Recovery Act
Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability Gao ID: GAO-10-231 December 10, 2009This report is the fourth in a series responding to a mandate under the American Recovery and Reinvestment Act of 2009 (Recovery Act). As of November 27, 2009, $69.1 billion, or about one quarter of the approximately $280 billion of total Recovery Act funds for programs administered by states and localities, had been paid out. The largest programs were the Medicaid Federal Medical Assistance Percentage (FMAP), the State Fiscal Stabilization Fund (SFSF), and highways. The Government Accountability Office's (GAO) work continues to focus on 16 states and the District of Columbia (District).
Of their increased FMAP grant awards for federal fiscal year 2009, the 16 states and the District had drawn down about $22.3 billion, or 97 percent of the funds available, as of November 30, 2009. Through November 16, 2009, in the 16 states and the District, $11.9 billion (76 percent) of Recovery Act highway funds had been obligated for nearly 4,600 projects and $1.9 billion (16 percent) had been reimbursed. Nationally, $20.4 billion (77 percent) had been obligated for over 8,800 projects and $4.2 billion (20 percent) had been reimbursed. Almost half of Recovery Act obligations nationally have been for pavement improvements--resurfacing, rehabilitating, and reconstructing roadways. Of the $7.5 billion in Recovery Act formula funding made available nationally for transit projects, $6.7 billion (88 percent) had been obligated through November 5, 2009. Most of these obligations are being used to upgrade transit facilities, improving bus fleets and light rail systems, and conducting preventive maintenance. As of November 6, 2009, of the Recovery Act funds available to them, the 16 states and the District had drawn down about $8.4 billion (46 percent) in SFSF; $735 million (11 percent) in Elementary and Secondary Education Act Title I, Part A funds; and $755 million (10 percent) in Individuals with Disabilities Education Act (IDEA), Part B funds. GAO surveyed a sample of local educational agencies about their planned uses of Recovery Act funds and found (1) retaining jobs is the primary planned use, with 63 percent planning to use over 50 percent of their SFSF funds to retain jobs; (2) other planned uses include nonrecurring items such as equipment; and (3) most report placing great importance on educational goals and reform. The Department of Housing and Urban Development has entered into funding agreements with 3,121 public housing agencies and made available nearly all of the almost $3 billion in public housing formula grant funds provided under the Recovery Act. As of November 14, these agencies had reported obligating about half of the funds HUD had made available. Housing agencies GAO visited are using funds to replace roofs, windows, and floors; upgrade kitchens and baths, and renovate rental units. Regarding the Weatherization Assistance Program, nationally, the states reported that, as of September 30, 2009, they had spent about $113 million (2 percent) of the $5 billion in Recovery Act funding and had completed weatherizing about 7,300 (1 percent) of the 593,000 housing units planned for weatherization. The Recovery Act also included a $100 million appropriation for the Emergency Food and Shelter Program. Local recipient organizations in the 16 states and the District were awarded almost $66.2 million and plan to use the funds primarily for "other food" services such as food banks and pantries, food vouchers, and rent and mortgage assistance.
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Report to the Congress:
United States Government Accountability Office:
GAO:
December 2009:
Recovery Act:
Status of States' and Localities' Use of Funds and Efforts to Ensure
Accountability:
GAO-10-231:
GAO Highlights:
Highlights of GAO-10-231, a report to the Congress.
Why GAO Did This Study:
This report, the fourth in a series responding to a mandate under the
American Recovery and Reinvestment Act of 2009 (Recovery Act),
addresses objectives including: (1) selected states‘ and localities‘
uses of Recovery Act funds and (2) the approaches taken by the selected
states and localities to ensure accountability for Recovery Act funds.
GAO‘s work continues to focus on 16 states and certain localities in
those jurisdictions, as well as the District of Columbia (District)”
representing about 65 percent of the U.S. population and two-thirds of
the intergovernmental federal assistance available under the Recovery
Act. GAO collected and analyzed documents and interviewed state and
local officials. GAO also analyzed federal agency guidance and spoke
with officials at the federal agencies overseeing Recovery Act
programs, including the Office of Management and Budget (OMB) and the
Departments of Education (Education), Transportation (DOT), Health and
Human Services, Homeland Security, Housing and Urban Development (HUD),
and Energy (DOE).
What GAO Found:
As of November 27, 2009, $69.1 billion, or about one quarter of the
approximately $280 billion of total Recovery Act funds for programs
administered by states and localities, had been paid out. Health,
education, and training accounted for almost 85 percent of Recovery Act
outlays to date for programs administered by states and localities (see
figure). The largest programs within these areas were the Medicaid
Federal Medical Assistance Percentage (FMAP), the State Fiscal
Stabilization Fund (SFSF) for education and other purposes, and
highways.
[Figure: Refer to PDF for image: pie-chart]
Health: 55.3%;
Education and training: 29.0%;
Transportation: 8.6%;
Income security: 3.5%;
Community development: 2.4%;
Energy and environment: 1.2%.
Total: $69.1 billion.
Source: GAO analysis of data from Recovery.gov.
[End of figure]
Increased Medicaid FMAP Funding:
Of their increased FMAP grant awards for federal fiscal year 2009, the
16 states and the District had drawn down about $22.3 billion, or 97
percent of the funds available, as of November 30, 2009. As of the same
date, they had drawn down about $3.6 billion, or 54 percent of the
funds available for the first quarter of federal fiscal year 2010. From
April to September 2009, nearly all states and the District experienced
Medicaid enrollment growth, most of which was due to the increasing
enrollment of children”a population group that is sensitive to economic
downturns. States and the District reported using or planning to use
state funds freed up by the increased FMAP for various purposes such as
financing general state budget needs. All but one of the states and the
District expressed concern about the sustainability of their Medicaid
programs when the availability of increased FMAP funds ends in January
2011. GAO estimates that the 16 states‘ and the District‘s share of
Medicaid payments will increase an average of 36 percent in January
2011 compared with the first quarter of federal fiscal year 2010,
although the effect of this increase will vary depending on changes in
Medicaid enrollment. Some states and the District have begun
considering options for reducing Medicaid programs in fiscal year 2011.
Highway Infrastructure Investment and Transit Funding:
Through November 16, 2009, in the 16 states and the District, $11.9
billion (76 percent) of Recovery Act highway funds had been obligated
for nearly 4,600 projects and $1.9 billion (16 percent) had been
reimbursed. Nationally, $20.4 billion (77 percent) had been obligated
for over 8,800 projects and $4.2 billion (20 percent) had been
reimbursed. Reimbursements have increased considerably since we last
reported in September. As highway projects progress, almost half of
Recovery Act obligations, both nationally and in the 16 states and the
District, have been for pavement improvements”resurfacing,
rehabilitating, and reconstructing roadways. Both state and federal
officials believe the states are on track to meet the Recovery Act‘s
requirement that all highway funds be obligated by March 2010. Of the
$7.5 billion in Recovery Act formula funding made available nationally
for transit projects, $6.7 billion (88 percent) had been obligated
through November 5, 2009. Most of these obligations are being used to
upgrade transit facilities, such as upgrading power substations or
installing enhanced bus shelters, improving bus fleets and light rail
systems, and conducting preventive maintenance. Transit agencies
continue to express confusion about how to calculate the numbers of
jobs created and saved, as required by the Recovery Act. GAO previously
recommended that OMB work with recipients to enhance understanding of
the reporting process and that DOT continue its outreach to state
departments of transportation and transit agencies. Both agencies are
implementing these recommendations, which will be key to addressing the
continued lack of understanding.
Education:
As of November 6, 2009, of the Recovery Act funds available to them,
the 16 states and the District had drawn down, in total, about $8.4
billion (46 percent) in SFSF;
$735 million (11 percent) in Elementary and Secondary Education Act
Title I, Part A funds;
and $755 million (10 percent) in Individuals with Disabilities
Education Act (IDEA), Part B funds. GAO surveyed a nationally
representative sample of local educational agencies (LEA) about their
planned uses of Recovery Act funds and found (1) retaining jobs is the
primary planned use, with 63 percent planning to use over 50 percent of
their SFSF funds to retain jobs”however, even with SFSF funds, an
estimated 32 percent expect to lose jobs;
(2) other planned uses include nonrecurring items such as equipment;
and (3) most report placing great importance on educational goals and
reform in planning the use of Recovery Act funds. In response to GAO‘s
prior recommendation that Education take action to ensure states
understand and fulfill their SFSF subrecipient monitoring
responsibility, Education officials said they will collect and review
states‘ subrecipient monitoring plans. GAO will continue to follow
implementation of this initiative.
Other Selected Recovery Act Programs:
HUD has entered into funding agreements with 3,121 public housing
agencies and made available nearly all of the almost $3 billion in
public housing formula grant funds provided under the Recovery Act.
Overall, as of November 14, these agencies had reported obligating
about half of the funds HUD had made available, but the progress toward
obligating all funds by March 2010 varied by housing agency. For
example, over 1,000 housing agencies had reported obligating all of
their funds, but more than 500 housing agencies had reported obligating
no funds. HUD is beginning to focus on helping housing agencies meet
the Recovery Act‘s March 2010 deadline to obligate all of their funds.
Housing agencies GAO visited are using Recovery Act funds to replace
roofs, windows, floors, and heating systems;
upgrade kitchens and baths;
and renovate rental units and common areas. HUD continues to make
progress in monitoring housing agencies and is including in its on-site
reviews housing agencies with relevant open Single Audit findings, as
GAO recommended. Regarding the Weatherization Assistance Program,
nationally, the states reported that, as of September 30, 2009, they
had spent about $113 million (2 percent) of the $5 billion in Recovery
Act funding and had completed weatherizing about 7,300 (1 percent) of
the 593,000 housing units planned for weatherization. Many
weatherization contracts between state and local weatherization
agencies have been delayed, in part because of continuing concerns
regarding prevailing wage rates. The Recovery Act also included a $100
million appropriation for the Emergency Food and Shelter Program. Local
recipient organizations in the 16 states and the District were awarded
almost $66.2 million and plan to use the funds primarily for ’other
food“ services such as food banks and pantries, food vouchers and food-
only gift certifications, and rent and mortgage assistance.
Accountability:
GAO has recommended that OMB take actions to realize the Single Audit
Act‘s full potential as an effective oversight tool for Recovery Act
programs. In response to GAO‘s recommendations, OMB implemented a
Single Audit Internal Control Project to encourage earlier reporting,
and 16 states have volunteered to participate. While its coverage could
be more comprehensive, OMB‘s analysis of the project‘s results could
provide meaningful information for improving future use of the Single
Audit Act for Recovery Act programs. GAO has also suggested two matters
for congressional consideration relating to the Single Audit Act. GAO
continues to believe that Congress should consider (1) amending the
Single Audit Act to provide for more timely internal control reporting
and audit coverage for smaller high-risk Recovery Act programs and (2)
developing mechanisms for providing additional resources to support
those charged with carrying out the Single Audit Act and related
audits.
What GAO Recommends:
GAO updates the status of agencies‘ efforts to implement prior GAO
recommendations to help address a range of accountability issues as
well as matters for congressional consideration. No new recommendations
are being made at this time. OMB provided technical comments that have
been incorporated, as appropriate.
View [hyperlink, http://www.gao.gov/products/GAO-10-231] or key
components. For state summaries, see [hyperlink,
http://www.gao.gov/products/GAO-10-232SP]. For more information,
contact J. Christopher Mihm at (202) 512-6806 or mihmj@gao.gov.
[End of section]
Contents:
Letter:
Background:
States and Localities Continue Use of Recovery Act Funds as Their
Fiscal Conditions Remain Challenging:
OMB Implements a Project for Earlier Reporting of Internal Control
Weaknesses:
OMB, States, and Federal Agencies Took Actions Aimed at Reducing Risks
Inherent in Initial Round of Section 1512 Reporting, but Further Data
Quality Efforts Are Needed:
GAO's Open Recommendations:
Appendix I: Objectives, Scope, and Methodology: Objectives and Scope:
States' and Localities' Uses of Recovery Act Funds: Medicaid Federal
Medical Assistance Percentage: Federal-Aid Highway Surface
Transportation Program: Transit Capital Assistance Program:
SFSF, ESEA Title I, and IDEA:
Public Housing Capital Fund:
Weatherization Assistance Program:
Emergency Food and Shelter Program:
State and Local Budget:
Assessing Safeguards and Internal Controls: Data and Data Reliability:
Appendix II: Program Descriptions:
Medicaid Federal Medical Assistance Percentage: Highway Infrastructure
Investment Program: Public Transit Program:
Education:
Public Housing Capital Fund:
Weatherization Assistance Program:
Emergency Food and Shelter Program:
State and Local Budget:
Appendix III: Local Entities Visited by GAO in Selected States and the
District of Columbia:
Appendix IV: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: Original and Increased Quarterly FMAPs for Fiscal Year 2009
and Preliminary Increased FMAPs for First Quarter of 2010 for 16 States
and the District:
Table 2: FMAP Grant Awards for Federal Fiscal Year 2009 and Funds Drawn
Down for 16 States and the District, as of November 30, 2009:
Table 3: Increase in State Share between Preliminary First Quarter
Fiscal Year 2010 Increased FMAP and Fiscal Year 2011 Regular FMAP:
Table 4: Recovery Act Highway Apportionments and Obligations Nationwide
and in Selected States as of November 16, 2009 (dollars in millions):
Table 5: Change in Percentage of LEAs Meeting Requirements of IDEA,
Part B, and Eligible for Flexibility to Reduce Local Expenditures:
Table 6: Percentage of Awarded Education Stabilization, ESEA Title I,
and IDEA, Part B Recovery Act Funds Drawn Down by States as of November
6, 2009:
Table 7: Comparison of the Average Percentage of Funds Obligated and
Drawn Down among Housing Agencies Grouped by Size of Recovery Act
Grant, as of November 14, 2009:
Table 8: Summary of Selected Projects Funded by Capital Fund Recovery
Competition Grants:
Table 9: Use of the Recovery Act's Weatherization Funds by Seven States
and the District, as of November 30, 2009:
Table 10: Standard, State Set-Aside, and Total EFSP Recovery Act Awards
to LROs in 16 Selected States and the District, as of October 27, 2009:
Table 11: Planned Use of EFSP Recovery Act Funds by Service Category
for LROs in 16 States and the District, as of November 4, 2009:
Table 12: Selected Examples of Local Governments' Use of Recovery Act
Funds:
Table 13: Highway Entities Visited by GAO:
Table 14: Transit Entities Visited by GAO:
Table 15: Educational Entities Visited by GAO:
Table 16: Housing Entities Visited by GAO:
Table 17: State and Local Weatherization Entities Visited by GAO:
Table 18: Local Governments Visited by GAO (Government Type, Population
and Unemployment):
Figures:
Figure 1: GAO's December 2009 Recovery Act Coverage of States and
Localities:
Figure 2: Estimated versus Actual Federal Outlays to States and
Localities under the Recovery Act:
Figure 3: Federal Recovery Act Outlays for Programs Administered by
States and Localities (as of November 27, 2009):
Figure 4: Percentage Increase in Medicaid Enrollment for April 2009 to
September 2009 for 16 States and the District:
Figure 5: Cumulative Recovery Act Highway Funds Obligated and
Reimbursed by FHWA Nationwide from March 31, 2009, to November 16,
2009:
Figure 6: National Recovery Act Highway Obligations by Project
Improvement Type as of October 31, 2009:
Figure 7: Percentage of Recovery Act Highway Apportionments That Have
Been Obligated for Statewide and Suballocated Areas in Selected States
as of October 31, 2009:
Figure 8: Nationwide Transit Capital Assistance Program Recovery Act
Obligations by Project Type as of November 5, 2009:
Figure 9: Estimated Percentage of LEAs Nationally with Funding
Decreases and Increases of 5 Percent or More for School Year 2009-2010,
by Source of Funding:
Figure 10: Estimated Percentage of LEAs with Budget Increases and
Decreases of 5 Percent of More for School Year 2009-2010, by State:
Figure 11: Estimated Percentage of LEAs Nationally Planning to Use More
Than 50 Percent of Their Recovery Act Funds to Retain and Create Jobs
for SFSF, ESEA Title I, and IDEA Programs:
Figure 12: Estimated Percentage of LEAs Planning to Use More Than 50
Percent of Their Recovery Act Funds to Retain Jobs, by State for SFSF,
ESEA Title I, and IDEA Programs:
Figure 13: Estimated Percentage of LEAs Expecting Decreases in the
Number of Jobs, Even with SFSF Recovery Act Funds, by State:
Figure 14: Estimated Percentage of LEAs That Placed Very Great or Great
Importance on Education Reform When Planning for Uses of Education
Funding:
Figure 15: Estimated Percentage of LEAs Nationally Planning to Use More
Than 25 Percent of Their Recovery Act Funds for Professional
Development, Technological Equipment, and Instructional Materials for
SFSF, ESEA Title I, and IDEA Programs:
Figure 16: Estimated Percentage of LEAs Planning to Take Advantage of
Flexibility to Reduce Local Spending on IDEA, by State:
Figure 17: Timeline of Major Department of Education Recovery Act
Guidance and Period LEAs Could Respond to GAO's Survey:
Figure 18: How LEAs Assessed the Content of Education's Guidance on
Allowable Uses:
Figure 19: Percentage of Public Housing Capital Fund Formula Grants
Allocated by HUD That Have Been Obligated and Drawn Down Nationwide as
of November 14, 2009:
Figure 20: Housing Agencies' Obligations of Recovery Act Funds by
Quartile as of November 14, 2009:
Figure 21: Percentage of Public Housing Capital Fund Formula Grants
Allocated by HUD That Have Been Obligated and Drawn Down by 47 Public
Housing Agencies Selected by GAO as of November 14, 2009:
Figure 22: Roof Repairs to an Iowa Public Housing Facility, Before Work
Began and Work in Progress:
Figure 23: Comparison of Obligation and Drawdown Rates for Troubled and
Nontroubled Housing Agencies:
Figure 24: Troubled versus Nontroubled Housing Agencies' Obligations of
Recovery Act Funds by Quartile as of November 14, 2009:
Figure 25: Selected Local Governments Included in Our December 2009
Review:
Figure 26: Selected Grant Programs and Their Administering Federal
Agency or Office:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
December 10, 2009:
Report to the Congress:
States' and localities' use of Recovery Act funds continues as the
nation responds to the most serious economic crisis since the Great
Depression. Congress and the administration crafted the American
Recovery and Reinvestment Act of 2009 (Recovery Act)[Footnote 1] with
the broad purpose of stimulating the economy. As of November 27, 2009,
$69.1 billion, or about one quarter of the approximately $280 billion
in Recovery Act funds for programs administered by states and
localities, had been paid out. Estimates show that the largest share of
the funds is expected to be spent in fiscal year 2010.
The Recovery Act specifies several roles for GAO, including conducting
bimonthly reviews of selected states' and localities' use of funds made
available under the act. This report, the fourth in response to the
act's mandate, addresses the following: (1) selected states' and
localities' uses of Recovery Act funds, (2) the approaches taken by the
selected states and localities to ensure accountability for Recovery
Act funds, and (3) states' plans to evaluate the impact of the Recovery
Act funds they received. The report provides overall findings and
discusses the status of actions in response to the recommendations we
made in our earlier reports. In addition, our recent report on
recipient reporting contained recommendations to the Office of
Management and Budget (OMB) to address the data quality and reporting
issues we identified. OMB agreed with those recommendations and is
taking action to address them.[Footnote 2]
As reported in our previous bimonthly Recovery Act reports, to address
these objectives, GAO selected a core group of 16 states and the
District of Columbia (District) that we will follow over the next few
years.[Footnote 3] Individual summaries for this core group are
compiled into an electronic supplement, GAO-10-232SP, and are also
accessible through GAO's Recovery Act page at www.gao.gov/recovery/.
Our reviews examine how Recovery Act funds are being used and whether
they are achieving the stated purposes of the act. These purposes
include:
* to preserve and create jobs and promote economic recovery;
* to assist those most impacted by the recession;
* to provide investments needed to increase economic efficiency by
spurring technological advances in science and health;
* to invest in transportation, environmental protection, and other
infrastructure that will provide long-term economic benefits;
and:
* to stabilize state and local government budgets, in order to minimize
and avoid reductions in essential services and counterproductive state
and local tax increases.
The states selected for our bimonthly reviews contain about 65 percent
of the U.S. population and are estimated to receive collectively about
two-thirds of the intergovernmental federal assistance funds available
through the Recovery Act. We selected these states and the District on
the basis of federal outlay projections, percentage of the U.S.
population represented, unemployment rates and changes, and a mix of
states' poverty levels, geographic coverage, and representation of both
urban and rural areas. For this report we visited a nonprobability
sample of 155 local entities within the 16 states and the District for
our program reviews. These local entities represented a range of types
of local governments (cities and counties) and program areas as shown
below. The local governments also varied by population sizes and
economic conditions (unemployment rates greater than or less than the
state's overall unemployment rate).
Figure 1: GAO's December 2009 Recovery Act Coverage of States and
Localities:
[Refer to PDF for image: table]
States visited: 16[A];
Local governments visited to review overall use of funds: 44;
Local governments visited by program area:
Highway: 17;
Transit: 25;
Education: 19;
Housing: 26;
Weatherization: 24.
Source: GAO analysis of states‘ and localities‘ use of Recovery Act
funds.
Notes: Entities include government officials and agencies,
transportation and transit authorities, school districts, charter
schools, housing authorities, and nonprofit organizations. Appendix III
provides a complete list of the local entities visited for this report.
[A] In addition to the 16 states, the District of Columbia is also
included in GAO's bimonthly reviews of the use of Recovery Act funds.
[End of figure]
Our work for this report focused on selected federal programs primarily
because they have begun disbursing funds to states or have known or
potential risks. These programs are as follows:
* Federal Medical Assistance Percentage (FMAP);
* Federal-Aid Highway Surface Transportation Program;
* Transit Capital Assistance Program;
* Fixed Guideway Infrastructure Investment Program;
* State Fiscal Stabilization Fund (SFSF);
* Title I, Part A of the Elementary and Secondary Education Act of 1965
(ESEA), as amended;
* Individuals with Disabilities Education Act (IDEA), as amended, Parts
B and C;
* Public Housing Capital Fund;
* Weatherization Assistance Program;
and:
* Emergency Food and Shelter Program (EFSP).
The risks can include existing programs receiving significant amounts
of Recovery Act funds or new programs. We collected documents from and
conducted semistructured interviews with executive-level state and
local officials and staff from state offices, including governors'
offices, recovery leads, state and local auditors, and controllers. In
addition, our work focused on federal, state, and local agencies
administering the selected programs receiving Recovery Act funds. We
analyzed guidance and interviewed officials from OMB. We also analyzed
grant award amounts, as well as relevant regulations and federal agency
guidance on programs selected for this review, and spoke with relevant
program officials at the U.S. Departments of Education, Energy, Health
and Human Services (Centers for Medicare & Medicaid Services), Housing
and Urban Development (HUD), Homeland Security (Federal Emergency
Management Agency), and Transportation.
Where attributed to state officials, we did not review state legal
materials for this report but relied on state officials and other state
sources for description and interpretation of relevant state
constitutions, statutes, legislative proposals, and other state legal
materials. The information obtained from this review cannot be
generalized to all states and localities receiving Recovery Act
funding. A detailed description of our scope and methodology can be
found in appendix I.
We conducted this performance audit from September 18, 2009, to
December 4, 2009, in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
Background:
Our analysis of initial estimates of Recovery Act spending provided by
the Congressional Budget Office (CBO) suggested that about $49 billion
would be outlayed to states and localities by the federal government in
fiscal year 2009, which ran through September 30, 2009. Actual federal
Recovery Act outlays reported on www.recovery.gov (Recovery.gov) show
that about $53 billion was outlayed to states and localities in fiscal
year 2009, about $4 billion more than estimated. Nonetheless, a greater
amount of Recovery Act funding is estimated to be outlayed in fiscal
year 2010. For fiscal year 2010, as of November 27, 2009, the federal
Treasury had paid out approximately $16.2 billion to states and
localities. Figure 2 shows the original estimate of federal outlays to
states and localities under the Recovery Act compared with actual
federal outlays as reported by federal agencies on Recovery.gov.
Figure 2: Estimated versus Actual Federal Outlays to States and
Localities under the Recovery Act:
[Refer to PDF for image: vertical bar graph]
Federal fiscal year (October 1-September 20): 2010;
Original estimate: $48.9 billion;
Actual as of November 27, 2009: $52.9 billion.
Federal fiscal year (October 1-September 20): 2010;
Original estimate: $107.7 billion;
Actual as of November 27, 2009: $16.2 billion.
Federal fiscal year (October 1-September 20): 2011;
Original estimate: $63.4 billion.
Federal fiscal year (October 1-September 20): 2012;
Original estimate: $23.3 billion.
Federal fiscal year (October 1-September 20): 2013;
Original estimate: $14.4 billion.
Federal fiscal year (October 1-September 20): 2014;
Original estimate: $9.1 billion.
Federal fiscal year (October 1-September 20): 2015;
Original estimate: $5.7 billion.
Federal fiscal year (October 1-September 20): 2016;
Original estimate: $2.5 billion.
Source: GAO analysis of CBO, Federal Funds Information for States, and
Recovery.gov data.
[End of figure]
As of November 27, 2009, the federal government had outlayed $69.1
billion in Recovery Act funds to state and local governments. As in
figure 3, health, and education and training accounted for almost 85
percent of Recovery Act outlays for programs administered by states and
localities. The largest programs within these areas were the FMAP,
SFSF, and highway spending. The distribution of total federal outlays
to states and localities by program is shown in figure 3.
Figure 3: Federal Recovery Act Outlays for Programs Administered by
States and Localities (as of November 27, 2009):
[Refer to PDF for image: pie-chart]
Health: 55.3%;
Education and training: 29.0%;
Transportation: 8.6%;
Income security: 3.5%;
Community development: 2.4%;
Energy and environment: 1.2%.
Total: $69.1 billion.
Source: GAO analysis of data from Recovery.gov.
[End of figure]
As we reported on November 19, 2009, recipients GAO contacted appear to
have made good-faith efforts to ensure complete and accurate reporting.
[Footnote 4] However, GAO's fieldwork and initial review and analysis
of recipient data from Recovery.gov indicate that there are a range of
significant reporting and quality issues that need to be addressed.
Even if the data quality issues are resolved, it is important to
recognize that the full-time equivalents (FTE) in recipient reports
alone do not reflect the total employment effects of the Recovery Act.
As noted, these reports solely reflect direct employment arising from
the expenditure of less than one third of Recovery Act funds.
Therefore, both the data reported by recipients and other macroeconomic
data and methods are necessary to gauge the overall employment effects
of the stimulus. The Recovery Act includes entitlements and tax
provisions, which also have employment effects. The employment effects
in any state will vary with labor market stress and fiscal condition.
States and Localities Continue Use of Recovery Act Funds as Their
Fiscal Conditions Remain Challenging:
Increased FMAP Continues to Help States Finance Their Growing Medicaid
Programs, but Concerns about Longer-Term Sustainability Have Led States
to Consider Future Program Reductions:
Medicaid is a joint federal-state program that finances health care for
certain categories of low-income individuals, including children,
families, persons with disabilities, and persons who are elderly. The
federal government matches state spending for Medicaid services
according to a formula based on each state's per capita income in
relation to the national average per capita income. The rate at which
states are reimbursed for Medicaid service expenditures is known as the
Federal Medical Assistance Percentage (FMAP), which may range from 50
percent to no more than 83 percent. The Recovery Act provides eligible
states with an increased FMAP for 27 months from October 1, 2008, to
December 31, 2010.[Footnote 5] On February 25, 2009, the Centers for
Medicare & Medicaid Services (CMS) made increased FMAP grant awards to
states, and states may retroactively claim reimbursement for
expenditures that occurred prior to the effective date of the Recovery
Act. Generally, for fiscal year 2009 through the first quarter of
fiscal year 2011, the increased FMAP, which is calculated on a
quarterly basis, provides for (1) the maintenance of states' prior year
FMAPs, (2) a general across-the-board increase of 6.2 percentage points
in states' FMAPs, and (3) a further increase to the FMAPs for those
states that have a qualifying increase in unemployment rates.
For states to qualify for the increased FMAP available under the
Recovery Act, they must meet a number of requirements, including the
following:
* States generally may not apply eligibility standards, methodologies,
or procedures that are more restrictive than those in effect under
their state Medicaid programs on July 1, 2008.[Footnote 6]
* States must comply with prompt payment requirements.[Footnote 7]
* States cannot deposit or credit amounts attributable (either directly
or indirectly) to certain elements of the increased FMAP into any
reserve or rainy-day fund of the state.[Footnote 8]
* States with political subdivisions--such as cities and counties--that
contribute to the nonfederal share of Medicaid spending cannot require
the subdivisions to pay a greater percentage of the nonfederal share
than would have been required on September 30, 2008.[Footnote 9]
* Most States Report Using Increased FMAP to Maintain Services to
Growing Medicaid Population:
We previously reported that by the end of fiscal year 2009, the
Recovery Act had provided increased FMAP rates in the 16 states and the
District that averaged 10.57 percentage points higher than the original
2009 rates established by the Department of Health and Human Services
(HHS).[Footnote 10] For the first quarter of federal fiscal year 2010,
qualifying increases in unemployment rates or increases in base FMAP
rates contributed to higher increased FMAP rates for half of the sample
states when compared to the fourth quarter of fiscal year 2009. The
increased FMAP for the first quarter of fiscal year 2010 averaged 11.07
percentage points higher than the original 2009 rate, with increases
ranging from 9.02 percentage points in Mississippi to 13 percentage
points in Michigan. (See table 1.)
Table 1: Original and Increased Quarterly FMAPs for Fiscal Year 2009
and Preliminary Increased FMAPs for First Quarter of 2010 for 16 States
and the District:
Percentage points:
State: Arizona;
Original fiscal year 2009 FMAP[A]: 65.77;
Fourth quarter fiscal year 2009 increased FMAP[B]: 75.93;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 75.93;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 10.16.
State: California;
Original fiscal year 2009 FMAP[A]: 50.00;
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.59.
State: Colorado;
Original fiscal year 2009 FMAP[A]: 50.00;
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.59.
State: District of Columbia;
Original fiscal year 2009 FMAP[A]: 70.00;
Fourth quarter fiscal year 2009 increased FMAP[B]: 79.29;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 79.29;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 9.29.
State: Florida;
Original fiscal year 2009 FMAP[A]: 55.40;
Fourth quarter fiscal year 2009 increased FMAP[B]: 67.64;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 67.64;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 12.24.
State: Georgia;
Original fiscal year 2009 FMAP[A]: 64.49;
Fourth quarter fiscal year 2009 increased FMAP[B]: 74.42;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 74.96;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 10.47.
State: Illinois;
Original fiscal year 2009 FMAP[A]: 50.32;
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.88;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.88;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.56.
State: Iowa;
Original fiscal year 2009 FMAP[A]: 62.62;
Fourth quarter fiscal year 2009 increased FMAP[B]: 70.71;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 72.55;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 9.93.
State: Massachusetts;
Original fiscal year 2009 FMAP[A]: 50.00;
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.59.
State: Michigan;
Original fiscal year 2009 FMAP[A]: 60.27;
Fourth quarter fiscal year 2009 increased FMAP[B]: 70.68;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 73.27;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 13.00.
State: Mississippi;
Original fiscal year 2009 FMAP[A]: 75.84;
Fourth quarter fiscal year 2009 increased FMAP[B]: 84.24;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 84.86;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 9.02.
State: New Jersey;
Original fiscal year 2009 FMAP[A]: 50.00;
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.59.
State: New York;
Original fiscal year 2009 FMAP[A]: 50.00;
Fourth quarter fiscal year 2009 increased FMAP[B]: 61.59;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 61.59;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.59.
State: North Carolina;
Original fiscal year 2009 FMAP[A]: 64.60;
Fourth quarter fiscal year 2009 increased FMAP[B]: 74.51;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 74.98;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 10.38.
State: Ohio;
Original fiscal year 2009 FMAP[A]: 62.14;
Fourth quarter fiscal year 2009 increased FMAP[B]: 72.34;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 73.47;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.33.
State: Pennsylvania;
Original fiscal year 2009 FMAP[A]: 54.52;
Fourth quarter fiscal year 2009 increased FMAP[B]: 65.59;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 65.85;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.33.
State: Texas;
Original fiscal year 2009 FMAP[A]: 59.44;
Fourth quarter fiscal year 2009 increased FMAP[B]: 69.85;
Preliminary first quarter fiscal year 2010 increased FMAP[C]: 70.94;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.50.
Average FMAP increase;
Fourth quarter fiscal year 2009 increased FMAP[B]: 10.57;
Difference between original 2009 FMAP and preliminary first quarter
2010 increased FMAP: 11.07.
Source: GAO analysis of HHS data.
Note: Beginning in the third quarter of fiscal year 2009, HHS changed
how it calculates the increased FMAP rates. Specifically, HHS
calculates preliminary FMAP rates prior to the start of each quarter
using Bureau of Labor Statistics preliminary unemployment estimates and
adjusts these FMAP rates once the final unemployment numbers become
available.
[A] The original fiscal year 2009 FMAP rates were published in the
Federal Register on November 28, 2007. A correction for the North
Carolina FMAP rate was published on December 7, 2007.
[B] The increased FMAP rates listed for the fourth quarter of federal
fiscal year 2009 were provided by CMS on September 16, 2009.
[C] Preliminary increased FMAP rates listed for the first quarter of
federal fiscal year 2010 were provided by CMS on November 13, 2009.
[End of table]
As in the first half of federal fiscal year 2009, overall Medicaid
enrollment for our sample of 16 states and the District continued to
grow. For the third and fourth quarters of federal fiscal year 2009,
overall Medicaid enrollment for our sample further increased by more
than 3 percent.[Footnote 11] While nearly all of the sample states and
the District reported an enrollment increase from April 2009 to
September 2009--with the highest number of programs experiencing an
increase of 3 percent to 6 percent--the percentage change in enrollment
varied widely, ranging from less than 1 percent in three states to
about 10 percent in Arizona. (See figure 4.) Similar to prior time
periods, most of the enrollment increase was attributable to children,
a population group that is sensitive to economic downturns.[Footnote
12]
Figure 4: Percentage Increase in Medicaid Enrollment for April 2009 to
September 2009 for 16 States and the District:
[Refer to PDF for image: vertical bar graph]
State: California;
Percent increase: 0.05%.
State: Massachusetts;
Percent increase: 0.27%.
State: Georgia;
Percent increase: 0.83%.
State: Illinois;
Percent increase: 1.81%.
State: Pennsylvania;
Percent increase: 2.23%.
State: District of Columbia;
Percent increase: 2.71%.
State: North Carolina;
Percent increase: 3.10%.
State: Mississippi;
Percent increase: 3.31%.
State: Ohio;
Percent increase: 3.41%.
State: New Jersey;
Percent increase: 3.48%.
State: Iowa;
Percent increase: 4.02%.
State: Michigan;
Percent increase: 4.08%.
State: New York;
Percent increase: 4.70%.
State: Colorado;
Percent increase: 5.21%.
State: Texas;
Percent increase: 5.29%.
State: Florida;
Percent increase: 6.82%.
State: Arizona;
Percent increase: 9.78%.
Overall:
Medicaid enrollment increased by 3.10 percent.
Source: GAO analysis of state reported enrollment data.
Note: The percentage increase is based on state-reported Medicaid
enrollment data for April 2009 to September 2009. California and
Georgia reported that their Medicaid enrollment totals for the fourth
quarter of federal fiscal year 2009 would likely increase once data
were finalized. Thus, our analysis likely understates the percentage
enrollment increases for these states. We estimated enrollment for the
District of Columbia for September 2009 because the District did not
provide Medicaid enrollment for this month.
[End of figure]
States can continue to draw from their increased FMAP grant awards for
third and fourth quarter fiscal year 2009 expenditures until CMS
finalizes the grant awards for these quarters, a process the agency has
not yet completed.[Footnote 13] As of November 30, 2009, the 16 sample
states and the District had drawn down more than $22.26 billion from
increased FMAP grant awards, or nearly 97 percent of funds available
for federal fiscal year 2009. (See table 2.) Nationally, the 50 states,
the District, and several of the largest U.S. insular areas combined
have drawn down about $32.6 billion, which represents just over 96
percent of the increased FMAP grants awarded in fiscal year 2009. In
addition, with the exception of Pennsylvania, all of the sample states
and the District have begun to draw down funds from their increased
FMAP grant awards for the first quarter of federal fiscal year 2010.
[Footnote 14] As of November 30, 2009, they have drawn down about $3.58
billion, or almost 54 percent of funds available.
Table 2: FMAP Grant Awards for Federal Fiscal Year 2009 and Funds Drawn
Down for 16 States and the District, as of November 30, 2009 (Dollars
in thousands):
State: Arizona;
FMAP grant awards[A]: $796,917;
Funds drawn down: $755,923;
Percentage of funds drawn down: 94.86.
State: California;
FMAP grant awards[A]: $4,364,715;
Funds drawn down: $3,831,014;
Percentage of funds drawn down: 87.77.
State: Colorado;
FMAP grant awards[A]: $340,024;
Funds drawn down: $309,475;
Percentage of funds drawn down: 91.02.
State: District of Columbia;
FMAP grant awards[A]: $141,775;
Funds drawn down: $127,227;
Percentage of funds drawn down: 89.74.
State: Florida;
FMAP grant awards[A]: $1,861,572;
Funds drawn down: $1,861,572;
Percentage of funds drawn down: 100.00.
State: Georgia;
FMAP grant awards[A]: $706,961;
Funds drawn down: $683,840;
Percentage of funds drawn down: 96.73.
State: Illinois;
FMAP grant awards[A]: $1,266,414;
Funds drawn down: $1,213,733;
Percentage of funds drawn down: 95.84.
State: Iowa;
FMAP grant awards[A]: $195,776;
Funds drawn down: $194,046;
Percentage of funds drawn down: 99.12.
State: Massachusetts;
FMAP grant awards[A]: $1,205,643;
Funds drawn down: $1,162,444;
Percentage of funds drawn down: 96.42.
State: Michigan;
FMAP grant awards[A]: $1,000,046;
Funds drawn down: $996,670;
Percentage of funds drawn down: 99.66.
State: Mississippi;
FMAP grant awards[A]: $291,580;
Funds drawn down: $291,580;
Percentage of funds drawn down: 100.00.
State: New Jersey[B];
FMAP grant awards[A]: $856,509;
Funds drawn down: $858,931;
Percentage of funds drawn down: 100.28.
State: New York;
FMAP grant awards[A]: $4,327,183;
Funds drawn down: $4,312,277;
Percentage of funds drawn down: 99.66.
State: North Carolina[B];
FMAP grant awards[A]: $827,062;
Funds drawn down: $944,469;
Percentage of funds drawn down: 114.20.
State: Ohio;
FMAP grant awards[A]: $1,228,943;
Funds drawn down: $1,188,412;
Percentage of funds drawn down: 96.70.
State: Pennsylvania;
FMAP grant awards[A]: $1,569,221;
Funds drawn down: $1,546,619;
Percentage of funds drawn down: 98.56.
