Rural Utilities Service

Here’s an interesting half a billion dollar bureau inside the Department of Agriculture that you probably never heard of: The Rural Utilities Service.  Like 4/5ths of the department of agriculture it has very little to do with actual agriculture.  Instead, it concentrates on bringing quality, affordable utility to rural areas.  Utilities such as electricity, clean water, telephone, and even broadband.

In 2009, the department spent 774 million on clean water and sewer projects.  It spent the money on loan guarantees, direct loans, and grants to partially funded projects.  What this means is that the Rural Utilities Service cannot decide to build something.  The local city or Indian tribe must plan it first and then petition for the department’s help.  The department gave out more money than usually thanks to the ARRA (American Recovery and Re-investment Act).  They even have a great annual report that it’s easy to read through.  Here’s a highlight of what the money was spent on:

In FY 2009, WEP funded 1,239 projects for $2.5
billion. The majority (77 percent) of the projects were
funded from the WEP regular loan and grant program
using both FY 2009 appropriated funds and Recovery
Act Funds. The balance of the projects was funded
through several special programs and initiatives.

Another utility that this bureau is trying to provide is broadband Internet.  This one cost us $135 million in 2009.  Not only does it help bring broadband to rural areas it also brings distance learning and medical resources to rural areas.

The Distance Learning and telemedicine Program (DLT) is designed specifically to meet the educational and health care needs of rural America. Through loans, grants and loan/grant combinations, advanced telecommunications technologies provide enhanced learning and health care opportunities for rural residents. The DLT program has funded over 1,050 projects in 48 states and four US territories totaling $350.4 million.

The accounts that track the spending does not differentiate between broadband and the DLT programs.  I guess because it’s hard to have one without the other.

The final expense account for the Rural Utilities Service is $100 million dollars for telephone communication infrastructure.  Maybe I’m a city-slicker snob, but this sounds like an awful lot of money for a dying technology.  I think we could eliminate this program, and either pocket the money, or put it into the rural broadband program.

For those paying close attention, you may have noticed that the previous 3 programs added together cost $1,009 million dollars whereas at the beginning I claimed that the department only cost half a billion.  That is because the last utility that the Rural Utilities Service provides actually made money in 2009.  Rural Electrification.

So how does Rural Electrification bring in money?  It’s because so many of it’s programs are direct loans.

USDA Rural Development makes loans to corporations, states, territories and subdivisions, and agencies such as municipalities, people’s utility districts, and cooperative, nonprofit, limited-dividend, or mutual associations that provide retail electric service to rural areas or supply the power needs of distribution borrowers in rural areas.

If more people pay off loans, than new loans are made -poof!- money made that year.  As far I can tell, this is the only utility program run by RUS that offers direct loans.  Of course this means that the program doesn’t make money every year, but it did in 2009.  350 million was made which even includes $22 million from the ARRA for High Energy Cost grants.

One more thing that offset the cost of the Rural Utilities Service is $209 million dollar income  leftover from the Rural Development Insurance fund(pdf).  The program winded down in 1987, but money is still being collected on loans it made.

So in conclusion.  If we take away some of the misleading offsets, we can see that about a billion dollars is spent on trying to bring city quality services to rural areas.

Community Development Month

August is going to be “Community Development Month” here.  No, it’s not some crackpot way to try and promote my blog.  Rather, it’s the part of the Federal Budget I’ll be mostly studying this month.  The Office of Management and Budget has a spending category called “Community and Regional Development”.  Within that there are 3 subgroups, “Community Development”, “Area and regional development”, and “Disaster relief and insurance”.

Altogether, this function of the government only gets about $27 billion a year, making it the 3rd smallest function.  Beat out by Energy, and general government.  I point this out, because I only meant this to be “Community Development Week” because it was so small.  However, upon studying it further, it’s turned into a much larger task.  For instance, “Community Development” only has 9 accounts associated with it in 2009, but many of those accounts represent more than 1 program.  For instance, the “Community Development Fund” covers 8 or 9 programs administrated by the Department of Housing and Urban Development.  There’s also a Renewable Energy Program ran by the Department of Agriculture that covers expenses for 3 different programs.

It probably sounds like a dry topic, but I’m learning about programs that I never heard of, fixing problems I didn’t know existed.  For instance, there is a fund to encourage cities to clean up polluted land and get it redeveloped.  There are other programs that I will go through as the month goes on.

This is meant to emulate the work I did on the “Income Security” function.  However, this time, available information prevailing, I will be going into even more detail than before.  If it’s interesting to me and others, I hope to do this with each of the sub-functions.  By the end of it, I should be an expert on the federal budget.  We’ll see…

The Deptartment of 1/5 Agriculture

Here’s a fun factoid for Monday morning.  The federal government spent approximately $22.2 billion dollars on agricultural research, services, and stabilization in Fiscal Year 2009.  However, the Department of Agriculture spent $114.4 billion dollars in Fiscal Year 2009.

So what is going on here?  Obviously, the Department of Agriculture spends it’s money on things besides agriculture.  This is nothing new.  This has been occurring at least since 1962 and will continue through 2010 and 2011.


(Click chart for larger image.  Click here for the numbers)

Looking at the chart above, you’ll notice that the amount the Department spends on non-agricultural spending was pretty low in 1962, but in the 70s started rising and kept rising, until the 2000s and great recession when spending didn’t rise, it exploded.  However, that doesn’t tell the full story.  I charted the non-agricultural spending by the Dept. of Agriculture and then adjusted for inflation.


(Click chart for larger image.  Click here for the numbers)

Looking at the inflation adjusted numbers, the spending doesn’t have quite the upward trend as before.  It looks like there was an increase during the seventies, but from there, the amount spent went sideways, not up.  That is, until the Great Recession and now the Department’s non-agriculture spending is rising fast.

So where is all that money going for the department?  A lot of places.  You can see all the accounts that it goes to if you wish(here).  For those who prefer a summary, here are all the non agrarian functions the department of agriculture spends money on as well as how much it spend for each.

  1. Area and regional development $1099
  2. Community development $27
  3. Conservation and land management $9246
  4. Consumer and occupational health and safety $956
  5. Disaster relief and insurance $71
  6. Food and nutrition assistance $78796
  7. Housing assistance $1093
  8. International development and humanitarian assistance $1696
  9. Pollution control and abatement $8
  10. Recreational resources $19
  11. Water resources $248

As you can see, many of the things that it spends money on do have an in-direct relationship to agriculture.  For instance, water and land management are important as they are 2 of the 3 main ingredients needed for growing crops.

All that being said, It’s still fun to point out that only 1 out of 5 dollars spent by the Department of Agriculture, actually gets spent on agriculture.