, funds drawn from the Administration and Technical Assistance (4%) set-
aside are restricted to the implementation of DWSRF activities and the provision of technical
assistance. There is relatively more flexibility, however, in the use of Local Assistance and Other
State Program (15%) set-aside funds; this set-aside offers the discretion needed to target state-
specific drinking water priorities. The relative limitation and flexibility of these two set-asides is
reflected in most state lUPs.

Chart 2 illustrates the range and number of drinking water-related initiatives funded by the Local
Assistance and Other State Programs (15%) set-aside. It is noteworthy that of the 95 initiatives
cited in the state lUPs, the 90 percent majority are clearly focused on the set-aside's three
primary objectives: source water protection, wellhead protection, and capacity development.

   Chart 2: State Drinking Water Initiatives Funded by the Local Assistance and
                        Other State Programs (15%) Set-Aside
             Wellhead Protection
              Source Water
          Assessment / Protection
OperatorTraining &
   Certification

Operating Permit Program
                                                            Land Acquisition/
                                                             Conservation
                                                            Capacity Development
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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
                                              Map1
IV.  State Program Administration

   Funding for the administration of
   state DWSRF program activities is
   drawn primarily from the
   Administration and Technical
   Assistance (4%) set-aside. State
   lUPs indicate that 33 states
   (including Puerto Rico) are using
   set-aside funds to administer their
   respective DWSRF program. As
   noted, DWNIMS data indicate that
   all states are utilizing the 4% set-
   aside for this purpose and/or
   technical assistance. DWNIMS data
   show that participating states used a total of $26.8 million from the 4% set-aside to fund DWSRF
   administration in the 2005 funding cycle.

   In addition to DWSRF program administration, many states are using the set-asides to
   supplement funding towards the management of their primacy agencies. States are able to apply
   funds from the State Program Management (10%) set-aside to support their PWSS efforts. Based
   on their lUPs, 37 states are drawing from the 10% set-aside to fund primacy agency management
   (Map 1). DWNIMS data show that participating states used a total of $38.3 million from the 10%
   set-aside to support their individual PWSS activities in 2005.
                                                  Use the 10% Set-Aside to Fund
                                                  Primacy Agency Management
                                               Map 2
 V.  Uses in Capacity Development

   Another critical use of DWSRF set-
   asides is the support of state Capacity
   Development Programs. Capacity
   development underlies each state's
   effort to ensure an adequate, long-term
   supply of safe drinking water. By
   investing in the TMF capabilities of a
   state's drinking water program, set-
   aside funds can be used to improve
   system performance, safety, and
   reliability. In total, 45 states and
   Puerto Rico report in their lUPs using
   set-aside funds to implement/manage a
   capacity development strategy (Map
   2).
The DWSRF set-asides are used to fund a number of specific efforts tied to capacity
development, including inspections, enforcement, sanitary surveys, and data management.
                                             Use Set-Aside Funds to Implement / Manage
                                             a Capacity Development Strategy
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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


According to state lUPs, most states are using the Administration and Technical Assistance (4%)
and the State Program Management (10%) set-asides to fund these tasks.
Additional details on the specific uses of set-aside funds are provided below:

     •  28 states use set-aside funding to support drinking water-related inspections.
        This includes annual PWS inspections, construction inspections, food and lodging
        inspections, complaint and water quality alert investigations, small system inspections,
        capacity development reviews, and random compliance inspections.

     •  16 states use set-aside funding to support enforcement efforts.
        This includes targeted  systems, general PWSS enforcement, and enforcement of
        operator certification requirements.

     •  27 states use set-aside funds to support sanitary survey processes.
        This includes training for survey completion and use of surveys as an opening for
        capacity development initiatives and small system assistance programs.

     •  40 states use set-aside funding to support data management activities.
        This includes maintaining and updating Safe Drinking Water Information System
        (SDWIS)/State and program-specific (e.g., wellhead protection) databases, migration to
        electronic records keeping, integration of PDA/handheld technologies, implementing
        Web-based access, expansion of GIS capabilities, and software and hardware upgrades.

