Sample Monitoring Report #1

DATE

PROGRAM MONITORING REPORT

WEATHERIZATION ASSISTANCE PROGRAM
GRANT #: XX-XXXX-XXXXXXXXX

STATE

I. Introduction

The STATE Weatherization Assistance Program (WAP) was monitored on DATE by the
U.S. Department of Energys (DOE) X Regional Office (XRO). The monitor is the
Weatherization Program Manager assigned to STATE. This monitoring effort focused on
the programmatic results of the 2003 Program Year (April 1, 2003-March 31, 2004) as
well as the 2004 Program Year to date. The visit was conducted at the STATE Housing
and Community Office (HCO) located at ADDRESS. This monitoring effort also
included two separate site visits to an Economic Opportunity Council in CITY, STATE
and a Community Action Agency in CITY, STATE, both current weatherization
subgrantees.

An entrance interview was conducted on the morning of DATE between the monitor and
HCO staff members. HCO staff present at the entrance interview were as follows: X, X,
and X. The entrance interview served to provide HCO staff with an overview of the
program monitoring process, as well as an opportunity to discuss the XRO WAP fiscal
monitoring report which was submitted to HCO on DATE.

While the XRO has performed several program and technical field visits to STATE in
recent years, the last official program monitoring visit was conducted on DATE. The
time between program monitoring visits occurred mainly because of an XRO
weatherization staff change that occurred on DATE.

II. Agency Profile

Observation #1: Organization and Staffing

The STATE Division of Housing and Community Renewal is responsible for

administering STATEs Weatherization Assistance Program. HCO is responsible for the
development of the State Plan, updates to the On-File Information, Weatherization
Policies and Procedures Manual, budgets and revisions, program reporting, subgrantee
monitoring, possible leveraging activities, and providing training and technical assistance
(T&TA). During Program Year (PY) 2003, STATE utilized several staff members time
on the WAP. HCO staff time pertaining to the WAP is charged to the U.S. DOE WAP

1
grant. HCO program staff are mainly located in the CITY office. HCO field staff are
located in CITY, CITY, and CITY. HCO employs 16 Field Reps. and 4 Regional
Supervisors to conduct program monitoring at the subgrantee level. HCO currently has a
staff of 5 fiscal monitors addressing fiscal-related matters at the subgrantee level. HCO is
currently one staff member short on the fiscal monitoring staff, and this position is
anticipated to be filled in the future.

HCO contracted with 67 subgrantees during PY 2003 to deliver the WAP statewide to
eligible low-income clients. The majority of subgrantees are Community Action
Agencies while the remaining subgrantees (approximately 25%) consist of a mix of
community-based organizations, county governments, and neighborhood or rural
preservation agencies.

III. State Plan Review

Observation #2: Budget

The one-year budget period under review extended from DATE through DATE.

PY 2003 PY 2004

DOE New Funds $X $X

DOE Carryover Funds $X $X

Total Approved Budget $X $X

HCO submitted a carryover request from PY 2001 and PY 2002 to PY 2003. This
carryover amount of $X represents 0.8% of the total amount budgeted for the combined
budget period of PY 2001 and PY 2002. (Please note that HCO opted to take advantage
of the early funding option offered by DOE Headquarters which combined PY 2001 and
PY 2002 into a single budget period). As a result, PY 2001 funds totaling $X were
combined with PY 2002 funds totaling $X along with carryover of $X for a total budget
of $X. HCO has informed the XRO that there will be no carryover funds from PY 2003
to PY 2004 as HCO has expended all funds for this budget period.

Recommendation #1:

Given the large amount of WAP funds provided to STATE, HCO should be commended
for utilizing the funds in a timely fashion and carrying over less than 1% of total funding.
The XRO encourages HCO to keep carryover amounts as low as possible and to strive
towards zero carryover in each Program Year. Avoiding carryover helps to put more
weatherization money to work in the state in a timely manner as well as reduces the
administrative burden on both HCO and the XRO. The XRO suggests that HCO submit
all future carryover requests and/or amendments as early as possible in the new Program

2
Year. The XRO wants to inform HCO that during the months of July through September
of each calendar year, XRO Contracting Officer priorities are geared toward awarding
new Federal funding by end of the Federal Fiscal Year (September 30th). Thus, there
could be possible delays during these months in processing requests that are not
addressing new Fiscal Year funds. Nonetheless, it is best to submit any carryover
requests as early as possible.

Observation #3: Units Completed

In STATE, overall weatherization production is reported as unduplicated which means

that the State can define production specific to a funding source, as opposed to blended
which means that other funds, such as LIHEAP, may be added to DOE funds to produce a
completely weatherized unit. In fact, roughly 60% of LIHEAP weatherization set-aside
funding is administered in conjunction with DOE activity. Thus, STATE does have a
significant amount of its LIHEAP set-aside funding blended with DOE funds.