State: Texas;
FMAP grant awards[A]: $2,026,041;
Funds drawn down: $1,982,852;
Percentage of funds drawn down: 97.87.
State: Sample total;
FMAP grant awards[A]: $23,006,383;
Funds drawn down: $22,261,085;
Percentage of funds drawn down: 96.76.
State: National total;
FMAP grant awards[A]: $33,800,409;
Funds drawn down: $32,599,063;
Percentage of funds drawn down: 96.45.
Source: GAO analysis of HHS data as of November 30, 2009.
[A] The FMAP grant awards listed are for all four quarters of federal
fiscal year 2009 through November 30, 2009.
[B] The drawdown in two states--North Carolina and New Jersey--has
exceeded the states' 2009 increased FMAP grant award. CMS officials
told us that, in some cases, states were incorrectly continuing to draw
from the 2009 increased FMAP grant but that CMS is working with states
to correct these discrepancies.
[End of table]
While the increased FMAP available under the Recovery Act is for state
expenditures for Medicaid services, the receipt of these funds may
reduce the funds that states would otherwise have to use for their
Medicaid programs, and states have reported using these freed-up funds
for a variety of purposes. Similar to their reported uses in fiscal
year 2009, states and the District most commonly reported using or
planning to use these freed-up funds in fiscal year 2010 to cover
increased Medicaid caseloads, maintain Medicaid eligibility levels, and
finance general state budget needs. In addition, more than half of the
states and the District reported using these funds to maintain benefits
and services and to maintain payment rates for practitioners and
institutional providers. Five states reported using these funds to meet
prompt pay requirements, and two states and the District also reported
using these funds to help finance their State Children's Health
Insurance Program or other local or state public health insurance
programs. Although virtually all of the sample states and the District
reported using these funds for multiple purposes, two states--North
Carolina and Ohio--reported that they plan to continue using freed-up
funds exclusively to finance general state budget needs.
As we previously reported, 12 states indicated they made adjustments to
their Medicaid programs in order to comply with Recovery Act
requirements, including rescinding prior program changes or canceling
planned changes that conflicted with requirements.[Footnote 15] In our
most recent survey, three states reported making additional adjustments
to comply specifically with the act's prompt pay requirement. For
example, Florida and Michigan reported making systems changes that
allow them to track their compliance with aspects of the prompt pay
requirement. The sample states previously identified the prompt pay
requirement as the most difficult for them in terms of compliance with
the Recovery Act,[Footnote 16] and in the most recent survey, four
states reported they did not comply with this requirement for 1 day.
Nonetheless, most sample states and the District indicated in the
recent survey that CMS's July 30, 2009, State Medicaid Director's
letter provided them with sufficient information to facilitate
compliance.[Footnote 17]
Responses from the sample states and the District were more varied when
asked about whether the increased FMAP funds were sufficient to protect
and maintain their Medicaid programs during the economic downturn or to
provide fiscal relief to the state. While two states reported that the
amount of increased FMAP funds was sufficient to meet these purposes in
fiscal year 2010, six states reported that the amount of increased FMAP
was not sufficient. The remaining eight states and the District
reported that the funds were only somewhat sufficient to meet these
purposes during fiscal year 2010. Among the states that reported the
amount of increased FMAP was not sufficient or only somewhat
sufficient, some reported taking actions to reduce their Medicaid
program spending. For example, California cut certain optional Medicaid
benefits, including adult dental services, though an official said the
state would have made additional program reductions without the
increased FMAP. Pennsylvania reported reducing disproportionate share
hospital payments[Footnote 18] and eliminating pay-for-performance
funds for some Medicaid managed care organizations.
States Are Considering Reductions to Their Medicaid Programs As
Concerns about Program Sustainability Persist:
As for the longer term outlook for their Medicaid programs, the
District and all but one of the sample states reiterated their concerns
about the sustainability of their Medicaid programs after the increased
FMAP funds are no longer available, beginning in January 2011. When
asked about the factors driving their concerns, virtually all of the
states and the District cited the size of the increase in the state's
share of Medicaid payments when the regular FMAP rate goes back into
effect in January 2011--an increase we estimate will range from 28
percent to 66.9 percent (an average of 36.4 percent) compared with the
first quarter 2010 increased FMAP. (See table 3.) In addition, most of
the sample states and the District reported that projected enrollment
increases and further declines in economic conditions and tax revenues
have also contributed to their concerns about the longer-term
sustainability of their programs. Ultimately, the effect of states'
increased share in Medicaid payments will vary depending on the extent
of change in Medicaid enrollment within their individual programs.
Table 3: Increase in State Share between Preliminary First Quarter
Fiscal Year 2010 Increased FMAP and Fiscal Year 2011 Regular FMAP:
State: Arizona;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 75.93;
Fiscal year 2011 regular FMAP[B]: 65.85;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 41.9;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 10.08.
State: California;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59;
Fiscal year 2011 regular FMAP[B]: 50.00;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 30.2;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59.
State: Colorado;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59;
Fiscal year 2011 regular FMAP[B]: 50.00;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 30.2;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59.
State: District of Columbia;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 79.29;
Fiscal year 2011 regular FMAP[B]: 70.00;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 44.9;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 9.29.
State: Florida;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 67.64;
Fiscal year 2011 regular FMAP[B]: 55.45;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 37.7;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 12.19.
State: Georgia;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 74.96;
Fiscal year 2011 regular FMAP[B]: 65.33;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 38.5;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 9.63.
State: Illinois;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.88;
Fiscal year 2011 regular FMAP[B]: 50.20;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 30.6;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 11.68.
State: Iowa;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 72.55;
Fiscal year 2011 regular FMAP[B]: 62.63;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 36.1;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 9.92.
State: Massachusetts;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59;
Fiscal year 2011 regular FMAP[B]: 50.00;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 30.2;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59.
State: Michigan;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 73.27;
Fiscal year 2011 regular FMAP[B]: 65.79;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 28.0;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 7.48.
State: Mississippi;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 84.86;
Fiscal year 2011 regular FMAP[B]: 74.73;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 66.9;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 10.13.
State: New Jersey;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59;
Fiscal year 2011 regular FMAP[B]: 50.00;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 30.2;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59.
State: New York;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 61.59;
Fiscal year 2011 regular FMAP[B]: 50.00;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 30.2;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 11.59.
State: North Carolina;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 74.98;
Fiscal year 2011 regular FMAP[B]: 64.71;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 41.0;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 10.27.
State: Ohio;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 73.47;
Fiscal year 2011 regular FMAP[B]: 63.69;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 36.9;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 9.78.
State: Pennsylvania;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 65.85;
Fiscal year 2011 regular FMAP[B]: 55.64;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 29.9;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 10.21.
State: Texas;
Preliminary fiscal year 2010 increased FMAP, first quarter[A]: 70.94;
Fiscal year 2011 regular FMAP[B]: 60.56;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 35.7;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 10.38.
State: Average difference;
Percentage difference in state share between preliminary first quarter
2010 increased FMAP and 2011 regular FMAP: 36.4;
Percentage point difference in state share between preliminary first
quarter 2010 increased FMAP and 2011 regular FMAP: 10.53.
Source: GAO analysis of HHS data.
[A] The preliminary increased FMAP rates listed for the first quarter
of federal fiscal year 2010 were provided by CMS on November 13, 2009.
[B] The fiscal year 2011 FMAP rates were published in the Federal
Register on November 27, 2009.
[End of table]
Due to these concerns, 11 states and the District reported that they
were considering reducing eligibility, benefits and services, or
provider rates in fiscal year 2011. Specifically, 5 states and the
District reported they were considering eligibility reductions;
8 states and the District reported considering reductions to benefits
and services; and 10 states and the District reported considering
reductions to provider payment rates. In terms of federal action that
would best address their concerns about program sustainability, nearly
all states and the District identified an extension in the availability
of the increased FMAP beyond December 2010. In addition, most states
and the District identified greater flexibility in the Recovery Act's
maintenance of eligibility requirement or prompt payment requirement as
actions that would also help address their concerns.
Most Highway and Transit Recovery Act Funding Has Been Obligated:
The majority of the approximately $35 billion that the Recovery Act
provided for highway infrastructure projects and public transportation
has been obligated nationwide and in the 16 states and the District of
Columbia (District) that are the focus of our review. For example, as
of November 16, 2009, $20.4 billion of the funds had been obligated for
just over 8,800 projects nationwide and $4.2 billion had been
reimbursed.[Footnote 19] In the 16 states and the District, $11.9
billion had been obligated for nearly 4,600 projects and $1.9 billion
had been reimbursed. Almost half of Recovery Act highway obligations
nationally and in the 16 states and the District have been for pavement
improvements--including resurfacing, rehabilitating, and reconstructing
roadways.
For Recovery Act transit funds, we focused our review on the Transit
Capital Assistance Program and the Fixed Guideway Infrastructure
Investment program, which received approximately 91 percent of the
Recovery Act transit funds, and on seven selected states that received
funds from these programs. As of November 5, 2009, about $6.7 billion
of the Recovery Act's Transit Capital Assistance Program and the Fixed
Guideway Infrastructure Investment program funds had been obligated
nationwide.[Footnote 20] Almost 88 percent of Recovery Act Transit
Capital Assistance Program obligations are being used for upgrading
transit facilities, improving bus fleets, and conducting preventive
maintenance.
Three Quarters of Highway Funds Have Been Obligated, and Reimbursements
Are Increasing:
The Recovery Act provides funding to states for restoration, repair,
and construction of highways and other activities allowed under the
Federal-Aid Highway Surface Transportation Program and for other
eligible surface transportation projects. The Recovery Act requires
that 30 percent of these funds be suballocated, primarily based on
population, for metropolitan, regional, and local use. Highway funds
are apportioned to states through federal-aid highway program
mechanisms, and states must follow existing program requirements, which
include ensuring the project meets all environmental requirements
associated with the National Environmental Policy Act (NEPA), paying a
prevailing wage consistent with federal Davis-Bacon Act requirements,
complying with goals to ensure disadvantaged businesses are not
discriminated against in the awarding of construction contracts, and
using American-made iron and steel in accordance with Buy America
program requirements. While the maximum federal fund share of highway
infrastructure investment projects under the existing federal-aid
highway program is generally 80 percent, under the Recovery Act, it is
100 percent.
In March 2009, $26.7 billion was apportioned to all 50 states and the
District for highway infrastructure and other eligible projects. Table
4 shows the funds apportioned and obligated nationwide and in selected
states as of November 16, 2009.
Table 4: Recovery Act Highway Apportionments and Obligations Nationwide
and in Selected States as of November 16, 2009 (dollars in millions):
State: Arizona;
Apportionment: $522;
Obligation: $299;
Obligation: Percentage of apportionment obligated: 57.
State: California;
Apportionment: $2,570;
Obligation: $2,085;
Obligation: Percentage of apportionment obligated: 81.
State: Colorado;
Apportionment: $404;
Obligation: $346;
Obligation: Percentage of apportionment obligated: 86.
State: District of Columbia;
Apportionment: $124;
Obligation: $106;
Obligation: Percentage of apportionment obligated: 86.
State: Florida;
Apportionment: $1,347;
Obligation: $1,123;
Obligation: Percentage of apportionment obligated: 83.
State: Georgia;
Apportionment: $932;
Obligation: $710;
Obligation: Percentage of apportionment obligated: 76.
State: Illinois;
Apportionment: $936;
Obligation: $784;
Obligation: Percentage of apportionment obligated: 84.
State: Iowa;
Apportionment: $358;
Obligation: $342;
Obligation: Percentage of apportionment obligated: 96.
State: Massachusetts;
Apportionment: 438;
Obligation: 252;
Obligation: Percentage of apportionment obligated: 58.
State: Michigan;
Apportionment: $847;
Obligation: $716;
Obligation: Percentage of apportionment obligated: 84.
State: Mississippi;
Apportionment: $355;
Obligation: $306;
Obligation: Percentage of apportionment obligated: 86.
State: New Jersey;
Apportionment: $652;
Obligation: $492;
Obligation: Percentage of apportionment obligated: 75.
State: New York;
Apportionment: $1,121;
Obligation: $833;
Obligation: Percentage of apportionment obligated: 74.
State: North Carolina;
Apportionment: $736;
Obligation: $659;
Obligation: Percentage of apportionment obligated: 90.
State: Ohio;
Apportionment: $936;
Obligation: $488;
Obligation: Percentage of apportionment obligated: 52.
State: Pennsylvania;
Apportionment: $1,026;
Obligation: $925;
Obligation: Percentage of apportionment obligated: 90.
State: Texas;
Apportionment: $2,250;
Obligation: $1,396;
Obligation: Percentage of apportionment obligated: 62.
State: Selected states total;
Apportionment: $15,551;
Obligation: $11,864;
Obligation: Percentage of apportionment obligated: 76.
State: U.S. total;
Apportionment: $26,660;
Obligation: $20,422;
Obligation: Percentage of apportionment obligated: 77.
Source: GAO analysis of FHWA data.
Note: Obligation data does not include obligations associated with $290
million of apportioned funds that were transferred from the Federal
Highway Administration (FHWA) to the Federal Transit Administration
(FTA) for transit projects. Generally, FHWA has authority pursuant to
23 U.S.C. § 104(k)(1) to transfer funds made available for transit
projects to FTA.
[End of table]
As of November 16, 2009, $4.2 billion had been reimbursed nationwide by
Federal Highway Administration (FHWA), including $1.9 billion
reimbursed to the 16 states and the District. These amounts represent
20 percent of the Recovery Act highway funding obligated nationwide and
16 percent of the funding obligated in the 16 states and the District.
As we reported in our September report, because it can take 2 or more
months for a state to bid and award the work to a contractor and have
work begin after funds have been obligated for specific projects, it
may take months before states request reimbursement from FHWA.[Footnote
21] However reimbursements have increased considerably over time, from
$10 million in April to $4.2 billion in mid-November. Reimbursements
have also increased considerably since we last reported in September
when $604 million had been reimbursed to the 16 states and the District
and $1.4 billion had been reimbursed nationwide. This is shown in
figure 5.
Figure 5: Cumulative Recovery Act Highway Funds Obligated and
Reimbursed by FHWA Nationwide from March 31, 2009, to November 16,
2009:
[Refer to PDF for image: vertical bar graph]
Date: March, 2009;
Reimbursements: $1,705,416;
Obligations: $4,692,139,093.
Date: April, 2009;
Reimbursements: $9,782,097;
Obligations: $8,915,848,872.
Date: May, 2009;
Reimbursements: $71,086,535;
Obligations: $12,966,048,380.
Date: June, 2009;
Reimbursements: $264,185,470;
Obligations: $16,144,532,636.
Date: July, 2009;
Reimbursements: $676,187,129;
Obligations: $117,204,099,101.
Date: August, 2009;
Reimbursements: $1,436,789,848;
Obligations: $17,963,530,785.
Date: September, 2009;
Reimbursements: $2,376,188,829;
Obligations: $19,119,020,465.
Date: October, 2009;
Reimbursements: $3,660,703,759;
Obligations: $19,877,442,367.
Date: November, 2009;
Reimbursements: $4,184,688,197;
Obligations: $20,421,830,237.
Source: GAO analysis of FHWA data.
Note: Obligation and reimbursement data does not include obligations or
reimbursements associated with $290 million of apportioned funds that
were transferred from FHWA to FTA for transit projects. Generally, FHWA
has authority pursuant to 23 U.S.C. § 104(k)(1) to transfer funds made
available for transit projects to FTA. November data is only for the
first 16 days of the month and not a full month.
[End of figure]
While reimbursement rates have been increasing, wide differences exist
across states. Some differences we observed among the states were
related to the complexity of the types of projects states were
undertaking and the extent to which projects were being administered by
local governments. For example, Illinois and Iowa have the highest
reimbursement rates--36 percent and 53 percent of obligations,
respectively--far above the national average. Illinois and Iowa also
have a far larger percentage of funds devoted to resurfacing projects
than other states--as discussed in the next section, resurfacing
projects can be quickly obligated and bid. Florida and California have
among the lowest reimbursement rates, less than 2 percent and 4 percent
of obligations, respectively. As discussed in the next section, Florida
is using Recovery Act funds for more complex projects, such as
constructing new roads and bridges and adding lanes to existing
highways. Florida officials also told us that the pace of awarding
contracts has been generally slower in areas where large numbers of
projects are being administered by local agencies (see GAO-10-232SP).
In California, state officials said that projects administered by local
agencies may take longer to reach the reimbursement phase than state
projects due to additional steps required to approve local highway
projects. For example, highway construction contracts administrated by
local agencies in California call for a local public notice and review
period, which can add nearly 6 weeks to the process. In addition,
California state officials stated that localities tend to seek
reimbursement in one lump sum at the end of a project, which can
contribute to reimbursement rates not matching levels of ongoing
construction.
States Continue to Dedicate Most Recovery Act Highway Funds for
Pavement Projects, but Use of Funds May Vary Depending on State
Transportation Goals:
Almost half of Recovery Act highway obligations nationally have been
for pavement improvements--including resurfacing, rehabilitating, and
reconstructing roadways--consistent with the use of Recovery Act funds
in our previous reports. Specifically, $4.5 billion, or 22 percent, is
being used for road resurfacing projects, while $5.2 billion, or 26
percent, is being used for reconstructing or rehabilitating
deteriorated roads.[Footnote 22] As we have reported, many state
officials told us they selected a large percentage of resurfacing and
other pavement improvement projects because those projects did not
require extensive environmental clearances, were quick to design, could
be quickly obligated and bid, could employ people quickly, and could be
completed within 3 years. In addition to pavement improvement, other
projects that have significant funds obligated include pavement
widening (reconstruction that includes new capacity to existing roads),
with $3 billion (15 percent) obligated, and bridge replacement and
improvements, with $2 billion (10 percent) obligated. Construction of
new roads and bridges accounted for 6 percent and 3 percent of funds
obligated, respectively. Figure 6 shows obligations by the types of
road and bridge improvements being made.
Figure 6: National Recovery Act Highway Obligations by Project
Improvement Type as of October 31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (70 percent, $13.99 billion):
Pavement improvement: reconstruction/rehabilitation ($5.18 billion):
26%;
Pavement improvement: resurface ($4.46 billion): 22%;
Pavement widening ($3.07 billion): 15%;
New road construction ($1.28 billion): 6%.
Bridge projects total (13 percent, $2.51 billion):
Bridge improvement ($1.02 billion): 5%;
Bridge replacement ($983 million): 5%;
New bridge construction ($511 million): 3%.
Other (17 percent, $3.37 billion):
Other ($3.37 billion): 17%.
Source: GAO analysis of Federal Highway Administration data.
Note: Totals may not add due to rounding. "Other" includes safety
projects, such as improving safety at railroad grade crossing, and
transportation enhancement projects, such as pedestrian and bicycle
facilities, engineering, and right-of-way purchases.
[End of figure]
The total distribution of project funds by improvement type among the
16 states and the District closely mirrors the distribution nationally--
however, we noted wide differences in how funds were used in these
states. States have considerable latitude to select projects under both
the Recovery Act and the regular Federal-Aid Highway Program, and as a
result, states have adopted different strategies to use Recovery Act
funding to meet the states' transportation goals and needs and promote
long-term investment in infrastructure. The following are some
examples:
* Illinois and Iowa have had a significant portion of their Recovery
Act funds obligated for resurfacing projects--63 percent and 59 percent
of funds, respectively, compared with 10 percent and 12 percent of
funds in Pennsylvania and Florida, respectively (the national average
is 22 percent). Iowa officials told us that focusing on pavement
projects allowed them to advance a significant number of needed
projects, which will reduce the demand for these types of projects and
free up federal and state funding for larger, more complex projects in
the near future.
* According to California officials, under a state law enacted in March
2009, 62.5 percent of funds went directly to local governments for
projects of their selection, while the remaining 37.5 percent is being
used mainly for state highway rehabilitation and maintenance projects
that, due to significant funding limitations, would not have otherwise
been funded. According to California officials, distributing a majority
of funds to localities allow a number of locally important projects to
be funded.
* Mississippi used over half its Recovery Act funds for pavement
improvement projects and around 14 percent of funds for pavement
widening. The Executive Director of the state transportation department
told us the Recovery Act allowed Mississippi to undertake needed
projects and to enhance the safety and performance of the state's
highway system. However, the Executive Director also said that the
act's requirements that priority be given to projects that could be
completed in 3 years resulted in missed opportunities to address long
term needs, such as upgrading a state roadway to interstate highway
standards that would have likely had a more lasting impact on
Mississippi's infrastructure and economic development.
* In Florida, 36 percent of funds have been obligated for pavement-
widening projects (compared with 15 percent nationally) and 23 percent
for construction of new roads and bridges (compared with 9 percent
nationally), while in Ohio, 32 percent of funds have been obligated for
new road and bridge construction.
* Pennsylvania targeted Recovery Act funds to reduce the number of
structurally deficient bridges in the state.[Footnote 23] As of October
2009, 31 percent of funds in Pennsylvania were obligated for bridge
improvement and replacement (compared with 10 percent nationally), in
part because a significant percentage (about 26 percent, as of 2008) of
the state's bridges are structurally deficient.[Footnote 24]
* Massachusetts has used most of its Recovery Act funds to date for
pavement improvement projects, including 30 percent of funds for
resurfacing projects and 43 percent of funds for reconstructing or
rehabilitating deteriorated roads. Massachusetts officials told us that
the focus of its projects for reconstructing and rehabilitating roads,
as well as the focus of future project selections, is to select
projects that promote the state's broader long-term economic
development goals. For example, according to Massachusetts officials,
the Fall River development park project supports an economic
development project and includes construction of a new highway
interchange and new access roadways to a proposed executive park. FHWA
officials expressed concern that Massachusetts may be pursuing
ambitious projects that run the risk of not meeting Recovery Act
requirements that all funds be obligated by March 2010.
States Are Taking Additional Steps to Meet Recovery Act Highway
Requirements, Including the Obligation Deadline and the Economically
Distressed Area and Maintenance of Effort Requirements:
Recovery Act highway funding is apportioned under the rules governing
the Federal-Aid Highway Program generally and its Surface
Transportation Program in particular, and states have wide latitude and
flexibility in which projects are selected for federal funding.
However, the Recovery Act tempers that latitude with requirements that
do not exist in the regular program, including the following
requirements:
* States are required to ensure that all apportioned Recovery Act
funds--including suballocated funds--are obligated within 1 year
(before Mar. 2, 2010). The Secretary of Transportation is to withdraw
and redistribute to eligible states any amount that is not obligated
within this time frame.[Footnote 25] Any Recovery Act funds that are
withdrawn and redistributed are available for obligation until
September 30, 2010.[Footnote 26]
* Give priority to projects that can be completed within 3 years and to
projects located in economically distressed areas. Distressed areas are
defined by the Public Works and Economic Development Act of 1965, as
amended.[Footnote 27] According to this act, to qualify as an
economically distressed area, the area must (1) have a per capita
income of 80 percent or less of the national average; (2) have an
unemployment rate that is, for the most recent 24-month period for
which data are available, at least 1 percent greater than the national
average unemployment rate; or (3) be an area the Secretary of Commerce
determines has experienced or is about to experience a "special need"
arising from actual or threatened severe unemployment or economic
adjustment problems resulting from severe short-or long-term changes in
economic conditions. In response to our recommendation, FHWA, in
consultation with the Department of Commerce, issued guidance on August
24, 2009, that provided criteria for states to use for designating
special needs areas for the purpose of Recovery Act funding.[Footnote
28]
* Certify that the state will maintain the level of spending for the
types of transportation projects funded by the Recovery Act that it
planned to spend the day the Recovery Act was enacted. As part of this
certification, the governor of each state is required to identify the
amount of funds the state plans to expend from state sources from
February 17, 2009, through September 30, 2010.[Footnote 29]
The first Recovery Act requirement is that states have to ensure that
all apportioned Recovery Act funds--including suballocated funds--are
obligated within 1 year. Over seventy-five percent of apportioned
Recovery Act highway funds had been obligated as of November 16, 2009,
both nationwide and among the 16 states and the District. Nine states
and the District have higher obligation rates than the national
average, including Iowa and the District--for which FHWA has obligated
96 percent and 86 percent of funds, respectively. Conversely, Arizona,
Massachusetts, Ohio, and Texas have obligation rates of between 52
percent and 62 percent of apportioned funds. Officials at FHWA and
state department of transportation officials in the states we reviewed
generally believe that these states are on track to meet the March 2010
1-year deadline.
However, two factors may affect some states' ability to meet the 1-year
requirement. First, many state and local governments are awarding
contracts for less than the original estimated cost. This allows states
to use the savings from lower contract awards for other projects, but
additional projects funded with deobligated funds must be identified
quickly. In order to use the savings resulting from the lower contract
awards, a state must request FHWA to deobligate the difference between
the official estimate and the contract award amount and then obligate
funds for a new project.
Our analysis of contract award data shows that for the 10 states and
the District, the majority of contracts are being awarded for less than
the original cost estimates.[Footnote 30] While there is a variation in
the number of contracts being awarded for lower than their original
estimates, every state we collected information from awarded at least
half of its contracts for less than the original cost estimates. Some
states had an extremely high number of contracts awarded at lower
amounts. For example, California, Georgia, and Texas awarded more than
90 percent of their contracts for less than their cost estimates. We
also found a significant variation in both the average amount and the
range of the savings from contracts awarded at lower amounts. For
example, in the District and Georgia, such contracts averaged more than
30 percent less than original state estimates, while in Colorado and
Massachusetts, such contracts averaged under 15 percent less than
original state estimates. In addition, there is also a significant
range in individual projects, with the savings ranging from less then 1
percent under estimates in a number of states to almost 55 percent
under estimates in New York and over 90 percent under in Illinois.
Federal regulations require states to promptly review and adjust
project cost estimates on an ongoing basis and at key decision points,
such as when the bid is approved.[Footnote 31] Many state officials
told us that their state has already started the process of ensuring
funds are deobligated and obligated to other highway programs and
projects by the 1-year deadline. For example, in Colorado, officials
are planning to use Recovery Act funds that are being deobligated by
FHWA for 5 new projects, while in California, FHWA deobligated
approximately $108.5 million and the state has identified 16 new state
projects for Recovery Act funding. FHWA officials told us they
recognize the need to develop a process to monitor and ensure
deobligation of Recovery Act funds from known savings before the 1-year
deadline.
A second factor that may affect some states' ability to meet the 1-year
requirement is that obligations for projects in suballocated areas,
while increasing, are generally lagging behind obligations for
statewide projects in most states and lagging considerably behind in a
few states. In the 16 states and the District, 79 percent of
apportioned statewide funds had been obligated as of October 31, 2009,
while 65 percent of suballocated funds had been obligated. Figure 7
shows obligations for statewide and suballocated areas in the 16 states
and the District.
Figure 7: Percentage of Recovery Act Highway Apportionments That Have
Been Obligated for Statewide and Suballocated Areas in Selected States
as of October 31, 2009:
[Refer to PDF for image: vertical bar graph]
State: Arizona;
Total obligations of statewide funds: 72%;
Total obligations of suballocated funds: 19%.
State: California;
Total obligations of statewide funds: 82%;
Total obligations of suballocated funds: 82%.
State: Colorado;
Total obligations of statewide funds: 90%;
Total obligations of suballocated funds: 80%.
State: District of Columbia;
Total obligations of statewide funds: 91%;
Total obligations of suballocated funds: 7%.
State: Florida;
Total obligations of statewide funds: 75%;
Total obligations of suballocated funds: 82%.
State: Georgia;
Total obligations of statewide funds: 80%;
Total obligations of suballocated funds: 71%.
State: Illinois;
Total obligations of statewide funds: 94%;
Total obligations of suballocated funds: 55%.
State: Iowa;
Total obligations of statewide funds: 95%;
Total obligations of suballocated funds: 91%.
State: Massachusetts;
Total obligations of statewide funds: 72%;
Total obligations of suballocated funds: 31%.
State: Michigan;
Total obligations of statewide funds: 93%;
Total obligations of suballocated funds: 61%.
State: Mississippi;
Total obligations of statewide funds: 98%;
Total obligations of suballocated funds: 55%.
State: New Jersey;
Total obligations of statewide funds: 93%;
Total obligations of suballocated funds: 34%.
State: New York;
Total obligations of statewide funds: 88%;
Total obligations of suballocated funds: 89%.
State: North Carolina;
Total obligations of statewide funds: 81%;
Total obligations of suballocated funds: 85%.
State: Ohio;
Total obligations of statewide funds: 48v
Total obligations of suballocated funds: 57%.
State: Pennsylvania;
Total obligations of statewide funds: 82%;
Total obligations of suballocated funds: 97%.
State: Texas;
Total obligations of statewide funds: 66%;
Total obligations of suballocated funds: 57%.
Source: GAO analysis of FHWA data.
Note: This figure includes only apportioned funds available for
highways and excludes $290 million of apportioned funds that were
transferred from FHWA to FTA for transit projects in 9 states.
Generally, FHWA has authority pursuant to 23 U.S.C. § 104(k)(1) to
transfer funds made available for transit projects to FTA.
[End of figure]
As shown in figure 7, and as we reported in September 2009, FHWA has
obligated substantially fewer funds suballocated for metropolitan and
local areas in three states. While the national average for obligations
of Recovery Act funds for suballocated areas is 63 percent, as of
October 31, New Jersey, Massachusetts, and Arizona had obligation rates
of 34 percent, 31 percent, and 18 percent of these funds, respectively.
Officials in these three states cited a number of reasons for this--
including lack of familiarity by local officials with federal
requirements and increased staff workload associated with Recovery Act
projects--and reported they were taking a number of actions to increase
obligations, such as imposing internal deadlines on local governments
to identify and submit projects.[Footnote 32] As of October 2009,
Arizona had awarded four contracts (one more than it had as of
September 2009) representing $29 million of the $157 million of
suballocated funds. This represents 18 percent of suballocated funds--a
decline from the 21 percent of suballocated funds that had been
obligated when we reported in September 2009. Arizona Department of
Transportation officials told us that although one new contract had
been awarded, the state's total obligation of suballocated funds had
declined because some suballocated funds were deobligated after more
contracts were awarded for less than the estimated amount. Officials
also told us that if local governments are not able to advertise
contracts for construction in suballocated areas prior to the March
2010 deadline, the state would use Recovery Act funds on "ready-to-go"
statewide highway projects in those areas. Similarly, officials in two
localities told us that if projects intended for Recovery Act funds
were in danger of not having funds obligated by the deadline, they
would use those funds on projects now slated to be funded with state
dollars and use state funding for other projects.
Although states are working to have all of their suballocated funds
obligated before March 2010, failure to do so will not prohibit them
from participating in the redistribution of Recovery Act funds after
March 2, 2010. The Secretary of Transportation is to withdraw highway
funds, including suballocated funds, which are not obligated before
March 2, 2010. States that have obligated all of the funds that were
apportioned for use by the state (those that were not suballocated) are
eligible to participate in this redistribution, regardless of whether
all of the state's suballocated funds have been obligated. FHWA is in
the process of developing guidance on the redistribution of any
Recovery Act funding that remains unobligated one year after
apportionment. According to DOT officials, consistent with the Recovery
Act, FHWA currently plans to model this redistribution after the
process used each year in the regular federal-aid highway program to
redistribute obligation authority, allowing Recovery Act funds
redistributed to the states to be available for any qualified project
in a state.
The second Recovery Act requirement is to give priority to projects
that are project to be completed in three years or are located in
economically distressed areas. In July and September 2009, we
identified substantial variation in the extent to which states
prioritized projects in economically distressed areas and how they
identified these areas. For example, we found instances of states
developing their own eligibility requirements for economically
distressed areas using data or criteria not specified in the Public
Works and Economic Development Act. State officials told us they did so
to respond to rapidly changing economic conditions. In response to our
recommendation, FHWA, in consultation with the Department of Commerce,
issued guidance to the states in August 2009 on identifying and giving
priority to economically distressed areas and criteria to identify
"special need" economically distressed areas that do not meet the
statutory criteria in the Public Works Act.[Footnote 33] In its
guidance, FHWA directed states to maintain information as to how they
identified, vetted, examined, and selected projects located in
economically distressed areas and to provide FHWA's division offices
with documentation that demonstrates satisfaction of the "special need"
criteria. FHWA issued additional questions and answers relating to
economically distressed areas in November 2009.
Widespread designations of special needs areas give added preference to
highway projects for Recovery Act funding;
however, they also make it more difficult to target Recovery Act
highway funding to areas that have been the most severely impacted by
the economic downturn. Three of the states we reviewed--Arizona,
California, and Illinois--had each developed and applied its own
criteria for identifying economically distressed areas, and in two of
the three states, applying the new criteria increased the number of
areas considered distressed. [Footnote 34] In California, the number of
counties considered distressed rose from 49 to all 58 counties, while
in Illinois, the number of distressed areas increased from 74 to 92 of
the state's 102 counties. All 15 counties in Arizona were considered
distressed under the state's original determination and remained so
when the state applied the revised criteria. FHWA officials told us
they expected the number of "special needs" distressed areas to
increase when the new guidance was applied. We plan to continue to
monitor the states' implementation of DOT's economically distressed
area guidance.
The third Recovery Act requirement is for states to certify that they
will maintain the level of state effort for programs covered by the
Recovery Act. As we reported in September 2009, most states revised the
initial explanatory or conditional certifications they submitted to DOT
after DOT's April 22, 2009, guidance required states to recertify
without conditions. All states that submitted conditional
certifications submitted a second maintenance of effort certification
to DOT without conditions, and DOT concluded that the form of each
state certification was consistent with its April guidance. In June
2009, FHWA began to review each state's maintenance of effort
calculation to determine whether the method of calculation was
consistent with DOT guidance and the amounts reported by the states for
planned expenditures for highway investment was reasonable. For
example, FHWA division offices evaluated, among other things, whether
the amount certified (1) covered the period from February 17, 2009,
through September 30, 2010, and (2) included in-kind contributions.
FHWA division staff then determined whether the state certification
needed (1) no further action, (2) further assessment, or (3) additional
information. In addition, according to FHWA officials, their
assessments indicated that FHWA needed to clarify the types of projects
funded by the appropriations and the types of state expenditures that
should be included in the maintenance of effort certifications. As a
result of these findings, DOT issued guidance in June, July, and
September 2009 and plans to issue additional guidance on these issues.
In August 2009, FHWA staff in headquarters reviewed the FHWA division
staff findings for each sate and proceeded to work with each FHWA
division office to make sure their states submit revised certifications
that will include the correct planned expenditures for highway
investment--including aid to local agencies. FHWA officials said that
of the 16 states and the District that we reviewed for this study, they
currently expect to have 12 states submit revised certifications for
state highway spending, while an additional 2 states are currently
under review and may have to revise their certifications. DOT officials
stated they have not determined when they will require the states to
submit their revised consolidated certification. According to these
officials, they want to ensure that the states have enough guidance to
ensure that all programs covered by the Recovery Act maintenance of
effort provisions have completed their maintenance of effort
assessments and that the states have enough guidance to ensure that
this is the last time that states have to amend their certifications.
Most state officials we spoke with are committed to trying to meet
their maintenance of effort requirements, but some are concerned about
meeting the requirements. As we have previously reported, states face
drastic fiscal challenges. States' fiscal year 2009 revenue collections
fell below fiscal year 2008 collections and revenue collections are
expected to continue their decline in fiscal 2010. Although the state
officials we spoke with are committed to trying to meet the maintenance
of effort requirements, officials from seven state departments of
transportation told us the current decline in state revenues creates
major challenges in doing so. For example, Iowa, North Carolina, and
Pennsylvania transportation officials said their departments may be
more difficult to maintain their levels of transportation spending if
state gas tax and other revenues, which are used to fund state highway
and state-funded transportation projects, decline. In addition, Georgia
officials also stated that reduced state gas tax revenues pose a
challenge to meeting its certified level of effort. Lastly, Mississippi
and Ohio transportation officials stated that if their state
legislatures reduce their respective department's budget for fiscal
year 2010 or 2011, the department may have difficulty maintaining its
certified spending levels.
FTA Reports That the Majority of Transit Funds Have Been Obligated,
with Most Funding Being Used for Transit Facilities, Bus Fleets, and
Preventive Maintenance:
The Recovery Act appropriated $8.4 billion to fund public transit
throughout the country mainly through three existing Federal Transit
Administration (FTA) grant programs, including the Transit Capital
Assistance Program and the Fixed Guideway Infrastructure Investment
program.[Footnote 35] The majority of the public transit funds--$6.9
billion (82 percent)--was apportioned for the Transit Capital
Assistance Program, with $6 billion designated for the urbanized area
formula grant program and $766 million designated for the nonurbanized
area formula grant program.[Footnote 36] Under the urbanized area
formula grant program, Recovery Act funds were apportioned to large and
medium urbanized areas--which in some cases include a metropolitan area
that spans multiple states--throughout the country according to
existing program formulas. Recovery Act funds were also apportioned to
states for small urbanized areas and nonurbanized areas under the
formula grant programs using the program's existing formula. Transit
Capital Assistance Program funds may be used for such activities as
facilities renovation or construction, vehicle replacements, preventive
maintenance, and paratransit services. Up to 10 percent of apportioned
Recovery Act Transit Capital Assistance funds may also be used for
operating expenses.[Footnote 37] The Fixed Guideway Infrastructure
Investment program was appropriated $750 million, of which $742.5
million was apportioned by formula directly to qualifying urbanized
areas.[Footnote 38] The funds may be used for any capital projects to
maintain, modernize, or improve fixed guideway systems.[Footnote 39]
The maximum federal fund share for projects under the Recovery Act's
Transit Capital Assistance Program and the Fixed Guideway
Infrastructure Investment program is 100 percent;
the federal share under the existing programs is generally 80 percent.
As they work through the state and regional transportation planning
process, designated recipients of the apportioned funds--typically
public transit agencies and metropolitan planning organizations (MPO)-
-develop a list of transit projects that project sponsors (typically
transit agencies) submit to FTA for Recovery Act funding.[Footnote 40]
FTA reviews the project sponsors' grant applications to ensure that
projects meet eligibility requirements and then obligates Recovery Act
funds by approving the grant application. Project sponsors must follow
the requirements of the existing programs, which include ensuring the
projects funded meet all regulations and guidance pertaining to the
Americans with Disabilities Act (ADA), pay a prevailing wage consistent
with federal Davis-Bacon Act requirements, and comply with goals to
ensure disadvantaged businesses are not discriminated against in the
awarding of contracts.
In March 2009, $6.9 billion was apportioned to states and urbanized
areas in all 50 states, the District, and five territories for transit
projects and eligible transit expenses under the Recovery Act's Transit
Capital Assistance Program and $750 million was apportioned to
qualifying urbanized areas under the Recovery Act's Fixed Guideway
Infrastructure Investment program. As of November 5, 2009, almost $6
billion of the Transit Capital Assistance Program funds had been
obligated nationwide and $738 million of the Fixed Guideway
Infrastructure Investment program funds has been obligated nationwide.