Chart 3 illustrates the number of states using DWSRF set-aside funds to support the program
administration tasks presented above. These totals are drawn exclusively from the state lUPs.
       Chart 3: Prevalence of Set-Aside-Funded Program Administration Tasks
              Inspections
Enforcement       Sanitary Surveys     Data Management
   Program Administration Task
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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


Notable Examples of Capacity Development Uses:

A number of states use the program administration tasks listed above to meet multiple objectives.
In West Virginia, PWS inspections now include backflow prevention testing and device
certification. Moreover, sanitary surveys of small PWSs in West Virginia are completed as part
of the state's on-site technical support program. While nearly one-third of states indicate they
will use set-aside funds to increase or enhance enforcement efforts, Alaska reports that it will
work with EPA to target specific systems for enforcement and/or comprehensive technical
assistance.
          Chart 4: How DWSRF Set-Asides Promote Program Integration
                           Operator
                          Certification
Public Involvement/
   Right to Know
       Source Water
         Protection
                               DWSRF Set-Asides
              Capacity
            Development
                  Sanitary Survey
                    Inspections
            Improving System
              Security and
           Emergency Response
                                  Rule Implementation
In addition to linking sanitary surveys to capacity development (South Carolina, like many
states, reports that the surveys are a "major component" of its capacity development strategy),
some states (e.g., Utah, Hawaii) also contract with local departments of health or other
organizations to conduct the surveys.

States are able to assist multiple programs by using set-asides to fund investment in data
management. For example, North Carolina is using set-aside monies to fund software and
hardware upgrades for its wellhead protection efforts. Connecticut's Operator Certification
Program will benefit from a database of eligible operator renewal training courses. In Iowa, the
10% set-aside will be used to upgrade computer programs and systems for a PDA-based sanitary
survey project. Web-based access is another compelling technology option for states. Oklahoma
is developing a secure Web site that allows field staff to modify and add to existing datasets.
 December 2007

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           Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
VI.  Outreach and Training

   Outreach and training at the state level are key tools for improving capacity among system
   owners and operators. Additionally, outreach and training raise public awareness in local
   drinking water systems, offering a degree of transparency and insight into system operation and
   management. In the best-case scenarios, outreach and training will increase both system
   performance and consumer confidence, assuring high-quality drinking water from well-
   maintained, well-regulated suppliers.

   To this end, a majority of states are using DWSRF set-aside funds to support outreach and
   training activities. Because these activities may fall under the umbrella of a variety of state
   programs, from operator certification to  source water protection, applicable funds are drawn
   from across the 2%, 10%, and 15% set-asides.
   DWSRF set-aside funds support public
   education efforts in 39 states (Map 3).
   This includes newsletters, Consumer
   Confidence Reports (CCRs), and
   public-access Web sites with drinking
   water program and system information.
   A number of state-specific source water
   and wellhead protection programs also
   use set-aside funds to promote public
   awareness and program objectives,
   including teacher training and
   community outreach.
 Map 3
     Use Set-Aside Funds to Support
     Public Education Efforts
 Notable Examples of Outreach and Training Uses:

   States also employ set-aside funds to train PWS operators and managers on how to improve their
   TMF capacity. Set-aside funds are used by 41 states and Puerto Rico to train system personnel
   and decision-makers (Map 4).
   Operator certification is another area
   where states can have a significant
   impact on the capacity of PWSs.
   Maryland, for example, uses the
   number of systems with certified
   operators as a measure of capacity
   improvement. Many states use
   DWSRF funds to present workshops,
   seminars, and other training events that
   provide operators with ongoing
   educational opportunities. This
   "continuing education" is frequently a
Map 4
   Use Set-Aside Funds to Train System
   Personnel and Decision-Makers
    December 2007

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             Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


     prerequisite for maintaining or renewing operator certification. Several states' data management
     activities are linked to operator certification/licensing; these states are working to integrate
     databases that will enable more functional operator tracking and monitoring. Overall, 32 states
     use DWSRF set-aside funds to manage operator certification programs. DWNIMS data show
     that participating states have used nearly $16 million from the 10% set-aside since 1996 to fund
     operator certification programs.