STATEs Weatherization Assistance Program exceeded its stated production goals for the
four quarters of PY 2003 (April 1, 2003-March 31, 2004). The state completed X of a
projected X units, or 127% of its goal, using DOE funds. The XRO also examined
previous years production for the state and noted that STATE has consistently exceeded
its stated production goals. The XRO wants to make known to HCO that it appreciates
the production results accomplished by the state each year in helping DOE to meet its
national weatherization production goals.

In STATE, subgrantees production goals are determined by the total funds awarded in a
specific Program Year minus the associated administrative costs and then divided by the
maximum average cost per unit. The required minimum number of units to be
weatherized is then stated in each subgrantees contract with HCO. Subgrantee
production is closely monitored by HCO and various procedures have been established
(i.e., additional T&TA, special condition status, etc.) to assist subgrantees that are not
meeting their assigned production goals.

Observation #4: Policy Advisory Council (PAC)

The STATE PAC is an active entity relating to the WAP. The PAC meets on a regular
basis, usually 9-10 times throughout the year. The PAC membership is adequately
diverse and attendance at each meeting appears to be consistent. The PAC meetings are
scheduled in different sectors of the state on a regular basis. Meetings usually occur in
CITY and CITY with at least one meeting each year taking place in a western locale. The
PAC is involved with reviewing the State Plan each year and conducts a specific meeting
to review and approve the draft plan before it goes before the public hearings. The PAC
also provides advice on various policy issues that are implemented in the WAP. The
XRO has attended 1-2 PAC meetings each year and has found the meetings to be
productive and influential in yielding multiple benefits to the WAP in STATE.

3
IV. Program Management

Observation #5: Policies and Procedures Manual

STATE utilizes a Weatherization Policies and Procedures Manual to provide a

comprehensive reference on required procedures necessary for operation of the WAP,
instruction for the completion of required forms, and information regarding
weatherization policies as interpreted by the State pertaining to DOEs 10 CFR 440
regulations. The most recent version of the Weatherization Policies and Procedures
Manual is dated DATE, and is geared for use by HCO program and field staff as well as
HCOs WAP subgrantees. The manual addresses various eligibility requirements as well
as proper technical field practices as they relate to conducting energy audits and
performing weatherization measures. The Weatherization Policies and Procedures
Manual, along with the accompanying Appendix of Forms, was reviewed during the
monitoring visit and is on file at the XRO as well.

Observation #6: Energy Audits

STATE utilizes multiple energy audits within the state, all of which have been approved
by DOE. HCO submitted energy audits to DOE for the required five-year approval
process in a timely fashion during PY 2003. The primary audit utilized for 1-4 unit
buildings is the Targeted Investment Protocol System (TIPS) audit which is designed
specifically for public programs and targeted investment. TIPS was re-approved for use
in STATE on DATE. STATE also received full approval from DOE to use the Targeted
Residential Energy Analysis Tools (TREAT) audit on DATE. (Interim approval was
granted on DATE.) HCO will continue to evaluate the TREAT audit in the WAP because
the audit was originally developed for the private sector. In the near term, HCOs
Regional Supervisors will be alerted on TREAT buildings before an audit is conducted so
that they can monitor the audit and its outcomes.

For multifamily buildings, STATE utilizes the Energy Audit Using the Queens
Information Package (EA-QUIP) developed by the Association for Energy Affordability.
EA-QUIP was given approval by DOE for use in the WAP on DATE. (Interim approval
was granted by DOE on DATE.) EA-QUIP is an energy audit which is approved for use
on buildings with 5 or more units. Having a multifamily audit approved for STATE is
vital considering a large percentage of units weatherized are in the CITY area. CITY and
its plethora of high rise multifamily buildings present a unique weatherization situation
that is not found in many other areas of the country.

In contrast to the large urban areas serviced by STATE weatherization subgrantees,

STATE also has a significant rural population. To address the need to weatherize mobile
home units, HCO utilizes a mobile home priority list which details various weatherization
measures that analysis has typically proven to be cost-effective for this housing stock.

4
Recommendation #2:

As noted in the DATE memorandum recently forwarded to HCO from the XRO under the
signature of OWIP Program Manager X, States that want to use EA-QUIP in
conjunction with the Weatherization Assistance Program must still submit to DOE the list
of measures considered, sample audits, field procedures, and other information as
described in Attachment 1 of WPN 01-4. However, if DOE has approved a states energy
audit procedures within the past five years, the state need only submit a letter to their
DOE Regional Office informing them of their intention to use EA-QUIP.