Almost 88 percent of Recovery Act Transit Capital Assistance Program
obligations are being used for upgrading transit facilities, improving
bus fleets, and conducting preventive maintenance. As we reported in
September 2009, many transit agency officials told us they decided to
use Recovery Act funding for these types of projects since they are
high-priority projects that support their agencies short-and long-term
goals, can be started quickly, improve safety, or would otherwise not
have been funded. This continues to be the case. In particular:
* Transit infrastructure facilities: $2.8 billion, or 47 percent, of
these funds obligated nationally have been for transit infrastructure
construction projects and related activities, which range from large-
scale projects, such as upgrading power substations, to a series of
smaller projects, such as installing enhanced bus shelters. For
example, in Pennsylvania, the Lehigh and Northampton Transportation
Authority will implement a new passenger information technology system,
install enhanced bus shelters and signage, and fund a new maintenance
facility. Elsewhere, in North Carolina, the Charlotte Area Transit
System will renovate its bus operating and maintenance facilities. In
addition, in California, the San Diego Association of Governments plans
to upgrade stations on a light-rail line and replace a section of a
railroad trestle bridge.
* Bus fleets: $2 billion, or 33 percent, of Recovery Act Funds
obligated nationally have been for bus purchases or rehabilitation to
replace aging vehicles or expand an agency's fleet. For example, in
Pennsylvania, the Lehigh and Northampton Transportation Authority plans
to purchase 5 heavy-duty hybrid buses and the Southeastern Pennsylvania
Transportation Authority plans to purchase 40 hybrid buses. In Iowa,
the state's smaller transit agencies are combining bus orders through
the state's department of transportation for 160 replacement buses and
20 buses to expand bus fleets in areas of growth around the state. In
Colorado, both the Regional Transportation District in Denver and the
Fort Collins-Transfort agency plan to purchase 6 buses each.
* Preventive maintenance: Another $515 million, or 9 percent, has been
obligated for preventive maintenance. FTA considers preventive
maintenance projects eligible capital expenditures under the Transit
Capital Assistance Program.
The remaining funds have been used for rail car purchases and
rehabilitation, leases, training, financing costs, and, in some limited
cases, operating expenses--all of which are eligible expenditures. In
particular, transit agencies reported using $5.2 million, or less than
1 percent, of the Transit Capital Assistance Program funds obligated by
FTA for operating expenses. For example, the Des Moines transit agency
has proposed to use approximately $788,800 for operating expenses, such
as costs associated with personnel, facilities, and fuel.
Figure 8: Nationwide Transit Capital Assistance Program Recovery Act
Obligations by Project Type as of November 5, 2009:
[Refer to PDF for image: pie-chart]
Transit infrastructure construction, $2.8 billion: 47%;
Bus purchases and rehabilitation,$2 billion: 33%;
Other capital expenses, $510 million: 9%;
Preventive maintenance, $515 million: 9%;
Rail car purchases and rehabilitation, $209 million: 4%;
Operating expense, $5.2 million: Less than 1%.
Source: GAO analysis of Federal Transit Administration data.
Note: Percentages may not add to 100 due to rounding. "Transit
Infrastructure Construction" includes engineering and design,
acquisition, construction, and rehabilitation and renovation
activities. "Other capital expenses" includes item, such as leases,
training, finance costs, mobility management project administration,
and other capital projects.
[End of figure]
Funds from the Recovery Act Fixed Guideway Infrastructure Investment
program may also be used for transit improvement projects, which could
include fixed guideway transit facilities and equipment. Recipients may
use the funding on any capital purpose to include purchasing of rolling
stock, improvements to rail tracks, signals and communications, and
preventive maintenance. For example, in New York, FTA approved a $254.4
million grant from Recovery Act Fixed Guideway Infrastructure
Investment funds to Metropolitan Transportation Authority for a variety
of maintenance and safety improvement projects, including the Jackson
Avenue Vent Plant Rehabilitation project in Long Island City. In
addition, the northeastern Illinois's Regional Transportation Authority
is planning on using $95.5 million that was obligated from the Fixed
Guideway Infrastructure Investment program to provide capital
assistance for the modernization of existing fixed guideway systems.
Metra (a regional commuter rail system that is part of the authority)
plans to use these funds, in part, to repair tracks and rehabilitate
stations.
Some State Transit Officials and Bus Manufacturers Are Using Different
Criteria to Measure Job Creation and Retention:
As we reported in September, recipients of transit Recovery Act funds,
such as state departments of transportation and transit agencies, are
subject to multiple reporting requirements. First, under section
1201(c) of the Recovery Act, recipients of transportation funds must
submit periodic reports to DOT on the amount of federal funds
appropriated, allocated, obligated, and reimbursed; the number of
projects put out to bid, awarded, or for which work has begun or been
completed; and the number of direct and indirect jobs created or
sustained, among other things. DOT is required to collect and compile
this information for Congress, and it issued its first report to
Congress in May 2009. Second, under section 1512, recipients of
Recovery Act funds, including but not limited to transportation funds,
are to report quarterly on a number of measures, such as the use of
funds and the number of jobs created or retained.
To help recipients meet these reporting requirements, DOT and OMB have
provided training and guidance. For example, DOT, through FTA,
conducted a training session consisting of six webinars to provide
information on the 1201(c) reporting requirements, such as who should
submit these reports and what information is required. In addition, FTA
issued guidance in September 2009 that provided a variety of
information, including definitions of data elements. OMB also issued
implementing guidance for section 1512 recipient reporting. For
example, on June 22, 2009, OMB issued guidance to dispel some confusion
related to reporting on jobs created and retained by providing, among
other information, additional detail on how to calculate the relevant
numbers. Despite this guidance, we reported in September that transit
officials expressed concerns and confusion about the reporting
requirement, and therefore we recommended that DOT continue its
outreach to transit agencies to identify common problems in accurately
fulfilling reporting requirements and provided additional guidance, as
appropriate. In responding to our recommendation, DOT said that it had
conducted outreach, including providing technical assistance, training
and guidance, to recipients and will continue to assess the need to
provide additional information.
Through our ongoing audit work, we continued to find confusion among
recipients about how to calculate the numbers of jobs created and saved
that is required by DOT and OMB for their reporting requirements.
First, a number of transit agencies continue to express confusion about
calculating the number of jobs resulting from Recovery Act funding,
especially with regard to using Recovery Act funds for purchasing
equipment, such as new buses. For the section 1201(c) reporting
requirement, transit agencies are not to report any jobs created or
sustained from the purchase of buses.[Footnote 41] However, for the
section 1512 recipient reporting requirement, transit agencies were
required to report jobs created or retained from bus purchases, as long
as these purchases were directly from the bus manufacturers and not
from dealer lots. FTA held an outreach session in September 2009 with
representatives from bus manufacturers and the American Public
Transportation Association in an effort to standardize 1512 reporting
methods and clarify recipient responsibilities under the federal
recipient reporting requirements. FTA, the represented manufacturers,
and American Public Transportation Association discussed a standardized
methodology that was established by the Office of Management and Budget
for calculating the number of jobs created or retained by a bus
purchase with Recovery Act funds. Under the agreed-upon methodology,
bus manufacturers are to divide their total U.S. employment by their
total U.S. production to determine a standard "full-time equivalents"
(FTE)-to-production ratio. The bus manufactures would then multiple
that FTE-to-production ratio by a standard full-time schedule in order
to provide transit agencies with a standard 'direct job hours"-to-
production ratio. This ratio is to include hours worked by
administrative and support staff, so that the ratio reflects total
employment. Bus manufacturers are to provide this ratio to the
grantees, usually transit agencies, which then the grantee can use to
calculate the number of jobs created or retained by a bus purchase. FTA
officials told us that the selected group of bus manufacturers and FTA
agreed that this methodology--which allows manufacturers to report on
all purchases, regardless of size--simplifies the job reporting
process. According to guidance, it is the responsibility of the transit
agency to contact the manufacturer and ask how many jobs were related
to that order. The manufacturers, in turn, are responsible for
providing the transit agencies with information on the jobs per bus
ratio at the time when buses are delivered. If the manufacturers cannot
give the agencies a jobs estimate, the transit agencies must develop
their own estimate.
While representatives from the bus manufacturers we interviewed were
using the agreed-upon methodology, there were a number of different
issues that were highlighted.
* Representatives from two bus manufacturers reported not knowing about
the FTA methodology and used their own measures for jobs created or
retained. For example, representatives from two manufacturers told us
that the labor-hours required to produce a bus formed the basis for
their calculation of FTEs and was then pro-rated based upon the amount
of production taking place in the United States and the purchase amount
funded by Recovery Act dollars.
* One bus manufacturer representative said it was difficult to pro-rate
the jobs calculation by the proportion funded by the Recovery Act, as
the agreed-upon methodology requires, since they did not always receive
this information from the transit agencies.
* According to FTA officials, the manufacturer is only responsible for
reporting the ratio of jobs created or retained per bus produced;
the purchasing transit agencies are responsible for the pro-rating and
final calculation of jobs created or retained. However, even bus
manufacturers that were otherwise aware of FTA guidance and following
FTA's methodology would sometimes calculate the total number of jobs
created or retained by a purchase.
The second area of confusion we found involved the methodology
recipients were using to calculate full-time equivalents for the
recipient reporting requirements. As we reported in our November 2009
report on recipient reporting, the data element on jobs created or
retained expressed in FTEs raised questions and concerns for some
recipients.[Footnote 42] In section 5.2 of the June 22 guidance, OMB
states that "the estimate of the number of jobs required by the
Recovery Act should be expressed as FTE, which is calculated as the
total hours worked in jobs retained divided by the number of hours in a
full-time schedule, as defined by the recipient." Further, "the FTE
estimates must be reported cumulatively each calendar quarter." In
addition to issuing guidance, OMB and DOT provided several types of
clarifying information to recipients as well as opportunities to
interact and ask questions or receive help with the reporting process.
However, FTE calculations varied depending on the period of performance
the recipient reported on, and we found examples where the issue of a
project period of performance created significant variation in the FTE
calculation. For example, in Pennsylvania, each of four transit
entities we interviewed used a different denominator to calculate the
number of full-time equivalent jobs they reported on their recipients
reports for the period ending September 30, 2009. Southeastern
Pennsylvania Transportation Authority in Philadelphia used 1,040 hours
as its denominator, since it had projects under way in two previous
quarters. Port Authority of Allegheny County prorated the hours based
on the contractors' start date, as well as to reflect that hours worked
from September were not included due to lag time in invoice processing;
Port Authority used 1,127 hours for contractors starting before April,
867 hours for contractors starting in the second quarter, and 347 hours
for contractors starting in the third quarter. Lehigh and Northampton
Transportation Authority in Allentown used 40 hours in the 1512 report
they tried to submit, but, due to some confusion about the need for
corrective action, the report was not filed. Finally, the Pennsylvania
Department of Transportation in the report for nonurbanized transit
agencies reported using 1,248 hours, which was prorated by multiplying
8 hours per workday times the 156 workdays between February 17 and
September 30, 2009. In several other of our selected states, this
variation across transit programs' period of performance for the FTE
calculation also occurred. Our November report provided additional
detail and recommendations to address the problems and confusion
associated with how FTEs were calculated in the October recipient
report.
As Many LEAs Are Facing Budget Cuts and Fiscal Pressures, Job Retention
Is the Primary Planned Use of Education Recovery Act Funds:
GAO's review of states' use of Recovery Act funds covers three programs
administered by the U.S. Department of Education (Education)--the State
Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended; and the Individuals
with Disabilities Education Act (IDEA), as amended. As part of this
review, GAO surveyed a representative sample of local education
agencies (LEA)--generally, school districts--nationally and in 16
states and the District of Columbia about their planned uses of
Recovery Act funds for each of these programs.[Footnote 43]
* State Fiscal Stabilization Fund. The State Fiscal Stabilization Fund
(SFSF) included approximately $48.6 billion to award to states by
formula and up to $5 billion to award to states as competitive grants.
The Recovery Act created the SFSF in part to help state and local
governments stabilize their budgets by minimizing budgetary cuts in
education and other essential government services, such as public
safety. Stabilization funds for education distributed under the
Recovery Act must first be used to alleviate shortfalls in state
support for education to LEAs and public institutions of higher
education (IHE). States must use 81.8 percent of their SFSF formula
grant funds to support education (these funds are referred to as
education stabilization funds) and must use the remaining 18.2 percent
for public safety and other government services, which may include
education (these funds are referred to as government services funds).
For the initial award of SFSF formula grant funds, Education awarded at
least 67 percent of the total amount allocated to each state,[Footnote
44] but states had to submit an application to Education to receive the
funds. The application required each state to provide several
assurances, including that the state will meet maintenance-of-effort
requirements (or will be able to comply with the relevant waiver
provisions) and that it will implement strategies to advance four core
areas of education reform, as described by Education: (1) increase
teacher effectiveness and address inequities in the distribution of
highly qualified teachers; (2) establish a pre-K-through-college data
system to track student progress and foster improvement; (3) make
progress toward rigorous college-and career-ready standards and high-
quality assessments that are valid and reliable for all students,
including students with limited English proficiency and students with
disabilities; and (4) provide targeted, intensive support and effective
interventions to turn around schools identified for corrective action
or restructuring.[Footnote 45] In addition, states were required to
make assurances concerning accountability, transparency, reporting, and
compliance with certain federal laws and regulations. After maintaining
state support for education at fiscal year 2006 levels, states must use
education stabilization funds to restore state funding to the greater
of fiscal year 2008 or 2009 levels for state support to LEAs and public
IHEs. On November 12, 2009, Education published final requirements for
Phase II applications for SFSF, which states must submit by January 11,
2010. The Department also published additional guidance for Phase II
applications in December 2009. According to the Phase II application,
in order to receive the remainder of their SFSF allocation, states must
agree to collect and publicly report on over 30 indicators and
descriptors related to the four core areas of education reform
described above. Additionally, states generally must, among other
things, provide confirmation that they maintained support for education
in 2009 at least at the level of such support in fiscal year 2006 and
reaffirm or provide updated information that they will maintain state
support in 2010 and 2011. When distributing these funds to LEAs, states
must use their primary education funding formula, but they can
determine how to allocate funds to public IHEs. In general, LEAs have
broad discretion in how they can use education stabilization funds, but
states have some ability to direct IHEs in how to use these funds.
* ESEA Title I, Part A. The Recovery Act provides $10 billion to help
LEAs educate disadvantaged youth by making additional funds available
beyond those regularly allocated through Title I, Part A of the
Elementary and Secondary Education Act of 1965 (ESEA), as amended.
[Footnote 46] The Recovery Act requires these additional funds to be
distributed through states to LEAs using existing federal funding
formulas, which target funds based on such factors as high
concentrations of students from families living in poverty. In using
the funds, LEAs are required to comply with applicable statutory and
regulatory requirements and must obligate 85 percent of the funds by
September 30, 2010.[Footnote 47] Education is advising LEAs to use the
funds in ways that will build the agencies' long-term capacity to serve
disadvantaged youth, such as through providing professional development
to teachers.
* IDEA, Parts B and C.[Footnote 48] The Recovery Act provided
supplemental funding for programs authorized by Parts B and C of the
Individuals with Disabilities Education Act (IDEA) as amended, the
major federal statute that supports early intervention and special
education and related services for children, and youth with
disabilities. Part B provides funds to ensure that preschool and school-
age children with disabilities have access to a free and appropriate
public education and is divided into two separate grant programs--Part
B grants to states (for school-age children) and Part B preschool
grants. Part C funds programs that provide early intervention and
related services for infants and toddlers with disabilities--or at risk
of developing a disability--and their families.
Even with Recovery Act Funds, a High Percentage of School Districts in
Some States Are Facing Budget Cuts, but in Other States, Budget
Increases Are More Common:
Education funding in the United States primarily comes from state and
local governments. Prior to the influx of Recovery Act funding for
education from the federal government, LEAs, on average, derived about
48 percent of their fiscal year 2007 funding budget from state funds,
44 percent from local funds, and 9 percent from federal funds.[Footnote
49] These percentages, however, likely shifted due to increased federal
Recovery Act funds and reductions in some state budgets for education.
While the federal role in financing public education has historically
been a limited one, the federal funds appropriated under the Recovery
Act provide a significant but temporary increase in federal support for
education to states and localities in part to help them address budget
shortfalls. According to CRS, the Recovery Act provided approximately
$100 billion for discretionary education programs--elementary,
secondary, and postsecondary--in fiscal year 2009, which, when combined
with regular appropriations, represents about a 235 percent increase in
federal funding compared to fiscal year 2008.
According to our survey, however, even with the current infusion of
Recovery Act funding for education programs, the budget condition of
LEAs across the country is mixed. Based on our national survey results,
we estimate that approximately the same amount of LEAs--17 percent--
face decreases of 5 percent or more in total education funding[Footnote
50] as face funding increases for the current school year. On the other
hand, an estimated 57 percent of LEAs reported smaller or no funding
changes for the current school year.[Footnote 51]
Changes to LEA budgets for the current school year varied substantially
depending on the source of the funding--federal, state, or local
government. Figure 9 shows the estimated percentage of LEAs nationally
that are facing budget fluctuations of 5 percent or more by funding
source. For the current school year, we estimate that 50 percent of
LEAs nationwide received such funding increases from the federal
government. By contrast, however, state funding cuts of 5 percent or
more were common for many LEAs across the country. According to our
survey, an estimated 41 percent of LEAs across the country are seeing
state funding cuts of 5 percent or more for education. By contrast, an
estimated 6 percent of LEAs report similar decreases from the federal
government for the current school year. Regarding local funds, an
estimated 9 percent of LEAs reported increases of 5 percent or more and
17 percent reported decreases of the same magnitude. For LEAs, a cut in
state or local funds may only be partially offset by an increase in
federal funds because LEAs, on average, receive a much higher
proportion of their funds from state and local governments than from
the federal government.
Figure 9: Estimated Percentage of LEAs Nationally with Funding
Decreases and Increases of 5 Percent or More for School Year 2009-2010,
by Source of Funding:
[Refer to PDF for image: horizontal bar graph]
Source of funding: State;
Percentage of LEAs with decrease of 5 percent or more: 41;
Percentage of LEAs with increase of 5 percent or more: 7.
Source of funding: Local;
Percentage of LEAs with decrease of 5 percent or more: 17;
Percentage of LEAs with increase of 5 percent or more: 9.
Source of funding: Federal;
Percentage of LEAs with decrease of 5 percent or more: 6;
Percentage of LEAs with increase of 5 percent or more: 50.
Total funding:
Percentage of LEAs with decrease of 5 percent or more: 17;
Percentage of LEAs with increase of 5 percent or more: 17.
Source: GAO survey of LEAs.
Notes: Percentage estimates for these nationwide estimates have margins
of error, at the 95 percent confidence level, of plus or minus 5
percentage points or less.
[End of figure]
A high percentage of the LEAs reporting a decrease in federal funding
were in California. California officials offered several possible
reasons why some LEAs in California reported federal funding decreases
of 5 percent or more for education.
While the national results of our survey show a mixed budgetary picture
for LEAs, sizable funding cuts to LEA overall budgets were concentrated
in a few of the states on which we are focusing our Recovery Act
review--California, North Carolina, and Georgia (see figure 10).
[Footnote 52] In California, for example, a majority of LEAs in the
state--an estimated 67 percent--are experiencing declines of 5 percent
or more in their overall education budgets this year. We previously
reported that, in California, the state legislature authorized
substantial budget cuts in order to balance the fiscal year 2009-2010
budget, with funding for education making up a large part of the
reduction--$6.5 billion was cut from K-12 and community college funding
in July alone. According to officials at Los Angeles Unified School
District--the largest LEA in the state--the LEA faces steep drops in
state revenue in education in fiscal year 2009-2010. In addition to
California, we estimate that nearly 40 percent of LEAs in both Georgia
and North Carolina face overall funding cuts of 5 percent or more, well
above the national average of 17 percent. According to the Department
of Public Instruction in North Carolina, the economic recession has
resulted in significant declines in state revenues for education, with
federal Recovery Act funding offsetting only a portion of the state
cuts. For example, one North Carolina LEA reported that the current
year budget process was difficult, with federal Recovery Act funding
"softening the blow" of state and local funding cuts but not completely
compensating for the reductions. In other states, however, many LEAs
report total funding increases for education of 5 percent or more for
the current school year. According to our survey, about 30 percent of
LEAs in Texas, Mississippi, and New Jersey reported total education
funding increases of 5 percent or more.
Figure 10: Estimated Percentage of LEAs with Budget Increases and
Decreases of 5 Percent of More for School Year 2009-2010, by State:
National average:
Percentage of LEAs with decrease of 5 percent or more: 17;
Percentage of LEAs with increase of 5 percent or more: 17.
California:
Percentage of LEAs with decrease of 5 percent or more: 67;
Percentage of LEAs with increase of 5 percent or more: 5.
Georgia:
Percentage of LEAs with decrease of 5 percent or more: 39;
Percentage of LEAs with increase of 5 percent or more: 6.
North Carolina:
Percentage of LEAs with decrease of 5 percent or more: 37;
Percentage of LEAs with increase of 5 percent or more: 3.
Illinois:
Percentage of LEAs with decrease of 5 percent or more: 15;
Percentage of LEAs with increase of 5 percent or more: 22.
Colorado:
Percentage of LEAs with decrease of 5 percent or more: 13;
Percentage of LEAs with increase of 5 percent or more: 15.
Massachusetts:
Percentage of LEAs with decrease of 5 percent or more: 12;
Percentage of LEAs with increase of 5 percent or more: 11.
Florida:
Percentage of LEAs with decrease of 5 percent or more: 11;
Percentage of LEAs with increase of 5 percent or more: 19.
Iowa:
Percentage of LEAs with decrease of 5 percent or more: 10;
Percentage of LEAs with increase of 5 percent or more: 10.
Texas:
Percentage of LEAs with decrease of 5 percent or more: 9;
Percentage of LEAs with increase of 5 percent or more: 30.
New York:
Percentage of LEAs with decrease of 5 percent or more: 7;
Percentage of LEAs with increase of 5 percent or more: 15.
Ohio:
Percentage of LEAs with decrease of 5 percent or more: 4;
Percentage of LEAs with increase of 5 percent or more: 16.
Mississippi:
Percentage of LEAs with decrease of 5 percent or more: 3;
Percentage of LEAs with increase of 5 percent or more: 30.
New Jersey:
Percentage of LEAs with decrease of 5 percent or more: 2;
Percentage of LEAs with increase of 5 percent or more: 29.
Source: GAO survey of LEAs.
Notes: This graphic does not include Pennsylvania, Michigan and Arizona
because at the time our survey was available--from August to October
2009--their state budgets had not been finalized, and therefore, a
large percentage of LEAs responded "don't know" to this funding
question on the survey.
Percentage estimates for states have margins of error, at the 95
percent confidence level, of plus or minus 12 percentage points or
less, with the exception of Florida, which has a margin of error of 14
percent. The nation-wide percentage estimates have a margin of error of
plus or minus 4 percentage points.
[End of figure]
LEAs Planned to Use Recovery Act Funds for Job Retention, but about a
Third Expect to Lose Jobs Overall:
Our survey results indicate that much of the Recovery Act funds for
education are being used by LEAs to retain staff. An estimated 64
percent of LEAs nationally reported giving very great or great
importance to retaining jobs when deciding how to spend Recovery Act
funds. Because employee-related expenditures are the largest category
of school expenditures--with salaries and benefits accounting for more
than 80 percent of local school expenditures, according to Education's
most recent estimates [Footnote 53]--it is understandable that LEAs
would use some of their Recovery Act funds for staff salaries. Also,
given the fiscal uncertainty and substantial budget shortfalls facing
states, federal funds authorized by the Recovery Act provide LEAs with
additional support for the retention of education staff. Overall, the
impact of Recovery Act education funds on job retention may be
significant because K-12 public school systems employ about 6.2 million
staff, based on Education's estimates, and make up about 4 percent of
the nation's workforce.[Footnote 54]
Retaining Jobs Was LEAs' Top Use for Recovery Act Funds across Three
Education Programs:
Job retention was the top planned use for Recovery Act funds for LEAs
across the three federal Education programs GAO reviewed. Figure 11
shows the national results of the estimated percentages of LEAs that
reported planning to use more than 50 percent of their Recovery Act
funds under SFSF, IDEA, Part B, and ESEA Title I, Part A to retain and
create education jobs. An estimated 63 percent of LEAs, the highest
percentage among the 3 programs we reviewed, plan to use Recovery Act
SFSF funds to retain jobs. In contrast, an estimated 25 percent and 19
percent of LEAs said they planned to use over half of their Recovery
Act funds on job retention under ESEA Title I, Part A and IDEA, Part B,
respectively. Overall, the percentages of LEAs that reported planning
to use Recovery Act funds to create jobs were lower than the
percentages planning to retain jobs, with an estimated 11 percent under
ESEA Title I, 7 percent under IDEA, and 3 percent under SFSF planning
to create jobs.
Figure 11: Estimated Percentage of LEAs Nationally Planning to Use More
Than 50 Percent of Their Recovery Act Funds to Retain and Create Jobs
for SFSF, ESEA Title I, and IDEA Programs:
[Refer to PDF for image: vertical bar graph]
Funding source: SFSF;
Funds to retain jobs: 63%;
Funds to create new jobs (instructional and noninstructional): 3%.
Funding source: Title I;
Funds to retain jobs: 25%;
Funds to create new jobs (instructional and noninstructional): 11%.
Funding source: IDEA;
Funds to retain jobs: 19%;
Funds to create new jobs (instructional and noninstructional): 7%.
Source: GAO survey of LEAs.
Note: The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of figure]
State education officials reported a variety of factors that may help
explain why LEAs reported planning to use Recovery Act funds to retain
jobs. In particular, officials noted that SFSF funds provided
flexibility in how they could be used. For example, one state education
official noted that LEAs have more flexibility in spending SFSF funds
for general education expenses because ESEA Title I and IDEA programs
target special populations---disadvantaged youth and students with
disabilities, respectively. This official said that because funding
levels for general education programs in his state have decreased while
federal funding levels for ESEA Title I and IDEA programs have
increased, LEAs have used SFSF funds to shore up funding for general
education and, in particular, preserve jobs.
The percentage of LEAs reporting they planned to use over 50 percent of
their Recovery Act education funds to retain jobs varied considerably
by state. In particular, Georgia, Michigan, Florida, New Jersey, New
York and North Carolina were among the states with the highest
percentages of LEAs that reported planning to use over half their SFSF
funds for job retention (see figure 12). North Carolina, Iowa, New
York, Georgia, Florida and Michigan were among the states with the
highest percentages of LEAs that reported they planned to use over half
of their ESEA Title I or IDEA Recovery Act funds for this purpose (see
figure 12).
Figure 12: Estimated Percentage of LEAs Planning to Use More Than 50
Percent of Their Recovery Act Funds to Retain Jobs, by State for SFSF,
ESEA Title I, and IDEA Programs:
[Refer to PDF for image: 3 vertical bar graphs]
Percentage of LEAs - SFSF:
Georgia: 92.3%;
Michigan: 86.9%;
Florida: 86.4%;
New Jersey: 78.8%;
New York: 78.0%;
North Carolina: 72.7%;
Iowa: 64.9%;
Mississippi: 67.8%;
Illinois: 64.9%;
Arizona: 61.5%;
California: 52.2%;
Ohio: 46.1%;
Massachusetts: 36.6%;
Texas: 32.4%;
Pennsylvania: 19.4%;
National average: approximately 64%.
Percentage of LEAs - Title I:
North Carolina: 49.1%;
Iowa: 45.9%;
New York: 39.8%;
Georgia: 38.1%;
Florida: 34.2%;
California: 29.1%;
Michigan: 22.9%;
Arizona: 22.8%;
Pennsylvania: 19.1%;
Illinois: 15.5%;
Colorado: 14.5%;
Texas: 11.9%;
Ohio: 10.7%;
Massachusetts: 10.2%;
New Jersey: 9.8%;
Mississippi: 4.7%;
National average: approximately 25%.
Percentage of LEAs - IDEA:
North Carolina: 51.5%;
New York: 37.3%;
Michigan: 36.8%;
Georgia: 35.8v
Florida: 34.2%;
Iowa: 31.7%;
Arizona: 28.7%;
California: 16.6%;
Ohio: 15.0%;
Colorado: 14.4%;
Massachusetts: 7.8%;
Illinois: 7.1%;
Texas: 6.9%;
Pennsylvania: 6.0%;
New Jersey: 2.5%;
Mississippi: 1.6%;
National average: approximately 20%.
Source: GAO survey of LEAs.
Notes: Percentage estimates for states have margins of error, at the 95
percent confidence level, of plus or minus 12 percentage points or less
(Florida has a margin of error of 15 percent, Massachusetts,
Pennsylvania, and New Jersey have margins of error of 16 percent, and
Colorado has a margin of error of 23 percent). The nationwide
percentage estimates have a margin of error of plus or minus 5
percentage points.
At the time our survey was conducted, from August 21 to October 4,
2009, Pennsylvania did not have an approved SFSF application. An
estimated 28 percent of surveyed LEAs in Pennsylvania reported they did
not know if they would receive SFSF funds and were therefore not
included in the SFSF fund use estimate.
Colorado was not included in our analysis of SFSF fund use because the
state did not allocate these funds to LEAs.
[End of figure]
LEA officials described the use of Recovery Act funds to retain staff
in the context of decreasing state and local education funds. For
example, education officials in New York City told us that Recovery Act
funds helped the city reduce a total education budget gap of nearly
$1.46 billion to $400 million for the current school year and avoid
teacher layoffs. In the small, rural school district of Jasper-
Troupsburg in upstate New York, district officials told us they were
facing a budget gap of $250,000. They said they would use 95 percent of
their Recovery Act funds to retain jobs. Without these funds, the
district would have been forced to cut teachers' salaries and reduce
work hours, as well as lay off 8 to 10 teachers out of 60 teachers,
according to LEA officials. Similarly in Charlotte-Mecklenburg, North
Carolina, LEA officials told us that Recovery Act funds allowed the
district to compensate for reductions in state aid and local funds and
that a large portion of these funds enabled the district to retain
education jobs. In another LEA in Arizona, officials explained that
with Recovery Act funds, they were able to offer contracts to all
teachers who were returning, but without these funds the extent to
which they would have had to reduce staff positions is unclear. They
speculated that, absent Recovery Act funds, other cost-cutting measures
might have included decreasing staff salaries and benefits.
Some LEAs used Recovery Act funds to hire new staff. When planning how
to spend Recovery Act funds, an estimated 17 percent of LEAs nationally
reported creating jobs as of very great or great importance during the
decision-making process. Officials at the Arlington Elementary School
District, a rural LEA in Arizona containing a single school, said that
IDEA Recovery Act funds would help the district add a special education
teacher to the one they currently have. They said the timing of the
Recovery Act funds was important to their district because of the
addition of three new students with disabilities to the school. Without
the IDEA Recovery Act funds they received, they said they would have
had to draw funds away from general education needs, which would have
meant combining classes and eliminating a position. Similarly, in
Weldon City Schools in North Carolina, officials reported that IDEA
Recovery Act funds allowed the LEA to create teaching and teaching
assistant positions for severely emotionally disturbed students.
Without these funds, officials said they would have had to lay off two
special education staff and would have been unable to provide the
intensive support for students with disabilities. Education officials
in some states said they are concerned about funding cliffs if LEAs use
Recovery Act funds to create new positions. For example, an official at
one LEA in New York state said district officials are concerned that
using Recovery Act Title I funds may lead to a funding cliff and that
the district may be unable to retain teachers hired with those funds
once they expire.
About a Third of LEAs Expected to Lose Jobs, Even with SFSF Funds:
An estimated 32 percent of LEAs nationally expected to lose jobs, even
with SFSF funds,[Footnote 55] but the percentage of LEAs expecting to
lose jobs varies by state. (See figure 13.) Among the states with
higher percentages of LEAs expecting job losses even with SFSF funds
were Georgia, Florida, North Carolina, and California. According to our
analysis, in all of these states except for Florida, the proportion of
LEAs that experienced decreases of 5 percent or more in total education
funding from last year was larger than the national average of 17
percent. For example, in Georgia 65 percent of LEAs reported that they
expected to lose jobs even with SFSF funds, and 39 percent of LEAs also
reported they experienced a total decrease in funds of 5 percent or
more. State education officials in Georgia said that declining state
and local revenues have forced many LEAs to cut their budgets and
eliminate programs, resulting in a loss of jobs. Our analysis also
found that the estimated percentage of the largest LEAs that reported
expecting to lose jobs even with SFSF funds was higher than the
national average.[Footnote 56] For example, officials at Charlotte-
Mecklenburg Schools, the largest LEA in North Carolina, said the
district was facing an $87 million reduction in state and county
funding and sustained a net reduction of 769 positions after Recovery
Act funds had been applied. While budget gaps may help explain the loss
of jobs in some states and localities, there may be other factors that
contribute to job loss. For example, Florida state officials noted that
Florida's declining student enrollment has meant that LEAs are
retaining fewer staff.
Figure 13: Estimated Percentage of LEAs Expecting Decreases in the
Number of Jobs, Even with SFSF Recovery Act Funds, by State:
[Refer to PDF for image: vertical bar graph]
Georgia: 64.6%;
Florida: 55.5%;
North Carolina: 54.4%;
California: 49.5%;
Michigan: 44.7%;
Arizona: 34.2%;
New York: 33.9%;
Iowa: 31.5%;
Massachusetts: 28.1%;
Texas: 20.2%;
Mississippi: 19.7%;
Ohio: 12.5%;
New Jersey: 12.5%;
Illinois: 10.1%;
Pennsylvania: 6.2%;
National average: approximately 32%.
Source: GAO survey of LEAs.
Notes: Colorado was not included in our analysis of SFSF fund use
because the state did not allocate these funds to LEAs.
Percentage estimates for states have margins of error, at the 95
percent confidence level, of plus or minus 12 percentage points or less
(Arizona, Iowa, Mississippi, and Pennsylvania have a margin of error of
13 percent; New Jersey has a margin of error of 15 percent; and
Massachusetts has a margin of error of 16 percent). The nationwide
percentage estimates have a margin of error of plus or minus 5
percentage points.
[End of figure]
Most LEAs Consider Educational Goals Important When Planning for
Recovery Act Funds:
In planning how to spend Recovery Act funds for their LEAs, most local
officials reported placing great importance on advancing educational
goals and reform set forth in Education's guidance on how best to use
the funds (see fig 14).[Footnote 57] Specifically, we estimate that
most LEAs--about 80 percent--gave great or very great importance to
"improving results for students" in deciding how to use Recovery Act
funds for their school districts. "Increasing educators' long term
capacity" was the next most cited, with approximately 70 percent of
LEAs giving very great or great importance to this factor. A majority
of LEAs considered "advancing district/reform and avoid recurring
costs" as important factors when planning how to utilize the Recovery
Act funding at their LEAs.
Figure 14: Estimated Percentage of LEAs That Placed Very Great or Great
Importance on Education Reform When Planning for Uses of Education
Funding:
[Refer to PDF for image: horizontal bar graph]
National average:
Improve results for students (including students in poverty, students
with disabilities, and English language learners): 78%;
Increase educators‘ long-term capacity to improve results for students:
71%;
Avoid recurring costs that your LEA and schools are unprepared to
assume when Recovery Act funding ends: 64%;
Advance district or school improvement/reform plans encompassed in the
Recovery Act: 56%;
Measure and track implementation of the Recovery Act and results for
students: 44%.
Source: GAO survey of LEAs.
Note: Percentage estimates for these nation-wide estimates have margins
of error, at the 95 percent confidence level, of plus or minus 5
percentage points or less.
[End of figure]
According to our survey, LEAs planned to spend some of their Recovery
Act funds on items that could help build long-term capacity and advance
educational goals and reform while also avoiding recurring costs for
LEAs. Overall, LEAs reported several nonrecurring items such as
purchasing technological equipment, including new computers;
providing professional development for instructional staff;
and purchasing instructional materials as among the highest uses of
funds after job retention and creation. Figure 15 shows the national
estimated percentages of LEAs that reported planning to use more than a
quarter of their Recovery Act funds for these three nonrecurring
budgetary items across the three education programs.[Footnote 58]
Figure 15: Estimated Percentage of LEAs Nationally Planning to Use More
Than 25 Percent of Their Recovery Act Funds for Professional
Development, Technological Equipment, and Instructional Materials for
SFSF, ESEA Title I, and IDEA Programs:
[Refer to PDF for image: vertical bar graph]
Recovery act funding source: IDEA;
Providing professional development for instructional staff: 12.7%;
Purchasing technological equipment: 21.7%;
Purchasing instructional materials: 11.4%.
Recovery act funding source: Title I:
Providing professional development for instructional staff: 15.1%;
Purchasing technological equipment: 18.4%;
Purchasing instructional materials: 12.5%.
Recovery act funding source: SFSF:
Providing professional development for instructional staff: 8.4%;
Purchasing technological equipment: 8.9%;
Purchasing instructional materials: 8.2%.
Source: GAO survey of LEAs.
Note: Percentage estimates for these nation-wide estimates have margins
of error, at the 95 percent confidence level, of plus or minus 5
percentage points or less.
[End of figure]
Interviews with LEAs in a number of states illustrate the range of
reform-oriented and capacity-building projects in these areas being
supported with Recovery Act funds. For example, in the Los Angeles
Unified School District, officials described using Recovery Act funds
for a special education leadership academy for assistant principals to
instruct them on compliance with special education requirements and
working with teachers to implement effective instructional programs. In
Weldon City Schools in North Carolina, LEA officials reported that IDEA
Recovery Act funds would enable the district to provide more technology
for children in their special education program, including updated
computers and transition kits for occupational course study classrooms.
Without these Recovery Act funds, officials said that technology funds
for such a program would have been unavailable. At Buckeye Elementary
School District in Arizona, officials said they used some of their IDEA
Recovery Act funds as seed money for acquiring software needed to
implement an educational initiative focusing on preventing the need for
special education interventions and serving approximately 600 students
with disabilities.
In Part Because of Fiscal Pressures, Many Local Education Agencies Plan
to Use IDEA Flexibility to Decrease their Local Spending on IDEA
Activities This Year, Including a Majority of LEAs in Some States:
This year, many LEAs will take advantage of flexibility under IDEA that
allows them to reduce their local, or state and local,[Footnote 59]
spending on students with disabilities, which could have implications
for future spending. As provided for in IDEA, in any fiscal year in
which an LEA's federal IDEA, Part B, allocation exceeds the amount the
LEA received in the previous year, an eligible LEA may reduce local
spending on students with disabilities by up to 50 percent of the
amount of the increase, as long as the LEA uses those freed-up funds
for activities authorized under the Elementary and Secondary Education
Act of 1965, as amended, which supports activities for general
education. Because Recovery Act funds for IDEA are counted as part of
the LEA's overall federal IDEA allocation, this year, the total
increase in IDEA funding for LEAs is far larger than the increases in
previous years. The decision by LEAs to decrease their local spending
may have implications for future spending on special education. Because
LEAs are required to maintain their previous year's level of local
spending[Footnote 60] on special education and related services to
continue to receive IDEA funds, LEAs taking advantage of the spending
flexibility will only be required to maintain these expenditures at the
reduced level in subsequent years. If LEAs that use the flexibility to
decrease their local spending do not voluntarily increase their
spending in future years, and federal IDEA allocations decrease--
specifically by returning to levels comparable to those before the
Recovery Act--the total federal, state, and local spending for the
education of students with disabilities will decrease compared to
spending before the Recovery Act.