     States are using a range of strategies to provide broad access to comprehensive operator
     certification and training programs, many of which, incorporate contract agreements. The Internet
     is also proving useful in the presentation of Web-based training sessions and access to online
     lists of approved  courses, as in the case of Pennsylvania. In Delaware, the Delaware Technical
     and Community College will receive one-half of the state's Small System Technical  Assistance
     (2%) set-aside (approximately $83,000) as the  sole provider of operator certification training.
     Under this agreement, the community college will test and train 350-400 operators over the
     course of a year, according to state regulations. This type of agreement is representative of the
     approach many states are taking to maintain their operator certification program.

     Chart 5 summarizes the number of states using DWSRF set-aside funds for outreach and training
     activities.
          Chart 5: Use of DWSRF Set-Asides for Outreach and Training Activities
         10
                   Public Education              PWS Staff Training            Operator Certification
                                       Outreach and Training Activity
VII.  Technical Assistance
    Technical assistance to PWSs is integral to capacity development and frequently provides a
    critical service for systems that are out of compliance. Such assistance is especially relevant for
    small systems (those serving fewer than 10,000 persons), many of which lack the TMF capacity
    to successfully address on their own the challenges they face. Similar to outreach and training-
    related activities, technical assistance is provided in a wide variety of contexts. This means that
    December 2007

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        Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


states draw from across the DWSRF set-asides to fund technical assistance initiatives. For the
purposes of this analysis, technical assistance consists of the following efforts:

     •  30 states use set-aside funds to support site visits, many through circuit riders, as
        reported in the lUPs.
        Site visits by qualified water system personnel form the mainstay of technical
        assistance in many states, particularly for small, rural PWSs. Site visits provide an
        opportunity for a hands-on, face-to-face exchange between operators and experts. In
        addition to remedying technical difficulties or addressing problems of non-compliance,
        many states structure  site visits to provide managerial and financial guidance as part of
        their capacity development strategies.

        Circuit riders offer states a cost-effective means of meeting demand for on-site
        technical assistance and other site visits. Many states contract with Rural Water
        Association (RWA) and similar groups to ensure adequate circuit rider coverage.
        Maine, for example, is applying its Small System Technical Assistance (2%) set-aside
        funds to pay for two Water Quality Specialist circuit riders through the Maine  RWA.
        The two circuit riders will visit 50-70 PWSs per month.

     •  IUP data indicate 3 states are using set-aside funds to conduct rate studies.
        Rate studies allow PWSs to determine if their rates are sufficient to cover the costs
        associated with collecting, storing, treating, and distributing a safe drinking water
        supply. Rate studies are particularly valuable in the context of managerial and  financial
        capacity development.

     •  6 states are using set-aside monies to  fund pilot studies, according to state  lUPs.
        Like rate studies, pilot studies are useful in exploring options for improving PWS
        operation. Kentucky,  for example, is using money from the 2% set-aside to fund a
        disinfection byproduct (DBP) pilot program evaluation.

     •  11 states are using set-aside funds for Area-Wide Optimization Program (AWOP)
        activities, according to state lUPs.
        AWOPs are used by states to target for assistance those high-risk PWSs with treatment
        processes in place that are not being optimally  utilized.  By developing prioritization
        criteria and evaluating system performance, states can focus investment and capacity
        development efforts on the most critically at-risk systems, often generating substantial
        increases in public health protection at low cost.