Observation #7: Applicant Prioritization and Applicant Waiting List

STATE has a functional system in place for determining WAP client eligibility. Clients
are first screened under a categorical eligible classification which includes such
categories as supplemental security income, public assistance, food stamps and LIHEAP
regular benefits. Clients that are not deemed categorically eligible are tested for income
eligibility at the level of 60% of state medium income (i.e., LIHEAP eligibility levels).

As is the case in many states, WAP subgrantees in STATE have waiting lists for clients to
be serviced. The time a client must wait for weatherization services varies among each
subgrantee. Some agencies have waiting lists as short as a few months, while other
agencies have waiting lists of a few years. The CITY and CITY areas currently have the
longest waiting lists. The waiting lists at subgrantees are usually constructed on a first
come/first served basis. Households occupied by elderly persons, chronically ill, and
children under 18 (with a focus on younger children first) are usually prioritized by the
subgrantees.

In fact, during the 4 quarters of PY 2003, the STATE WAP served X elderly-occupied
units, X disability-occupied units, X children-occupied units, and X Native American-
occupied units.

V. Subgrantee Issues

Observation #8: Contracts

HCO has a contract in place with each of its WAP subgrantees. The contract includes,
but is not limited to:

Master Contract Form

Contract Face Page

5
 Contract Signature Page
Certification Forms
Budget Period Information and Dates
Budget Support Documentation
Production Goals and Monthly Production Schedule
Special Conditions (if applicable)
Capital Purchases (including vehicles anticipated)
T&TA Detail Sheet

Contracts are signed by the WAP subgrantee and then reviewed and signed by HCO. The
contracts are then processed through the STATE Department of Law and the STATE
Comptrollers Office. Contracts between HCO and its WAP subgrantees historically have
been signed on an annual basis. Contracts between HCO and its subgrantees note the
minimum number of units to be weatherized by the subgrantee at a specific maximum
cost per unit.

The contract process at HCO has recently undergone a significant restructuring.

Beginning in PY 2004, HCO converted from yearly contracts to five-year contracts with
its WAP subgrantees. Each five-year contract term is broken down into five one-year
budget periods. The contract boilerplate has also been pared down in PY 2004 to make it
more user-friendly and easier to understand. Most of the extraneous information was put
into the Weatherization Policies and Procedures Manual.

Contract amendments are done between HCO and its subgrantees when appropriate, and
this process must be initiated by the subgrantee in writing. Contract amendments may be
done for several reasons including carryover funding and any additional allocation or
adjustment of funds during a Program Year. If a subgrantee needs to shift funds, HCOs
WAP Director has final authorization. If a subgrantees needs to add or subtract funds or
adjust the budget period for some legitimate reason, the request goes to the Comptrollers
office.

Currently, there are a couple of subgrantees which have special conditions placed on their
contracts. HCO closely monitors that the requirements of the special conditions are met.
Upon review of the issues stated by HCO in the contract, HCO makes a determination on
whether or not to remove the special conditions designation. If issues are not resolved,
HCO may opt to terminate a subgrantees contract as was the case most recently with U
Community Action, Inc. on DATE.

Sample contracts between HCO and XXX Community Action Agency, Inc., XXX County
Economic Opportunity Council, Inc., and XXX Program were reviewed during the
monitoring visit.

Recommendation #3:

6
With HCOs shift to five-year contract terms, the use of a specified contract dollar
amount may prove problematic given that any dollar figure HCO noted in the initial
contract issuance will only be an estimate of the amount that may actually be provided to
a subgrantee based on the annual fluctuation in Federal funding to the State. It is
therefore recommended that HCO somehow alter the contract boilerplate to indicate that
the five-year contract dollar amount is an estimate based of future Federal funding.
This estimate notation should prevent any subgrantee from claiming that they did not
receive the original dollar amount stated in their contract should funding to a given
subgrantee not reach the specified dollar amount in the initial contract amount section on
the Master Contract Form. It is recommended that the language pertaining to this issue
be strengthened in the contract boilerplate as well as in the letter sent to subgrantees from
HCOs Weatherization Program Director.

Observation #9: Field Monitoring

HCO employs X Field Representatives and X Regional Supervisors to conduct program

monitoring at subgrantees across the state. During Program Year 2003, HCO Field Reps.
performed approximately X program visits. HCO Field Reps. are cycled for their
territories every year. Having the Field Reps. switch territories cyclically helps to
prevent stagnation and provides subgrantees with a varied, unbiased review process.

In STATE, 100% of weatherized units receive a final inspection by the subgrantee before
a unit is counted as a weatherized unit and the contractor is paid in full for the work
performed. In STATE, the subgrantees differ slightly in terms of the individual who
actually conducts the post-inspection. Some subgrantees have different individuals who
conduct the initial energy audit and the post-inspection. Other subgrantees have the same
individual perform the initial energy audit and the post-inspection. In rural areas, it is
sometimes more common to find the same individual conducting both the energy audit
and the post-inspection. HCO has a functional procedure in place to ensure that all units
are inspected by the subgrantees. HCO Field Reps. review 100% of completed client
files and make sure that clients sign-off that the unit was inspected. HCOs Field Reps.
also perform on-site visits and interview clients to make sure units were post-inspected.