To be eligible to exercise this flexibility, the LEA must meet the
requirements of IDEA, Part B, including meeting targets in its state's
performance plan, and this year, almost all of the states in our sample
have had an increase in the number of LEAs that have met requirements-
-and are therefore eligible--compared to last year. Under IDEA, each
state is required to have in place a performance plan, which
establishes targets for LEAs. Overall, among the 15 states in our study
that had made LEA determinations related to their state performance
plan this year, all but New York, Georgia, and Texas[Footnote 61] had
experienced an increase in the number of LEAs that met requirements.
State officials in states that experienced such increases attributed
these increases to training, technical assistance and monitoring of
indicators that were problematic for LEAs to meet in previous years.
However, officials in some states also told us they had changed the
criteria in their state performance plan this year.[Footnote 62] Others
changed the determinations process by increasing the minimum number of
students--called an "n" size or cell size--required for making
calculations related to the state performance plan, which could
effectively prevent some LEAs with small numbers of students from being
evaluated in certain areas. If an LEA has fewer than the minimum number
of special education students required for a particular target, the
LEA's data on that target would be considered "not applicable" and
would not have bearing on the determination of whether the LEA met
requirements.
Officials in states that changed their determinations processes or
criteria said that doing so made their plans and targets comparable to
other states' targets and helped ensure that expectations placed on
LEAs were reasonable.[Footnote 63] Three states changed their
determinations criteria and experienced large increases in the number
of LEAs meeting requirements--Arizona, Michigan, and Ohio--while two
others that increased their minimum "n" size also experienced large
increases--California and Illinois. (See table 5.) Officials in Ohio
told us that they changed the determinations criteria with the goal of
increasing the number of LEAs that were determined to meet
requirements, thereby giving most LEAs in the state the option to
reduce their local spending. States have some discretion over their
determinations process and criteria, but the Secretary of Education
issued a letter to state education officials in October 2009
encouraging them to implement the LEA determinations process in a
rigorous manner, with a focus on improving results for students with
disabilities and ensuring that appropriate special education and
related services are provided.
Table 5: Change in Percentage of LEAs Meeting Requirements of IDEA,
Part B, and Eligible for Flexibility to Reduce Local Expenditures:
State: Arizona;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 22;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 81;
Percentage increase (decrease): 59.
State: California;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 48;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 99.7;
Percentage increase (decrease): 51.7.
State: Colorado;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 18;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 46;
Percentage increase (decrease): 28.
State: District of Columbia[B];
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: [Empty];
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: [Empty];
Percentage increase (decrease): [Empty].
State: Florida;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 67;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 76;
Percentage increase (decrease): 9.
State: Georgia;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 81;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 76;
Percentage increase (decrease): (5).
State: Illinois;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 44;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 82;
Percentage increase (decrease): 38.
State: Iowa;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 98;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 99;
Percentage increase (decrease): 1.
State: Massachusetts[A];
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 80;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 90;
Percentage increase (decrease): 10.
State: Michigan;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 57;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 100;
Percentage increase (decrease): 43.
State: Mississippi;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 97;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: b;
Percentage increase (decrease): [Empty].
State: New Jersey;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 91;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 93;
Percentage increase (decrease): 2.
State: New York;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 95;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 90;
Percentage increase (decrease): (5).
State: North Carolina;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 45;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 58;
Percentage increase (decrease): 13.
State: Ohio;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 8;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 99;
Percentage increase (decrease): 91.
State: Pennsylvania;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 99;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 99.5;
Percentage increase (decrease): 0.5.
State: Texas;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2008-2009 school year: 58;
Percentage of LEAs eligible for flexibility to reduce local
expenditures[A]: 2009-2010 school year: 36;
Percentage increase (decrease): (22).
Source: GAO analysis of data provided by state officials during October
and November 2009.
Notes: States determined the number of LEAs meeting requirements and
therefore eligible for funding flexibility in school year 2008-2009
based on data from the 2006-2007 school year. Similarly, for 2009-2010
funding flexibility, states use data from the 2007-2008 school year.
The total number of LEAs includes districts, state-operated programs,
charter schools, and administrative units that receive a determination
of whether State Performance Plan targets have been achieved. In
Florida and New Jersey, percentage calculations reflect GAO's
assumption that there were the same total number of LEAs in both years.
[A] IDEA section 613(a)(2)(C)(iii) (codified at 20 U.S.C §
1413(a)(2)(C)(iii)) provides that if the state educational agency
determines that an LEA is not meeting the requirements of Part B, it
shall prohibit the LEA from reducing its local maintenance-of-effort
spending. However, Massachusetts prohibits the funding flexibility only
for districts that are determined as "needs substantial intervention."
All Massachusetts LEAs actually had the funding flexibility in both
school years 2008-2009 and 2009-2010, but the numbers in the table
represent the percentage of LEAs that were determined to have met
requirements.
[B] At the time of our interview, District of Columbia officials
reported that the state educational agency has not performed
determinations in prior years and were in the process of making
determinations for this year. Mississippi officials also said they were
in the process of making determinations this year and will use the most
recent determinations to establish eligibility for the funding
flexibility.
[End of table]
According to some state officials, some LEAs were hesitant to utilize
the reduced local expenditure flexibility in the past, because the
increase in their allocation--and the amount of local or state funding
that could be "freed up"--was small. However, this year, the amount of
funding that can be "freed up" is larger than in prior years, and using
this flexibility will give LEAs, some facing budgetary pressures, more
flexibility in deciding how to spend their local funds. According to
state officials, LEAs that take advantage of this flexibility will not
necessarily reduce their local spending by the entire 50 percent
allowed under the law, but some state officials said that some LEAs may
reduce local spending because they have concerns about creating
unsustainable funding commitments for special education, because
services cannot be easily cut after Recovery Act funds are gone. In
Ohio and Colorado, state officials said that this flexibility will
allow LEAs to fund important services that will benefit both general
education and special education students. Another option for LEAs
seeking to benefit students in both general education and special
education settings is to set aside up to 15 percent of their IDEA funds
for Coordinated Early Intervening Services (CEIS), which can be used to
serve students who have not been identified as having a disability.
Mississippi state officials said that some of their LEAs plan to set
aside funds for CEIS instead of using the flexibility to decrease local
spending.
This year, according to our survey, an estimated 44 percent of LEAs
plan to use the reduced local expenditure flexibility to decrease local
spending on students with disabilities, although the percentages vary
across states: from 14 percent in New York to 72 percent in Iowa. (See
figure 16.) An estimated 48 percent of the largest LEAs planned to do
so.[Footnote 64] However, officials in some states said they had
advised LEAs about whether to use the flexibility, and state education
officials in Colorado, Iowa, and Georgia said they expect many or all
eligible LEAs to utilize the flexibility, whereas officials in the
District of Columbia, Arizona, Mississippi, and Texas said they expect
few, if any, to do so.
Figure 16: Estimated Percentage of LEAs Planning to Take Advantage of
Flexibility to Reduce Local Spending on IDEA, by State:
[Refer to PDF for image: stacked vertical bar graph]
Estimated percentages:
State: Iowa;
Yes: 72.4%;
Don't know: 14.7%;
No: 13.0%.
State: California;
Yes: 66.5%;
Don't know: 25.7%;
No: 7.82%.
State: Georgia;
Yes: 58.3%;
Don't know: 18.0%;
No: 23.8%.
State: Michigan;
Yes: 52.0%;
Don't know: 25.7%;
No: 22.4%.
State: Pennsylvania;
Yes: 49.8%;
Don't know: 22.0%;
No: 28.2%.
State: Illinois;
Yes: 49.0%;
Don't know: 18.0%;
No: 32.9%.
State: Colorado;
Yes: 49.0%;
Don't know: 13.6%;
No: 37.4%.
State: Florida;
Yes: 40%;
Don't know: 14.9%;
No: 45.1%.
State: New Jersey;
Yes: 36.0%;
Don't know: 19.3%;
No: 44.7%.
State: Arizona;
Yes: 33.2%;
Don't know: 35.6%;
No: 31.2%.
State: Ohio;
Yes: 28.2%;
Don't know: 47.6%;
No: 24.2%.
State: North Carolina;
Yes: 21.6%;
Don't know: 33.2%;
No: 45.2%.
State: Massachusetts;
Yes: 18.1%;
Don't know: 25.%;
No: 56.7%.
State: Mississippi;
Yes: 17.4%;
Don't know: 40.2%;
No: 42.5%.
State: Texas;
Yes: 15.2%;
Don't know: 38.9%;
No: 45.9%.
State: New York;
Yes: 14.4%;
Don't know: 30.1%;
No: 55.6%.
State: National average:
Yes: approximately 43%.
Source: GAO survey of LEAs.
Note: Estimates for states have margins of error, at the 95 percent
confidence level, of plus or minus 12 percentage points or less
(Colorado and Florida have margins of error of 15 percent). Percentage
estimates for these nation-wide estimates have margins of error, at the
95 percent confidence level, of plus or minus 5 percentage points or
less.
[End of figure]
States Vary in the Rate at Which They Draw Down Recovery Act Funds for
Education Programs, and Some States and LEAs Have Questions about
Proper Cash Management Practices:
As of November 6, 2009, states covered by our review had drawn down 46
percent ($8.4 billion) of the awarded education stabilization
funds,[Footnote 65] 11 percent ($735 million) of Recovery Act funds for
ESEA Title I, and 10 percent ($755 million) of Recovery Act funds for
IDEA. Some states had drawn down a much larger portion of their funds
than other states. For example, Arizona, California, Georgia, and
Illinois had drawn down 83 percent or more of their awarded education
stabilization funds, while the District of Columbia and Pennsylvania
had not drawn down any funds. Pennsylvania had little time to draw down
funds because it had just received approval for its SFSF application a
few days earlier. The District of Columbia had not yet requested
assurances from the LEAs that education stabilization funds would be
used in accordance with federal requirements--the District requires
such assurances before the LEAs obligate federal funds. In addition,
the District of Columbia had not drawn down any of its Recovery Act
funds for ESEA Title I or IDEA, Part B, in part, because it had not
completed its review of LEA applications for these funds, according to
District of Columbia officials. Although New Jersey had not drawn down
any of its ESEA, Title I or IDEA Recovery Act funds as of November 6,
the state drew down funds later in November.
Table 6: Percentage of Awarded Education Stabilization, ESEA Title I,
and IDEA, Part B Recovery Act Funds Drawn Down by States as of November
6, 2009:
Percentage of awarded Recovery Act funds drawn down:
State: Arizona;
Education stabilization funds: 90%;
ESEA Title I: 9%;
IDEA, Part B: 7%.
State: California;
Education stabilization funds: 85%;
ESEA Title I: 41%;
IDEA, Part B: 21%.
State: Colorado;
Education stabilization funds: 56%;
ESEA Title I: 0;
IDEA, Part B: 3%.
State: District of Columbia;
Education stabilization funds: 0;
ESEA Title I: 0;
IDEA, Part B: 0.
State: Florida;
Education stabilization funds: 14%;
ESEA Title I: 11%;
IDEA, Part B: 15%.
State: Georgia;
Education stabilization funds: 83%;
ESEA Title I: 3%;
IDEA, Part B: 4%.
State: Illinois;
Education stabilization funds: 92%;
ESEA Title I: 0;
IDEA, Part B: 7%.
State: Iowa;
Education stabilization funds: 50%;
ESEA Title I: 16%;
IDEA, Part B: 39%.
State: Massachusetts;
Education stabilization funds: 61%;
ESEA Title I: 4%;
IDEA, Part B: 7%.
State: Michigan;
Education stabilization funds: 71%;
ESEA Title I: 1%;
IDEA, Part B: 2%.
State: Mississippi;
Education stabilization funds: 9%;
ESEA Title I: 2%;
IDEA, Part B: 0.
State: New Jersey;
Education stabilization funds: 45%;
ESEA Title I: 0;
IDEA, Part B: 0.
State: New York;
Education stabilization funds: 2%;
ESEA Title I: 0;
IDEA, Part B: 3%.
State: North Carolina;
Education stabilization funds: 28%;
ESEA Title I: 11%;
IDEA, Part B: 16%.
State: Ohio;
Education stabilization funds: 25%;
ESEA Title I: 7%;
IDEA, Part B: 8%.
State: Pennsylvania;
Education stabilization funds: 0;
ESEA Title I: 18%;
IDEA, Part B: 17%.
State: Texas;
Education stabilization funds: 2%;
ESEA Title I: 5%;
IDEA, Part B: 6%.
State: Total;
Education stabilization funds: 46%;
ESEA Title I: 11%;
IDEA, Part B: 10%.
Source: GAO analysis of U.S. Department of Education data.
[End of table]
Education Continues to Work with Some States to Address Federal Cash
Management Requirements under the New SFSF Program:
Department of Education officials report they continue to work with
several states to provide clarification on the appropriate methods for
managing cash flows under the newly created SFSF program. However, some
state educational agencies (SEA) report that they need clarifying
guidance on cash management issues before moving forward with guidance
to LEAs. As we have reported, Recovery Act cash management issues in a
number of states have been a concern to Education and the Education
Office of Inspector General, and Education officials report that they
are monitoring drawdowns of Recovery Act funds to help ensure that
states are complying with federal requirements.
In our recent discussions with Education officials regarding cash
management, they said their guidance to SEAs and LEAs is to minimize
the amount of time they hold federal funds before they need to spend
them. Department of Education regulations require states to minimize
the time elapsing between the transfer of the grant funds from the U.S.
Treasury and disbursement by the states, and similarly require LEAs to
minimize the time they hold funds before disbursing them. Regulations
generally require subgrantees to calculate and remit any interest
earned on advance payments made to them by states on at least a
quarterly basis.[Footnote 66] In other words, the goal is to draw down
the funds when they are needed and spend them immediately. Education
officials told us that if LEAs retain federal cash balances of SFSF or
other federal funds in interest bearing accounts, they are to calculate
the interest due using the actual interest the funds have earned. These
officials stated, however, that Education does not require LEAs to keep
federal funds in interest bearing accounts. Further, according to
Education officials, regulations do not require that LEAs calculate the
interest due on each federal funding program separately.
However, as we have previously reported, several states do not have
cash management systems in place for SFSF funds that can disburse funds
to LEAs when they are needed and ensure the calculation and remittance
of any interest due. Officials in some of these states told us they are
seeking clarifying guidance from Education on how to properly track and
report on cash balances and interest earned.
* The Illinois State Board of Education (ISBE) does not have a
mechanism in place to allow LEAs to draw down SFSF funds on an as-
needed basis. As a result, the ISBE distributes the state's share of
SFSF funds as General State Aid payments--these payments are made based
on a predetermined schedule (semimonthly, in equal installments).
According to Education officials, the agency is working with the ISBE
to develop a procedure to withhold future SFSF payments from LEAs that
carry SFSF cash balances.
* In Arizona, state distribution of funding raised concerns at one LEA.
LEA officials told us they had planned to pay the salaries of 15
teachers over the course of the school year with their SFSF funds, and
they submitted a drawdown request for 1 month's funding. However, the
state unexpectedly sent the funding all at one time, and the LEA
officials were concerned about having excess SFSF cash on hand at
month's end. LEA officials said they used the SFSF funds to pay all
district salaries for that month, in order to be able to expend all
funds in a timely manner. In our discussions with Education officials,
they acknowledged there could be a cash management issue if an SEA is
sending SFSF funds to LEAs in advance of the LEAs' needing it.
Education officials said they would need to look into this matter.
* As we previously reported, the California Department of Education
(CDE) has recently implemented a pilot program to monitor LEA cash
balances. CDE officials report they are currently developing interest
calculation procedures for LEAs, including for Recovery Act SFSF fund
balances. Education officials said they have been in communication with
CDE about that agency's efforts to develop procedures for LEA
calculation of interest on SFSF funds and other federal cash balances.
Education officials told us they are waiting to make a decision on
CDE's proposed interest calculation procedures until they receive the
proposal in writing from CDE. CDE officials told us they would issue
further cash management instruction to LEAs when the issue is resolved.
* New Jersey Department of Education (NJED) officials reported that
they currently have a system in place to monitor SFSF cash balances.
They said they instruct LEAs to remit any interest over $100 earned on
SFSF cash balances back to the federal government; however, they do not
expect LEAs to accrue interest on SFSF funds because the LEAs plan to
use the funds each month to pay salaries. State officials told us they
monitor LEA SFSF expenditures on a quarterly basis to determine LEA
cash needs for the following quarter. If an LEA spends less than 90
percent of the payments issued that quarter, the NJED withholds
payments until the LEA's expenditures exceed 90 percent.
LEAs' Views of Federal Guidance Is Correlated with Their Views of State
Guidance, and Some States with High Levels of Satisfaction Have Similar
State Practices in Developing and Distributing Guidance:
Starting on April 1, 2009, about a month and a half after enactment of
the Recovery Act, Education began issuing guidance related to uses of
Recovery Act funds for ESEA Title I, IDEA, Part B, and SFSF, as well as
other programs. Since then Education has issued guidance updates, has
hosted webinars on a variety of topics of significance under the
Recovery Act, and has made all these resources available on its Web
site. According to Education officials, before the department issues
written guidance, it conducts a series of internal and other reviews
that contribute to the total amount of time needed to develop and
disburse written guidance. Within Education, generally, both the Office
of the General Counsel and the Office of the Secretary review proposed
guidance documents, and, depending on the topic covered, other offices
are also involved in the review process. After Education completes its
internal review, it submits its proposed guidance documents to the
Office of Management and Budget for an external review,[Footnote 67]
and generally OMB has been able to provide its review on an expedited
basis, depending on the volume of documents OMB has received to review
from all executive agencies. Figure 17 shows major Recovery Act
guidance that Education has issued since the Recovery Act was enacted,
including both cross-cutting topics such as cash management, recipient
reporting, and educational reform, as well as program-specific guidance
pertaining to ESEA Title I, IDEA, and SFSF. To provide context for the
discussion on survey results concerning guidance, we have included in
figure 17 the period when LEAs responded to the survey.
Figure 17: Timeline of Major Department of Education Recovery Act
Guidance and Period LEAs Could Respond to GAO's Survey:
[Refer to PDF for image: illustrated timeline]
February:
Cross-cutting:
* February 17: Recovery Act signed into law.
April:
Cross-cutting:
* April 1: SFSF, IDEA, and Title I Recovery Act funds made available;
* April 24: Education guidance on using Recovery Act funds to drive
reform;
IDEA Part B grants to states and preschools:
* April 1: Initial IDEA Recovery Act guidance;
* April 13: IDEA Part B Recovery Act guidance update;
ESEA Title I, Part A:
* April 1: Initial Title I Recovery Act guidance;
SFSF:
* April 1: Initial SFSF Recovery Act guidance;
* April 7: SFSF guidance update.
May:
SFSF:
* May 1: SFSF maintenance of effort(MOE) guidance released;
* May 11: SFSF guidance update.
July:
Cross-cutting:
* July 27: Webinar on new Recovery Act programs;
* July 30: Webinar on fraud prevention in Recovery Act programs;
IDEA Part B grants to states and preschools:
* July 1: IDEA Part B Recovery Act guidance update;
ESEA Title I, Part A:
* Title I waiver guidance released.
August:
Cross-cutting:
* August 10: Education Webinar on completing section 1512 quarterly
reports;
* August 24: Webinar on cash management;
IDEA Part B grants to states and preschools:
* August 28: Recovery Act reporting tip sheet for IDEA, Part B
released;
ESEA Title I, Part A:
* August 28 Recovery Act reporting tip sheet for Title I released;
SFSF:
* August 27 E-mail reminding states of requirement for SFSF
subrecipient monitoring;
* August 28: Recovery Act reporting tip sheet for SFSF released.
September:
IDEA Part B grants to states and preschools:
* September 10: IDEA Part B uses of Recovery Act funds guidance
released;
ESEA Title I, Part A:
* September 3: Title I uses of Recovery Act funds guidance released;
* September 3: Recovery Act reporting tip sheet for Title I updated;
* September 14: Webinar on Title I MOE requirements;
SFSF:
* September 3: Recovery Act reporting tip sheet for SFSF updated.
October:
Cross-cutting:
* October 5: Education guidance on Recovery Act 1512 Quarterly
Reporting revised;
* October reporting 5: Webinar on using strategic planning to link
Title I and IDEA Recovery Act funds to Education Technology and
Statewide Longitudinal Data System Grants.
November:
Cross-cutting:
* November 2: Webinar on cost allocations and indirect costs;
ESEA Title I, Part A:
* Title I Recovery Act guidance updated;
SFSF:
* November 9: SFSF phase II applications released;
* November 12: Final Race to the Top fund applications released;
* Week of November 16: Webinars on Phase II SFSF application;
* November 24: Webinar on Race to the Top.
All activities between August 21 and October 4 are included in the GAO
survey.
Source: GAO analysis of Department of Education Guidance documents and
events.
[End of figure]
Our survey estimates show that a majority of LEAs nationwide found
Education's guidance on allowable uses for IDEA, ESEA Title I, and SFSF
Recovery Act funds to be very adequate, adequate, or neither adequate
nor inadequate.[Footnote 68] For example, officials in two LEAs we
interviewed after the survey was completed told us they had found
Education's guidance adequate. An official in another district we
visited said that at the time of the survey, he had assessed
Education's guidance as neither adequate nor inadequate but later
considered Education's guidance adequate because Education has issued
additional guidance. A much smaller percentage of LEAs found the
guidance to be inadequate or very inadequate. Specifically, as shown in
figure 18, we estimate that the percentage of LEAs reporting that
guidance was very adequate, adequate, or neither adequate nor
inadequate was 69 percent for IDEA, 75 percent for ESEA Title I, and 60
percent for SFSF.[Footnote 69]
Figure 18: How LEAs Assessed the Content of Education's Guidance on
Allowable Uses:
[Refer to PDF for image: vertical bar graph]
Recovery Act funds: IDEA;
Neither adequate nor inadequate: 22.4%;
Very adequate or adequate: 46.4%;
Very inadequate or inadequate: 25.2%.
Recovery Act funds: Title I;
Neither adequate nor inadequate: 27.2%;
Very adequate or adequate: 47.9%;
Very inadequate or inadequate: 18.3%.
Recovery Act funds: SFSF;
Neither adequate nor inadequate: 23.9%;
Very adequate or adequate: 36.2%;
Very inadequate or inadequate: 26.1%.
Source: GAO survey of LEAs.
Notes: This figure excludes the estimated percentages of survey
respondents that did not respond to this question or responded "don't
know" or "not applicable."
Percentage estimates for these nation-wide estimates have margins of
error, at the 95 percent confidence level, of plus or minus 5
percentage points or less.
[End of figure]
We found a statistically significant relationship for all three
Education programs we reviewed showing that LEAs with favorable
assessments of state guidance also tend to have favorable assessments
of federal guidance. For example, in Florida, where 87 percent of LEAs
indicated that their state's IDEA Recovery Act guidance was very
adequate or adequate, 72 percent of LEAs indicated that Education's
guidance on this subject was very adequate or adequate. Both of these
estimates are statistically higher than the national averages of 58
percent for state guidance and 46 percent for Education's guidance.
Further, our survey results indicate that LEAs' assessment of both
Education's guidance and their state's guidance varied by the size of
LEAs--with larger LEAs assessing guidance more favorably than smaller
LEAs. This difference was statistically significant for SFSF as well as
for IDEA and ESEA Title I Recovery Act guidance. For example, an
estimated 63 percent of the largest LEAs[Footnote 70] said Education's
ESEA Title I Recovery Act guidance was very adequate or adequate
compared to 48 percent of all other LEAs nationally.
Three states--Florida, Massachusetts, and Georgia--were among the best
in terms of the percentage of LEAs assessing their state's Recovery Act
guidance for ESEA Title I, IDEA, and SFSF as adequate or very adequate.
Our interviews with state officials in these three states revealed
three common themes: (1) continuous communication between state
officials and LEA program and financial staff; (2) collaboration
between state and local program and financial officials in developing
brief, navigable guidance documents to ease use; and (3) use of various
media (or technology) to enhance efficiency in delivering guidance.
Education officials agreed that states can play a critical role in
disseminating and explaining federal guidance. In particular, Education
officials were interested in knowing more about promising practices in
states where LEAs were satisfied with guidance, so that they could help
disseminate those practices to other states.
First, regarding communication, officials in Georgia said there is
continuous dialogue between state officials and LEA officials, and a
state official in Massachusetts reported that the state has developed
an organizational culture that placed a high priority on communication
with the field. Further, officials in Florida said that their frequent
communication with LEAs helped them keep LEAs abreast of important
updates and was particularly helpful because it helped state officials
generate a list of LEA questions and concerns that they were able to
draw on in deciding what guidance to develop. In contrast, officials in
a school district we visited in another state told us that when they
call their state's Department of Education for guidance, they often do
not get their calls returned.
Second, regarding collaboration in developing guidance, state officials
in Florida said they directly involved a group of superintendents in
developing user-friendly guidance documents and later invited all
superintendents to give feedback on the guidance. These guidance
documents are posted on the state's Web site, highlight 21 possible
strategies for using Recovery Act funds, and indicate which strategies
correspond to particular Recovery Act programs. Further, officials in
all three states said they had brought state and local programmatic and
financial officials together as part of their guidance efforts. One
state official in Florida said that this effort had been critical to
making sure the guidance was understood by both program and financial
staff at the LEA level.
Finally, regarding strategies to enhance efficiency in delivering
guidance, Florida, Georgia, and Massachusetts used webinars to directly
answer questions from LEAs and used LISTERV e-mail lists, so that they
could compose a single e-mail message alert including new guidance and
send it to all superintendents at once. Both strategies have allowed
state officials to provide consistent information to many
superintendents simultaneously. In contrast, officials in one district
we visited in another state told us there had been times they had
needed to call around the school district to see who had received
guidance from state officials because there was no consistency in which
local officials were receiving guidance from state officials. Florida
officials also told us they had created summaries of Education's
guidance that highlighted the most important information to make it
easier for superintendents to find the information they needed. In
contrast, a school superintendent in another state who reported on
GAO's survey that his state's guidance for ESEA Title I and SFSF was
very inadequate said he felt "stranded on a desert island" because he
did not receive updates when new guidance was made available on the
state Web site and did not have time to check the Web site daily to see
what had changed or to search for answers to his questions in
Education's guidance documents.
Education Is Continuing to Provide Technical Assistance and Monitor
States' Use of Recovery Act Funds:
Education continues to provide intensive technical assistance to six
states and territories that the department felt could benefit the most
from additional assistance. Education identified the six states and
territories that would be most likely to benefit from intensive
technical assistance by using a risk-based approach that assessed
factors such as high funding levels and recent monitoring or audit
findings. Four of the states--California, Illinois, Michigan, and
Texas--and the District of Columbia are part of our review.[Footnote
71] Education officials have made site visits and held conference calls
with these states and involved officials from multiple offices in the
department to provide programmatic and financial expertise to answer
the states' questions. Education officials said that in planning these
meetings, they worked with each state to identify the types of
technical assistance that would be needed to address state-specific
concerns. Education also provides technical assistance to other states
on issues related to the Recovery Act, but this technical assistance is
provided separately by individual program offices. Education also hosts
biweekly webinars open to any states and school districts on Recovery
Act-related topics, such as quarterly reporting and cash management,
and it makes the presentations available on its Web site for
downloading.
Education officials told us they have been conducting on-site
monitoring visits concerning ESEA Title I and IDEA that include
monitoring of Recovery Act-related issues, and have been monitoring
SFSF in other ways as it continues development of a comprehensive
monitoring plan for this new program. Education officials told us they
have asked specific questions related to the Recovery Act during ESEA
Title I and IDEA monitoring visits. In addition, the program office
responsible for IDEA has been piloting a desk review tool specifically
related to the Recovery Act and shared an early draft with states to
help inform them about how they will be monitored. According to
Education officials, to date, the department has been monitoring the
use of SFSF funds through its review of SFSF applications, waiver
applications, and quarterly Recovery Act reporting and through
telephone calls with states. Officials said their upcoming review of
Phase II SFSF applications to be submitted by states will help identify
states that may be having problems related to SFSF, so that the
department can conduct on-site monitoring visits to those states.
Education officials said they plan to collect states' SFSF subrecipient
monitoring plans in the future but have not yet begun to collect these
plans; in our last report, GAO recommended that Education take further
action, such as collecting and reviewing documentation of state
monitoring plans, to ensure that states understand and fulfill their
responsibility to monitor subrecipients of SFSF funds. Department
officials sent an e-mail reminding states of their responsibility to
conduct subrecipient monitoring on SFSF and specifying what should be
in states' monitoring plans. Education officials said they routinely
discuss the requirement for subrecipient monitoring during their site
visits and conference calls with states. Our work in states continues
to indicate a need for Education's oversight of state subrecipient
monitoring plans. For example, we found that officials in Massachusetts
do not have a comprehensive monitoring plan and are instead planning to
rely on their state's Single Audit report,[Footnote 72] alterations to
their LEA reporting requirements, and reviews of LEAs' funding
applications to monitor SFSF sub-recipients. However, Education
officials told us they consistently tell states that the Single Audit
is not enough for subrecipient monitoring and that states have to be
active with ongoing subrecipient monitoring.
Housing Agencies Continue to Make Progress on Recovery Act Projects,
Although Less Than Half of the Funds Have Been Obligated:
The Recovery Act requires the U.S. Department of Housing and Urban
Development (HUD) to allocate $3 billion through the Public Housing
Capital Fund to public housing agencies using the same formula for
amounts made available in fiscal year 2008. HUD allocated Capital Fund
formula dollars to public housing agencies shortly after passage of the
Recovery Act and, after entering into agreements with more than 3,100
public housing agencies, obligated these funds on March 18, 2009.
[Footnote 73] As of November 14, 2009, 2,598 public housing agencies
(83 percent of the housing agencies that entered into agreements with
HUD for Recovery Act funds) had reported to HUD that they had obligated
a total of $1.46 billion, an increase of over $500 million from the
level reported as of September 5, 2009. In total, public housing
agencies reported obligating about 49 percent of the total Capital Fund
formula funds HUD allocated to them (see figure 19). According to HUD
officials, housing agencies report obligations after they have entered
into binding commitments to undertake specific projects. A majority of
housing agencies that had obligated funds--2,113 of 2,598 housing
agencies--had also drawn down funds in order to pay for project
expenses already incurred. In total, as of November 14, 2009, public
housing agencies had drawn down almost $350 million, or about 12
percent of the total HUD allocated to them. Funds drawn down more than
doubled, increasing by $204 million from the level reported as of
September 5, 2009.
Figure 19: Percentage of Public Housing Capital Fund Formula Grants
Allocated by HUD That Have Been Obligated and Drawn Down Nationwide as
of November 14, 2009:
[Refer to PDF for image: 3 pie-charts, horizontal bar graph]
Funds obligated by HUD: 99.9%; $2,981,981,614.
Funds obligated by public housing agencies: 48.9%; $1,459,530,334.
Funds drawn down by public housing agencies: 11.7%; $349,998,639.
Number of public housing agencies:
Entering into agreements for funds: 3,121;
Obligating funds: 2,598;
Drawing down funds: 2,113.
Source: GAO analysis of HUD data.
Note: According to HUD officials, housing agencies are required to
report obligations once per month and generally report as of the end of
the previous month. Most of the obligations reported as of November 14,
2009, would reflect activity as of October 31, 2009, but some housing
agencies report data late and may include obligations that occurred
after the month ended, according to a HUD official. Throughout this
report we use data reported as of November 14, 2009.
[End of figure]
The Recovery Act requires that housing agencies obligate 100 percent of
their funds within 1 year from when the funds became available, which
means they have until March 17, 2010, to obligate 100 percent of their
funds. More than 1,000 housing agencies (33 percent) had reported
obligating 25 percent of their funds or less as of November 14, 2009,
including 523 (17 percent) that had reported obligating none of their
Recovery Act funds (see figure 20). However, 1,055 housing agencies (34
percent) had reported obligating 100 percent of their funds as of
November 14, 2009, placing them well ahead of the Recovery Act's 12-
month deadline. An additional 467 housing agencies (15 percent) had
reported obligating more than 75 percent of their funds as of November
14, 2009. The size of the grant and the number, size, and complexity of
projects that housing agencies selected may account for some of the
differences in obligation rates. Although HUD is making efforts to
assist housing agencies with meeting the deadline, officials expect
some housing agencies probably will not obligate all of their funds in
time.
Figure 20: Housing Agencies' Obligations of Recovery Act Funds by
Quartile as of November 14, 2009:
[Refer to PDF for image: vertical bar graph]
Percent of funds obligated: 0-25%;
Percentage of housing agencies: 33%.
Percent of funds obligated: 25.01-50%;
Percentage of housing agencies: 8%.
Percent of funds obligated: 50.01-75%;
Percentage of housing agencies: 10%.
Percent of funds obligated: 75.01-100%;
Percentage of housing agencies: 49%.
Source: GAO analysis of HUD data.
[End of figure]
HUD officials stated they have been emphasizing the 1-year deadline to
housing agencies, and they pointed to notices, frequently asked
questions, and Web seminars as evidence. In addition, they have
stressed that the Recovery Act does not provide HUD with any way to
grant exceptions or extensions. HUD will recapture any funds not
obligated by March 17, 2010, and will reallocate those funds to other
housing agencies. According to HUD officials, in November 2009 HUD
field staff began contacting housing agencies that had not obligated
any Recovery Act funds by phone, by e-mail, or in person in order to
understand where these housing agencies are in the process of awarding
contracts and obligating funds. They said they will repeat the process
for housing agencies below certain obligation levels, such as 25
percent or 50 percent, beginning in early December. Field staff will be
preparing status reports for each housing agency, which HUD will review
in order to determine what additional steps HUD should take to assist
housing agencies in meeting the March 2010 deadline. HUD headquarters
staff are also preparing an e-mail notification to all housing agencies
that are below the level of obligations at which HUD expects them to be
at this point in the year. HUD officials said they will send these
notifications each month. For housing agencies that continue to
struggle to obligate their funds, HUD officials said they plan to
provide additional technical assistance, including possibly sending
staff on site to help the process along. HUD plans to ask housing
agencies to report obligations as funds are obligated--agencies report
monthly--so that HUD can have up-to-date information to determine
ongoing outreach and monitoring efforts. As they get closer to the
March deadline, HUD officials expect more housing agencies will achieve
100 percent obligations, allowing HUD to better target its outreach
efforts. While HUD's goal is that agencies achieve 100 percent
obligations, officials said that realistically some housing agencies
probably will not obligate all of their funds in time. They said that
part of the process of reaching out to housing agencies with low
obligations is to identify which housing agencies do not expect to make
the deadline, so that HUD can begin planning for recapturing and
reallocating the funds. They hope to have an estimate of how much will
not be obligated in time by early February 2010. The officials stated
HUD has not yet determined how it will reallocate funds that are
recaptured. It will be important for HUD to follow through on these
efforts to ensure housing agencies obligate the funds in a timely
manner.
Of the 47 housing agencies in 16 states and the District of Columbia we
selected for in-depth review throughout our Recovery Act work, as of
November 14, 2009, 45 had reported obligating funds totaling $207
million, or about 39 percent of the total Capital Fund formula funds
HUD had allocated to the agencies (see figure 21). Obligations had
increased by about $60 million from the level we reported in September.
A majority of housing agencies that had obligated funds--43 of 45
housing agencies--had also drawn down funds. In total, these housing
agencies had drawn down about $34 million, or about 6 percent of the
total allocated to them by HUD, an increase of about $21 million from
the level we reported in September 2009.
Figure 21: Percentage of Public Housing Capital Fund Formula Grants
Allocated by HUD That Have Been Obligated and Drawn Down by 47 Public
Housing Agencies Selected by GAO as of November 14, 2009:
[Refer to PDF for image: 3 pie-charts, horizontal bar graph]
Funds obligated by HUD: 100%; $531,001,215.
Funds obligated by public housing agencies: 39.1%; $207,477,611.
Funds drawn down by public housing agencies: 6.4%; $34,025,199.
Number of public housing agencies:
Entering into agreements for funds: 47;
Obligating funds: 45;
Drawing down funds: 43.
Source: GAO analysis of HUD data.
[End of figure]
Housing Agencies Receiving Smaller Recovery Act Grants Are Obligating
and Drawing Down Funds Faster Than Housing Agencies Receiving Larger
Grants:
Housing agencies that received Recovery Act formula grants of less than
$100,000 continue to obligate and draw down funds at a faster rate than
housing agencies that received grants of more than $500,000.[Footnote
74] The difference between these groups of housing agencies has
remained about the same--13 percentage points--as when we reported in
September 2009. For housing agencies with smaller grants--that is, less
than $100,000--the average percentage of Recovery Act funds obligated
was about 63 percent, while for housing agencies with larger grants--
that is, more than $500,000--the average percentage of Recovery Act
funds obligated was 50 percent (see table 7). Similarly, the average
percentage of Recovery Act funds drawn down was 41 percent for housing
agencies with smaller grants, compared with 17 percent for housing
agencies with larger grants.
Table 7: Comparison of the Average Percentage of Funds Obligated and
Drawn Down among Housing Agencies Grouped by Size of Recovery Act
Grant, as of November 14, 2009:
Number of housing agencies:
Amount of Recovery Act grant: Less than $100,000: 924;
Amount of Recovery Act grant: $100,000 to $500,000: 1,397;
Amount of Recovery Act grant: More than $500,000: 800;
Total: 3,121.
Portion of total Recovery Act formula grant funds:
Amount of Recovery Act grant: Less than $100,000: 2%;
Amount of Recovery Act grant: $100,000 to $500,000: 11%;
Amount of Recovery Act grant: More than $500,000: 87%;
Total: 100%.
Average percentage of funds obligated:
Amount of Recovery Act grant: Less than $100,000: 62.6%;
Amount of Recovery Act grant: $100,000 to $500,000: 59.8%;
Amount of Recovery Act grant: More than $500,000: 50.0%;
Total: 58.1%.
Average percentage of funds drawn down:
Amount of Recovery Act grant: Less than $100,000: 41.3%;
Amount of Recovery Act grant: $100,000 to $500,000: 29.6%;
Amount of Recovery Act grant: More than $500,000: 16.7%;
Total: 29.7%.
Source: GAO analysis of HUD data.
[End of table]
As we reported in September 2009, housing agencies with smaller grants
are often able to take advantage of simplified and less formal
procurement procedures, which could help them obligate funds more
quickly. In addition, we found that housing agencies with smaller
grants are using their Recovery Act funds on a limited number of small
and narrowly focused projects, while housing agencies with larger
grants are using Recovery Act funds on either a larger number of
projects or projects with a broader scope, some of which may require
additional layers of HUD review and approval.
