Taxpayer Guide Audit Callout Map

Interactive Maps: Program Eligibility and Grant Spending (2024-S-9)

Objectives

To determine whether the Department of Health (DOH) is administering and monitoring the Lead Service Line Replacement Program to ensure funds are allocated properly and being used by municipalities effectively and only for allowed purposes, and whether the water utility inventory is completed accurately and on time. The audit covered the period from March 2018 through June 2025.

About the Program

Lead service lines present a significant risk of lead contamination in drinking water. High levels of lead in drinking water can cause serious health effects in both adults and children, including damage to the brain and kidneys and an increased risk of high blood pressure, heart attack, stroke, and cancer. Children are at greatest risk for long-term health effects because their bodies and brains are still developing.

To address these concerns, New York’s Clean Water Infrastructure Act (Act) of 2017 added Section 1114 to the State Public Health Law (Law), requiring DOH to implement a Lead Service Line Replacement Program (Program) to provide municipalities with grants to replace lead drinking water service lines. The Law required DOH to allocate Program funds equitably among all regions of the State and prioritize funding to municipalities with a high percentage of elevated childhood blood lead levels. Under the Law, DOH was also required to consider whether the community was low income and the number of lead service lines in need of replacement when distributing awards.

The Program received an initial $20 million allocation from the 2017 State budget and an additional $10 million through a budget agreement in 2018. DOH awarded the entire $30 million and the Program has not been allocated any additional funding since those initial allocations. However, DOH administers other initiatives that fund a wide range of water quality projects, including efforts to reduce lead in drinking water systems. DOH also has a role in administering the $369 million New York recently received through the federal Bipartisan Infrastructure Law for lead service line inventory and replacement projects.

In 2023, New York passed the Lead Pipe Right to Know Act, codifying the Environmental Protection Agency (EPA) lead service line inventory requirements into Section 1114-b of the Public Health Law. Under both the EPA requirements and the Law, covered water systems were to develop an initial service line material inventory by October 16, 2024 that includes the location and material composition (e.g., lead, galvanized requiring replacement, non-lead, or lead status unknown) for both the public and consumer portions of the service lines. Water systems containing service lines classified as anything other than non-lead must submit updated inventories at least annually. In October 2024, the EPA also issued the Lead and Copper Rule Improvements, which require all lead service lines to be replaced by December 1, 2037, which it estimates will cost New York State $2.5 billion.

Key Findings

DOH did not implement sufficient controls to ensure the Program’s effectiveness, which limited the ability to replace more lead service lines. Despite DOH efforts, including establishing a plan for Program implementation detailing estimated replacement costs, resources and techniques for identifying lead service lines, and guidance for evaluating progress and providing support to municipalities, we found that DOH’s guidance and oversight were not sufficient to ensure that funds were always spent effectively, as follows:

• Of the $30 million allocated to the Program and awarded to municipalities, only about $23 million was spent. The unspent funds ($7 million) were returned to the Act’s fund and were not re-dispersed to other municipalities that also qualified for the funding.
• While most of the $23 million spent by municipalities was used for costs directly related to replacing lead service lines, some municipalities used a significant portion of their award on investigative and administrative costs. For example, one municipality used 77% and another used 48% of its grant award on investigations. While we recognize that administrative and investigative activities are a necessary component of the Program, its primary purpose was to replace lead service lines.
• Amounts spent on lead service line replacements were sometimes significantly higher than expected. In its plan, DOH estimated a maximum cost of $11,000 to replace a typical lead service line. However, we identified 382 individual line replacements that cost over $11,000, with the highest single line replacement totaling $66,000. Overall, DOH reimbursed the municipalities about $1 million over the maximum expected cost of $11,000 for the 382 lead service lines.
• While DOH’s funding methodology complied with the Law, the methodology at times left municipalities with high percentages of elevated childhood blood lead levels without an award in favor of ones with much lower percentages. After identifying eligible municipalities, DOH weighed its three scoring factors equally and, when there was a tie, used the number of houses built before 1939 as a tie-breaker. This means that municipalities with higher rates of childhood lead poisoning were sometimes passed over in favor of municipalities with lower rates of childhood lead poisoning, but more pre-1939 homes. For example, one municipality with 3.65% of children with elevated blood lead levels was awarded a grant, even though three other municipalities in the region had higher percentages, including one with a 7.16% rate of elevated childhood blood lead levels—nearly double the percentage.
• DOH miscalculated the median household income score (one of the three scoring factors used in its methodology for awarding grants) for one municipality, which resulted in it being incorrectly awarded $518,962. Although the municipality did not use any of its award, the funds were not redistributed by DOH. Consequently, six other municipalities actually had a higher score—one of which should have been offered the award over the municipality that was.

We also found that DOH did not ensure that all covered water systems submitted complete and accurate service line inventories in compliance with State and federal requirements, with 951 of 2,951 water systems (32%) covered by the initial inventory requirement missing the October 16, 2024 deadline. Compliance improved after DOH began to follow up; however, as of August 2025, 140 public water systems (5%) still had not submitted an inventory. Further, many inventories reported a high number of service lines composed of “unknown” material, and our testing showed significant accuracy issues, limiting the usefulness of the data. For example, we found errors with 105 of the 371 service lines (28%) we reviewed, all of which involved service lines that had been replaced through the Program but were still reported as being composed of “lead” or “unknown” material in the inventories.

Key Recommendations

• Develop and implement enhanced controls and monitoring practices for grants administered by DOH. This may include, but not be limited to, developing policies and procedures and promoting enhanced participation in programs by providing clear guidelines and support to awardees to ensure funds are spent purposefully.
• Develop and implement formal procedures to ensure all covered water systems submit complete and accurate service line inventories, and provide annual updates when required. Take steps, such as providing additional support to help water systems accurately identify the material composition of service lines, to increase the number of service lines with known and verified materials.