HCOs Field Reps. perform monitoring visits to subgrantees approximately once every
six weeks, and inspect 20% of the total units weatherized statewide in a given Program
Year. If a situation arises where an agency needs to be monitored more frequently (e.g.
an agency on special conditions), HCO will arrange for extra monitoring.

The HCO Field Reps. visits to subgrantees involve both in-office file and paperwork
reviews, as well as in-field visits to actual homes weatherized. The HCO Field Reps.
responsibilities include, but are not limited to:

Review client files for accuracy of services performed;

Ensure all billed material is present;
Verify Inspectors signature on client sign-off form;

7
 Critique the energy audit;
Review the Energy Auditors recommendations;
Confirm required testing has been completed;
Examine client education for effectiveness;
Ensure Health & Safety activities are energy-related, appropriate and effective;
Verify that subgrantee staff are knowledgeable of and are practicing House as a
System science;
Inspect the actual weatherization measures installed in a clients home.

HCOs Field Reps. perform occasional tests (i.e., blower door, infrared scanning, etc.)
while monitoring units weatherized by subgrantees. For instance, a blower door test may
be conducted at a unit where an HCO Field Rep. questions the CFM reduction numbers.
HCO relies on using a subgrantees tools and equipment as opposed to purchasing and
transporting their own equipment on monitoring visits.

Occasionally, an HCO Field Rep. will notice issues that need to be corrected or were not
properly addressed initially during the weatherization process. If problems with a
particular job persist, HCO has the authority to request that payments to a contractor be
withheld, the job be disallowed, or even special conditions be placed on the subgrantee
regarding future weatherization work performed. If an HCO Field Rep. issues a re-work
order, the Field Rep. will usually re-visit the unit in person. Digital photos as well as
contacting clients via phone are methods also utilized to ensure any re-works have been
completed properly.

The XRO examined HCO field monitoring reports from all four regions in the state. The
reports appear to be detailed and thorough. It is understandably difficult to get complete
uniformity in the reports given that STATE has a large statewide monitoring staff. The
XRO also examined several Program Evaluation of Contractor forms during the
monitoring. It is noted that these annual evaluation forms score the subgrantee on a scale
from 1-5 for numerous program-related areas, and allow for HCO Field Rep. comments.

Recommendation #4:

The XRO recommends that HCO continue to discourage situations where one individual
at a subgrantee is performing both the initial energy audit and the post-inspection. The
XRO understands that this is a difficult task to accomplish in certain areas of the state,
but having different individuals perform these tasks has proven successful in yielding
better weatherization results in an independent, unbiased setting. The XRO encourages
HCO to continue working with subgrantees to devise alternatives to this situation.

Recommendation #5:

The XRO recommends that HCO Field Reps. continue to frequently utilize new and
proven technologies to the best of their abilities. The XRO recommends that HCO set a
minimum number of blower door tests to be conducted on a yearly basis during
scheduled monitoring visits to each subgrantee. This procedure will serve two purposes:

8
1) It will ensure that any claimed CFM reductions in weatherized units are reflected
accurately and correctly, and 2) It may confirm a possible problem with the subgrantees
blower door apparatus, or operator misuse, if the confirmed CFM numbers are
significantly different.

The XRO also recommends that all HCO Field Reps. strive toward utilizing infrared
scanning cameras on all units inspected where sidewall insulation was installed provided
that there is an adequate temperature differential which will allow the infrared camera to
scan the exterior walls properly. The infrared camera has proven highly successful in
pinpointing missed or partially filled bays and voids left during the insulation process, as
well as determining successful sidewall insulating practices.

Recommendation #6:

The XRO recommends that HCO consider incorporating the use of digital pictures into
its monitoring program on a routine basis. The use of digital pictures will offer solid
confirmation that any re-work requests have been sufficiently addressed. This type of
measure has proven quite successful in other states.

Recommendation #7:

The XRO recommends that if HCO continues to use the Program Evaluation of
Contractor form that HCO Field Reps. note any corrective action for any category
scored as needs improvement or poor. The XRO noted that in several reports a rating
of needs improvement was noted, but no corrective action was required. It makes
sense that if a line item needs improvement that HCO should identify a method of
corrective action and then follow-up on that issue in the future.

Observation #11: Fiscal Monitoring

(Note that the XRO Weatherization Program Manager and XRO Contracting Officer
conducted a separate fiscal monitoring visit to HCO on DATE. Please refer to the XRO
fiscal monitoring report previously submitted to HCO for further details.)