More Projects Are Under Way; Lower-Than-Expected Bid Amounts Could
Result in Housing Agencies Needing Additional Projects to Use All
Recovery Act Funds:
Housing agencies we visited reported that more of their projects had
begun since our prior visits for the July 2009 report, and several
housing agencies reported they had completed one or more projects
during that time. For this report, we selected 47 Recovery Act-funded
projects at 25 housing agencies in nine states--11 of which had not
started, 22 of which were under way, and 14 of which were already
completed (see figure 22). Many of the completed projects involved roof
replacement, including projects in Iowa, New Jersey, and Arizona. We
visited several projects under way that involved replacing windows and
siding, repainting building exteriors, or repairing sidewalks. As we
previously reported, other planned uses of Recovery Act funds include
heating, ventilation, and air conditioning (HVAC) system upgrades or
replacements; interior rehabilitation work, such as kitchen or bathroom
renovations and flooring or carpet replacements; and demolition and
construction of new units. The estimated costs for the projects we
selected ranged from $4,500 for one roof replacement to more than $32
million for the complete rehabilitation of 172 rental units--$28
million of which will be Recovery Act funds. Housing agencies reported
that 62 of the 77 contracts they planned to award for these projects--
some projects had more than one contract--had already been awarded or
were in the process of soliciting bids.
Figure 22: Roof Repairs to an Iowa Public Housing Facility, Before Work
Began and Work in Progress:
[Refer to PDF for image: 2 photographs]
Source: GAO.
[End of figure]
Officials from at least four housing agencies stated that they received
bids that were lower than expected, which will allow them to complete
more projects with these funds. They said that, due to economic
conditions, contractors have little work and are submitting lower bids
in order to have projects and keep their staff employed. As a result,
housing agencies may have to identify additional projects on which to
use Recovery Act funds in order to obligate all their funds, although
officials from these agencies did not anticipate having difficulties in
obligating all their Recovery Act funds before the deadline. For
example, officials from Mississippi Regional Housing Authority VIII
were considering expanding the scope of an interior renovation project
after awarding a contract for less than half of what they had budgeted
for roofing, siding, and other exterior improvements at another
property.
Housing Agencies Report Few Challenges Meeting the Priorities of the
Recovery Act:
The Recovery Act required housing agencies to give priority to projects
already under way or in the 5-year plan, projects that can award
contracts based on bids within 120 days, and projects that rehabilitate
vacant rental units, and in many cases housing agencies were able to
meet one or more of these priorities. As we reported in July 2009,
housing agencies generally selected projects that were on their 5-year
plans. Others, such as Boston Housing Authority, also selected projects
that were already under way but that could be expanded or accelerated
with additional funds. Eighteen housing agencies we visited were able
to award at least one contract based on bids within 120 days of the
funds becoming available. For example, Rahway Housing Authority in New
Jersey awarded seven of its nine contracts, representing 87 percent of
its Recovery Act funds, within 120 days. In addition, two housing
agencies each had only one project and one contract for that project,
which they were able to award within 120 days. However, housing
agencies with larger projects or a larger number of projects were at
times unable to meet this time frame due to extensive design work that
needed to be done first or to internal and external policies and
procedures that are not easily sped up. For example, officials at
Boston Housing Authority said that the design work to meet the
extensive and complex building codes takes time. In addition, housing
agencies that HUD put on "zero threshold" or that were troubled
performers said they had difficulty meeting this priority because of
the additional monitoring steps HUD had put in place for them. Finally,
housing agencies reported having few vacant units and therefore did not
have many projects to rehabilitate vacant units. One exception was
Newark Housing Authority in New Jersey, which had rehabilitated 313
vacant units using Recovery Act funds and expected to rehabilitate 109
more. Newark Housing Authority officials said they had about 700 long-
term vacant units, as well as 300 units vacant as a result of normal
turnover.
The Recovery Act also required that housing agencies use Recovery Act
funds to supplement rather than supplant funds from other sources.
Housing agency officials we spoke with generally did not see
supplanting as a major challenge and thought they would have no trouble
abiding by the requirement. Officials at several housing agencies noted
they had many more projects that needed to be done than could be
completed with only their regular Capital Fund grants, so it was not
difficult to identify projects that did not have any other funding. In
addition, housing agency officials told us they were keeping track of
their Recovery Act funds separately from their regular Capital Fund
grants in order to make clear that the Recovery Act funds were not
supplanting other funds that had already been obligated. Other housing
agency officials stated that annual statements and 5-year plans are
reviewed multiple times--by the public, by the housing agency's board,
and by HUD--and that these layers of review serve as a check to ensure
that supplanting does not occur.
HUD Continues to Monitor Troubled Housing Agencies' Use of Recovery Act
Funds:
As we noted in our September 2009 report, HUD has designated 172
housing agencies as troubled under its Public Housing Assessment System
(PHAS) and has implemented a strategy for monitoring these housing
agencies.[Footnote 75] Of these 172 troubled housing agencies, 106
(61.6 percent) were considered by HUD to be low-risk troubled, 53 (30.8
percent) were considered medium-risk troubled, and the remaining 13
(7.6 percent) were considered high-risk troubled. HUD officials stated
they have completed remote reviews of these housing agencies'
administration of the Recovery Act and plan to complete on-site reviews
on the premises of these housing agencies by December 31, 2009. HUD
analyzed a sample of 45 remote reviews and 45 on-site reviews. Among
other things, HUD remote reviews found that many housing agencies had
not amended their procurement polices as required by HUD. On-site
reviews found that most sampled agencies had not yet awarded contracts
at the time of the review. HUD also found that agencies were moving
cautiously on contracting as they awaited HUD's August 2009 guidance on
implementing the "Buy American" provision of the Recovery Act. HUD's
remote reviews also raised questions about proposed work items that do
not appear in previously approved annual statements or 5-year plans. As
a result, according to HUD, field staff contacted housing agencies to
ensure that they appropriately amended their plans to reflect these
projects. As of November 14, 2009, troubled housing agencies accounted
for 6 percent of all Recovery Act funds provided by HUD, and they
continue to obligate and draw down Recovery Act funds at a slower rate
than nontroubled housing agencies (see figure 23).
Figure 23: Comparison of Obligation and Drawdown Rates for Troubled and
Nontroubled Housing Agencies:
[Refer to PDF for image: 7 pie-charts]
Recovery Act funds obligated by HUD (Total: $2,981,981,614):
Troubled housing agencies (172 agencies): $185,944,247:
Funds obligated by HUD: 100%; $185,944,247;
Funds obligated by housing agencies: 27.0%; $50,195,249;
Funds drawn down by housing agencies: 5.5%; $10,151,830.
Nontroubled housing agencies (2,949 agencies): $2,796,037,367:
Funds obligated by HUD: 100%; $2,796,037,367;
Funds obligated by housing agencies: 50.4%; 1,409,335,085;
Funds drawn down by housing agencies: 12.2%; $339,846,809.
Source: GAO analysis of HUD data.
Note: According to HUD officials, 13 nontroubled housing agencies had
not entered into agreements with HUD for Recovery Act funds, and
therefore HUD did not obligate funds to them.
[End of figure]
Further, when obligation rates are broken down by quartiles (see figure
24), as of November 14, 2009, 65 percent of all troubled housing
agencies have obligated 25 percent or less of their Recovery Act funds.
More than one-third, almost 37 percent, of the troubled housing
agencies have not obligated any Recovery Act funds. As noted above,
according to HUD officials, HUD is in the process of contacting all
housing agencies that had not obligated any funds, including troubled
housing agencies, as well as housing agencies with low obligation
rates, in order to determine what assistance HUD could provide to these
agencies.
Figure 24: Troubled versus Nontroubled Housing Agencies' Obligations of
Recovery Act Funds by Quartile as of November 14, 2009:
[Refer to PDF for image: vertical bar graph]
Percent of funds obligated: 0-25%;
Percentage of housing agencies: Nontroubled PHAs:
Percentage of housing agencies: Troubled PHAs:
Percent of funds obligated: 25.01-50%;
Percentage of housing agencies: Nontroubled PHAs:
Percentage of housing agencies: Troubled PHAs:
Percent of funds obligated: 50.01-75%;
Percentage of housing agencies: Nontroubled PHAs:
Percentage of housing agencies: Troubled PHAs:
Percent of funds obligated: 75.01-100%;
Percentage of housing agencies: Nontroubled PHAs:
Percentage of housing agencies: Troubled PHAs:
Source: GAO analysis of HUD data.
[End of figure]
One possible reason for these slower obligation and draw-down rates is
the additional monitoring that HUD is implementing for housing agencies
that are designated as troubled performers under PHAS. For example,
according to HUD officials, all 172 troubled public housing agencies--
regardless of risk category--have been placed on a "zero threshold"
status, which means HUD has not allowed them to draw down Recovery Act
funds without HUD field office approval.[Footnote 76] HUD officials
said the ability to place housing agencies on "zero threshold" has
always been available and had been used for housing agencies that have
had problems obligating and expending their Capital Fund grants
appropriately prior to the Recovery Act. However, as we previously
reported, HUD has implemented more extensive monitoring for all
troubled housing agencies, including requiring that HUD field office
staff review all award documents (such as solicitations, contracts, or
board resolutions, where applicable) prior to obligation of Recovery
Act funds. According to HUD officials, also contributing to the low
obligation percentages is the fact that many troubled housing agencies
routinely struggle with procurement processes.
HUD Is Implementing Its Strategy for Monitoring Nontroubled Housing
Agencies:
Building on its efforts to more closely monitor the use of Recovery Act
funds by troubled housing agencies, HUD is implementing a strategy for
monitoring nontroubled housing agencies, as well. Under its nontroubled
strategy, HUD has taken the 2,949 nontroubled housing agencies that
received Recovery Act funds and separated them into two groups for the
purposes of monitoring and oversight: high risk and low risk.[Footnote
77] The high-risk group is composed of the 332 housing agencies that
have been identified as the highest risk based in part on the amount of
their Recovery Act funding. The low-risk group consists of the
remaining 2,617 nontroubled housing agencies. HUD's nontroubled
strategy calls for remote reviews to be completed by January 15, 2010,
on all nontroubled housing agencies. In addition, HUD's strategy calls
for on-site reviews for a sample of nontroubled housing agencies from
each of the two risk groups, with the objective of reaching those at
greatest risk and ensuring coverage of grantees constituting the
greatest amount of formula grant dollars. Remote reviews are to focus
on four main components: grant initiation, environmental compliance,
procurement, and grant administration. On-site reviews of a sample of
housing agencies provide follow up to outstanding issues from the
remote reviews and also include a review of contract administration for
procurements related to the use of Recovery Act funds.
HUD's nontroubled strategy calls for on-site reviews for a sample of
252 high-risk nontroubled housing agencies to be completed by February
15, 2010. For the remaining 2,617 housing agencies in the low-risk
group, HUD's strategy calls for on-site reviews for a sample of 286
housing agencies to be completed by February 15, 2010. In September
2009, we recommended that HUD expand the criteria for selecting housing
agencies for on-site reviews to include housing agencies with open
Single Audit findings that may affect the use of Recovery Act funds. In
October 2009, HUD implemented this recommendation by expanding its
criteria for selecting housing agencies for on-site reviews to include
all housing agencies with open 2007 and 2008 Single Audit findings as
of July 7, 2009, relevant to the administration of Recovery Act funds.
HUD has identified 27 such housing agencies and plans to complete these
on-site reviews by February 15, 2010.
Technical Challenges with FederalReporting.gov Delayed Housing
Agencies' Processing of Recipient Reports:
HUD officials said that even though many of the data elements requested
for Recovery Act recipient reporting were new to housing agencies,
approximately 96 percent of housing agencies had successfully reported
into federalreporting.gov. Initial reports suggested a lower reporting
rate of approximately 84 percent, but this was due to a substantial
number of housing agencies incorrectly entering values into certain
identification fields, such as the award ID number, the awarding
agency, or the type of funding received. HUD officials said the system
did not have validation measures in place to ensure the correct award
ID numbers were entered. In addition, housing agencies could not edit
the award ID number without submitting a new report. According to a HUD
official, OMB initially termed reports that could not be matched with a
federal agency as "orphaned." A HUD official said that HUD program and
Recovery team staff reviewed reports submitted with nonmatching award
ID numbers and OMB's list of reports that could not be matched to a
federal agency to determine if they matched HUD awards. As a result of
these efforts by HUD staff, HUD was able to achieve a rate of reporting
of approximately 96 percent.
According to HUD officials, public housing agencies encountered
challenges related to registration and system accessibility. For
example, a HUD official said the registration process for
federalreporting.gov requires several steps such as obtaining a DUNS
number, registering with the Central Contractor Registration (CCR) and
obtaining a Federal Reporting Personal Identification Number (FRPIN).
The HUD official told us these steps are necessary for validating the
recipient reports because they ensure the appropriate points of contact
at the appropriate organizations--in this case, public housing
agencies--are reporting for each program. Federalreporting.gov states
that each recipient's point of contact information is taken directly
from the CCR, and if an organization changes its point of contact
information, it will take 48 hours for federalreporting.gov to receive
the change and e-mail the FRPIN and temporary password to the new point
of contact. According to the HUD official, a housing agency's contact
information in CCR is sometimes outdated, and the systems are often not
updated in time for access to be correctly transferred. Additionally,
one housing agency official in Mississippi reported saving his data
entry as a draft before being timed out of the system but was unable to
retrieve the data when he re-entered the reporting Web site. A HUD
official said that, in the future, HUD and OMB will need to improve the
function of the system and that the agencies are working to ensure all
housing agencies have access to the reporting systems.
Housing Agencies' Confusion about the Methodology for Calculating Jobs
Created and Retained May Have Resulted in Reporting Errors:
According to a HUD official, there was widespread misunderstanding by
public housing agencies about OMB's methodology for calculating the
number of jobs created or retained by the Recovery Act, in part because
housing agencies are not familiar with reporting jobs information. In a
few cases, we found that public housing agencies had reported the
number of jobs created or retained into federalreporting.gov without
converting the number into full-time equivalents. For example,
officials from a housing agency in Illinois reported the number of
people, by trade, who worked on Recovery Act-related projects but did
not apply the full-time equivalent calculation outlined by OMB in the
June 22 reporting guidance. Additionally, officials from a public
housing agency in Mississippi told us that they based the number of
jobs they reported into federalreporting.gov on letters from their
contractors detailing the number of positions rather than full-time
equivalents created as a result of their Recovery Act-funded projects.
In another case, a housing agency official in Massachusetts told of
having difficulty locating guidance on calculating job creation. As a
result, the housing agency may have underreported jobs data from an
architectural firm providing design services for a Recovery Act window
replacement project at a public housing complex.
OMB published guidance on calculating jobs created and retained using
full-time equivalents (FTE) on June 22, 2009. In early September, HUD
posted the OMB guidance to its Web site and provided information by e-
mail to housing agencies on registration for federalreporting.gov, as
well as links to Web seminars and training provided by OMB. In the
meantime, as HUD was developing program-specific guidance, HUD and OMB
discussed clarifying portions of OMB's guidance right up to the end of
September, according to a HUD official. HUD issued further guidance to
public housing agencies by e-mail on September 25, 2009, approximately
2 weeks before the October 10, 2009, deadline for recipient reporting,
providing templates and data dictionaries tailored to the Public
Housing Capital Fund. The guidance also reiterated the recipient
reporting responsibilities for public housing agencies.
HUD officials told us they did not have enough time to translate some
of the terminology into concrete terms that would be clearer to housing
agency officials, partly due to their continuing discussions with OMB
on clarifying its guidance. For example, HUD posted a jobs calculator
spreadsheet to its Web site, and HUD field staff would direct housing
agencies to this guidance when they asked specific questions about how
to calculate jobs. A HUD official said it seemed like some housing
agencies may have pulled information for the recipient reports from the
wrong fields in the job calculator, which produced errors. Therefore,
greater instruction may be needed beyond what was provided to housing
agencies on the job calculator's instructions page. A HUD official
stated they will work with OMB to improve housing agencies'
understanding of the methodology for reporting in full-time equivalents
prior to the next round of recipient reporting in January 2010. This is
consistent with recommendations we recently made. We reported in
November 2009 that recipients of Recovery Act funds were inconsistent
in their interpretation of OMB guidance on reporting FTEs.[Footnote 78]
We recommended that OMB, among other things, clarify the definition and
standardize the period of measurement for FTEs and work with federal
agencies to align this guidance with OMB's guidance and across
agencies.
HUD has taken a number of steps to ensure recipient reported data are
correct, including developing a data quality review plan, automated
data checks, flags for duplicate entries, awards entered incorrectly as
contracts, and incorrect award identification numbers. Overall, HUD
entered approximately 2,700 comments into federalreporting.gov through
its data quality checks of housing agency recipient reports. We
continue to monitor these efforts as part of our ongoing assessment of
recipient reporting requirements.
HUD Is Seeking to Improve Registration and Accessibility for RAMPS
Reporting:
As we reported in September 2009, HUD developed the Recovery Act
Management and Performance System (RAMPS) for Recovery Act reporting
purposes, including public housing agencies' compliance information for
the National Environmental Policy Act (NEPA), as required by the
Recovery Act. Section 1609 of the Recovery Act requires that adequate
resources must be devoted to ensuring that applicable environmental
reviews under NEPA are completed expeditiously and that the shortest
existing applicable process under NEPA shall be used. HUD officials
said that while public housing agencies have had to comply with NEPA
since it was enacted in 1970, reporting on environmental assessments is
a new requirement for public housing agencies.
A HUD official said most of the challenges that housing agencies faced
were related to registration and accessing RAMPS rather than entering
data. For example, some housing agencies reported having difficulty
gaining access to RAMPS. According to a HUD official, this may be due
to housing agencies' unfamiliarity with electronic reporting and
frustration with the amount of reporting required. The official said
that for RAMPS, HUD provided screenshot-by-screenshot guidance to
housing agencies to assist them through the reporting system. However,
the HUD official also said there was no self-registration for RAMPS.
Instead, HUD provided registration information to housing agencies
using data elements from HUD systems, including information on active
users combined with recipient groups, tax identification numbers and
grant numbers. According to the HUD official, if any of these elements
did not line up across systems, housing agencies were not registered to
use RAMPS and could not access the system. The official said HUD is
working to clean up the data in RAMPS to make sure the registration
process is successful for the next round of recipient reporting.
According to a HUD official, in some cases HUD field offices are
responsible for conducting the environmental reviews under NEPA and
therefore are responsible for reporting into RAMPS. The official said a
consequence of this is that it takes staff away from other
responsibilities, such as monitoring and oversight. In other cases,
housing agencies that complete environmental reviews under NEPA must
report data directly into HUD's RAMPS.
Competitive Grants for Public Housing Have Been Awarded, and Projects
Will Begin Soon:
Under the Recovery Act, HUD was required to award nearly $1 billion to
public housing agencies based on competition for priority investments,
including investments that leverage private sector funding or financing
for renovations and energy conservation retrofitting. HUD accepted
applications from June 22 to August 18, 2009, and according to a HUD
official, 746 housing agencies submitted 1,817 applications for these
competitive grants. In September 2009, HUD awarded competitive grants
to housing agencies that successfully addressed the requirements of the
notice of funding availability under the following four categories:
* For the creation of energy-efficient communities, 36 grants totaling
$299.7 million were awarded for substantial rehabilitation or new
construction, and 226 grants totaling $305.8 million were awarded for
moderate rehabilitation.
* For gap financing for projects that are stalled due to financing
issues, 38 grants totaling $198.8 million were awarded.
* For public housing transformation, 15 grants totaling $95.9 million
were awarded to revitalize distressed or obsolete public housing
projects.
* For improvements addressing the needs of the elderly or persons with
disabilities, 81 grants totaling $94.8 million were awarded.
According to data provided by HUD, larger housing agencies (that is,
those with more than 250 public housing units) were more successful in
obtaining competitive grants. Although smaller housing agencies (those
with fewer than 250 units) outnumber larger housing agencies by three
to one, larger agencies submitted about three applications for every
one submitted by smaller agencies. A HUD official said that some small
housing agencies have only one or two projects, and because one
competitive grant may be awarded for a given project, these agencies
had fewer opportunities to apply. Further, applications from larger
housing agencies were more likely to be successful. Specifically, while
about 26 percent of applications from larger housing agencies resulted
in competitive grant awards, 11 percent of applications from smaller
housing agencies resulted in awards. Housing agencies with more than
250 units represent about one-fourth of all housing agencies but manage
most of the public housing units nationally. As a result, because these
housing agencies likely have more needs and more projects to be funded,
it was no surprise to the HUD official they were so successful. He said
HUD was satisfied by the participation and successful applications of
housing agencies of all sizes.
We selected one competitive grant from each of eight housing agencies.
Six of the grants we selected were multimillion-dollar efforts, while
five grants had an energy-efficiency focus. Four projects involve at
least 100 units, including one involving 281 units. See table 8 for a
summary of the projects. Housing agency officials said these projects
would begin in the coming months.
Table 8: Summary of Selected Projects Funded by Capital Fund Recovery
Competition Grants:
State and housing agency: Arizona--City of Phoenix Housing Department;
Category: Creating energy-efficient communities, moderate
rehabilitation;
Amount: $3,408,000;
Description of project: Rehabilitate and retrofit 281 units of a 374-
unit complex with low-flow faucets, showerhead, and toilets, and energy-
efficient exhaust fans and appliances (among other improvements).
State and housing agency: Colorado--Housing Authority of the City and
County of Denver;
Category: Public housing transformation;
Amount: $10,000,000;
Description of project: Install rooftop photovoltaic panels and energy-
efficient water heaters, furnaces, ranges, refrigerators, and windows,
and upgrade electrical systems for a 25-building, 192-unit complex.
State and housing agency: Georgia--Housing Authority of the City of
Macon;
Category: Creating energy-efficient communities, substantial
rehabilitation or new construction;
Amount: $8,579,227;
Description of project: Install exterior insulation, new roofs,
photovoltaic panels, and energy-efficient appliances, heat pumps, and
windows for 50 duplexes.
State and housing agency: Illinois--Chicago Housing Authority;
Category: Public housing transformation;
Amount: $9,900,000;
Description of project: Develop 60 new replacement public housing units
and 77 nonpublic housing rental units, 123 for-sale homes, a community
space, and a management and maintenance facility.
State and housing agency: Iowa--Ottumwa Housing Authority;
Category: Creating energy-efficient communities, moderate
rehabilitation;
Amount: $78,300;
Description of project: Install energy-efficient lighting and
refrigerators for five sites.
State and housing agency: Massachusetts--Boston Housing Authority;
Category: Creating energy-efficient communities, substantial
rehabilitation or new construction;
Amount: $22,196,000;
Description of project: Construct 96 new units and a community center
with recycled materials, photovoltaics, or other renewable energy
sources, energy recovery systems, and energy-efficient windows,
lighting, appliances, and roofs.
State and housing agency: New Jersey--Newark Housing Authority;
Category: Creating energy-efficient communities, substantial
rehabilitation or new construction;
Amount: $11,171,981;
Description of project: Raze and build a new 90-unit complex designed
using "green" (energy efficient) materials.
State and housing agency: Texas--San Antonio Housing Authority;
Category: Addressing the needs of the elderly or persons with
disabilities;
Amount: $265,528;
Description of project: Redesign layout for recreational areas and
install new floors, brighter lighting, and new elevators for a 66-unit
facility.
Source: GAO analysis of HUD and public housing agency data.
[End of table]
Housing Agencies Had Mixed Views about the Competition and Faced
Capacity Issues Applying for Competitive Grants:
We found mixed views of the competition among housing agency officials
that had applied for competitive grants. We visited 15 housing agencies
that applied for competitive grants, including 8 that received
competitive grant awards. Officials at three agencies said they were
very satisfied with the application process, while five others said
they were somewhat satisfied, including two that were not awarded a
competitive grant. Only one official was very dissatisfied, and another
was somewhat dissatisfied, and in both cases, their housing agencies
were not awarded a competitive grant. Both officials said they had not
received feedback on why their applications were not successful and
thought the requirements may have favored agencies with more resources.
HUD officials said they recently notified housing agencies that had
unsuccessful applications why they were not selected, the most common
reason being insufficient funds. In addition, officials from two
housing agencies thought the competition was not fair because housing
agencies that had already made certain improvements, such as increasing
energy efficiency or completing lead-paint abatement, were not able to
accumulate as many points for those types of activities as housing
agencies that had been less proactive.
Capacity was a substantial barrier to applying for competitive grants
for a variety of agencies we visited, including at least one housing
agency that was awarded a competitive grant. For example, officials in
Phoenix stated they had a contractor assist with the application
because their staff did not have the time or capacity to complete it in
time. Officials from two other housing agencies stated they did not
apply because they did not have enough time or staff to pull together
the information required before the deadline. Officials from another
agency believed that larger housing agencies were able to put together
better applications that were more likely to be awarded grants because
they had professional staff in house to put the applications together.
Other housing agency officials said they did not apply because they
were not sure that they had the capacity to administer the competitive
grant within the time frames specified in the Recovery Act.
DOE's Weatherization Assistance Program Is Just Beginning to Spend
Recovery Act Funds:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the Department of Energy (DOE) is
distributing to each of the states, the District of Columbia
(District), and seven territories and Indian tribes;
the funds are to be spent over a 3-year period. During the past 32
years, the program has helped more than 6.2 million low-income families
by making such long-term energy-efficiency improvements to their homes
as installing insulation; sealing leaks; and modernizing heating
equipment, air circulation fans, and air conditioning equipment. These
improvements enable families to reduce energy bills, allowing these
households to spend their money on other needs, according to DOE. The
Recovery Act appropriation represents a significant increase for a
program that has received about $225 million per year in recent years.
DOE has approved the weatherization plan of each of the states, the
District, and seven territories and Indian tribes. DOE has obligated
about $4.76 billion of the Recovery Act's weatherization funding to the
states, while retaining about 5 percent of funds to cover the
department's expenses. Each state has access to 50 percent of its
funds, and DOE plans to provide access to the remaining funds once a
state meets a certain target.[Footnote 79] As of September 30, 2009, 43
states and territories reported they had begun to use Recovery Act
weatherization funds, while 15 states and territories reported they had
not used any Recovery Act funds.[Footnote 80] The 43 states and
territories also reported that, as of September 30, 2009, they had
outlaid $113 million, or about 2 percent, of the $5 billion for
weatherization activities and had completed weatherizing about 7,300,
or about 1 percent, of the 593,000 housing units planned. In addition,
they reported that about 2,800 jobs had been created and about 2,400
jobs had been retained through the use of the Recovery Act's
weatherization funds.
As shown in table 9, as of November 30, 2009, six of the states in our
review had begun spending Recovery Act funds to weatherize homes, while
California and the District had not.[Footnote 81] A key factor slowing
the start of weatherization activities is the act's requirement that
all laborers and mechanics employed by contractors and subcontractors
on Recovery Act projects be paid at least the prevailing wage,
including fringe benefits, as determined under the Davis-Bacon Act.
Because the Weatherization Assistance Program, funded through annual
appropriations, is not subject to the Davis-Bacon Act, the Department
of Labor (Labor) had not previously determined prevailing wage rates
for weatherization workers. On September 3, 2009, Labor completed its
determination of wage rates for weatherization work conducted on
residential housing units in each county of the 50 states and the
District.
Table 9: Use of the Recovery Act's Weatherization Funds by Seven States
and the District, as of November 30, 2009:
State: California;
Funds used to weatherize homes?: No;
When funds were first used: N/A.
State: District of Columbia;
Funds used to weatherize homes?: No;
When funds were first used: N/A.
State: Iowa;
Funds used to weatherize homes?: Yes;
When funds were first used: September 2009.
State: Massachusetts;
Funds used to weatherize homes?: Yes;
When funds were first used: September 2009.
State: Michigan;
Funds used to weatherize homes?: Yes;
When funds were first used: August 2009.
State: New York;
Funds used to weatherize homes?: Yes;
When funds were first used: September 2009.
State: Ohio;
Funds used to weatherize homes?: Yes;
When funds were first used: July 2009.
State: Pennsylvania;
Funds used to weatherize homes?: Yes;
When funds were first used: November 2009.
Source: GAO analysis of state information.
Note: As of November 30, 2009, California and the District of Columbia
had not begun to weatherize homes using Recovery Act funds.
[End of table]
While Prevailing Wage Rates Have Largely Been Resolved, Ensuring
Compliance with Recovery Act Requirements Has Delayed Weatherization
Activities in Some States:
Officials in each of the states and the District in our review said
that, overall, Labor's county-by-county prevailing wage rates for
weatherization work were about what they had expected. About two-thirds
of these officials told us Labor's wage rates are similar to what local
agencies had previously been paying. Many representatives of the local
agencies we interviewed confirmed that these rates generally were about
what they had been paying for weatherization work.
However, many weatherization contracts between states and local
agencies have been delayed because of concerns about complying with
Recovery Act requirements--including Davis-Bacon Act requirements that
contractors pay workers weekly and submit weekly certified payroll
records--and OMB's reporting requirements. Some state agencies have
delayed disbursing Recovery Act funds to local agencies because they
were not satisfied that local agencies had the proper infrastructure in
place to comply with these requirements. Pennsylvania officials told us
that delays occurred because some local agencies had initially
submitted management plans that had not included language describing
how they would comply with the Davis-Bacon Act. The state agencies of
California and the District of Columbia, which had not spent any
Recovery Act funds to weatherize homes, were finalizing Recovery Act
weatherization contracts with their local agencies as of November 30,
2009. California's state agency requires local agencies to adopt
Recovery Act requirements in their weatherization contracts, including
certifying that they can comply with the Davis-Bacon Act, before these
agencies are provided with Recovery Act funds to weatherize homes. Only
2 of California's 35 local agencies that have been awarded Recovery Act
funds had accepted these required amendments by the initial October 30,
2009, deadline. According to California officials, many local agencies
pursued negotiations due to concerns about some provisions of these
amendments.
Several state and local agency officials expressed concern about the
administrative burden to state and local agencies of complying with
Recovery Act requirements, and many of these agencies were taking the
time to hire additional staff to better ensure compliance. For example,
Michigan officials told us their agency planned to add 22 staff,
including a Davis-Bacon analyst, to ensure compliance with Recovery Act
requirements. They also told us that federal administrative
requirements, such as a weekly certified payroll, required them to make
technological upgrades in their weatherization division. Ohio officials
told us that ensuring compliance with the Davis-Bacon Act documentation
was a significant undertaking. District officials told us that their
agency had not expended Recovery Act funds to weatherize homes because
they have been developing the infrastructure to administer the program
by, for example, hiring new staff. Local agencies in California,
Michigan, New York, and Ohio had also hired new staff to process Davis-
Bacon paperwork. Several state and local officials expressed concern
about the administrative burden on small contractors of complying with
Recovery Act requirements because these contractors generally have
fewer resources and less experience with accounting processes.
According to DOE officials, some local agencies have been hesitant to
use Recovery Act funding to weatherize homes until they are certain
they are in compliance with the Davis-Bacon Act. The DOE officials had
expected to receive fewer questions from local agencies about Davis-
Bacon Act requirements after Labor had determined prevailing wages, but
in fact they continue to receive frequent questions about these
requirements. The DOE officials explained that many local agencies have
been expending their DOE annual appropriation funds--which are not
subject to Davis-Bacon Act requirements--to weatherize homes before
using their Recovery Act funds.
State and local officials in California, New York, and Ohio also
expressed concern about Labor's determination that the new prevailing
wage rates for weatherization workers are limited to multifamily
residential buildings of four or fewer stories, while Labor's
commercial building construction wage rates (for plumbers, carpenters,
and other laborers) apply to multifamily residential buildings of five
or more stories. As a result, local agencies conducting weatherization
work on multifamily units in high rise buildings must pay their workers
wage rates that can be significantly higher than what local agencies
pay weatherization workers for residential housing units. For example,
in New York County (Manhattan), commercial prevailing wages were three
times more than the rates for residential weatherization laborers.
Representatives of two local agencies in New York told us that they
intend to subcontract out all weatherization work conducted on
buildings over four stories because they could not pay their workers
vastly different wages based on the type of building involved.
According to Ohio officials, some local agencies had delayed projects
in larger multifamily buildings until they could better estimate
project costs. In response to states' concerns, DOE's November 10,
2009, guidance states that the wage rates for the new weatherization
laborer category do not apply to weatherization work performed on
buildings of five or more stories. The guidance allows the states to
calculate the cost effectiveness over the lifetime of a project by
using the new weatherization wage rates rather than the prevailing
wages for plumbers, carpenters, and other laborers working on
multifamily buildings.[Footnote 82]
Some States Are Concerned That Compliance with the National Historic
Preservation Act Will Slow Weatherization Activities:
Compliance with the National Historic Preservation Act could also slow
the use of the Recovery Act's weatherization funds. First enacted in
1966, the National Historic Preservation Act requires federal agencies
to, among other things, take into account the effect of any federal or
federally assisted undertaking on historical properties included in a
national register of historic sites, buildings, structures, and
objects.[Footnote 83] Michigan state officials told us that, under the
act, its State Historic Preservation Office is allowed to conduct a
historic review of every home over 50 years of age if any work is to be
conducted. They explained that, in Michigan, this could mean an
estimated 90 percent of the homes to be weatherized would need such a
review, which could cause significant delays. However, in November
2009, Michigan state officials signed an agreement with the State
Historic Preservation Office that is designed to expedite the review
process. With this agreement in place, state officials said they are
confident that the historic preservation requirements can be met
without causing further delays. New York officials told us that several
entire neighborhoods in their state fall under the protection of the
act and noted that the State Historic Preservation Office may have to
conduct a review before any residential units in such a neighborhood
can be weatherized. State officials in Iowa expressed similar concerns.
State officials in New York and Iowa have contacted their respective
historic preservation offices to develop approaches for addressing the
review process.
State and Local Agencies Have Begun to Report on the Impacts of
Recovery Act Funds; While All Submitted Timely Reports, Two Cited
Issues with the Reporting Requirements:
DOE's guidance directs the states to report on the number of housing
units weatherized and the resulting impacts to energy savings and jobs
created and retained at both the state and local agency level. While
state officials have estimated the number of housing units that they
expect to weatherize using Recovery Act funds, only a few of the states
have begun collecting data about actual impacts. Although many local
officials have collected data about new hires, none could provide us
with data on energy savings. This lack of information about impacts
exists primarily because most state and local agencies either are just
beginning to use Recovery Act funds to weatherize homes or have not yet
begun to do so. Some of the local agencies, however, either collect or
plan to collect information about other impacts. For example, local
agencies in both California and Michigan collect data about customer
satisfaction. In addition, a local agency in California plans to report
about obstacles, while an agency in New York will track and report the
number of units on the waiting list.
In regard to recipient reporting, weatherization officials in all eight
states that we reviewed said they submitted these reports on schedule.
However, Massachusetts and Ohio officials cited issues with the
reporting requirements. In Massachusetts, state officials told us of
confusion associated with terminology related to new or retained jobs,
and local officials said that the Massachusetts Recovery and
Reinvestment Office requires additional information about demographics
not required by OMB. Ohio officials told us that for reporting
purposes, they estimated the number of jobs that could potentially be
created. The inconsistency between potential positions and actual hours
worked resulted in an inaccurate reporting of jobs created. One of the
local agencies we visited reported 36 jobs created, but officials
acknowledged they had only filled 20 positions at the time of our
visit. Another local agency reported 14 agency and 8 contractor jobs
created, but an official confirmed that only 6 agency and 7 contractor
positions had been filled.
Federal, State, and Local Agencies Plan to Monitor the Use of Recovery
Act Weatherization Funds but Face Challenges:
States plan to monitor the use of the Recovery Act's weatherization
funds through fiscal and programmatic reviews of the local agencies
providing weatherization service. DOE requires that state agencies
collect information from their local agencies and submit programmatic
and fiscal reports. Only a few states we reviewed expressed concerns
that a small number of their local agencies did not have adequate
controls.
Most states reported that the primary tools for evaluating a local
agency's internal controls will be the fiscal reviews and program
monitoring. This includes reviews of client files and financial
information, on-site monitoring of local service providers, and site
inspections of at least 5 percent of weatherized homes. State officials
in Iowa reported that controls were in place prior to the Recovery Act
and that the demonstrated success of these programs is proof of
sufficient internal controls. Other state officials reported that
Single Audits provided insight into a local agency's internal controls.
Five of the eight states we reviewed reported that they had adequate
resources to monitor the status of Recovery Act funds and evaluate the
program's success. However, some states noted they would need to hire
staff to meet the increased workload.
Local agencies plan to use a variety of controls to ensure that the
Recovery Act's weatherization funds are used for the intended purposes.
The most frequently mentioned controls were to separate Recovery Act
funds from annually appropriated weatherization funds, pre-and post-
weatherization evaluations, tracking job costs, and unannounced site
inspections. Most local agencies also have procedures in place to
ensure they do not contract with service providers that have been
placed on the "Excluded Parties List" due to a history of fraudulent
business practices.[Footnote 84] Local agencies reported the most
common procedure to evaluate a contractor's reputation was to check the
contractor's name online against the "Excluded Parties List." Other
local agencies require contractors to sign documentation stating that
they have not been debarred or bankrupt. Risk assessments also serve as
a procedure to prevent fraudulent or wasteful use of Recovery Act
funds. For example, some local agencies reported that new contractors
are subjected to a higher level of scrutiny than more experienced
contractors. Local agency officials in New York, California, and Ohio
told us a long history of weatherization service mitigates the risk
that a contractor will improperly use funds.
Our review has started to examine the states' efforts to monitor the
performance and reporting of local agencies. While the states have
spent relatively few funds and we have reviewed weatherization
activities in only a few locales, we have identified challenges for DOE
and the states to ensure that Recovery Act funds are spent prudently
and that the performance of local agencies is well-managed. For
example, in Ohio we found during our site visits that grantees had
inconsistent practices for reporting the number of homes weatherized
and, in one case, a grantee used Recovery Act funds to weatherize the
home of an ineligible applicant. Faced with these early implementation
challenges, Ohio officials indicated that administrative monitoring
will begin in December 2009 and fiscal monitoring in January 2010, and
on November 20, 2009, the state issued new guidance to all state
agencies regarding reporting requirements. Challenges in Pennsylvania
include expanding the state's oversight capacity, training and
certifying weatherization workers, and implementing a statewide
procurement system for weatherization materials purchased with Recovery
Act funds. In addition, California's Inspector General reported that
one local agency has been designated as high risk because of
questionable spending.
DOE is hiring staff to provide national oversight to the Recovery Act
weatherization program. DOE officials told us that each state will be
assigned a project officer who will review the state's fiscal and
programmatic reports. Project officers will also be responsible for
coordinating site visits to the state and local agencies responsible
for weatherization, as well as visiting a sample of projects being
weatherized with Recovery Act funds. DOE is in the process of hiring
this team.
FEMA's EFSP Recovery Act Funds Have Been Awarded to Local Recipient
Organizations:
The Emergency Food and Shelter Program (EFSP), which is administered by
the Federal Emergency Management Agency (FEMA) within the Department of
Homeland Security (DHS), was authorized in July 1987 by the Stewart B.
McKinney Homeless Assistance Act to provide food, shelter, and
supportive services to the homeless.[Footnote 85] The program is
governed by a National Board composed of a representative from FEMA:
and six statutorily designated national nonprofit
organizations.[Footnote 86] Since its first appropriation in fiscal
year 1983, EFSP has awarded over $3.4 billion in federal aid to more
than 12,000 local private nonprofit and government human service
entities in more than 2,500 communities nationwide.