     •  8 states are using set-aside funds for leak detection/efficiency programs, according
        to state lUPs.
        Assisting PWSs with  leak detection and water efficiency programs conserves resources
        and can increase suppliers' fiscal health. A number of states are using set-aside funds to
        support leak detection and water efficiency programs. Noteworthy examples include
        Massachusetts, which offers local assistance grants for leak detection; Florida, which
        provides training on leak detection during monthly Florida RWA meetings; and Texas,
        which is funding  water conservation and drought contingency programs.
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          Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
      •   IUP data show that 13 states are using set-aside funds for security-related efforts.
          Technical assistance for security-related issues includes assistance preparing
          Vulnerability Assessments (VAs) and Emergency Response Plans (ERPs). Arkansas,
          for example, uses set-aside funds to assist PWSs in drafting ERP documents as part of
          its wellhead protection program. Missouri's set-aside funds support the completion of
          VAs as part of the state's capacity development strategy.

      •   43 states are using set-aside funds for source water/wellhead protection initiatives.
          IUP data show most states are pursuing source water/wellhead protection programs.
          The success of these initiatives depends on participation by PWSs statewide, many of
          which require technical assistance to effectively implement protection-related  efforts.
          Set-aside funding makes it possible for states to assist smaller PWSs with source water
          and wellhead protection. Minnesota, for example, helps small systems using
          groundwater to identify and manage potential sources of contamination. New
          Hampshire provides grants for at least six source water protection projects per year.

 Chart 6 summarizes the number of states using DWSRF set-aside funds for technical assistance
 activities.
        Chart 6: States' Use of DWSRF Set-Asides for Technical Assistance
           Site Visits
                     Rate Studies
                                Pilot Studies
                                            AWOPs
                                                        Leak
                                                     Detection/Water
                                                       Efficiency
                               Form of Technical Assistance
Security
           Source
         Water/Wellhead
          Protection
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             Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


VIII.  Restructuring

     In some cases, the long-term viability of a PWS will depend on a partnership, consolidation, or
     similar restructuring effort. These measures are intended to correct a system's TMF inadequacy.
     These efforts also reflect a trend towards regionalization. Regionalization—the integration of
     otherwise disparate PWSs across a large geographic area—is predicated on the economies of
     scale enjoyed by larger systems. These systems typically possess superior TMF resources,
     making them better equipped to maintain compliance and sustain long-term public health
     protection.
                                                    Map 5
In general, few states report using set-
aside funds to encourage partnerships,
consolidation, or restructuring (Map
5). Virginia is a notable exception. As
part of its capacity development and
technical assistance strategy, Virginia
uses money from its 15% set-aside to
fund a receivership program. The
program is designed to improve water
quality for PWSs in receivership until
either their sale or connection to an
existing PWS is complete. The
Virginia receivership program
requires a stringent showing of urgent
conditions and dire lack of capacity at the PWS to appoint a receiver. The receivership funds can
then be allocated for short-term activities essential to restore the basic functioning of the PWS.
                                                       Use Set-Aside Funds for Consolidation
                                                       and Restructuring Efforts
  IX.  Targeted Assistance

     Because they often have more limited TMF resources, small PWSs are particularly challenged in
     complying with state and federal water quality standards. As additional standards take effect,
     increasing the number of requirements systems must meet, it is important that states provide
     these systems with targeted assistance. Disadvantaged systems, designated by the SDWA as
     PWS service areas that meet affordability criteria established by the states in which they are
     located (1452[d][3J), also benefit from concerted state support. The Small System Technical
     Assistance (2%) set-aside provides states with the funds needed to help small PWSs develop
     TMF capacity and maintain compliance. Data from DWNIMS indicate that more than $106
     million has been awarded under the 2% set-aside through mid-2005.
      December 2007
                                                                                        12

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          Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
Notable Examples of Targeted Assistance Uses:

  According to their IlJPs, 44 states and Puerto Rico are targeting assistance to small systems with
  set-aside funds, including those drawn from the Small System Technical Assistance (2%) set-
  aside.1 Of those 44, five states are using set-aside funding for targeted assistance to
  disadvantaged systems (Map 6). Much of the assistance provided to these systems is delivered as
  part of a capacity development strategy or in the context of broader technical assistance
  activities. Tennessee, for example, provides small PWSs with training in proper sampling
  techniques. Michigan is helping small systems initiate wellhead protection efforts cost-
  effectively by using existing datasets to model groundwater dynamics. As part of its capacity
  development strategy, Georgia is supporting 85 technical assistance visits to help small systems
  with compliance over a two-year period.
  States also allocate funds from the 2%
  set-aside to support small systems in a
  variety of other ways. Indiana and
  Ohio use  set-aside monies to fund
  distinct technical assistance programs:
  the Small System Technical
  Assistance Fund (SSTAF) in Indiana;
  and the Small System Technical
  Assistance Program (SSTAP) in
  Ohio. States like Mississippi, Nevada,
  and New  Jersey use contract
  arrangements to ensure small PWSs
  receive the technical support they
  need.
         Map 6
\ _   \ Use Set-Aside Funds to Target Small Systems
^B Use Set-Aside Funds to Target Disadvantaged Systems
  While disadvantaged PWSs need not be small, they are similarly at-risk in terms of maintaining
  compliance and ensuring the continued delivery of high-quality drinking water. Many states use
  consumer data, such as median income, to define a system as disadvantaged. In addition to
  receiving targeted assistance through the DWSRF set-asides, the infrastructure needs of
  disadvantaged systems are often prioritized through the loan application review and project
  ranking processes.

  In some instances, set-aside-funded programs offer disadvantaged PWSs a bridge to DWSRF
  loans. South Dakota, for example, uses set-aside monies to help disadvantaged systems obtain
  funding for infrastructure upgrades. In New Mexico, disadvantaged systems benefit from
  assistance preparing Preliminary Engineering Reviews and environmental assessment
  documentation. Michigan uses set-aside monies to help disadvantaged systems meet project
  planning costs.
  1 This figure differs from the DWNIMS data, which indicate that 48 states are providing technical assistance to
  small systems with funding from the 2% set-aside.
  December 2007
                                                 13

-------
           Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development


X.  Summary Analysis

  In examining the organization and objectives of the programs and activities funded through the
  DWSRF set-asides, several overarching trends emerge. States are applying set-aside monies in
  accordance with the intent of capacity development—the need to protect public health by
  investing in the increased TMF performance of PWSs. Set-aside funds can be easily aligned with
  state capacity development priorities, which help to achieve a reliable supply of high-quality
  drinking water for the American public. In this regard, efforts to assist small and disadvantaged
  PWSs, in particular, can be seen primarily as exercises in capacity development.

  The use of set-aside funds to undertake a variety of activities that build on regular contact with
  PWS owners and operators offers a concrete example of how the tactical aspects of PWSS or
  program administration can support more strategic capacity development objectives. Maintaining
  a direct relationship with PWSs statewide, either through technical assistance, operator
  certification, or other training or regulatory activities, is key to most states' efforts to increase
  compliance through enhanced institutional capacity.

  Similarly, states' investment in information technology and data management is an effective
  management and outreach tool in promoting capacity development that exemplifies the use of
  DWSRF set-aside funds to expand institutional capabilities, outreach, and overall  PWS
  assistance. While maintaining or upgrading SDWIS/state systems is an important data
  management effort, the integration of handheld/PDA technology into state networks offers
  another means of streamlining data collection and reporting. State-managed operator certification
  programs also depend on accurate, up-to-date information regarding qualifications, and ongoing
  trainings. The proliferation of source water and wellhead protection programs has created
  demand for dedicated systems to manage GIS and hydrologic and geologic data, inventories of
  potential contaminants, and source water assessments. Use of the Internet as a tool for internal
  and external communication and outreach (e.g., remote access for operators and regulators,
  public information Web sites) has also required continued investment in information technology.
  These investments span the variety of state activities, contributing to capacity development at
  multiple levels.