HCO currently has a staff of X fiscal monitors addressing fiscal-related matters at the
subgrantee level. HCO is currently one staff member short on the fiscal monitoring staff,
and this position is anticipated to be filled in the future. During Program Year 2003,
HCO Field Reps. performed approximately X fiscal visits to subgrantees. Fiscal visits
are made to subgrantees approximately every 8 weeks.

HCO is able to monitor expenditures as well as production by each subgrantee on a

monthly basis through the fiscal process which is in place for reporting and tracking units
weatherized throughout the state. The monthly reports ensure that the financials and
production levels are in line with each other, as well as checks to ensure that the figures
are indicated under the correct budget categories. For subgrantees to get paid for

9
weatherized units, they must meet 80% of production goals in a given month on a pro-
rata basis.

During the monitoring visit, the XRO examined the issue of administrative expenses.
HCO noted that 22 of 67 subgrantees receive less than $X per year. In fact, HCO utilizes
a formula based allocation structure that includes heating degree days and a poverty
formula that mirrors the Federal formula. Because of this practice, no agency in STATE
receives less than $X in a Program Year, whereas as many as 6 subgrantees might be
funded at less than $X if this was done differently. Under DOE regulations, these 22
agencies are eligible to receive up to an additional 5% for administrative expenses
because they receive less than $X. Subgrantees receiving less than $X in STATE are
provided with an additional 1%, thus receiving a total of 6% for administrative expenses.
The XRO confirmed with HCO that none of its subgrantees are exceeding the maximum
allocation for administrative expenses during the covered period of this review.

Observation #12: Files

Upon examination, the filing system at HCO appeared to be actively managed, well
labeled, well organized, and functional. HCO maintains WAP files for the past three
years on-site at ADDRESS. After three years, program files are archived. Fiscal records
are kept seven years and are then destroyed. Each subgrantee has its own file folder
which contains a general information file with required documentation and subgrantee
information update form, annual reports, etc. Contract years for each subgrantee are
filed separately and in chronological order. Vehicle purchase information forms are filed
along with required vehicle bid (minimum of 3) solicitations. Also noted in HCOs filing
system were field monitoring reports, budget/contract files, and program documents such
as the Annual Plan, and Weatherization Policies and Procedures Manual. Payment files
were examined and the XRO noted that several requests were questioned by HCO
resulting in reduced or denied requests for various reasons. This observation shows
active management and review within HCO regarding payment requests.

Recommendation #8:

The XRO recommends that HCO continue to keep any discretionary grant files separate
from the formula grant files. For instance, a separate file should be created and
maintained for the $40,000 Fuel and Energy grant. The XRO also noted upon
examination that there was no SF-424 form in the formula grant file. The XRO
recommends as a standard practice that all grant-related documents and correspondence
be filed in the grant file so that they are accessible for review. The XRO is cognizant that
many forms are stored electronically these days, however a complete printed version of
the grant should be accessible for reference to both state and outside entities.

10
Observation #13: Site Visit
This monitoring effort included a site visit on DATE to X County Economic Opportunity
Council (SOC) in CITY, STATE and a site visit on DATE to X Community Action
Agency (MCAA) in CITY, STATE.

SOC is an agency with two offices that on average weatherizes between X and X units
per month. SOC employs three two-person crews, two sidewall insulation contractors,
one energy auditor, and assorted office staff. SOC has a waiting list of approximately X-
X units which amounts to an 18-month wait for some eligible clients. SOC operates
several programs such as WIC and an in-house food pantry. Participating on this site
visit with the XRO were: NAME and NAME of HCO/CITY, NAME, HCO Field Rep.,
NAME, SOC Weatherization Director, and NAME, SOC Energy Auditor. The site visit
began at SOCs CITY office with a general discussion about the WAP and issues specific
to the subgrantee (i.e., hard to retain staff at low salaries, large number of mobile homes
in the area, agency uniquely color codes all files, POI in place for only one of the two
sidewall contractors, etc.). The site visit then entailed on-site visits to two homes that
were weatherized by SOC. The first unit was a single family house in CITY, STATE in
which insulation was installed in the sidewalls, attic and crawlspace, front door was
replaced, air sealing measures were performed which reduced the CFM from 2,096 to
1,907, CO detector and smoke detector installed, as well as additional measures. The
second unit was an older vintage mobile home in CITY, STATE in which R-19 fiberglass
was installed in the roof, rear door was replaced, CO detector installed, as well as
additional measures. The work observed at these two units were worthy measures to be
conducted and the quality of work performed was deemed to be sufficient (although we
were unable to gain access to the attic at the single family home in CITY to verify the
quality of the attic insulation). In addition, a stop was made to a third site where a crew
was on-site performing weatherization work in progress on a mobile home.