The Recovery Act Increased Funds for EFSP Program:
The Recovery Act included a $100 million appropriation for the EFSP
program in addition to the $200 million included in DHS's fiscal year
2009 appropriations. The additional funding was awarded to the National
Board on April 9, 2009. As stated in FEMA's May 15, 2009, Recovery Act
Plan for EFSP, EFSP's goal is to deliver critical funding to human
services organizations serving hungry and homeless people throughout
our nation. While additional funding is provided, FEMA's Recovery Act
plan notes that EFSP's objectives remain the same. These objectives are
to:
* allocate funds to the neediest areas,
* deliver the funds expeditiously and efficiently,
* create and strengthen public and private sector partnerships,
* empower local representatives to make funding decisions, and:
* maintain minimal but accountable reporting.
* The National Board Distributes EFSP Funds to Local Recipient
Organizations Selected by Local Boards:
The National Board distributes the EFSP funds to local recipient
organizations (LRO) selected by Local Boards in jurisdictions the
National Board has determined are eligible for funds--for example,
local food banks or shelters within a state. The United Way Worldwide
is the Secretariat and Fiscal Agent to the National Board and employs a
staff of 12 to administer the program. One FEMA permanent full-time
position is dedicated to the EFSP program, but the position is not
funded through the EFSP appropriation. By law, the total amount
appropriated for the EFSP program is awarded to the National Board.
The National Board uses population, unemployment, and poverty data to
determine which jurisdictions, such as counties or cities within a
state, are eligible for EFSP funds. Local Boards evaluate applications
from LROs in the jurisdiction and determine which LROs will receive the
grant awards.[Footnote 87] In order to be eligible to have LROs receive
a portion of the $100 million in EFSP Recovery Act funds, jurisdictions
must have met one of the following criteria from February 2008 through
January 2009:
* their number of unemployed was 13,000 or more with a 5 percent rate
of unemployment,
* their number of unemployed was between 300 and 12,999 with a 7
percent rate of unemployment, or:
* their number of unemployed was 300 or more with a poverty rate of 11
percent.
Once the National Board determines that jurisdictions are eligible for
EFSP funding, and notifies the jurisdictions of their allocations,
Local Boards are convened in each of the qualifying jurisdictions to
review applications submitted by LROs and determine which LROs in their
communities will receive funds.[Footnote 88] While the Local Board
determines which LROs are to be awarded funds, the National Board
distributes the funds directly to the LROs, rather than through the
Local Board or a state or local government agency. The National Board's
program manual stipulates, however, that the Local Boards are
responsible for monitoring LRO's expenditure of EFSP funds to ensure
that LRO's actual expenditures are consistent with planned uses of
funds and are within the purpose of the Act that established the EFSP
program.
EFSP funds, including the Recovery Act funds, can be used for a range
of services, including food in the form of served meals or other food,
such as groceries; lodging in a mass shelter or hotel; 1 month's rent
or mortgage payment; 1 month's utility bill payment; minimal repairs to
allow a mass feeding or sheltering facility to function during a
program year; and equipment necessary to feed or shelter people up to a
$300 limit per item. Program funds cannot be used for rental security
deposits of any kind, cash payments of any kind, lobbying efforts,
salaries (except as an administrative allowance that is limited to 2
percent of the total award), purchases or improvements of an
individual's private property, telephone costs, repairs to government-
owned or profit-making facilities, and any payments for services not
incurred.
The National Board reserved about $12 million of the $100 million EFSP
Recovery Act funds for State Set-Aside (SSA) awards. SSA committees
identify jurisdictions with significant needs or service gaps that may
not have qualified for EFSP funding under the standard formula.
[Footnote 89] The jurisdictions may include areas with recent jumps in
unemployment and isolated pockets of homelessness or poverty. The SSA
committees develop their own formula, based on the number of unemployed
in the non-EFSP qualifying jurisdictions in each state, to identify
pockets of homelessness or jumps in unemployment.
Recovery Act EFSP Award Funds to LROs in 16 States and the District of
Columbia:
As of November 4, 2009, LROs in the 16 states and the District of
Columbia (District) that GAO is following as part of its Recovery Act
review were awarded almost $66.2 million in Recovery Act EFSP funds (76
percent) out of almost $87 million in standard Recovery Act awards
nationwide, and about $4.8 million (almost 40 percent) of the
approximately $12 million in Recovery Act SSA awards.[Footnote 90] The
Recovery Act awards (standard and set-aside combined) for the LROs in
the 16 states and the District ranged from $14.6 million for
California's LROs to $720,540 for Iowa's LROs. (See table 10.) The
average standard EFSP Recovery Act award for the LROs in each of the 16
states and the District was about $3.6 million. The average SSA
Recovery Act award was about $300,000 for the LROs in the 16 states,
ranging from about $724,000 for Pennsylvania's LROs to about $2,300 for
Arizona's. SSA funds, which are intended to meet significant needs or
fill gaps in places not covered by the standard EFSP funds, constituted
differing proportions of the total EFSP awards in the states we
reviewed. For example, the SSA award for LROs in Pennsylvania
represented 19 percent of the state's total EFSP award, while it
represented less than 1 percent of Arizona LROs' total award. In
contrast, Iowa LROs received a total SSA award of about $406,000--more
than half (56 percent) of the state LROs' total award of about
$720,500.
Table 10: Standard, State Set-Aside, and Total EFSP Recovery Act Awards
to LROs in 16 Selected States and the District, as of October 27, 2009:
State: Arizona;
Standard awards: $1,734,145;
Set-aside awards: $2,333;
Total funds awarded: $1,736,478.
State: California;
Standard awards: $14,474,217;
Set-aside awards: $115,620;
Total funds awarded: $14,589,837.
State: Colorado;
Standard awards: $1,309,517;
Set-aside awards: $199,880;
Total funds awarded: $1,509,397.
State: District of Columbia;
Standard awards: $248,214;
Set-aside awards: 0;
Total funds awarded: $248,214.
State: Florida;
Standard awards: $5,772,757;
Set-aside awards: $389,833;
Total funds awarded: $6,162,590.
State: Georgia;
Standard awards: $2,755,365;
Set-aside awards: $506,047;
Total funds awarded: v3,261,412.
State: Illinois;
Standard awards: $4,378,181;
Set-aside awards: $357,546;
Total funds awarded: $4,735,727.
State: Iowa;
Standard awards: $314,365;
Set-aside awards: $406,175;
Total funds awarded: $720,540.
State: Massachusetts;
Standard awards: $1,666,169;
Set-aside awards: $242,249;
Total funds awarded: $1,908,418.
State: Michigan;
Standard awards: $4,480,296;
Set-aside awards: $63,179;
Total funds awarded: $4,543,475.
State: Mississippi;
Standard awards: $912,298;
Set-aside awards: $82,468;
Total funds awarded: $994,766.
State: New Jersey;
Standard awards: $2,373,518;
Set-aside awards: $336,726;
Total funds awarded: $2,710,244.
State: New York;
Standard awards: $5,290,000;
Set-aside awards: $307,271;
Total funds awarded: $5,597,271.
State: North Carolina;
Standard awards: $3,067,887;
Set-aside awards: $156,760;
Total funds awarded: $3,224,647.
State: Ohio;
Standard awards: $3,781,504;
Set-aside awards: $515,952;
Total funds awarded: $4,297,456.
State: Pennsylvania;
Standard awards: $3,053,499;
Set-aside awards: $724,112;
Total funds awarded: $3,777,611.
State: Texas;
Standard awards: $5,772,469;
Set-aside awards: $379,606;
Total funds awarded: $6,152,075.
State: Total funds awarded;
Standard awards: $61,384,401;
Set-aside awards: $4,785,757;
Total funds awarded: $66,170,158.
Source: FEMA.
[End of table]
Planned Use of Recovery Act Funds by LROs in 16 States and the
District:
As of November 4, 2009, LROs in 16 states and the District of Columbia
had plans for using more than $64.7 million (98 percent) of their total
Recovery Act EFSP awards.[Footnote 91] (See table 11.)
Table 11: Planned Use of EFSP Recovery Act Funds by Service Category
for LROs in 16 States and the District, as of November 4, 2009:
Dollars in thousands:
Arizona;
Served meals: $53;
Other food: $429;
Mass shelter: $579;
Other shelter: $43;
Supplies/equipment: $6;
Rehab./building code: $0;
Rent/mortgage: $536;
Utilities: $55;
Admin.: $25;
Total by state: $1,726.
California;
Served meals: $1,552;
Other food: $5,968;
Mass shelter: $2,137;
Other shelter: $921;
Supplies/equipment: $25;
Rehab./building code: $7;
Rent/mortgage: v3,046;
Utilities: $651;
Admin.: $273;
Total by state: $14,580.
Colorado;
Served meals: $86;
Other food: $307;
Mass shelter: $221;
Other shelter: $44;
Supplies/equipment: $14;
Rehab./building code: 0;
Rent/mortgage: $760;
Utilities: $40;
Admin.: $24;
Total by state: $1,496.
District of Columbia;
Served meals: $47;
Other food: $46;
Mass shelter: $36;
Other shelter: 0;
Supplies/equipment: 0;
Rehab./building code: 0;
Rent/mortgage: $86;
Utilities: 0;
Admin.: $3;
Total by state: $218.
Florida;
Served meals: $592;
Other food: $1,749;
Mass shelter: $1,142;
Other shelter: $123;
Supplies/equipment: $29;
Rehab./building code: $4;
Rent/mortgage: $1,863;
Utilities: $467;
Admin.: $96;
Total by state: $6,065.
Georgia;
Served meals: $323;
Other food: $439;
Mass shelter: $447;
Other shelter: $92;
Supplies/equipment: $22;
Rehab./building code: $6;
Rent/mortgage: $1,005;
Utilities: $587;
Admin.: $49;
Total by state: $2,971.
Illinois;
Served meals: $180;
Other food: $1,963;
Mass shelter: $430;
Other shelter: $73;
Supplies/equipment: $16;
Rehab./building code: $32;
Rent/mortgage: $1,685;
Utilities: $262;
Admin.: $35;
Total by state: $4,675.
Iowa;
Served meals: $59;
Other food: $154;
Mass shelter: $130;
Other shelter: $14;
Supplies/equipment: $2;
Rehab./building code: $0;
Rent/mortgage: $203;
Utilities: $129;
Admin.: $13;
Total by state: $705.
Massachusetts;
Served meals: $317;
Other food: $449;
Mass shelter: $270;
Other shelter: $14;
Supplies/equipment: $0;
Rehab./building code: $0;
Rent/mortgage: $648;
Utilities: $173;
Admin.: $37;
Total by state: $1,908.
Michigan;
Served meals: $230;
Other food: $1,690;
Mass shelter: $362;
Other shelter: $41;
Supplies/equipment: $24;
Rehab./building code: $0;
Rent/mortgage: $1,260;
Utilities: $846;
Admin.: $67;
Total by state: $4,520.
Mississippi;
Served meals: $96;
Other food: $243;
Mass shelter: $33;
Other shelter: $10;
Supplies/equipment: $4;
Rehab./building code: $0;
Rent/mortgage: $317;
Utilities: $210;
Admin.: $9;
Total by state: $922.
New Jersey;
Served meals: $201;
Other food: $545;
Mass shelter: $128;
Other shelter: $107;
Supplies/equipment: $19;
Rehab./building code: $2;
Rent/mortgage: $1,245;
Utilities: $206;
Admin.: $34;
Total by state: $2,485.
New York;
Served meals: $993;
Other food: $2,171;
Mass shelter: $226;
Other shelter: $108;
Supplies/equipment: $123;
Rehab./building code: $3;
Rent/mortgage: $1,538;
Utilities: $258;
Admin.: $95;
Total by state: $5,515.
North Carolina;
Served meals: $239;
Other food: $606;
Mass shelter: $602;
Other shelter: $115;
Supplies/equipment: $14;
Rehab./building code: $7;
Rent/mortgage: $944;
Utilities: $615;
Admin.: $33;
Total by state: $3,174.
Ohio;
Served meals: $320;
Other food: $1,282;
Mass shelter: $728;
Other shelter: $119;
Supplies/equipment: $12;
Rehab./building code: $3;
Rent/mortgage: $1,087;
Utilities: $599;
Admin.: $66;
Total by state: $4,215.
Pennsylvania;
Served meals: $348;
Other food: $927;
Mass shelter: $780;
Other shelter: $128;
Supplies/equipment: $15;
Rehab./building code: $6;
Rent/mortgage: $998;
Utilities: $519;
Admin.: $57;
Total by state: $3,778.
Texas;
Served meals: $435;
Other food: $1,989;
Mass shelter: $944;
Other shelter: $68;
Supplies/equipment: $11;
Rehab./building code: $0;
Rent/mortgage: $1,531;
Utilities: $718;
Admin.: $86;
Total by state: $5,781.
Total;
Served meals: $6,073;
Other food: $20,957;
Mass shelter: $9,191;
Other shelter: $2,020;
Supplies/equipment: $336;
Rehab./building code: $69;
Rent/mortgage: $18,750;
Utilities: $6,336;
Admin.: $1,002;
Total by state: $64,734.
Source: GAO analysis of data provided by EFSP National Board
Secretariat.
Notes: "Rehab." means rehabilitation. "Admin." means administration.
The data were submitted by Local Boards to the EFSP National Board
Secretariat, United Way Worldwide.
Totals may not add due to rounding.
[End of table]
Our analysis of the planned use of EFSP Recovery Act funds reported by
the Local Boards in the 16 states and the District showed that the
largest planned use of funds by the LROs was for "other food" (32
percent)--that is, food programs such as food banks and pantries, food
vouchers and food-only gift certificates, and rent and mortgage
assistance (29 percent). However, there is some variation in how LROs
in the states planned to use the EFSP funds. For example, while LROs in
California and New York reported that they planned to use about 40
percent of their total award funds on other food, LROs in Texas,
Florida, and Michigan reported that they planned to use from 29 percent
to 37 percent of their award funds on other food. Further, LROs in the
District, Iowa, and Mississippi reported that they planned to use from
29 percent to 39 percent of their EFSP funds on mortgage and rent
assistance, the second largest category for planned use of funds. Mass
shelter was the third-largest category for planned use of EFSP funds by
LROs across the 16 states and the District, representing about 14
percent of total planned use of funds by LROs in these states.
Recovery Act Funds Provide Assistance to Local Governments and States
and Help to Address Some Budget Challenges:
For this report we expanded our focus on the use of Recovery Act funds
to include local as well as state governments. As shown in figure 25,
we visited 44 local governments to collect information regarding their
use of Recovery Act funds. To select local governments for our review,
we identified localities representing a range of types of governments
(cities and counties), population sizes, and economic conditions
(unemployment rates greater than and less than the state's overall
unemployment rate). We balanced these selection criteria with
logistical considerations including other scheduled Recovery Act work,
local contacts established during prior reviews, and the geographic
proximity of the local government entities. The 44 localities we
visited ranged in population from 15,042 in Newton, Iowa to 8,363,710
in New York City. Unemployment rates in our selected localities ranged
from 5.8 percent in Garfield County, Colorado to 26.3 percent in Flint,
Michigan.[Footnote 92]
Figure 25: Selected Local Governments Included in Our December 2009
Review:
[Refer to PDF for image: U.S. map indicating locations]
In Arizona, GAO visited Maricopa County and Yavapai County;
In California, GAO visited the City of Los Angeles and Sacramento
County;
In Colorado, GAO visited Adams County, the city and county of Denver,
and Garfield County;
In Florida, GAO visited Ft. Myers City and Lee County;
In Georgia, GAO visited the city of Atlanta, the city of Macon, and
Tift County;
In Illinois, GAO visited the cities of Chicago, Joliet, and
Springfield;
In Iowa, GAO visited the cities of Cedar Rapids, Des Moines, and
Newton;
In Massachusetts, GAO visited the cities of Boston and Springfield;
In Michigan, GAO visited Allegan County, the city of flint, and the
city of Royal Oak;
In Mississippi, GAO visited the cities of Jackson, Meridian, and
Vicksburg;
In New Jersey, GAO visited Cumberland County and the City of Newark;
In New York, GAO visited the city of Buffalo, New York City, Steuben
County, and Westchester County;
In North Carolina, GAO visited the city of Durham and Halifax County;
In Ohio, GAO visited the city of Athens, the city of Cincinnati, Putnam
County, and the city of Toledo;
In Pennsylvania, GAO visited the city of Allentown, Dauphin County, the
city of Harrisburg, and Lehigh County;
In Texas, GAO visited the city of Dallas and Denton County.
Sources: U.S. Census Bureau, U.S. Department of Labor, Bureau of Labor
Statistics, and Local Area Unemployment Statistics (data); MapInfo
(map).
[End of figure]
Local Government Use of Recovery Act Funds Varied by Program Areas
While Some Local Governments Reported Difficulty in Applying for
Recovery Act Grants:
The use of Recovery Act funds helped to fund existing programs for some
local governments. A number of local government officials reported that
they used Recovery Act funds for existing programs or non-recurring
projects and did not apply for grants that would result in long-term
financial obligations. For example, although several local government
officials reported applying for the Community Oriented Policing
Services (COPS) Hiring Recovery Program grant, officials in a few
localities expressed concerns about their ability to retain officers
hired with Recovery Act funds.[Footnote 93] Several localities reported
applying for and receiving funds for public works or infrastructure
projects. For example, Meridian, Mississippi is using Recovery Act
funds from the Energy Efficiency and Conservation Block Grant to
complete restoration of its city hall using energy-efficient materials.
A few localities reported that projects to increase energy efficiency
could provide long-term cost-savings to the local government.
The process of distributing federal assistance through grants is
complicated and involves many different parties. Most Recovery Act
funds to local governments flow through existing federal grant
programs. Some of these funds are provided directly to the local
government by federal agencies and others are passed from the federal
agencies through state governments to local governments. As shown in
table 12, local officials reported their governments' use of Recovery
Act funds in program areas including public safety (COPS, Edward Byrne
Memorial Justice Assistance Grant (JAG)), Energy Efficiency and
Conservation Block Grants (EECBG), housing (Community Development Block
Grant (CDBG) and Homeless Prevention and Rapid Re-Housing Program
(HPRP)), transportation and transit, workforce investment (Workforce
Investment Act (WIA)), and human services (Community Services Block
Grants (CSBG) and Supplemental Nutrition Assistance Program (formerly
the food stamp program), and education (SFSF). Other Recovery Act funds
received by the selected localities included grants for community
health centers, waste water treatment, airport improvement, and other
programs.[Footnote 94]
Table 12: Selected Examples of Local Governments' Use of Recovery Act
Funds:
Recovery Act grant: COPS;
Selected examples of local use of funds: A COPS grant provided the city
of Macon, Georgia with funding to hire 14 police officer positions;
Example of a local government: Macon, GA.
Recovery Act grant: EECBG;
Selected examples of local use of funds: The city of Chicago was
awarded a $27,648,800 EECBG grant to fund several projects, including
energy efficiency housing retrofits for low income residents that are
intended to save residents, on average, 15-20 percent of their energy
costs. The City's Department of Environment will work with local
lenders to establish a revolving loan fund to support energy efficiency
retrofits in low-to moderate-income households;
Example of a local government: Chicago, IL.
Recovery Act grant: WIA;
Selected examples of local use of funds: Newark was awarded $5,236,609
for WIA Adult, WIA Youth, and WIA Dislocated Worker programs. The
NewarkWORKS agency plans to administer the funds for several projects
to support workforce preparation, talent development, life skills
training, and job readiness workshops;
Example of a local government: Newark, NJ.
Recovery Act grant: CDBG;
Selected examples of local use of funds: The City of Harrisburg has
been allocated $599,343.00 for use under the CDBG program. CDBG funds
will be used for the acquisition, rehabilitation, management, and
disposition of not less than four vacant, blighted, single-family
properties citywide for sale to low-and moderate-income households. The
allocation includes funding for administrative costs associated with
the program;
Example of a local government: Harrisburg, PA.
Recovery Act grant: Increased Demand for Services (IDS);
Selected examples of local use of funds: The IDS grant funding is being
used to support the Community Health Center of Yavapai (CHCY) dental
and medical services in Cottonwood (Verde Valley) in eastern Yavapai
County, Arizona. Of the $255,166 in IDS funds awarded, $184,061 is
being used to expand dental services and $71,105 to retain jobs in the
medical clinic;
Example of a local government: Yavapai County, AZ.
Recovery Act grant: Airport Improvement Program;
Selected examples of local use of funds: The Denver International
Airport was awarded 2 competitive Airport Improvement Program grants
totaling $11,489,921 to rehabilitate pavement and widen the shoulders
for one of its runways as well as rehabilitate drainage systems on the
terminal taxiways and aprons. The projects are estimated to save or
retain 128 jobs;
Example of a local government: Denver, CO.
Source: GAO analysis of local governments' reported use of funds.
[End of table]
In addition to Recovery Act funds for which local governments were
prime recipients, several local government officials reported that
additional Recovery Act funds were received by other entities within
their local jurisdictions.[Footnote 95] For example, housing
authorities, transit authorities, nonprofit organizations, and school
systems were reported as entities within local jurisdictions which
received Recovery Act funds directly from the federal government.
Newark, New Jersey officials reported that their local government
actively helped community partners pursue funding that the city was not
eligible for, such as a National Endowment for the Arts grant. The city
of Chicago, Illinois also established a partnership with nonprofit
organizations to provide training on how to apply for Recovery Act
grants for which the city was ineligible.
Some local governments reported experiencing challenges in applying for
and administering Recovery Act grants, including insufficient staff
capacity, lack of guidance, budget constraints, and short application
timetables. In particular, smaller localities, which are often rural,
reported that they faced challenges due to grant requirements and a
lack of staff capacity to find and apply for federal Recovery Act
grants. Allegan County, Michigan officials also told us the
requirements and goals of many Recovery Act programs do not fit the
needs of a rural county like Allegan. For example, applicants for a
grant from the U.S. Department of Transportation's Transit Investments
for Greenhouse Gas and Energy Reduction program must apply for at least
$2 million, making it difficult for Allegan County to compete. Other
local government officials reported that they did not employ a staff
person to handle grants and therefore did not have the capacity to
understand which grants they were eligible for and how to apply for
them. A few local officials also reported concerns regarding some
grants' matching requirements, either at the state or federal level.
For example, officials in Springfield, Massachusetts and Harrisburg,
Pennsylvania reported an inability to apply for some grants because it
was not feasible for them to generate the funds needed to meet the
matching requirements.[Footnote 96]
Local Governments Report Ongoing Budget Challenges after Use of
Recovery Act Funds:
Local government officials reported that use of Recovery Act funds
helps to support local services but recent revenue declines are still
resulting in mid-cycle budget shortfalls. An October 2009 survey by the
National Association of Counties said that 56 percent of counties
responding to the survey reported starting their fiscal years with up
to $10 million in projected shortfalls.[Footnote 97] In the face of
decreasing revenue sharing by counties and states, a number of
localities used Recovery Act funds to plug the resulting gaps in
program funding. The localities we visited reported varied revenue-
sharing relationships with state or county governments, but several
received at least some revenue from the state or county government. A
few of these localities reported that decreases in revenue sharing
contributed to their current budget shortfalls. In some cases, the
receipt of Recovery Act funds helped offset the decline in revenue
sharing from other levels of government. In other cases, Recovery Act
funds received at the state level may have reduced the severity of the
state's revenue sharing reductions.
Several of the local governments included in our review experienced
revenue declines and budget gaps.[Footnote 98] For example, Los
Angeles, California officials stated that they were facing a $530
million shortfall as a result of declining property taxes, sales taxes,
transfer/real estate transaction taxes, as well as utility and gas user
taxes. In Jackson, Mississippi, the county government in which Jackson
is located reduced the city's 2009 fiscal year portion of the road and
bridge tax revenue by over $500,000 and city officials expect the
revenue decrease to continue into fiscal year 2010. City officials in
Cincinnati, Ohio anticipate there will be a $28 million shortfall in
their general fund tax revenues for fiscal year 2009 and that these
revenues will continue to fall in fiscal year 2010.
Local governments took a variety of budget actions to address
shortfalls. Cincinnati, Ohio, for example, took several steps to close
their budget shortfall, including layoffs, furloughs, union wage
concessions, cutbacks in services, and drawing down on reserves.
According to officials from Atlanta, Georgia, they offset declines in
revenues by raising the property tax rate to address a projected $56
million budget gap. Officials from the city of Dallas, Texas explained
that property and sales taxes represent two thirds of their $1.3
billion general revenue fund and the city of Dallas experienced
declines in property and sales tax revenue for the previous 12 months,
and anticipates a decline in property tax revenue for fiscal year 2010.
Dallas officials relied on reductions in staff and city services as
well as using $21.7 million from the city's reserve fund to balance
their budget. Officials from both Dallas and Denton County, Texas
reported that their local governments receive no state aid. In
contrast, the city of Springfield, Massachusetts relies on state aid
for 60 percent of its revenue base, and state aid for the city of
Buffalo, New York comprises about 43 percent of its revenue base.
Officials from Buffalo expressed concern over impending cuts to state
aid, while Springfield, Massachusetts officials noted that reductions
in state aid would have been more severe had the state not received
Recovery Act funds.
Local Government Plans for Recovery Act Exit Strategies Vary Based on
Funding Received:
Local government officials reported varied approaches to planning for
the end of Recovery Act funds and several local officials did not
report the need for a formal exit strategy. Officials representing a
number of local governments said they did not need an exit strategy
because of the limited effect of the use of Recovery Act funds.
Officials in Yavapai County, Arizona stated that Recovery Act funds did
not result in the adjustment of any budget actions. Although the county
administration is not planning a formal exit strategy, county agencies
are developing plans for the end of specific grant periods. Officials
in Halifax County, North Carolina also reported that Recovery Act funds
have not yet impacted the city's budget and they have not discussed an
exit strategy. Some local officials said that because Recovery Act
funds were generally used for one-time projects which will not result
in long-term liabilities they did not plan to develop an exit strategy.
For example, officials in Los Angeles reported that they are working to
ensure that Recovery Act funds are for one-time uses and making sure
funds are leveraged to enhance community services rather than to fund
ongoing projects requiring future financial support. Officials in
Newton, Iowa stated that the development of a Recovery Act exit
strategy is currently not applicable because the Recovery Act funded
one-time improvement projects and not recurring operation expenses.
On the other hand, a number of local governments reported that they are
developing plans to sustain current Recovery Act projects after
Recovery Act funding ends. Officials in Dallas, Texas acknowledged that
sustaining the 50 police officers beyond the 3-year period of the
Recovery Act funding would be challenging, but because public safety is
a top priority and because it would be politically difficult to
eliminate police officer positions, the city is committed to taking any
necessary steps to ensure it can retain the additional officers. Other
local governments reported developing a more general exit strategy
consisting of reductions in expenditures or possible increases in
revenue to prepare for the end of Recovery Act funding. Officials in
Steuben County, New York said that they will have to increase taxes,
reduce expenditures, and tap into their reserve while Westchester
County, New York officials said that they may have to increase taxes
and tap into reserves to prepare for the end of Recovery Act funds.
Officials in Tift County, Georgia plan to maintain two positions in the
District Attorney's office supported by Recovery Act funds by charging
users a fee in the future. Officials in Springfield, Massachusetts
stated that the city is preparing for a "doomsday budget" once Recovery
Act funds are no longer available and are planning to hold back
expenditures as much as possible while exploring additional revenue
sources.
State Governments Receive Infusion of Recovery Act Funds While
Continuing to Face Budget Challenges:
The Recovery Act continues to help state governments maintain services.
According to associations representing state officials, budget cuts and
tax increases would be larger without the use of Recovery Act funds.
According to the National Governors Association (NGA) and National
Association of State Budget Officers (NASBO), states will have faced
$256 billion in budget gaps between fiscal years 2009 and 2011.
[Footnote 99] These shortfalls were closed through a combination of
budget cuts, tax increases, use of available reserves, and use of
Recovery Act funds provided primarily for health care and education.
According to the Pew Center on the States (Pew), 6 of our 16 selected
states fall within Pew's top 10 list of recession-stricken states that
are particularly affected with ongoing fiscal woes.[Footnote 100]
According to a senior Iowa official, the receipt of Recovery Act funds
allowed Iowa to mitigate the effects of an across-the-board cut of 10
percent in fiscal year 2010 general fund expenditures, including
maintaining state and local education services and reducing the number
of layoffs in state agencies and local school districts. Without the
use of Recovery Act funds, Iowa may have needed to cut additional
programs, services and staff. As we reported in September 2009,
Colorado had already planned to use more than $600 million in Recovery
Act funds in fiscal year 2010. These funds include SFSF and the
increased FMAP for Medicaid, which Colorado used to pay expenses
related to its increased Medicaid caseload. The state now plans to use
an additional $190 million in Recovery Act funds to offset proposed
cuts in budgets for higher education and corrections. North Carolina
state budget officials told us Recovery Act funds are helping in the
areas of education and health and human services, and the state intends
to use more of its State Fiscal Stabilization funds in the second
quarter. The Governor of Massachusetts also announced a plan to close
the latest budget gap through the use of $62 million in Recovery Act
funds, among other strategies. Pennsylvania enacted its fiscal year
2010 budget since our September report. Michigan and the District of
Columbia completed their fiscal years and their 2010 budgets since our
September report. According to Michigan officials, the state enacted
its 2010 budget on October 30, 2009. Michigan addressed a projected
$2.7 billion shortfall through spending cuts, including cuts to state
agencies' budgets, local school districts, provider reimbursement rates
for Medicaid services, and state revenue sharing to local governments.
OMB Implements a Project for Earlier Reporting of Internal Control
Weaknesses:
Starting in April 2009, we have noted in our bimonthly reports that OMB
needs to take additional action to focus auditors' efforts on areas
that can provide the most efficient and most timely results to realize
the Single Audit Act's full potential as an effective oversight tool
for Recovery Act programs.[Footnote 101] We reported that as federal
funding of Recovery Act programs accelerates, the Single Audit process
may not provide the accountability and focus needed to assist
recipients in making timely adjustments to internal controls to provide
assurances that the money is being spent efficiently and effectively to
meet program objectives.[Footnote 102] To provide additional leverage
as an oversight tool for Recovery Act programs, we recommended that OMB
adjust the current audit process to, among other things, provide for
review of internal controls before significant expenditures occurred.
The statutory Single Audit reporting deadline is too late to provide
audit results in time for the audited entity to take action on internal
control deficiencies before significant expenditures of Recovery Act
funds. As a result, an audited entity may not receive feedback needed
to correct identified internal control deficiencies until the latter
part of the subsequent fiscal year.[Footnote 103] The timing problem is
exacerbated by the extensions to the 9-month deadline, consistent with
OMB guidance, that have routinely been granted.
OMB has developed a Single Audit Internal Control Project in response
to our recommendations. One of the project's goals is to encourage
auditors to identify and communicate significant deficiencies and
material weaknesses in internal control over compliance for selected
major Recovery Act programs 3 months sooner than the 9-month time frame
currently required under statute. If effective, the project should
allow auditee program management to expedite corrective action and
mitigate the risk of improper Recovery Act expenditures. OMB announced
the project on September 10, 2009. In order to facilitate early
communication of internal control significant deficiencies and material
weaknesses, the project requires the auditor to issue an interim report
by November 30, 2009, based on its internal control test work. This
communication is to be based on the OMB Circular A-133 test work on the
internal control over compliance in effect for the period ended June
30, 2009, and is to be presented to auditee management prior to
December 31, 2009. Auditee management is to provide the interim
communication report and a corrective action plan to the appropriate
federal agency by January 31, 2010.[Footnote 104] Federal agencies--
each of which will assign a project liaison--will then have up to 90
days to issue a written interim management decision regarding their
assessment of the areas that have the highest risk to Recovery Act
funding and any concerns about the proposed plan of corrective action.
The project was designed to include at least 10 states that received
Recovery Act funding, with each state selecting at least 2 Recovery Act
programs for interim internal control testing and reporting from the
following 11 programs.[Footnote 105]
* Department of Labor's Unemployment Insurance;
* Department of Transportation's (DOT) Federal-Aid Highway Surface
Transportation Program;
* DOT's Federal Transit-Capital Investment Grants;
* Environmental Protection Agency's (EPA) Capitalization Grants for
Clean Water State Revolving Fund;
* EPA's Capitalization Grants for Drinking Water State Revolving Fund;
* Department of Energy's (DOE) Weatherization Assistance Program,
* Department of Education's (Education) State Fiscal Stabilization
Fund;
* Education's Title I, Part A of the Elementary and Secondary Education
Act of 1965, as amended;
* Health and Human Services' (HHS) Child Care and Development Block
Grant;
* HHS's Medicaid; and:
* various agencies' research and development clusters.
OMB designed the project to be voluntary. To encourage participation,
OMB provided incentives to the states for volunteering. States and
their auditors that participate are granted some relief in their
workload because the auditor will not be required to perform risk
assessments of smaller federal programs.[Footnote 106] OMB has also
modified the requirements under Circular A-133 to reduce the number of
low-risk programs that must be included in some project participants'
Single Audits.[Footnote 107] GAO had previously recommended that OMB
evaluate options for providing relief related to low-risk programs to
balance new audit responsibilities associated with the Recovery Act.
One of the project's goals is to identify deficiencies in internal
controls for selected major Recovery Act programs 3 months sooner than
the 9-month time frame currently required under statute, so that
potential issues can be addressed by the auditee's management and the
federal agencies in a timely manner. Another goal is to provide OMB
with insight into how a variety of states are implementing certain
Recovery Act programs. By monitoring and analyzing the project's
results, OMB officials stated they can determine whether states are
experiencing issues that OMB may need to address through additional
guidance. If significant problems are identified, OMB officials have
stated they may release further guidance for Recovery Act programs.
At the end of the project period, OMB will determine the success of the
project by evaluating whether:
* there has been sufficient participation from the auditees, auditors,
and federal agencies;
* the early communication process provides auditee and federal program
management with useful information regarding internal control
deficiencies in the Recovery Act programs administered by the states,
thus resulting in expedited correction of such deficiencies and reduced
risk to Recovery Act programs;
and:
* the process accelerates the audit resolution by the federal agencies
and therefore provides auditee management with early feedback to assist
in correction of the high-risk deficiencies in the most expeditious
manner.
Sixteen States Volunteered to Participate in OMB's Single Audit
Internal Control Project:
On October 7, 2009, OMB announced that it was soliciting auditors and
auditees from the 50 states, the District of Columbia, Puerto Rico, and
Guam, to participate in the project. OMB encouraged potential
participants to respond to the announcement by October 16, 2009. The
following 16 states volunteered to participate in the project: Alaska,
California, Colorado, Florida, Georgia, Louisiana, Maine, Missouri,
Nevada, North Carolina, Ohio, Oklahoma, South Dakota, Tennessee, Texas,
and Virginia.
GAO had previously recommended that the Director of OMB take steps to
achieve sufficient participation and coverage of Recovery Act funded
programs in the project to leverage Single Audits as an effective
oversight tool. The 16 project participants can provide important
information on the potential impact of the early communication process.
OMB met its goals for the scope of the project, and OMB officials
stated that, overall, they were satisfied with the population and
geographic diversity among the states that volunteered. Participants
include states that use auditors within state government to conduct
Single Audits as well as some that use external auditors. In addition,
California and Texas, which are among the top three states with the
highest levels of Recovery Act obligations from the federal government,
are participating.
The project required the states to select at least two programs for
internal control testing. Thirteen states selected 2 programs, 2 states
selected more than 2 programs, and Texas selected 8 programs. OMB
officials said that some of the officials from states not participating
expressed concerns about lacking sufficient resources to do the work.
Of the 16 project participants, 9 selected the unemployment insurance
program, 5 selected the SFSF program, 4 selected the Medicaid program,
and 5 selected the Highway Infrastructure Investment program for audit.
As of October 23, 2009, the Recovery Act portions of these 4 programs
were the top 4 of all Recovery Act programs in terms of obligations to
states. Further, each of the 11 Recovery Act programs included in the
project by OMB was selected for inclusion by at least one participating
state for early internal control testing.
The project's coverage could be more comprehensive to provide greater
assurances about the extent that Recovery Act funding was effectively
used to meet program objectives. As of October 23, 2009, Recovery Act
federal obligations attributable to states totaled $236.5 billion and
related outlays totaled $106.3 billion.[Footnote 108] Based on these
and other data gathered through October 23, we estimate that, in dollar
terms, the project participants' selected Recovery Act programs are
responsible for:
* 16 percent of Recovery Act obligations,
* 23 percent of Recovery Act outlays,
* 36 percent of Recovery Act obligations for the 16 volunteer states,
and:
* 50 percent of Recovery Act outlays for the 16 volunteer states.
OMB officials acknowledged that the project was not designed to provide
coverage over a majority of Recovery Act program funding.
We commend the 16 states that elected to participate in the project.
OMB has stated that by participating in the project, the auditors and
auditees are demonstrating to Congress and the general public their
deep interest in safeguarding the Recovery Act funds against fraud,
waste, and abuse. However, the project's dependence on voluntary
participation limits its scope and coverage. Voluntary participation
may also bias the project's results by excluding from analysis states
or auditors with practices that cannot accommodate the project's
requirement for early reporting of control deficiencies. It is unclear
whether OMB has the authority to mandate participation in the project.
The project's goal of identifying potential material weaknesses and
significant deficiencies for selected major Recovery Act programs
sooner than currently required has merit, especially since the project
includes two of the three states with the largest amounts of Recovery
Act funding nationwide--California and Texas. Although the project's
coverage could be more comprehensive, it is our view that the analysis
of the project's results could provide meaningful information to OMB
for better oversight of Recovery Act programs. OMB stated that it will
use the results of its analysis of the project as an indicator for
making potential future modifications for improvement in the Single
Audit Act. We will continue to monitor the implementation and progress
of the project and report on its status in our February 2010 report.
As we reported in July 2009, because a significant portion of Recovery
Act expenditures will be in the form of federal grants and awards, the
Single Audit process could be used as a key accountability tool over
these funds. However, the Single Audit Act, enacted in 1984 and most
recently amended in 1996, did not contemplate the risks associated with
the current environment where large amounts of federal awards are being
expended quickly through new programs, greatly expanded programs, and
existing programs. Finally, in our July 2009 report, we included a
matter for congressional consideration pointing out that Congress is
considering a legislative proposal. We believe that the matter
continues to be relevant for Congressional consideration and
reemphasize that:
* To the extent that appropriate adjustments to the Single Audit
process are not accomplished under the current Single Audit structure,
Congress should consider amending the Single Audit Act or enacting new
legislation that provides for more timely internal control reporting,
as well as audit coverage for smaller Recovery Act programs with high
risk.
* To the extent that additional audit coverage is needed to achieve
accountability over Recovery Act programs, Congress should consider
mechanisms to provide additional resources to support those charged
with carrying out the Single Audit Act and related audits.
