Changes to Water Quality Grant and Loan Administration

In June representatives from the Governor’s Office invited the Water Quality Program (WQP), stakeholders, and clients to participate in a "Kaizen Event" to streamline the grant and loan processes.

"Kaizen" means continual improvement, and is a commonly used process-improvement tool in which a process is mapped, problems are identified, solutions are designed, and implementation planning occurs—all in one week!

The event was facilitated by a well-known Kaizen consultant.

As a result of this event, we expect immediate and imminent changes in the way grants and loans are managed. Successfully implementing these changes will require a strong team effort by stakeholders/clients, Ecology management, and frontline staff. We have received very clear direction and total support regarding this new process from the Governor's Office and from Ecology senior management, including Director Jay Manning, Deputy Director Polly Zehm , and Chief Financial Officer Pat McLain.

The Kaizen team was given the following objectives to guide their work:

Reduce the time it takes to process a grant and loan project from application to signature by 50 percent. This means shorten the time it takes from the time an application is delivered to the time an agreement is signed.
Reduce the time it takes to process a payment request from six to three weeks. This means from the time a payment request is received by Ecology to the time it is paid by fiscal.
Reduce the number of project extensions granted by 10 percent.
Increase the number of closeouts completed by 10 percent.

New Funding Cycle Process and Key Dates

As a result of the Kaizen review, the following decisions have been made:
Applicants will only have six months from the publication date of the Final Offer and Applicant list to sign an agreement. This is a significant change. We are also expediting the signature process for applicants identified on the FY 2008 funding list.
Critical application and program information will be made available on the website in August.
Applications will be accepted from September 1 – October 31 (no change).
Internal staff training will take place in July.
Application workshops will take place in September (no change).
As applications are received by Ecology, they will be sent electronically to regional project managers for immediate review and ranking. They will no longer be sent for the second regional review.
After the applications are rated, regional staff will convene in a central meeting location for up to three days to discuss scores and eligibility issues that arise from the rating and ranking process.
By the end of this meeting, Ecology will develop a Draft Offer and Applicant List to send to the Legislature before it convenes in January.
Shortly after the Draft Offer & Applicant List is sent to the Legislature, Ecology will begin the 30-day public comment period.
Once the Draft Offer & Applicant List is issued, staff and project sponsors will begin negotiating scopes of work for projects near the top of the Draft Offer & Applicant List (those almost certain to be funded).
Ecology will issue the Final Offer and Applicant List as soon as possible after the 30-day comment review process. The estimated date could be as early as March 15. New contract agreements can be signed at this time.
Expect to see standardized grant and loan boilerplates to reduce errors. Ecology will attempt to take scopes of work and budgets directly from the application whenever possible.

Payment Request Process: Changes Effective Immediately

We implemented the current payment request process because of a previous state audit. Financial Management Section staff implemented two new processes: one for high-risk projects and one for low-risk projects. The process for low-risk projects is the subject of this change; the process for high-risk projects has not changed.

Staff and Kaizen participants believed that the current process required an inordinate amount of “non-value-added” steps in order to approve a payment request submitted by a loan or grant recipient.

Specifically, a previous state auditor expressed concern over a potential lack of oversight in approving payment requests. The auditor expressed concern that the regional project managers were not reviewing the payment requests before fiscal paid them.

Because of the audit, Financial Management Section managers implemented a new process in which payment requests are first reviewed by the financial manager, then sent to the regional project manager for another review, and then sent back to the financial manager for final approval. This added a significant amount of time to the process and resulted in several external complaints by local governments that needed timely payments to make payroll, amongst other financial deadlines.

During the Kaizen event, a State Auditor’s Office representative was contacted for advice and guidance on the current and proposed process. The Auditor’s Office representative did not express significant concern over who approves payment requests as long as staff can ensure that costs billed/paid are for eligible and allowable costs. The Auditor’s Office representative also stressed that a key component in the success of this new process is the strong team relationship between the financial manager and the project manager.

New Payment Request Process for Low-Risk Projects:

Payment requests for low risk projects are submitted to the financial manager.
The financial manager will review and approve payment requests.
If the financial manager has significant concerns regarding progress or eligibility, the project manager will be contacted directly.

Kaizen participants: Janice Roderick, USDA - Rural Development; George Boggs, Whatcom Conservation District; Maryann Ness, King County DNR; Kahle Jennings, City of Centralia; Michelle Tucker, EPA; Chad Atkins, Ecology ERO; Sanjay Barik, Ecology CRO; Linda Steinmann, OFM; , Sarah Davenport-Smith, Ecology NWRO; Pat Brommer, Ecology HQ; David Dunn, Ecology HQ; Selden Hall, State Department of Health; Kelly Snyder and Leslie Hafford, Washington State Public Works Board; Ken Ziebart, Ecology NWRO; Cindy Price, Ecology HQ; Barb Pettit, Kittitas Reclamation District; Allison Mohns, Skagit County; Mike McNickle, Jefferson County Department of Public Health; Tom Knuckey, Bremerton; Steve Carley, Ecology, HQ; Shawna Beers, Ecology HQ; Meg Jones, Governor’s GMAP Office; Dave Peeler, Ecology WQ Program Manager; and Polly Zehm, Ecology Deputy Director.