MCAA is an agency which recently added service territory by taking over the territory of
X Community Action, Inc. on DATE. MCAA employs three three-person crews, two
energy auditors, and three office staff. MCAA has X units scheduled for the current
Program Year including a couple of multifamily buildings. MCAAs waiting list for
client services is currently longer than two years and includes more than 500 eligible
clients. The waiting list increased from 14 months to over two years once MCAA took
over X Community Action, Inc.s service territory. MCAA has also been able to leverage
nearly $X in other program funds (i.e., Home, Rehab, etc.) for weatherization services.
Participating on this site visit with the XRO were: NAME, HCO Weatherization
Program Director, NAME, HCO Field Rep., and NAME, MCAA Weatherization
Director. The site visit began at MCAAs CITY, STATE office with a general discussion
about the WAP and issues specific to the subgrantee. Afterwards, the group proceeded to
visit three sites. The first site located in CITY, STATE was a four-unit multifamily
Victorian house which was gut-rehabilitated and completed with partial weatherization
funds. This house is now divided into multiple apartments and will be rented to only
low-income tenants. The second unit was a single family house on the outskirts of CITY
in which various measures such as attic insulation, a CO detector, and additional
weatherization measures were installed. The third unit visited was located in CITY,

11
STATE and was a high-rise multifamily elderly apartment building. Work performed in
this building included new heating systems, common area lighting, new roof, and some
measures in each individual apartment. The work observed at these three sites were
worthy measures to be conducted and the quality of work performed was deemed to be
sufficient (although we were unable to gain access to the attic at the single family home
on the outskirts of CITY to verify the quality of the attic insulation).

(In addition to the site visits noted above, since DATE the XRO Weatherization Program
Manager has performed several technical field monitoring visits with HCO staff to CITY,
STATE, and the surrounding areas.)

VI. Training and Technical Assistance (T&TA)

Observation #14: T&TA Funding

The STATE Weatherization Assistance Programs T&TA Program Year 2003 and 2004
budgets were approved as follows:

PY 2003_ PY2004_

Grantee T&TA $X $X
Subgrantee T&TA $X_ $X_
$X $X

Observation #15: T&TA Activities

The use of T&TA funds in STATE is determined by an annual program evaluation which
is conducted near the end of each Program Year in combination with any Field Rep.
comments noted during the program and fiscal monitoring visits performed throughout
the Program Year. T&TA funds are provided to every subgrantee in the state and are
allocated based on a formula similar to the DOE formula. Under the current HCO policy,
no subgrantee can receive more than $X of T&TA funds per year for training and
equipment. All subgrantees must prepare a budget and plan for T&TA funds and the
budget and plan must be approved by the assigned HCO Field Rep. prior to expenditure
of the funds. During the course of the Program Year, a subgrantees T&TA plan can be
amended only with approval of the assigned HCO Field Rep.

HCO confirmed that the following training options are available to any subgrantee in
need of training: Technical Training, Program Management Training, Financial
Management Training, Procurement Training, Subcontracting Training, and Inventory
Control Training. HCO noted that approximately 90% of training requests come to HCO
directly from the subgrantees while only 10% of training requests are initiated internally
from HCO Field Reps. following monitoring visits. HCO has internal staff assigned to
handle training for program and fiscal operations. HCO has an internal Training and

12
Technical Unit that focuses on the technical field issues. NAME is the lead heating
systems trainer, while NAME primarily addresses computer and database issues. HCO
also has two Technical Support Subgrantees funded through the WAP: ASSOCIATION
CITY and the STATE Weatherization Directors Association (SWDA) based in City.
Both Technical Support Subgrantees serve the entire state with ASSOCIATION having an
on-site training center located in CITY with training capabilities in both single family 1-4
unit as well as multifamily dwellings. ASSOCIATION also shares its training schedules
with HCO and SWDA. Private subcontractors are also utilized by HCO for training
purposes. During the program monitoring effort, HCO noted that database training is
now in high demand as well as the technical areas of air sealing and heating system
training/clean and tune.

VII. Health and Safety Issues

STATEs HCO has a Health and Safety section on record as a component of its 2003
Weatherization Policies and Procedures Manual. Currently, the State does not have a
policy in place which requires each subgrantee to have a staff member who serves as the
Competent Health and Safety Officer per OSHA regulations. HCO intends to
implement a policy within the next two years and is working with ASSOCIATION and
SWDA to develop such a policy. HCO notes that the Competent Health and Safety
Officer designation will most likely be assigned to a Crew Chief or Weatherization
Director position, and will not be assigned lower than the Crew Chief level. HCO also
noted during the program monitoring visit that SWDA is developing a weekly Health and
Safety newsletter that will contain valuable information to be distributed to all
subgrantees.