OMB Has Provided Flexibility in Its Administrative Cost Guidance
Related to Recovery Act Responsibilities:
During a time when states are grappling with unprecedented levels of
declining state revenues and fiscal stress, states continue to seek
relief from additional pressures created by requirements to implement
and comply with the Recovery Act. This includes a wide range of
activities to help ensure the prudent, timely, and transparent
expenditures of Recovery Act funds, including, but not limited to,
Single Audits. States often take on additional fiscal and
administrative burdens to accomplish critical activities such as
awarding grants, contracts, and cooperative agreements and providing
funds for expenses incurred for general administration. Such additional
costs can exacerbate states' existing fiscal stress. However, states do
not generally recover central administrative costs up front, but
instead are reimbursed for such expenses after the fact. This process
can have the unintended consequence of preventing state governments
from obtaining the necessary resources to quickly build administrative
capacities to meet the important new oversight, reporting, and audit
requirements of the Recovery Act. In addition, as we previously noted,
it is our view that Congress should consider mechanisms to provide
additional resources to support those charged with carrying out the
Single Audit Act and related audits.
Our September 23, 2009, Recovery Act report noted that in order to
achieve the delicate balance between robust oversight and the smooth
flow of funds to Recovery Act programs, states may need timely
reimbursement for these activities. We recommended that to the extent
that the Director of OMB has the authority to consider mechanisms to
provide additional flexibilities to support state and local officials
charged with carrying out Recovery Act responsibilities, it is
important to expedite consideration of alternative administrative cost
reimbursement proposals. In response to this recommendation, OMB issued
a memorandum on October 13, 2009, to provide guidance to address
states' questions regarding specific exceptions to OMB Circular A-87,
Cost Principles for State, Local and Indian Tribal Governments. In the
memorandum, OMB provided clarifications for states regarding specific
exceptions to OMB Circular A-87 that are necessary in order for the
states to perform timely and adequate Recovery Act oversight,
reporting, and auditing. We believe the October OMB guidance provides
the additional clarification needed for states and localities to
proceed with their plans to recoup administrative costs.
OMB, States, and Federal Agencies Took Actions Aimed at Reducing Risks
Inherent in Initial Round of Section 1512 Reporting, but Further Data
Quality Efforts Are Needed:
We previously reported[Footnote 109] that the risks inherent in the
initial round of section 1512 recipient reporting could negatively
impact the completeness, accuracy, and reliability of the information
reported and on actions taken by OMB, the states, and federal agencies.
Many recipients had not previously been subject to such reporting
requirements, and their systems and processes had not been tested to
provide reliable and accurate data, such as that required by section
1512. Risks were also increased because of the large number of
recipients, making it more difficult for states and federal agencies to
monitor the quality of the data reported by these recipients within a
short time.
While actions have been taken by the states, the District of Columbia,
and federal agencies to address risks and help ensure the quality of
the reported data, we found there are significant issues to be
addressed in reporting data quality and consistent application of OMB
guidance.[Footnote 110] All of the jurisdictions we reviewed had data
quality review procedures in place for the recipient reporting data,
either by a central state office or by state agencies. For example, at
least three states (Florida, Michigan, and Pennsylvania) and the
District of Columbia subjected the data to reviews at different levels
in the state, including reviews by state program offices, state
agencies, state recovery czars, and state agency inspectors general
(IG). In the District of Columbia, data was reviewed at three different
levels--by grant managers, by the agency administering the grant, and
by the District's recovery czar. In Florida, fiscal and program staff
in state agencies and state agency IGs reviewed the data. At least six
states (Florida, Georgia, Iowa, Michigan, Ohio, and Pennsylvania)
required prime recipients to certify that they had reviewed the data.
At least seven states (Florida, Georgia, Iowa, Michigan, New Jersey,
North Carolina, and Texas) and the District of Columbia implemented
controls, either manual or automated, intended to identify blank
fields, correct field size, typographical errors, outliers, and other
anomalies, such as whether the amount of funds spent was greater than
the amount of funds received.
In general, federal agencies that awarded Recovery Act funds to states
developed internal policies and procedures for limited data quality
reviews, as required by OMB. Federal agency IGs conducted reviews at
federal agencies to determine whether the agencies had established
processes to perform limited data quality reviews intended to identify
material omissions and significant reporting errors and notify the
recipients of the need to make appropriate and timely changes to their
reported data.
Even with the data quality review actions taken by states and federal
agencies, we found that the data suffers from a number of issues. As we
reported last month,[Footnote 111] based on our initial set of basic
analyses of the recipient report data available for download from
Recovery.gov, we identified recipient report records that showed
certain data values or patterns in the data that were either erroneous
or merit further review due to an unexpected or atypical data value or
relationship between data values. Although recipients in the states we
reviewed generally made good faith efforts to report accurately, there
is evidence that the data reporting has been inconsistent, partly due
to various interpretations of guidance. For example, recipients appear
to have interpreted guidance on how to calculate and report data on
jobs created or retained in somewhat different ways and took different
approaches in how they developed their jobs data.
We made two recommendations to the Director of OMB. First, to improve
the consistency of full-time equivalent (FTE) data collected and
reported, OMB should continue to work with federal agencies to increase
recipient understanding of the reporting requirements and application
of the guidance. Specifically, OMB should (1) clarify the definition
and standardize the period of measurement for FTEs and work with
federal agencies to align this guidance with OMB's guidance and across
agencies; (2) given its reporting approach, consider being more
explicit that "jobs created or retained" are to be reported as hours
worked and paid for with Recovery Act funds; and (3) continue working
with federal agencies and encourage them to provide or improve program-
specific guidance to assist recipients, especially as it applies to the
FTE calculation for individual programs. Second, OMB should work with
the Recovery Board and federal agencies to re-examine review and
quality assurance processes, procedures, and requirements in light of
experiences and identified issues with this round of recipient
reporting and consider whether additional modifications need to be made
and if additional guidance is warranted.
OMB agreed with our recommendations. In a written response to our
recommendations, OMB's Controller told us that OMB is committed to
continually improving the reporting process, so that the Recovery Act
goals of transparency and usefulness to the American people will be
met. He also stated that each of our recommendations aligns with what
OMB is hearing directly from recipients and agencies. OMB is working to
better define the reporting period of measurement for recipients. As
the reporting becomes more regular with quarterly updates, the time
period covered by the data should be more consistent. OMB also plans to
issue streamlined guidance to provide additional clarity in advance of
the January reporting period, including refining its jobs-counting
guidance. Further, OMB has continuing discussions with agencies about
lessons learned and best practices, including suggestions for data
quality. OMB pointed out that while there were numerous instances of
reliable and accurate data reported, there were also erroneous data.
OMB will continue to work with the Recovery Board to identify errors,
large and small, and transparently correct them.
As recipient reporting moves forward, we will continue to review the
processes that federal agencies and recipients have in place to ensure
the completeness and accuracy of data, including reviewing a sample of
recipient reports across various Recovery Act programs to assure the
quality of reported information. Our subsequent quarterly reports on
recipient reporting will also discuss actions taken on the
recommendations and will provide additional recommendations, as
appropriate.
GAO's Open Recommendations:
To strengthen efforts to track the use of funds, demonstrate results,
and increase outreach to states and localities that administer Recovery
Act programs, we continue to recommend the following actions:
Reporting on Program Impact:
Recipients of Recovery Act funds are expected to report quarterly on a
number of measures, including the use of funds and the number of jobs
created and retained. In addition to statutory requirements, the Office
of Management and Budget (OMB) has directed federal agencies to collect
performance information and to assess program accomplishments.
Recipient financial tracking and reporting: Recovery Act prime
recipients and federal agency reviewers are required to perform data
quality checks; however, OMB guidance does not explicitly mandate a
methodology for conducting quality reviews and providing final approval
of data reported.
Recommendations: In our July report, we recommended that the Director
of OMB (1) clarify what constitutes appropriate quality control and
reconciliation by prime recipients, especially for subrecipient data,
and (2) specify who should provide formal certification and approval of
data reported. More recently, in our comments on recipient reporting of
jobs data,[Footnote 112] we recommended that OMB work with the Recovery
Accountability and Transparency Board and federal agencies to re-
examine review and quality assurance processes, procedures, and
requirements in light of experiences and identified issues with the
first round of recipient reporting and consider whether additional
modifications need to be made and if additional guidance is warranted.
The Controller of OMB in a November 18, 2009, letter outlined a series
of actions OMB plans to take to address the issues and recommendations
in our November report on recipient reporting. Those actions include
conducting survey research with individual recipients to learn directly
about what they liked about the reporting system, as well as problems
they encountered.
According to the OMB Controller, OMB and federal agencies will continue
to work with the Recovery Board to examine recipient data for
inconsistencies or errors. We believe that if effectively implemented,
OMB's planned and ongoing actions will address our recommendations.
Other impact measures: As we noted in our July report, reporting on
Recovery Act performance results is broader than the employment-related
reporting required by the act. We continue to recommend that the
Director of OMB--perhaps through the Senior Management Councils--
clarify what other program performance measures recipients are expected
to report on to demonstrate the impact of Recovery Act funding.
Communications and Guidance:
Funding notification and program guidance: State officials expressed
concerns regarding communication on the release of Recovery Act funds
and their inability to determine when to expect federal agency program
guidance. As we recommended, OMB now requires federal agencies to
notify recovery coordinators in states, the District of Columbia,
commonwealths, and territories within 48 hours of an award to a grantee
or contractor in their jurisdiction. However, OMB does not have a
master timeline for issuing federal agency guidance. We believe that
OMB and federal agencies can strike a better balance between developing
timely and responsive guidance and providing a longer-range timeline to
support states' and localities' planning efforts.
Recommendation: We recommended in our April report and continue to
recommend the addition of a master schedule for anticipated new or
revised federal Recovery Act program guidance and a more structured,
centralized approach to making this information available, such as what
is provided at www.recovery.gov on recipient reporting.
OMB provided technical comments that have been incorporated into this
report, as appropriate.
We are sending copies of this report to the Office of Management and
Budget; the Centers for Medicare & Medicaid Services; the Departments
of Education, Energy, Housing and Urban Development, and
Transportation; and the Federal Emergency Management Agency. In
addition, we are sending sections of the report to officials in the 16
states and the District covered in our review. The report is available
at no charge on the GAO Web site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-5500. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made major contributions to this
report are listed in appendix IV.
Signed by:
Gene L. Dodaro:
Acting Comptroller General of the United States:
List of Addressees:
The Honorable Nancy Pelosi:
Speaker of the House of Representatives:
The Honorable Robert C. Byrd:
President Pro Tempore of the Senate:
The Honorable Harry Reid:
Majority Leader:
United States Senate:
The Honorable Mitch McConnell:
Republican Leader:
United States Senate:
The Honorable Steny Hoyer:
Majority Leader:
House of Representatives:
The Honorable John Boehner:
Minority Leader:
House of Representatives:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate:
The Honorable Dave Obey:
Chairman:
The Honorable Jerry Lewis:
Ranking Member:
Committee on Appropriations:
House of Representatives:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Edolphus Towns:
Chairman:
The Honorable Darrell E. Issa:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
This appendix describes our objectives, scope, and methodology (OSM)
for this fourth of our bimonthly reviews on the Recovery Act. A
detailed description of the criteria used to select the core group of
16 states and the District of Columbia (District) and programs we
reviewed is found in appendix I of our April 2009 Recovery Act
bimonthly report.[Footnote 113]
Objectives and Scope:
The Recovery Act specifies several roles for GAO, including conducting
bimonthly reviews of selected states' and localities' use of funds made
available under the act. As a result, our objectives for this report
were to assess (1) selected states' and localities' uses of and
planning for Recovery Act funds, (2) the approaches taken by the
selected states and localities to ensure accountability for Recovery
Act funds, and (3) states' plans to evaluate the impact of the Recovery
Act funds they have received to date.
Our teams visited the 16 selected states, the District, and a
nonprobability sample of 155 entities (e.g., state and local
governments, local education agencies, and public housing authorities)
during September, October, November, and December 2009.[Footnote 114]
As for our previous Recovery Act reports, our teams met with a variety
of state and local officials from executive-level and program offices.
During discussions with state and local officials, teams used a series
of program review and semistructured interview guides that addressed
state plans for management, tracking, and reporting of Recovery Act
funds and activities. We also reviewed state constitutions, statutes,
legislative proposals, and other state legal materials for this report.
Where attributed, we relied on state officials and other state sources
for description and interpretation of state legal materials. Appendix
III details the states and localities visited by GAO. Criteria used to
select localities within our selected states follow.
States' and Localities' Uses of Recovery Act Funds:
Using criteria described in our earlier bimonthly reports, we selected
the following streams of Recovery Act funding flowing to states and
localities for review during this report: increased Medicaid Federal
Medical Assistance Percentage (FMAP) grant awards; the Federal-Aid
Highway Surface Transportation Program; the Transit Capital Assistance
Program, the State Fiscal Stabilization Fund (SFSF); Title I, Part A of
the Elementary and Secondary Education Act of 1965 (ESEA); Parts B and
C of the Individuals with Disabilities Education Act (IDEA); the Public
Housing Capital Fund; the Weatherization Assistance Program; and the
Emergency Food and Shelter Program. We also reviewed how Recovery Act
funds are being used by states and localities. In addition, we analyzed
www.recovery.gov data on federal spending.
Medicaid Federal Medical Assistance Percentage:
For the increased FMAP grant awards, we obtained increased FMAP grant
and draw-down figures for each state in our sample and the District
from the Centers for Medicare & Medicaid Services (CMS). To examine
Medicaid enrollment, states' efforts to comply with the provisions of
the Recovery Act, and related information, we relied on our Web-based
survey, asking the 16 states and the District to provide new
information as well as to update information they had previously
provided to us. When necessary, we interviewed Medicaid officials from
certain states to clarify survey responses. We also interviewed CMS
officials regarding the agency's oversight of increased FMAP grant
awards and its guidance to states on Recovery Act provisions. To assess
the reliability of increased FMAP draw-down figures, we interviewed CMS
officials on how these data are collected and reported. To establish
the reliability of our Web-based survey data, we pretested the survey
with Medicaid officials in several states and also conducted consistent
follow-up with all sample states to ensure a high response rate. Based
on these steps, we determined that the data provided by CMS and
submitted by states were sufficiently reliable for the purposes of our
engagement.
Federal-Aid Highway Surface Transportation Program:
For highway infrastructure investment, we reviewed status reports and
guidance to the states and discussed these with the U.S. Department of
Transportation (DOT) and Federal Highway Administration (FHWA)
officials. We obtained data from FHWA on obligations, reimbursements,
and types of projects funded with Recovery Act highway infrastructure
funds nationally and for the District and each of the 16 states. From
state DOT officials, we obtained information on the status of projects
and contracts, including the number of projects planned, out for bid,
awarded, and completed. We interviewed officials from Arizona,
California, Georgia, Massachusetts, Mississippi, and New Jersey
regarding the progress of project and highway development in
metropolitan areas. We interviewed officials from Arizona, California,
and Illinois, who developed their own criteria to determine
economically distressed areas to examine how these states calculated
and justified their designations. We obtained data from 10 states and
the District on highway project cost estimates and contract awards and
analyzed these data to determine the savings from awarding contracts
for less than the estimated costs. In all, we reviewed 1,880 contracts
ranging from 12 contracts in the District to 587 in Illinois.
Transit Capital Assistance Program:
For Recovery Act public transit investment, we reviewed information
from California, Colorado, Illinois, Iowa, New York, North Carolina,
and Pennsylvania on the Federal Transit Administration's (FTA) Transit
Capital Assistance Program. We also examined the Fixed Guideway
Infrastructure Investment program in New York and Pennsylvania. We
reviewed status reports and guidance to the states and discussed these
with FTA officials. To determine the current status of transit funding,
we obtained data from FTA on obligations and unobligated balances for
Recovery Act grants nationally and, for each of our selected urbanized
and nonurbanized areas, the numbers and types of projects funded. We
reviewed information from selected urbanized and nonurbanized areas to
include how projects were chosen, how funds were used, and how progress
was reported. To determine how transit agencies and states are ensuring
the accountability of funds and addressing reporting requirements, we
reviewed the guidance each state uses to meet reporting requirements,
including reporting on project status, subcontracts, and estimated jobs
created. We also interviewed selected bus manufacturers on how job
creation figures were calculated for Recovery Act-funded purchases. We
also interviewed FTA about meetings with bus manufacturers to
standardize guidance on job reporting.
SFSF, ESEA Title I, and IDEA:
To obtain national and selected state-level information on how Recovery
Act funds made available by the U.S. Department of Education under
SFSF, ESEA Title I, and IDEA are being used at the local level, we
designed and administered a Web-based survey of local education
agencies (LEA) in the 50 states and the District of Columbia. We
surveyed school district superintendents across the country to learn if
they have received or expect to receive Recovery Act funding and how
these funds are being used. We conducted our survey from August to
October 2009, with a 73 percent final weighted response rate at the
national level. We selected a stratified[Footnote 115] random sample of
2,101 LEAs from the population of 16,028 LEAs included in our sample
frame of data obtained from the Common Core of Data (CCD) in 2006-2007.
In order to make estimates for each of the 16 states and the District
of Columbia, we stratified the sample based on those specific states.
With the exception of the District of Columbia, all of our sample
states had a response rate that exceeded 70 percent, with final
weighted response rates ranging from 71 percent for Iowa to 90 percent
for Georgia.
We took steps to minimize nonsampling errors by pretesting the survey
instrument with officials in 5 LEAs in July and August 2009. Because we
surveyed a sample of LEAs, survey results are estimates of a population
of LEAs and thus are subject to sampling errors that are associated
with samples of this size and type. Our sample is only one of a large
number of samples that we might have drawn. As each sample could have
provided different estimates, we express our confidence in the
precision of our particular sample's results as a 95 percent confidence
interval (e.g., plus or minus 10 percentage points). We excluded 14 of
the sampled LEAs for various reasons--because they were no longer
operating in the 2009-2010 school year, were a duplicate entry, or were
not an LEA--and therefore were considered out of scope. All estimates
produced from the sample and presented in this report are
representative of the in-scope population and have margins of error of
plus or minus 5 percentage points or less for our overall sample and 12
percentage points or less for our 16 state samples, excluding the
District, unless otherwise noted.
To obtain specific examples of how LEAs are using Recovery Act funds,
we visited at least two LEAs in Arizona, California, the District, New
York, and North Carolina and interviewed LEA officials. To learn about
issues related to Recovery Act funds for education, we interviewed
officials in the District and state officials in each of the 16 states
covered by our review. We also interviewed officials at the U.S.
Department of Education (Education) and reviewed relevant laws,
guidance, and communications to the states. Further, we obtained
information from Education about the amount of funds these states have
drawn down from their accounts with Education.
Public Housing Capital Fund:
For Public Housing, we obtained data from HUD's Electronic Line of
Credit Control System on the amount of Recovery Act funds that have
been obligated and drawn down by each housing agency in the country. To
update progress on how housing agencies are using these funds, we
visited 25 of the 47 agencies we previously selected in nine states.
[Footnote 116] At the selected agencies, we interviewed housing
agency officials and conducted site visits of ongoing or planned
Recovery Act projects. We also selected one Capital Fund Recovery
Competition grant in all but one of the nine states and collected
information on the housing agency's plans for those funds. We also
interviewed HUD officials to understand their procedures for monitoring
housing agency use of Recovery Act funds and validating data that
housing agencies reported to FederalReporting.gov.
Weatherization Assistance Program:
For the Weatherization Assistance Program, we reviewed relevant
regulations and federal guidance and interviewed Department of Energy
officials who administer the program at the federal level. In addition,
for this report, we collected updated information from seven of our
selected states and the District on their weatherization programs.
[Footnote 117] We conducted semistructured interviews of officials in
the states' agencies that administer the weatherization program and
with local service providers responsible for weatherization production.
These interviews covered updates on the use of funds, the
implementation of the Davis-Bacon Act, accountability measures, and
impacts of the Recovery Act weatherization program. We also conducted
site visits to interview 20 local providers of weatherization and to
witness weatherization production. We continued to collect data about
each state's total allocation for weatherization under the Recovery
Act, as well as the allocation already provided to the states and the
expenditures to date.
Emergency Food and Shelter Program:
For the Emergency Food and Shelter Program (EFSP), we reviewed relevant
federal laws and regulations, and guidance from the Federal Emergency
Management Agency (FEMA) and the program's National Board, which
administer the program, and interviewed the FEMA official responsible
for managing the program. We also analyzed data on the EFSP Recovery
Act funds awarded to local recipient organizations (LRO) in the 16
states and the District that GAO reviewed, as well as data on the
planned uses of EFSP Recovery Act funds reported by the LROs.
State and Local Budget:
We continued our review of the use of Recovery Act funds for the 16
states and the District, with a particular focus on those jurisdictions
that enacted budgets since our last report. We conducted interviews
with budget officials and reviewed proposed and enacted budgets and
revenue estimates to update our understanding of the use of Recovery
Act funds in the selected states and the District.
To select local governments for our review, we identified localities
representing a range of types of governments (cities and counties),
population sizes, and economic conditions (unemployment rates greater
than or less than the state's overall unemployment rate). We used the
latest unemployment rates and population sizes that were available as
we prepared the draft. We balanced these selection criteria with
logistical considerations, including other scheduled Recovery Act work,
local contacts established during prior reviews, and the geographic
proximity of the local government entities.
The teams visited a total of 44 local government entities, 27 cities,
16 counties, and one local government entity organized as a city and
county, Denver. Due to the small sample size and judgmental nature of
the selection, GAO's findings are not generalizable to all local
governments.
To gain an understanding of local governments' use of Recovery Act
funds we met with the chief executives, recovery coordinators,
auditors, and finance officials at the selected local governments. We
also met with associations representing local governments to understand
their perspectives on the impact of the Recovery Act on local
governments and reviewed reports and analysis regarding the fiscal
conditions of local governments.
The list of local governments selected in each state is found in
appendix III.
Assessing Safeguards and Internal Controls:
To determine how states are planning for the recipient reporting
requirements of the Recovery Act, we asked cognizant officials to
describe the activities undertaken related to recipient reporting,
including guidance that has been issued to state agencies and
subrecipients, monitoring plans, and policies and procedures that have
been developed for recipient reporting. We also reviewed relevant
recipient reporting guidance issued by the Office of Management and
Budget (OMB). For audit work related to Single Audits, we reviewed
OMB's guidance and the scope and objectives for the Single Audit
Internal Control Project. We also discussed with relevant OMB officials
their efforts toward implementing the project. We reviewed and analyzed
federal agency financial and activity reports to compare obligations
and outlays by states for programs included in the OMB project to
obligations and outlays attributable to states for all Recovery Act
programs as of October 23, 2009. We obtained this data from
www.Recovery.gov. In addition, we discussed with OMB officials OMB's
progress toward addressing GAO recommendations related to Single Audits
our in previous Recovery Act reports.
Data and Data Reliability:
We collected funding data from www.recovery.gov and federal agencies
administering Recovery Act programs for the purpose of providing
background information. We used funding data from www.recovery.gov--
which is overseen by the Recovery Accountability and Transparency
Board--because it is the official source for Recovery Act spending.
Based on our limited examination of this information thus far, we
consider these data sufficiently reliable with attribution to official
sources for the purposes of providing background information on
Recovery Act funding for this report.[Footnote 118] Our sample of
states, localities, and entities has been purposefully selected and the
results of our reviews are not generalizable to any population of
states, localities, or entities.
We conducted this performance audit from September 18, 2009, to
December 4, 2009, in accordance with generally accepted government
auditing standards. Those standards require that we plan and perform
the audit to obtain sufficient, appropriate evidence to provide a
reasonable basis for our findings and conclusions based on our audit
objectives. We believe that the evidence obtained provides a reasonable
basis for our findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Program Descriptions:
Following are descriptions of selected grant programs discussed in this
report.
Figure 26: Selected Grant Programs and Their Administering Federal
Agency or Office:
[Refer to PDF for image: table]
Federal agency: Department of Agriculture;
Agency office: Food and Nutrition Service;
Grant program or programs administered:
* Supplemental Nutrition Assistance Program.
Federal agency: Department of Agriculture;
Agency office: Forest Service;
Grant program or programs administered:
* Wildland Fire Management Program.
Federal agency: Department of Commerce;
Agency office:National Telecommunications and Information
Administration;
Grant program or programs administered:
* Broadband Technology Opportunities Program/State Broadband Data and
Development Program.
Federal agency: Department of Education;
Agency office: Office of Elementary and Secondary Education;
Grant program or programs administered:
* Elementary and Secondary Education Act Title I-A grants;
* State Fiscal Stabilization Fund.
Federal agency: Department of Education;
Agency office: Office of Special Education and Rehabilitative Services;
Grant program or programs administered:
* Individuals with Disabilities Education Act Part B and C grants.
Federal agency: Department of Energy;
Agency office: Office of Energy Efficiency and Renewable Energy;
Grant program or programs administered:
* Clean Cities program;
* Energy Efficiency and Conservation Block Grants;
* Weatherization Assistance Program.
Federal agency: Department of Health and Human Services;
Agency office: Administration for Children and Families;
Grant program or programs administered:
* Child Care and Development Block Grants;
* Community Services Block Grants;
* Head Start/Early Start;
* Recovery Act Impact on Child Support Incentives;
* Title IV-E Adoption Assistance and Foster Care Programs.
Federal agency: Department of Health and Human Services;
Agency office: The Centers for Medicare & Medicaid Services;
Grant program or programs administered:
* Medicaid Federal Medical Assistance Percentage.
Federal agency: Department of Health and Human Services;
Agency office: Health Resources and Services Administration;
Grant program or programs administered:
* Capital Improvement Program;
* Increased Demand for Services.
Federal agency: Department of Homeland Security;
Agency office: Federal Emergency Management Agency;
Grant program or programs administered:
* Emergency Food and Shelter Program;
* Recovery Act Assistance to Firefighters Fire Station Construction
Grants.
Federal agency: Department of Housing and Urban Development;
Agency office: Office of Community Planning and Development;
Grant program or programs administered:
* Community Development Block Grants;
* Homelessness Prevention and Rapid Re-Housing Program;
* Neighborhood Stabilization Program 2.
Federal agency: Department of Housing and Urban Development;
Agency office: Office of Public and Indian Housing;
Grant program or programs administered:
* Public Housing Capital Fund.
Federal agency: Department of Justice;
Agency office: Office of Community Oriented Policing Services;
Grant program or programs administered:
* Community Oriented Policing Services Hiring Recovery Program.
Federal agency: Department of Justice;
Agency office: Office of Justice Programs;
Grant program or programs administered:
* Assistance to Rural Law Enforcement to Combat Crime and Drugs
Program;
* Edward Byrne Memorial Justice Assistance Grant Program;
* Internet Crimes Against Children Initiatives.
Federal agency: Department of Justice;
Agency office: Office on Violence Against Women;
Grant program or programs administered:
* Services*Training*Officers*Prosecutors Violence Against Women Formula
Grants.
Federal agency: Department of Labor;
Agency office: Employment and Training Administration;
Grant program or programs administered:
* Senior Community Service Employment Program;
* Workforce Investment Act Title I-B Grants.
Federal agency: Department of Transportation;
Agency office: Federal Aviation Administration;
Grant program or programs administered:
* Airport Improvement Program.
Federal agency: Department of Transportation;
Agency office: Federal Highway Administration;
Grant program or programs administered:
* Federal-Aid Highway Surface Transportation Program.
Federal agency: Department of Transportation;
Agency office: Federal Transit Administration;
Grant program or programs administered:
* Fixed Guideway Infrastructure Investment Program;
* Transit Capital Assistance Program;
* Transit Investments for Greenhouse Gas and Energy Reduction Grant
Program.
Federal agency: Department of Transportation;
Agency office: Office of the Secretary;
Grant program or programs administered:
* Transportation Investment Generating Economic Recovery Discretionary
Grants.
Federal agency: Environmental Protection Agency;
Agency office: Office of Air and Radiation;
Grant program or programs administered:
* Diesel Emission Reduction Act Grants.
Federal agency: Environmental Protection Agency;
Agency office: Office of Solid Waste and Emergency Response;
Grant program or programs administered:
* Brownfields Program.
Federal agency: Environmental Protection Agency;
Agency office: Office of Water;
Grant program or programs administered:
* Clean Water State Revolving Fund;
* Drinking Water State Revolving Fund.
Federal agency: National Endowment for the Arts;
Grant program or programs administered:
* National Endowment for the Arts Recovery Act grants.
Source: GAO analysis.
[End of figure]
Medicaid Federal Medical Assistance Percentage:
Medicaid is a joint federal-state program that finances health care for
certain categories of low-income individuals, including children,
families, persons with disabilities, and persons who are elderly. The
federal government matches state spending for Medicaid services
according to a formula based on each state's per capita income in
relation to the national average per capita income. The Centers for
Medicare & Medicaid Services, within the Department of Health and Human
Services, approves state Medicaid plans, and the amount of federal
assistance states receive for Medicaid service expenditures is known as
the Federal Medical Assistance Percentage (FMAP). The Recovery Act's
temporary increase in FMAP funding will provide the states with
approximately $87 billion in assistance.
Highway Infrastructure Investment Program:
The Recovery Act provides funding to states for restoration, repair,
and construction of highways and other activities allowed under the
Federal Highway Administration's Federal-Aid Highway Surface
Transportation Program and for other eligible surface transportation
projects. The Recovery Act requires that 30 percent of these funds be
suballocated, primarily based on population, for metropolitan,
regional, and local use. Highway funds are apportioned to states
through federal-aid highway program mechanisms, and states must follow
existing program requirements. While the maximum federal fund share of
highway infrastructure investment projects under the existing federal-
aid highway program is generally 80 percent, under the Recovery Act, it
is 100 percent.
Funds appropriated for highway infrastructure spending must be used in
accordance with Recovery Act requirements. States are required to
ensure that all apportioned Recovery Act funds--including suballocated
funds--are obligated[Footnote 119] within 1 year. The Secretary of
Transportation is to withdraw and redistribute to eligible states any
amount that is not obligated within these time frames.[Footnote 120]
Additionally, the governor of each state must certify that the state
will maintain its level of spending for the types of transportation
projects funded by the Recovery Act it planned to spend the day the
Recovery Act was enacted. As part of this certification, the governor
of each state is required to identify the amount of funds the state
plans to expend from state sources from February 17, 2009, through
September 30, 2010.[Footnote 121]
Public Transit Program:
The Recovery Act appropriated $8.4 billion to fund public transit
throughout the country through existing Federal Transit Administration
(FTA) grant programs, including the Transit Capital Assistance Program,
and the Fixed Guideway Infrastructure Investment program. Under the
Transit Capital Assistance Program's formula grant program, Recovery
Act funds were apportioned to large and medium urbanized areas--which
in some cases include a metropolitan area that spans multiple states--
throughout the country according to existing program formulas. Recovery
Act funds were also apportioned to states for small urbanized areas and
nonurbanized areas under the Transit Capital Assistance Program's
formula grant programs using the program's existing formula. Transit
Capital Assistance Program funds may be used for such activities as
vehicle replacements, facilities renovation or construction, preventive
maintenance, and paratransit services. Recovery Act funds from the
Fixed Guideway Infrastructure Investment program[Footnote 122] were
apportioned by formula directly to qualifying urbanized areas, and
funds may be used for any capital projects to maintain, modernize, or
improve fixed guideway systems.[Footnote 123] As they work through the
state and regional transportation planning process, designated
recipients of the apportioned funds--typically public transit agencies
and metropolitan planning organizations (MPO)--develop a list of
transit projects that project sponsors (typically transit agencies)
submit to FTA for approval.[Footnote 124]
Funds appropriated for the Transit Capital Assistance Program and the
Fixed Guideway Infrastructure Investment Program must be used in
accordance with Recovery Act requirements. States are required to
ensure that all apportioned Recovery Act funds are obligated[Footnote
125] within 1 year. The Secretary of Transportation is to withdraw and
redistribute to each state or urbanized area any amount that is not
obligated within these time frames.[Footnote 126] Additionally,
governors must certify that the state will maintain the level of state
spending for the types of transportation projects funded by the
Recovery Act it planned to spend the day the Recovery Act was enacted.
As part of this certification, the governor of each state is required
to identify the amount of funds the state plans to expend from state
sources from February 17, 2009, through September 30, 2010.[Footnote
127]
Education:
State Fiscal Stabilization Fund:
The State Fiscal Stabilization Fund (SFSF), administered by the Office
of Elementary and Secondary Education of the Department of Education,
included approximately $48.6 billion to award to states by formula and
up to $5 billion to award to states as competitive grants. The Recovery
Act created the SFSF in part to help state and local governments
stabilize their budgets by minimizing budgetary cuts in education and
other essential government services, such as public safety.
Stabilization funds for education distributed under the Recovery Act
must first be used to alleviate shortfalls in state support for
education to Local Education Agencies (LEA) and public institutions of
higher education (IHE). States must use 81.8 percent of their SFSF
formula grant funds to support education (these funds are referred to
as education stabilization funds) and must use the remaining 18.2
percent for public safety and other government services, which may
include education (these funds are referred to as government services
funds). For the initial award of SFSF formula grant funds, Education
made available at least 67 percent of the total amount allocated to
each state,[Footnote 128] but states had to submit an application to
Education to receive the funds. The application required each state to
provide several assurances, including that the state will meet
maintenance-of-effort requirements (or will be able to comply with the
relevant waiver provisions) and that it will implement strategies to
advance four core areas of education reform: (1) increase teacher
effectiveness and address inequities in the distribution of highly
qualified teachers; (2) establish a pre-K-through-college data system
to track student progress and foster improvement, (3) make progress
toward rigorous college-and career-ready standards and high-quality
assessments that are valid and reliable for all students, including
students with limited English proficiency and students with
disabilities; and (4) provide targeted, intensive support and effective
interventions to turn around schools identified for corrective action
or restructuring.[Footnote 129] In addition, states were required to
make assurances concerning accountability, transparency, reporting, and
compliance with certain federal laws and regulations. After maintaining
state support for education at fiscal year 2006 levels, states must use
education stabilization funds to restore state funding to the greater
of fiscal year 2008 or 2009 levels for state support to LEAs and public
IHEs. When distributing these funds to LEAs, states must use their
primary education funding formula, but they can determine how to
allocate funds to public IHEs. In general, LEAs have broad discretion
in how they can use education stabilization funds, but states have some
ability to direct IHEs in how to use these funds.
ESEA Title I, Part A:
The Recovery Act provides $10 billion to help LEAs educate
disadvantaged youth by making additional funds available beyond those
regularly allocated through Title I, Part A of the Elementary and
Secondary Education Act of 1965,[Footnote 130] as amended. Title I
funding is administered by the Office of Elementary and Secondary
Education within the Department of Education. The Recovery Act requires
these additional funds to be distributed through states to LEAs using
existing federal funding formulas, which target funds based on such
factors as high concentrations of students from families living in
poverty. In using the funds, LEAs are required to comply with
applicable statutory and regulatory requirements and must obligate 85
percent of the funds by September 30, 2010.[Footnote 131] Education is
advising LEAs to use the funds in ways that will build the agencies'
long-term capacity to serve disadvantaged youth, such as through
providing professional development to teachers.
IDEA, Parts B and C:
The Recovery Act provided supplemental funding for Parts B and C of the
Individuals with Disabilities Education Act (IDEA), as amended, the
major federal statute that supports early intervention and special
education and related services for children, and youth with
disabilities. Part B provides funds to ensure that preschool and school-
aged children with disabilities have access to a free and appropriate
public education and is divided into two separate grant programs --Part
B grants to states (for school-age children) and Part B preschool
grants. The IDEA Part B grants are administered by the Office of
Special Education and Rehabilitative Services. Part C funds programs
that provide early intervention and related services for infants and
toddlers with disabilities--or at risk of developing a disability--and
their families.
Public Housing Capital Fund:
The Public Housing Capital Fund provides formula-based grant funds
directly to public housing agencies to improve the physical condition
of their properties; to develop, finance, and modernize public housing
developments; and to improve management. Under the Recovery Act, the
Office of Public and Indian Housing within the U.S. Department of
Housing and Urban Development (HUD) allocated nearly $3 billion through
the Public Housing Capital Fund to public housing agencies using the
same formula for amounts made available in fiscal year 2008 and
obligated these funds to housing agencies in March 2009.
HUD was also required to award nearly $1 billion to public housing
agencies based on competition for priority investments, including
investments that leverage private sector funding or financing for
renovations and energy conservation retrofitting. In September 2009,
HUD awarded competitive grants for the creation of energy-efficient
communities, gap financing for projects stalled due to financing
issues, public housing transformation, and improvements addressing the
needs of the elderly or persons with disabilities.
Weatherization Assistance Program:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the Department of Energy (DOE) is
distributing to each of the states, the District, and seven territories
and Indian tribes, to be spent over a 3-year period. The program,
administered by the Office of Energy Efficiency and Renewable Energy
within DOE, enables low-income families to reduce their utility bills
by making long-term energy-efficiency improvements to their homes by,
for example, installing insulation, sealing leaks, and modernizing
heating equipment, air circulation fans, and air conditioning
equipment. Over the past 32 years, the Weatherization Assistance
Program has assisted more than 6.2 million low-income families. By
reducing the energy bills of low-income families, the program allows
these households to spend their money on other needs, according to DOE.
The Recovery Act appropriation represents a significant increase for a
program that has received about $225 million per year in recent years.
DOE has approved the weatherization plans of the 16 states and the
District that are in our review and has provided at least half of the
funds to those areas.
Emergency Food and Shelter Program:
The Emergency Food and Shelter Program (EFSP), which is administered by
the Federal Emergency Management Agency (FEMA) within the Department of
Homeland Security (DHS), was authorized in July 1987 by the Stewart B.
McKinney Homeless Assistance Act to provide food, shelter and
supportive services to the homeless.[Footnote 132] The program is
governed by a National Board composed of a representative from FEMA and
six statutorily-designated national nonprofit organizations.[Footnote
133] Since its first appropriation in fiscal year 1983, EFSP has
awarded over $3.4 billion in federal aid to more than 12,000 local
private, non-profit, and government human service entities in more than
2,500 communities nationwide.
State and Local Budget:
The following grant programs were mentioned in the state and local
budget section of this report.
Airport Improvement Program:
Within the Department of Transportation, the Federal Aviation
Administration's Airport Improvement Program provides formula and
discretionary grants for the planning and development of public-use
airports. The Recovery Act provides $1.1 billion for discretionary
Grant-in-Aid for Airports under this program with priority given to
projects that can be completed within 2 years. The Recovery Act
requires that the funds must supplement, not supplant, planned
expenditures from airport-generated revenues or from other state and
local sources for airport development activities. The Recovery Act
provides $1.1 billion for this program.
Assistance to Rural Law Enforcement to Combat Crime and Drugs Program:
The Recovery Act Assistance to Rural Law Enforcement to Combat Crime
and Drugs Program is administered by the Bureau of Justice Assistance
(BJA), a component of the Office of Justice Programs, U.S. Department
of Justice. The purpose of this program is to help rural states and
rural areas prevent and combat crime, especially drug-related crime,
and provides for national support efforts, including training and
technical assistance programs strategically targeted to address rural
needs. The Recovery Act provides $125 million for this program, and BJA
has made 212 awards.
Broadband Technology Opportunities Program/State Broadband Data and
Development Program:
The Department of Commerce's National Telecommunications and
Information Administration (NTIA) administers the Recovery Act's
Broadband Technology Opportunities Program. This program was
appropriated $4.7 billion, including $350 million for the purposes of
developing and maintaining a broadband inventory map. To accomplish
this, NTIA has developed the State Broadband Data and Development Grant
Program, a competitive, merit-based matching grant program to fund
projects that collect comprehensive and accurate state-level broadband
mapping data, develop state-level broadband maps, aid in the
development and maintenance of a national broadband map, and fund
statewide initiatives directed at broadband planning.