  As can be clearly seen throughout this document, states vary in their approach to using set-
  asides. With such diversity, it is important to recognize that what may work for one state may not
  be appropriate for use in another. Identifying what "works" is crucial in managing a successful
  DWSRF program. States should continue to review their current assistance strategies and PWSS
  program priorities regularly in order to determine the overall effectiveness of historical and
  current set-aside usage. Only through appropriate programmatic review and accountability will
  we, as a nation, be able to  continually provide water safe to drink for a sustainable future.
   December 2007                                                                         14

-------
      Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
Appendix A
State Intended Use Plan (IUP) Summary Matrices
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-------
    Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
 Appendix  B
 EPA DWSRF Regional Contact Information
December 2007

-------
         Analysis on the Use of DWSRF Set-Asides: Promoting Capacity Development
                 US EPA - DWSRF Regional Contact Information
Region I: CT, ME, MA, NH, RI, VT
  U. S. EPA One Congress Street JFK Federal
  Building
  Boston, MA 02114-2023
  DWSRF contact:
  Jackie Leclair (MA, ME, VT)
  (617)918-1549
  Mark Spinale (CT, NH, RI)
  (617)918-1547
  (617) 918-2064 (fax)

Region II: NJ, NY, Puerto Rico
  U. S. EPA 290 Broadway
  New York, NY 10007-1866
  DWSRF contact:
  Alicia Suarez
  (212)637-3851
  (212)637-3891 (fax)

Region III: DE, MD, PA, VA, WV, DC
  U.S. EPA 1650 Arch Street
  Philadelphia, PA 19103
  DWSRF contact:
  Mary T. Brewster
  (215)814-5456
  (215) 814-2782 (fax)

Region IV: AL, FL, GA, KY, MS, NC, SC, TN
  U. S. EPA 61 Forsyth Street
  Atlanta, GA 30303
  DWSRF contacts:
  Sheryl Parsons (GA, FL, NC, KY)
  (404) 562-9337
  Carl Biemiller (AL, TN, MS, SC)
  (404) 562-9341
  (404) 562-8692 (fax)

Region V: IL, IN, MI, MN, OH, WI
  U. S. EPA 77 West Jackson Blvd.
  Chicago, IL 60604-3507
  DWSRF contact:
  Andrew Lausted
  (312)886-0189
  (312) 886-0168 (fax)
Region VI: AR, LA, NM, OK, TX
  U. S. EPA 1445 Ross Avenue
  Dallas, TX 75202-2733
  DWSRF contact:
  Velma Smith
  (214)665-7153
  (214) 665-6490 (fax)

Region VII: IA, KS, MO, NE
  U. S. EPA 901 North Fifth Street
  Kansas City, KS 66101
  DWSRF contact:
  Judy Novak
  (913)551-7360
  (913) 551-7765 (fax)

Region VIII: CO, MT, ND, SD, UT, WY
  U. S. EPA 999  18th Street, Suite 300
  Denver, CO 80202-2466
  DWSRF contacts:
  Brian Friel (ND, SD, WY)
  (303)312-6277
  Ron Hill (CO, MT, UT)
  (303)312-6265
  (303)312-6131 (fax)

Region IX: AZ, CA, HI, NV, Guam,
  American Samoa
  U. S. EPA 75 Hawthorne Street
  San Francisco, CA 94105
  DWSRF contact:
  Jose T. Caratini
  (415)972-3566
  (415) 947-3549 (fax)
  E-Mail: caratini.jose@epa.gov

Region X: AK, ID, OR, WA
  U. S. EPA 1200 Sixth Avenue
  Seattle, WA 98101
  DWSRF contact:
  Rick Green
  (206)553-8504
  (206) 553-0165 (fax)
December 2007
                                                                                  B-2

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