Observation #16: Lead Safe Weatherization (LSW)

Per Weatherization Program Notice 02-6, Weatherization Activities and Federal Lead-
Based Paint Regulations, put forth in July 2002, all states must have submitted a LSW
Training Plan that was part of the WAP Annual File within 60 days of the date of the
Program Notice. This plan must have had a schedule for the completion of LSW training
for direct hire and contractor weatherization workers who work on homes where painted
surfaces could be disturbed in the course of weatherizing a home. This training must
have been completed within nine months of the date of the Program Notice.

As required in WPN 02-6, STATE will continue to provide subgrantees with Lead Safe
Worker Training. All subgrantees had the opportunity to send people to this training
where they received the Lead Safe Weatherization Practices Booklet. Subgrantees
throughout STATE are required to provide building occupants with a copy of the U.S.
Environmental Protection Agency publication Protect Your Family From Lead in Your
Home when the home was constructed prior to 1978.

13
Observation #17: Pollution Occurrence Insurance (POI)

HCO has contacted all weatherization subgrantees in the state regarding Pollution
Occurrence Insurance. HCO is committed to working with its subgrantees, DOE, and
other partners to ensure compliance with this program requirement. HCO has the option
of considering the national POI coverage arranged through NASCSP in conjunction with
COMPANYl, or exploring other possible POI options on its own. HCO indicated to the
XRO during the program monitoring visit that POI is having some potential negative
effects on contractors in a state that already has an insurance struggle.

VIII. Miscellaneous Issues

Observation #18: WinSAGA

In general, HCO has made WinSAGA entries in a timely manner. DOE Headquarters has
targeted the entering of weatherization program and fiscal data in WinSAGA a top
priority for PY 2003 and PY 2004. The XRO emphasizes the importance of continuing to
enter information into WinSAGA as expeditiously as possible in the future since
Headquarters often conducts research analysis using the data in WinSAGA. DOE
Headquarters has requested that all states have their quarterly data entered into the system
no later than 30 days after the end of each quarter.

Recommendation #9:

The XRO wishes to remind HCO to enter data and electronically sign all FSRs and PSRs
entered into WinSAGA on time each quarter within the 30-day reporting period after the
close of each quarter. Quarterly report submissions in WinSAGA will continue to be
monitored for various production numbers and prioritized by all Regional Offices. The
XRO recommends HCO continue to contact the assigned XRO Program Manager should
there be a delay in entering quarterly information for whatever reason.

Observation #19: On-File Information

For Program Year 2004 and beyond, a change was made in the Weatherization
Application Package that no longer requires the Master File to be submitted to DOE each
year for review. All information contained in the Master File will be retained on-site at
HCO. The Master File has also been officially renamed as On-File Information.

The On-File Information is to be maintained at HCOs office and be available for review
at any time. The On-File Information will be examined during future DOE monitoring
visits. The XRO reminds HCO that any changes to the On-File Information are to be
provided to the XRO in the Annual Plan for review each year, and that the On-File
Information is to be subsequently updated accordingly. The XRO noted that the On-File
Information was not updated for the current Program Year at the time of the program

14
monitoring visit. Given that this is a new process, the XRO will let this notice serve as a
reminder to update the On-File Information accordingly and trusts that HCO will have
updated the current Program Years On-File Information.

Observation #20: HCO Travel

Over the course of the last couple of years, HCO like several other states has had to
address State imposed travel restrictions. This has resulted at times in HCO not being
able to attend various meetings and conferences where their presence, as a leader in
weatherization, is important. Within the last year, this restriction has shown
improvement. HCO was able to send numerous HCO program and field staff to the
CONFERENCE in CITY, STATE in August, send representatives to the 2004
Weatherization State Managers Meeting in CITY, STATE, and have the Weatherization
Program Director attend an XRO State Programs Managers meeting in CITY on DATE.

HCOs Weatherization Program Director has signature authority for all weatherization
program-related travel. This policy was changed recently to meld with an HCO policy
which requires a state bureau Director to approve and sign a travel request. In years past,
other HCO program staff members also had signature authority for HCO field staff travel.
HCO noted that even if a travel request has been signed by the Weatherization Program
Director, the request must be submitted for approval to the state travel office. It is
possible that the state travel office might also reject a travel request.

For future travel regarding any DOE initiative, the XRO will ensure that HCO is notified
at minimum 30 days prior to any event, so that a travel request may be submitted and
routed through the state system in a timely manner.

Recommendation #10:

The XRO recommends that HCO, at minimum, plan to send a representative(s) to the
following meetings/events: Regional Office planning meetings, DOE WAP Regional
Conferences (biennial), DOE WAP National Conference (biennial), DOE WAP State
Managers Meeting (biennial). Such events should be indicated in the states Annual
Plan. The XRO also recommends HCO consider other meetings as well such as the
NCAF Leveraging Conference, the NASCSP Mid-Winter Orientation, etc. As changes to
the 2005 WAP Grant Guidance indicate, When States prepare their budgets for 2005, it
is essential they should include adequate travel expenses for staff to effectively
implement the program. It should be noted that funds to pay for State and local travel
are provided as part of the Weatherization grant, and proper usage of these funds will be
closely monitored by DOE to ensure compliance with stated travel indicated in States
Annual Plans. The XRO recommends open dialogue with HCO on various travel issues
as they arise in the future. The XRO is tasked with closely monitoring travel-related
issues in all states during the upcoming year and beyond.

15
Observation #21: CITY Lead Law

During the program monitoring visit, HCO alerted the XRO to a new law that took effect
on DATE. The law technically affects only the CITY area, but HCO is concerned how
the law may affect weatherization statewide. The goal of the law is to make all buildings
lead safe by DATE. The law states that it must be assumed there is lead in a building if
the building is built before 1960. Building owners can conduct tests to prove that lead is
not present. The law states that if children under the age of seven live in a building and
lead is discovered, the building must undergo lead remediation. HCO weatherization in
CITY estimates that 22-23% of units weatherized are occupied by children under the age
of seven. The XRO invites HCO to keep our staff informed on this new law and how it
affects HCOs oversight and management of the WAP.

Observation #22: Weatherization of Rental Units

In STATE, all subgrantees are required to weatherize an equitable number of rental units
in their service territory each Program Year. Financial contributions are required from
non-income eligible owners. A rental agreement, which is outlined in the State Plan, is
utilized whenever a rental property is weatherized in the state.

Recently, the CITY area has balked at the 50% contribution requirement from building
owners. Under the new plan, buildings below 21 units would require a 25% owner
contribution while buildings with 21 or more units would require a 35% owner
contribution. The State Plan now requires that rental units be addressed. HCO Field
Reps. and Regional Supervisors will focus on this effort during future monitoring visits.
HCO plans to utilize census tracking data to gauge if various demographics are being
addressed in the weatherization process in a given area of the state. HCO is considering
placing a requirement to weatherize a certain percentage of rental units in each
subgrantees contract. This way, if a subgrantee is not responding to a certain
demographic, HCO will be able to question the subgrantee and ultimately this will lead to
a more diverse demographic receiving weatherization services throughout STATE.

Observation #23: Weatherization Special Projects Solicitation

The XRO recognizes HCO for its efforts in inviting proposals for publicly assisted
multifamily housing and unmet energy conservation needs through a solicitation for
weatherization-related special projects. This open invitation for proposals appears to be
well received throughout the state and allows for only weatherization subgrantees to
apply for discretionary funding for various projects that they may not be able to
accomplish under regular formula funding conditions.

In Program Year 2004, the solicitation was released DATE with a DATE application
deadline. HCO reserved $X million in weatherization funds for these initiatives. $X
million will be designated toward publicly assisted housing while the remaining $X

16
million will be reserved for weatherization subgrantees unmet needs. The XRO applauds
HCO for recognizing the need of its subgrantees and for devising this structure which has
been beneficial to several subgrantees across the state in funding special projects.

Observation #24: Notification of Issues to DOE

HCO and its staff have a positive working relationship with good interaction among its
respective staff members. In certain instances, it is beneficial for a State to inform DOE
of issues that occur in a State regarding the WAP. HCO has indicated that it will alert the
XRO immediately in any case that involves a misrepresentation of funds. HCO will also
alert the XRO in other instances based on the nature of the issue(s). For instance, HCO
will alert the XRO if an issue involving a subgrantee becomes public or is examined
and/or reported on in the media, or if HCO has plans to proceed with removing a
subgrantee from its involvement in the WAP.

Observation #25: DOE XRO Weatherization Program Manager Role

HCO staff indicated they are happy with the relationship between HCO and the XRO
weatherization staff. HCO noted during the monitoring visit that they wish to see the
XRO Weatherization Program Managers role continue as it has been in recent years.
HCO views the Weatherization Program Manager as a liaison between the State and DOE
Headquarters. HCO views the relationship as a functional partnership in weatherization.

IX. Summary

The Weatherization Assistance Program in STATE is currently being administered in an

effective manner. STATE weatherized X units in PY 2003 while managing the program
within the statutory requirements. HCOs current staff assigned to the WAP understands
both the programmatic and technical requirements as well as various challenges
pertaining to the program. HCOs weatherization staff is to be commended on being
proactive in managing and monitoring the program, as well as taking the initiative on
several occasions to contact the XRO regarding questions and issues that need
clarification and/or resolution. The XRO would be remiss if we did not take a moment to
again thank HCO and its many staff members for all the hard work and effort put forth in
hosting the 2004 regional conference and making the event such a success. Lastly, the
XRO stands ready to assist HCO and STATEs Weatherization Assistance Program in PY
2004 and beyond.

17