Brownfields Program:
The Recovery Act provides $100 million to the Brownfields Program,
administered by the Office of Solid Waste and Emergency Response within
the Environmental Protection Agency, for cleanup, revitalization, and
sustainable reuse of contaminated properties. The funds will be awarded
to eligible entities through job training, assessment, revolving loan
fund, and cleanup grants.
Capital Improvement Program:
The Department of Health and Human Services' Health Resources and
Services Administration has allocated $862.5 million in Recovery Act
funds for Capital Improvement Program grants to health centers to
support the construction, repair, and renovation of more than 1,500
health center sites nationwide, including purchasing health information
technology and expanding the use of electronic health records.
Child Care and Development Block Grants:
Administered by the Administration for Children and Families within the
Department of Health and Human Services, Child Care and Development
Block Grants, one of the funding streams comprising the Child Care and
Development Fund, are provided to states, according to a formula, to
assist low-income families in obtaining child care, so that parents can
work or participate in education or training activities. The Recovery
Act provides $1.9 billion in supplemental funding for these grants.
Clean Water State Revolving Fund:
The Recovery Act provides $4 billion for the Clean Water State
Revolving Fund, administered by the Office of Water within the
Environmental Protection Agency, to fund municipal wastewater
infrastructure projects. The Recovery Act requires states to use at
least 50 percent of the amount of their capitalization grant to provide
additional subsidization of loans to eligible recipients. In addition,
to the extent there are sufficient project applications, at least 20
percent of the appropriated funds must be designated for green
infrastructure, water efficiency improvements, or other environmentally
innovative projects.
Clean Cities program:
The Department of Energy's Clean Cities program, administered by the
Office of Energy Efficiency and Renewable Energy, is a government-
industry partnership that works to reduce America's petroleum
consumption in the transportation sector. The Department of Energy is
providing nearly $300 million in Recovery Act funds for projects under
the Clean Cities program, which provide a range of energy-efficient and
advanced vehicle technologies, such as hybrids, electric vehicles, plug-
in electric hybrids, hydraulic hybrids and compressed natural gas
vehicles, helping reduce petroleum consumption across the United
States. The program also supports refueling infrastructure for various
alternative fuel vehicles, as well as public education and training
initiatives, to further the program's goal of reducing the national
demand for petroleum.
Community Development Block Grants:
The Community Development Block Grant (CDBG) program, administered by
the Office of Community Planning and Development within the Department
of Housing and Urban Development, enables state and local governments
to undertake a wide range of activities intended to create suitable
living environments, provide affordable housing, and create economic
opportunities, primarily for persons of low and moderate income. Most
local governments use this investment to rehabilitate affordable
housing and improve key public facilities. The Recovery Act includes $1
billion for the CDBG program.
Community Services Block Grants:
Community Services Block Grants (CSBG), administered by the
Administration for Children and Families within the Department of
Health and Human Services (HHS), provide federal funds to states,
territories, and tribes for distribution to local agencies to support a
wide range of community-based activities to reduce poverty. The
Recovery Act appropriated $1 billion for CSBG to become available
immediately.
Community Oriented Policing Services (COPS) Hiring Recovery Program:
The COPS Hiring Recovery Program (CHRP), administered by the Office of
Community Oriented Policing Services within the U.S. Department of
Justice, provides competitive grant funds directly to law enforcement
agencies for the purpose of hiring or rehiring career law enforcement
officers and increasing their community policing capacity and crime-
prevention efforts. CHRP grants provide 100 percent funding for 3 years
for approved entry-level salaries and benefits for newly hired, full-
time sworn officer positions or for rehired officers who have been laid
off, or are scheduled to be laid off on a future date, as a result of
local budget cuts.
Diesel Emission Reduction Act Grants:
The program objective of the Diesel Emission Reduction Act Grants,
administered by the Office of Air and Radiation in conjunction with the
Office of Grants and Debarment, within the U.S. Environmental
Protection Agency (EPA), is to reduce diesel emissions. EPA will award
grants to address the emissions of in-use diesel engines by promoting a
variety of cost-effective emission reduction strategies, including
switching to cleaner fuels, retrofitting, repowering or replacing
eligible vehicles and equipment, and idle reduction strategies. The
Recovery Act appropriated $300 million for the Diesel Emission
Reduction Act grants. In addition, the funds appropriated through the
Recovery Act for the program are not subject to the State Grant and
Loan Program Matching Incentive provisions of the Energy Policy Act of
2005.
Drinking Water State Revolving Fund:
The Drinking Water State Revolving Fund program was established under
the Safe Drinking Water Act (SDWA) Amendments of 1996, which authorizes
the Environmental Protection Agency (EPA) to award capitalization
grants to states, which in turn are authorized to provide low-cost
loans and other types of assistance to public water systems to finance
the costs of infrastructure projects needed to achieve or maintain
compliance with SDWA requirements. The Recovery Act provides $2 billion
in funding for this program, which is administered by the Office of
Water within EPA.
Edward Byrne Memorial Justice Assistance Grant Program:
The Edward Byrne Memorial Justice Assistance Grant (JAG) Program within
the Department of Justice's Bureau of Justice Assistance provides
federal grants to state and local governments for law enforcement and
other criminal justice activities, such as crime prevention and
domestic violence programs, corrections, treatment, justice information
sharing initiatives, and victims' services. JAG funds are allocated
based on a statutory formula determined by population and violent crime
statistics, in combination with a minimum allocation to ensure that
each state and territory receives some funding.
Energy Efficiency and Conservation Block Grants:
The Energy Efficiency and Conservation Block Grants (EECBG),
administered by the Office of Energy Efficiency and Renewable Energy
within the Department of Energy, provides funds through competitive and
formula grants to units of local and state government and Indian tribes
to develop and implement projects to improve energy efficiency and
reduce energy use and fossil fuel emissions in their communities. The
Recovery Act includes $3.2 billion for the EECBG. Of that total, $400
million is to be awarded on a competitive basis to grant applicants.
Title IV-E Adoption Assistance and Foster Care Programs:
Administered by the Administration for Children and Families within the
Department of Health and Human Services, the Foster Care Program helps
states to provide safe and stable out-of-home care for children until
the children are safely returned home, placed permanently with adoptive
families or placed in other planned arrangements for permanency. The
Adoption Assistance Program provides funds to states to facilitate the
timely placement of children, whose special needs or circumstances
would otherwise make placement difficult, with adoptive families.
Federal Title IV-E funds are paid to reimburse states for their
maintenance payments using the states' respective Federal Medical
Assistance Percentage (FMAP) rates.[Footnote 134] Under the Recovery
Act, an estimated additional $806 million will be provided to states to
increase the federal match for state maintenance payments for foster
care, adoption assistance, and guardianship assistance.
Head Start/Early Head Start:
The Head Start program, administered by the Office of Head Start of the
Administration for Children and Families within the Department of
Health and Human Services, provides comprehensive early childhood
development services to low-income children, including educational,
health, nutritional, social, and other services, intended to promote
the school readiness of low-income children. Federal Head Start funds
are provided directly to local grantees, rather than through states.
The Recovery Act provided an additional $2.1 billion in funding for
Head Start, including $1.1 billion directed for the expansion of Early
Head Start programs. The Early Head Start program provides family-
centered services to low-income families with very young children
designed to promote the development of the children, and to enable
their parents to fulfill their roles as parents and to move toward self-
sufficiency.
Homelessness Prevention and Rapid Re-Housing Program:
The Homelessness Prevention and Rapid Re-Housing Program, administered
by the Office of Community Planning and Development within the
Department of Housing and Urban Development, awards formula grants to
states and localities to prevent homelessness and procure shelter for
those who have become homeless. Funding for this program is being
distributed based on the formula used for the Emergency Shelter Grants
program. According to the Recovery Act, program funds should be used
for short-term or medium-term rental assistance;
housing relocation and stabilization services, including housing
search, mediation or outreach to property owners, credit repair,
security or utility deposits, utility payments, and rental assistance
for management;
or appropriate activities for homeless prevention and rapid rehousing
of persons who have become homeless. The Recovery Act includes $1.5
billion for this program.
Increased Demand for Services:
The Department of Health and Human Services' Health Resources and
Services Administration (HRSA) has allocated Recovery Act funds for
Increased Demand for Services (IDS) grants to health centers to
increase health center staffing, extend hours of operations, and expand
existing services. The Recovery Act provided $500 million for health
center operations. HRSA has allocated $343 million for IDS grants to
health centers.[Footnote 135]
Internet Crimes Against Children Initiatives:
Internet Crimes Against Children Initiatives (ICAC), administered by
the Department of Justice, Office of Justice Programs' (OJP) Office of
Juvenile Justice and Delinquency Prevention (OJJDP), seeks to maintain
and expand state and regional ICAC task forces to address technology-
facilitated child exploitation. This program provides funding to states
and localities for salaries and employment costs of law enforcement
officers, prosecutors, forensic analysts, and other related
professionals. The Recovery Act appropriated $50 million for ICAC.
National Endowment for the Arts Recovery Act grants:
The Recovery Act provides $50 million to be distributed in direct
grants by the National Endowment for the Arts to fund arts projects and
activities that preserve jobs in the nonprofit arts sector threatened
by declines in philanthropic and other support during the current
economic downturn.
Neighborhood Stabilization Program 2:
The Neighborhood Stabilization Program (NSP), administered by the
Office of Community Planning and Development within the Department of
Housing and Urban Development, provides assistance for the acquisition
and rehabilitation of abandoned or foreclosed homes and residential
properties, among other activities, so that such properties may be
returned to productive use. Congress appropriated $2 billion in NSP2
funds in the Recovery Act for competitive awards to states, local
governments, and nonprofit organizations. NSP is considered to be a
component of the Community Development Block Grant (CDBG) program and
basic CDBG requirements govern NSP.
Recovery Act Assistance to Firefighters Fire Station Construction
Grants:
The Recovery Act Assistance to Firefighters Fire Station Construction
Grants, also known as fire grants or the FIRE Act grant program, is
administered by the Department of Homeland Security, Federal Emergency
Management Agency (FEMA), Assistance to Firefighters Program Office.
The program provides federal grants directly to fire departments on a
competitive basis to build or modify existing non-federal fire stations
in order for departments to enhance their response capability and
protect the communities they serve from fire and fire-related hazards.
The Recovery Act includes $210 million for this program and provides
that no grant shall exceed $15 million.
Recovery Act Impact on Child Support Incentives:
Under title IV-D of the Social Security Act, the Administration for
Children and Families (ACF), within the Department of Health and Human
Services, administers matching grants to states to carry out their
child support enforcement programs, which enhance the well-being of
children by identifying parents, establishing support obligations, and
monitoring and enforcing those obligations. Furthermore, ACF makes
additional incentive payments to states based on their child support
enforcement programs meeting certain performance goals. These
activities are appropriated annually and the Recovery Act does not
appropriate funds for either of them. However, the Recovery Act
temporarily provides for incentive payments expended by states for
child support enforcement to count as state funds eligible for the
matching grants. This change is effective October 1, 2008, through
September 30, 2010.
Transportation Investment Generating Economic Recovery Discretionary
Grants:
Administered by the Department of Transportation's Office of the
Secretary, the Recovery Act provides $1.5 billion in competitive
grants, generally between $20 million and $300 million, to state and
local governments, and transit agencies. These grants are for capital
investments in surface transportation infrastructure projects that will
have a significant impact on the nation, a metropolitan area, or a
region. Projects eligible for funding provided under this program
include, but are not limited to, highway or bridge projects, public
transportation projects, passenger and freight rail transportation
projects, and port infrastructure investments.
Transit Investments for Greenhouse Gas and Energy Reduction Grant
Program:
The Transit Investments for Greenhouse Gas and Energy Reduction
(TIGGER) Grant program, administered by the Federal Transit
Administration within the Department of Transportation, is a
discretionary program to support transit capital projects that result
in greenhouse gas reductions or reduced energy use. The Recovery Act
provides $100 million for the TIGGER program, and each submitted
proposal must request a minimum of $2 million.
Senior Community Service Employment Program:
The Senior Community Service Employment Program (SCSEP), administered
by the Employment and Training Administration within the Department of
Labor, promotes useful part-time opportunities in community service
activities for unemployed low-income persons who are 55 years or older
and who have poor employment prospects. The Recovery Act provides $120
million for SCSEP.
Services*Training*Officers*Prosecutors (STOP) Violence Against Women
Formula Grants Program:
Under the STOP Program, the Office on Violence Against Women within the
Department of Justice, has awarded over $139 million in Recovery Act
funds to promote a coordinated, multidisciplinary approach to enhance
services and advocacy to victims, improve the criminal justice system's
response, and promote effective law enforcement, prosecution, and
judicial strategies to address domestic violence, dating violence,
sexual assault, and stalking.
Supplemental Nutrition Assistance Program (formerly the Food Stamp
Program):
The Supplemental Nutrition Assistance Program (SNAP), administered by
the Food and Nutrition Service within the Department of Agriculture,
serves more than 35 million people nationwide each month. SNAP's goal
is to help low-income people and families buy the food they need for
good health. The Recovery Act provides for a monthly increase in
benefits for the program's recipients. The increases in benefits under
the Recovery Act are estimated to total $20 billion over the next 5
years.
Wildland Fire Management Program:
The Department of Agriculture's Forest Service administers the Wildland
Fire Management Program funding for projects on federal, state, and
private land. The goals of these projects include ecosystem
restoration, research, and rehabilitation;
forest health and invasive species protection;
and hazardous fuels reduction. The Recovery Act provided $500 million
for the Wildland Fire Management program.
Workforce Investment Act Title I-B Grants:
The Workforce Investment Act of 1998 (WIA) programs, administered
primarily by the Employment and Training Administration within the
Department of Labor, provide job training and related services to
unemployed and underemployed individuals. The Recovery Act provides an
additional $2.95 billion in funding for state formula grants for Youth,
Adult, and Dislocated Worker Employment and Training Activities under
Title I-B of WIA. These grants are allocated to states, which in turn
allocate funds to local entities. The adult program provides training
and related services to individuals ages 18 and older, the youth
program provides training and related services to low-income youth ages
14 to 21, and dislocated worker funds provide training and related
services to individuals who have lost their jobs and are unlikely to
return to those jobs or similar jobs in the same industry.
[End of section]
Appendix III: Local Entities Visited by GAO in Selected States and the
District of Columbia:
Table 13: Highway Entities Visited by GAO:
Arizona:
City/county: Phoenix;
Entity: Arizona Department of Transportation.
City/county: Phoenix;
Entity: Maricopa Association of Governments.
City/county: Prescott;
Entity: Northern Arizona Council of Governments.
California:
City/county: Burlingame;
Entity: City of Burlingame.
City/county: Sacramento;
Entity: California Department of Transportation (Caltrans).
District of Columbia:
City/county: Washington;
Entity: District Department of Transportation.
Florida:
City/county: Alachua;
Entity: Alachua County.
City/county: Clay;
Entity: Clay County.
City/county: Duval;
Entity: Duval County.
City/county: Union;
Entity: Union County.
Illinois:
City/county: Springfield;
Entity: Illinois Department of Transportation.
City/county: Springfield;
Entity: Federal Highway Administration - Illinois Division Office.
Mississippi:
City/county: Attala County;
Entity: State Aid Road Construction.
City/county: Bolivar County;
Entity: Mississippi Department of Transportation.
New Jersey:
City/county: Trenton;
Entity: New Jersey DOT.
New York:
City/county: New York City;
Entity: New York City Department of Transportation.
Texas:
City/county: Plano;
Entity: City of Plano.
Source: GAO.
Note: Total number of highway entities visited by GAO is 17.
[End of table]
Table 14: Transit Entities Visited by GAO:
California:
City/county: Oakland;
Entity: Metropolitan Transportation Commission.
City/county: San Diego;
Entity: San Diego Association of Governments.
City/county: San Francisco;
Entity: San Francisco Municipal Transportation Agency.
Colorado:
City/county: Denver;
Entity: Regional Transportation District.
City/county: Fort Collins;
Entity: Transfort.
Georgia:
City/county: Atlanta;
Entity: Metropolitan Atlanta Rapid Transit Authority (MARTA).
City/county: Lawrenceville;
Entity: Gwinnett County Transit.
Iowa:
City/county: Ames;
Entity: Ames Transit Agency.
City/county: Atlantic;
Entity: Southwest Iowa Transit Agency.
City/county: Des Moines;
Entity: Des Moines Area Regional Transit Authority.
City/county: Fort Dodge;
Entity: Mid-Iowa Development Association.
Illinois:
City/county: Arlington Heights;
Entity: Pace, the Suburban Bus Division of the Regional Transportation
Authority.
City/county: Chicago;
Entity: Chicago Transit Authority.
New Jersey:
City/county: Newark;
Entity: New Jersey Transit.
New York:
City/county: Buffalo;
Entity: Niagara Frontier Transportation Authority.
City/county: Glens Falls;
Entity: Greater Glens Falls Transit.
City/county: New York City;
Entity: Metropolitan Transportation Authority.
North Carolina:
City/county: Boone;
Entity: AppalCART.
City/county: Charlotte;
Entity: Charlotte Area Transit System.
City/county: Raleigh;
Entity: North Carolina Department of Transportation Public
Transportation Division.
Pennsylvania:
City/county: Allentown;
Entity: Lehigh and Northampton Transportation Authority (LANTA).
City/county: Allentown;
Entity: Lehigh Valley Planning Commission (LVPC).
City/county: Harrisburg;
Entity: Pennsylvania Department of Transportation Bureau of Public
Transportation.
City/county: Philadelphia;
Entity: Southeastern Pennsylvania Transportation Authority (SEPTA).
City/county: Pittsburgh;
Entity: Port Authority of Allegheny County.
Source: GAO.
Note: Total number of transit entities visited by GAO is 25.
[End of table]
Table 15: Educational Entities Visited by GAO:
Arizona:
City: Arlington;
Name: Arlington Elementary District.
City: Buckeye;
Name: Buckeye Elementary District.
City: Congress;
Name: Congress Elementary District.
City: Cornville;
Name: Desert Star Community School, Inc.
City: Prescott;
Name: Yavapai Community College District.
City: Tempe;
Name: Maricopa County Community College District.
City: Tonapah;
Name: Saddle Mountain Unified School District.
California:
City: Caruthers;
Name: Alvina Elementary Charter School.
City: Los Angeles;
Name: Los Angeles Unified School District.
District of Columbia:
City: Washington;
Name: District of Columbia Public Schools.
City: Washington;
Name: Friendship Public Charter School.
City: Washington;
Name: William E. Doar, Jr. Public Charter School.
Illinois:
City: Glenview;
Name: Glenview School District 34.
City: Springfield;
Name: Illinois State Board of Education.
City: Springfield;
Name: Springfield School District 186.
New York:
City: Jasper;
Name: Jasper-Troupsburg Central School District.
City: New York;
Name: New York City Department of Education.
North Carolina:
City: Charlotte;
Name: Charlotte-Mecklenburg Schools.
City: Weldon;
Name: Weldon City Schools.
Source: GAO.
Note: Total number of educational entities visited by GAO is 19.
[End of table]
Table 16: Housing Entities Visited by GAO:
Arizona:
City/county: Glendale;
Entity: City of Glendale Community Housing Division.
City/county: Phoenix;
Entity: City of Phoenix Housing Department.
City/county: Phoenix;
Entity: Housing Authority of Maricopa County.
City/county: Pinal;
Entity: Pinal County Housing Department.
City/county: Tucson;
Entity: City of Tucson Department of Housing and Community Development.
Colorado:
City/county: Denver;
Entity: Housing Authority of the City and County of Denver.
City/county: Holyoke;
Entity: Holyoke Housing Authority.
City/county: Kersey;
Entity: Housing Authority of the Town of Kersey.
Georgia:
City/county: Athens;
Entity: Athens Housing Authority.
City/county: Atlanta;
Entity: Atlanta Housing Authority.
City/county: Macon;
Entity: Macon Housing Authority.
Iowa:
City/county: Des Moines;
Entity: Des Moines Municipal Housing Agency.
City/county: Evansdale;
Entity: Evansdale Municipal Housing Authority.
City/county: Mason City;
Entity: North Iowa Regional Housing Authority.
City/county: Ottumwa;
Entity: Ottumwa Housing Authority.
Illinois:
City/county: Chicago;
Entity: Chicago Housing Authority.
City/county: Ottawa;
Entity: Housing Authority for LaSalle County.
Massachusetts:
City/county: Boston;
Entity: Boston Housing Authority.
City/county: Revere;
Entity: Revere Housing Authority.
Mississippi:
City/county: Gulfport;
Entity: Mississippi Regional Housing Authority No. VIII.
City/county: Picayune;
Entity: The Housing Authority of the City of Picayune.
New Jersey:
City/county: Newark;
Entity: Newark Housing Authority.
City/county: Plainfield;
Entity: Housing Authority of Plainfield.
City/county: Rahway;
Entity: The Housing Authority of the City of Rahway.
City/county: Trenton;
Entity: Trenton Housing Authority.
Texas:
City/county: San Antonio;
Entity: San Antonio Housing Authority (SAHA).
Source: GAO.
Note: Total number of housing entities visited by GAO is 26.
[End of table]
Table 17: State and Local Weatherization Entities Visited by GAO:
California:
City/county: Garden Grove;
Entity: Community Action Partnership of Orange County.
City/county: Los Angeles;
Entity: Pacific Asian Consortium in Employment (PACE).
City/county: Riverside;
Entity: Community Action Partnership of Riverside County.
City/county: Roseville;
Entity: Project Go, Inc.
District of Columbia:
City/county: Washington;
Entity: ARCH Training Center.
City/county: Washington;
Entity: District Department of the Environment.
City/county: Washington;
Entity: United Planning Organization.
Iowa:
City/county: Des Moines;
Entity: Polk County Public Works Department.
City/county: Marshalltown;
Entity: Mid-Iowa Community Action, Inc.
Massachusetts;
City/county: Chelsea;
Entity: Community Action Programs Inter-City, Inc.
City/county: Gloucester;
Entity: Action, Inc.
Michigan:
City/county: Jackson;
Entity: Community Action Agency of Jackson, Lenawee, Hillsdale.
City/county: Lansing;
Entity: Michigan Department of Human Services.
City/county: Pontiac;
Entity: Oakland Livingston Human Services Agency.
New York:
City/county: Centereach;
Entity: Community Development Corporation of Long Island.
City/county: Long Island City;
Entity: Community Environmental Center.
City/county: Syracuse;
Entity: People's Equal Action and Community Effort.
Ohio:
City/county: Athens;
Entity: Corporation for Ohio Appalachian Development (COAD).
City/county: Columbus;
Entity: Mid-Ohio Regional Planning Commission (MORPC).
City/county: Dayton;
Entity: Community Action Partnership of the Greater Dayton Area (CAP-
Dayton).
City/county: Nelsonville;
Entity: Tri-County (Hocking-Athens-Perry) Community Action.
Pennsylvania:
City/county: Gettysburg;
Entity: South Central Community Action Programs.
City/county: Harrisburg;
Entity: Department of Community and Economic Development.
City/county: Harrisburg;
Entity: Pennsylvania Housing Finance Agency.
Source: GAO.
Note: Total number of weatherization entities visited by GAO is 24.
[End of table]
Table 18: Local Governments Visited by GAO (Government Type, Population
and Unemployment):
State: Arizona;
Local government: Maricopa County;
Type of local government: County;
Population: 3,954,598;
Unemployment rate: 8.5%.
State: Arizona;
Local government: Yavapai County;
Type of local government: County;
Population: 215,503;
Unemployment rate: 9.5%.
Local government: City of Los Angeles;
Type of local government: City;
Population: 3,833,995;
Unemployment rate: 14.0%.
State: California;
Local government: Sacramento County;
Type of local government: County;
Population: 1,394,154;
Unemployment rate: 12.2%.
State: Colorado;
Local government: Adams County;
Type of local government: County;
Population: 430,836;
Unemployment rate: 8.1%.
State: Colorado;
Local government: Denver;
Type of local government: City and County;
Population: 598,707;
Unemployment rate: 7.7%.
State: Colorado;
Local government: Garfield;
Type of local government: County;
Population: 55,426;
Unemployment rate: 5.8%.
State: Florida;
Local government: Ft. Myers City;
Type of local government: City;
Population: 65,394;
Unemployment rate: 12.1%.
State: Florida;
Local government: Lee County;
Type of local government: County;
Population: 593,136;
Unemployment rate: 13.9%.
State: Georgia;
Local government: Atlanta;
Type of local government: City;
Population: 537,958;
Unemployment rate: 11.4%.
State: Georgia;
Local government: Macon;
Type of local government: City;
Population: 92,775;
Unemployment rate: 11.7%.
State: Georgia;
Local government: Tift County;
Type of local government: County;
Population: 42,434;
Unemployment rate: 10.6%.
State: Illinois;
Local government: Chicago;
Type of local government: City;
Population: 2,853,114;
Unemployment rate: 11.3%.
State: Illinois;
Local government: Joliet;
Type of local government: City;
Population: 146,125;
Unemployment rate: 12.2%.
State: Illinois;
Local government: Springfield;
Type of local government: City;
Population: 117,352;
Unemployment rate: 8.2%.
State: Iowa;
Local government: Cedar Rapids;
Type of local government: City;
Population: 128,056;
Unemployment rate: 6.6%.
State: Iowa;
Local government: Des Moines;
Type of local government: City;
Population: 197,052;
Unemployment rate: 7.3%.
State: Iowa;
Local government: Newton;
Type of local government: City;
Population: 15,042;
Unemployment rate: 8.1%.
State: Massachusetts;
Local government: Boston;
Type of local government: City;
Population: 609,023;
Unemployment rate: 9.2%.
State: Massachusetts;
Local government: Springfield;
Type of local government: City;
Population: 150,640;
Unemployment rate: 12.8%.
State: Michigan;
Local government: Allegan;
Type of local government: County;
Population: 112,975;
Unemployment rate: 13.2%.
State: Michigan;
Local government: Flint;
Type of local government: City;
Population: 112,900;
Unemployment rate: 26.3%.
State: Michigan;
Local government: Royal Oak;
Type of local government: City;
Population: 57,110;
Unemployment rate: 9.9%.
State: Mississippi;
Local government: Jackson;
Type of local government: City;
Population: 173,861;
Unemployment rate: 8.6%.
State: Mississippi;
Local government: Meridian;
Type of local government: City;
Population: 38,232;
Unemployment rate: 12.2%.
State: Mississippi;
Local government: Vicksburg;
Type of local government: City;
Population: 24,974;
Unemployment rate: 14.5%.
State: New Jersey;
Local government: Cumberland County;
Type of local government: County;
Population: 156,830;
Unemployment rate: 12.6%.
State: New Jersey;
Local government: City of Newark;
Type of local government: City;
Population: 278,980;
Unemployment rate: 15.0%.
State: New York;
Local government: Buffalo;
Type of local government: City;
Population: 270,919;
Unemployment rate: 10.8%.
State: New York;
Local government: New York City;
Type of local government: City;
Population: 8,363,710;
Unemployment rate: 10.2%.
State: New York;
Local government: Steuben;
Type of local government: County;
Population: 96,573;
Unemployment rate: 9.5%.
State: New York;
Local government: Westchester;
Type of local government: County;
Population: 953,943;
Unemployment rate: 7.4%.
State: North Carolina;
Local government: Durham;
Type of local government: City;
Population: 223,284;
Unemployment rate: 7.3%.
State: North Carolina;
Local government: Halifax County;
Type of local government: County;
Population: 54,983;
Unemployment rate: 13.1%.
State: Ohio;
Local government: Athens;
Type of local government: City;
Population: 22,088;
Unemployment rate: 8.6%.
State: Ohio;
Local government: Cincinnati;
Type of local government: City;
Population: 333,336;
Unemployment rate: 9.3%.
State: Ohio;
Local government: Putnam County;
Type of local government: County;
Population: 34,543;
Unemployment rate: 9.0%.
State: Ohio;
Local government: Toledo;
Type of local government: City;
Population: 293,201;
Unemployment rate: 12.1%.
State: Pennsylvania;
Local government: Allentown;
Type of local government: City;
Population: 107,250;
Unemployment rate: 12.4%.
State: Pennsylvania;
Local government: Dauphin County;
Type of local government: County;
Population: 256,562;
Unemployment rate: 8.1%.
State: Pennsylvania;
Local government: Harrisburg;
Type of local government: City;
Population: 47,148;
Unemployment rate: 11.5%.
State: Pennsylvania;
Local government: Lehigh County;
Type of local government: County;
Population: 339,989;
Unemployment rate: 9.3%.
State: Texas;
Local government: Dallas;
Type of local government: City;
Population: 1,279,910;
Unemployment rate: 8.7%.
State: Texas;
Local government: Denton County;
Type of local government: County;
Population: 636,557;
Unemployment rate: 7.7%.
Source: GAO analysis of U.S. Census Bureau and U.S. Department of
Labor, Bureau of Labor Statistics (BLS), Local Area Unemployment
Statistics (LAUS).
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
Total number of local governments visited by GAO is 44.
[End of table]
[End of section]
Appendix IV: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
J. Christopher Mihm, Managing Director for Strategic Issues, (202) 512-
6806 or mihmj@gao.gov:
For issues related to SFSF, and other education programs: Cynthia
Fagnoni, Managing Director of Education, Workforce, and Income
Security, (202) 512-7215 or fagnonic@gao.gov:
For issues related to Medicaid programs: Dr. Marjorie Kanof, Managing
Director of Health Care, (202) 512-7114 or kanofm@gao.gov:
For issues related to highways, transit, and other transportation
programs: Katherine A. Siggerud, Managing Director of Physical
Infrastructure, (202) 512-2834 or siggerudk@gao.gov:
For issues related to energy and weatherization: Patricia Dalton,
Managing Director of Natural Resources and Environment, (202) 512-3841
or daltonp@gao.gov:
For issues related to public housing: Richard J. Hillman, Managing
Director of Financial Markets and Community Investment, (202) 512-8678
or hillmanr@gao.gov:
For issues related to internal controls and Single Audits: Jeanette
Franzel, Managing Director of Financial Management and Assurance, (202)
512-9471 or franzelj@gao.gov:
For issues related to contracting and procurement: Paul Francis,
Managing Director of Acquisition Sourcing Management, (202) 512-2811 or
francisp@gao.gov:
For issues related to emergency food and shelter: Cathleen A. Berrick,
Managing Director of Homeland Security and Justice, (202) 512-3404 or
berrickc@gao.gov:
Staff Acknowledgments:
The following staff contributed to this report: Stanley Czerwinski,
Denise Fantone, Susan Irving, and Yvonne Jones, (Directors);
Thomas James, James McTigue, and Michelle Sager, (Assistant Directors);
Sandra Beattie (Analyst-in-Charge); and Robert Alarapon, David
Alexander, Marie Penny Ahearn, Judith Ambrose, Peter Anderson, Lydia
Araya, Thomas Beall, James Bennett, Noah Bleicher, Jessica Botsford,
Anthony Bova, Muriel Brown, Lauren Calhoun, Richard Cambosos, Ralph
Campbell Jr., Virginia Chanley, Tina Cheng, Marcus Corbin, Robert
Cramer, Jeffrey DeMarco, Michael Derr, Helen Desaulniers, Ruth "Eli"
DeVan, David Dornisch, Kevin Dooley, Holly Dye, Abe Dymond, James
Fuquay, Alice Feldesman, Alexander Galuten, Ellen Grady, Anita
Hamilton, Geoffrey Hamilton, Tracy Harris, Bert Japikse, Karen Keegan,
John Krump, Jon Kruskar, Hannah Laufe, Jean K. Lee, Sarah McGrath, Jean
McSween, Donna Miller, Kevin Milne, Shelia McCoy, Mimi Nguyen, Josh
Ormond, Ken Patton, Sarah Prendergast, Brenda Rabinowitz, Carl Ramirez,
James Rebbe, Beverly Ross, Aubrey Ruge, Sylvia Schatz, Sidney Schwartz,
John Smale Jr., Kathryn Smith, George Stalcup, Andrew J. Stephens,
Alyssa Weir, Crystal Wesco, and Kimberly Young.
Program Contributors:
The names of GAO staff contributing to information contained in the
sections on the selected program are as follows:
Education--SFSF, IDEA, Title I;
Cornelia M. Ashby, James L. Ashley, Ed Bodine, Karen A. Brown, Amy
Buck, Alex Galuten, Bryon Gordon, Sonya Harmeyer, Susan Lawless, Ying
Long, Sheila McCoy, Jean McSween, Mimi Nguyen, Karen V. O'Conor, Kathy
Peyman, James M. Rebbe, Michelle Verbrugge, and Charles Willson.
Emergency Food and Shelter;
Laurel Beedon, John Hansen, and William Jenkins.
Medicaid;
Susan Anthony, Emily Beller, Ted Burik, Julianne Flowers, Martha Kelly,
and Carolyn Yocom.
Public Housing;
Don Brown, Don Kiggins, May Lee, John Lord, John McGrail, Marc Molino,
Paul Schmidt, Jennifer Schwartz, and Mathew Scire.
Safeguarding/Single Audit;
Phyllis Anderson, Marcia Buchanan, Eric Holbrook, Heather Keister, Kim
McGatlin, Diane Morris, and Susan Ragland.
State and Local Budget Stabilization;
Sandra Beattie, Anthony Bova, Stanley J. Czerwinski, Jeffrey DeMarco,
Sarah Prendergast, and Michelle Sager.
Transportation/highway and transit programs;
Bob Ciszewski, A. Nicole Clowers, Steve Cohen, Catherine Colwell, Dean
Gudicello, Heather Halliwell, Greg Hanna, Delwen Jones, Les Locke, Tim
Schindler, Raymond Sendejas, Tina Won Sherman, Carrie Wilks, and Susan
Zimmerman.
Weatherization;
Jessica Bryant-Bertail, Ric Cheston, Mark Gaffigan, Kim Gianopoulos,
Stuart Ryba, and Jason Trentacoste.
Contributors to Recovery Act Reporting on the Selected States and the
District:
The names of GAO staff contributing to the selected states and the
District appendixes are as follows:
Arizona;
Rebecca Bolnick, Tom Brew, Lisa Brownson, Aisha Cabrer, Steven Calvo,
Eileen Larence, Steven Rabinowitz, Radha Seshagiri, Jeff Schmerling,
James Solomon, and Ann Walker.
California;
Paul Aussendorf, Linda Calbom, Joonho Choi, Guillermo Gonzalez, Chad
Gorman, Richard Griswold, Don Hunts, Delwen Jones, Susan Lawless,
Brooke Leary, Heather MacLeod, Emmy Rhine, Eddie Uyekawa, Lacy Vong,
and Randy Williamson.
Colorado;
Paul Begnaud, Steve Gaty, Kathy Hale, Susan Iott, Jennifer Leone, Brian
Lepore, Robin Nazzaro, Tony Padilla, Lesley Rinner, Kay Harnish-Ladd,
Kathleen Richardson, and Mary Welch.
District of Columbia;
Laurel Beedon, Sunny Chang, Marisol Cruz, Nagla'a El-Hodiri, Mattias
Fenton, John Hansen, Adam Hoffman, William O. Jenkins, Jr., LaToya
King, and Linda Miller.
Florida;
Susan Aschoff, Patrick di Battista, Lisa Galvan-Trevino, Sabur Ibrahim,
Kevin Kumanga, Frank Minore, Zina Merritt, Brenda Ross, Andy Sherrill,
Barbara Steel-Lowney, Margaret Weber, and James Whitcomb.
Georgia;
Alicia Puente Cackley, Waylon Catrett, Chase Cook, Nadine Garrick, Marc
Molino, Daniel Newman, John H. Pendleton, Barbara Roesmann, Paige
Smith, David Shoemaker, and Robyn Trotter.
Illinois;
Leslie Aronovitz, Cynthia Bascetta, Dean Campbell, Robert Ciszewski,
Gail Marnik, Cory Marzullo, Paul Schmidt, Roberta Rickey, and Rosemary
Torres Lerma.
Iowa;
Tom Cook, James Cooksey, Dan Egan, Christine Frye, Marietta Mayfield,
Ronald Maxon, Mark Ryan, Lisa Shames, and Ben Shouse.
Massachusetts;
Stanley J. Czerwinski, Laurie Ekstrand, Nancy J. Donovan, Kathleen M.
Drennan, Lorin Obler, Keith C. O'Brien, Carol Patey, Salvatore F.
Sorbello Jr., and Robert Yetvin.
Michigan;
Manuel Buentello, Ranya Elias, Patrick Frey, Kevin Finnerty, Henry
Malone, Revae Moran, Giao N. Nguyen, Robert Owens, Susan Ragland, and
Amy Sweet.
Mississippi;
James Elgas, Barbara Haynes, John K. Needham, Norman J. Rabkin, Anna
Russell, Gary Shepard, Erin Stockdale, and Ryan Stott.
New Jersey;
Gene Aloise, Kisha Clark, Diana Glod, Alexander Lawrence Jr., Tarunkant
Mithani, Vincent Morello, Tahra Nichols, Nitin Rao, Cheri Truett, and
David Wise.
New York;
Colin Fallon, Christopher Farrell, Susan Fleming, Emily Larson, Dave
Maurer, Tiffany Mostert, Joshua Ormond, Summer Pachman, Frank
Puttallaz, Barbara Shields, Glenn Slocum, Ronald Stouffer, and Yee
Wong.
North Carolina;
Cornelia Ashby, Sandra Baxter, Bonnie Derby, Terrell Dorn, Steve Fox,
Bryon Gordon, Fred Harrison, Charlene Johnson, Leslie Locke, Anthony
Patterson, and Paula Rascona.
Ohio;
William Bricking, Matthew Drerup, Cynthia M. Fagnoni, Laura Jezewski,
Bill J. Keller, Sanford Reigle, David C. Trimble, Myra Watts Butler,
Lindsay Welter, and Doris Yanger.
Pennsylvania;
Mark Gaffigan, Brian Hartman, John Healey, Phillip Herr, Shirin
Hormozi, Richard Jorgenson, Richard Mayfield, James Noel, Jodi M.
Prosser, Andrea E. Richardson, and MaryLynn Sergent.
Texas;
Carol Anderson-Guthrie, Fred Berry, Ron Berteotti, Steve Boyles, K.
Eric Essig, Erinn Flanagan, Ken Howard, Michael O'Neill, Bob Robinson,
Daniel Silva, and Lorelei St. James.
[End of section]
Footnotes:
[1] Pub.L. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] GAO, Recovery Act: Recipient Reported Jobs Data Provide Insights
into Use of Recovery Act Funding, but Data Quality and Reporting Issues
Need Attention, [hyperlink, http://www.gao.gov/products/GAO-10-223]
(Washington, D.C.: Nov. 19, 2009).
[3] GAO, Recovery Act: As Initial Implementation Unfolds in States and
Localities, Continued Attention to Accountability Issues Is Essential,
[hyperlink, http://www.gao.gov/products/GAO-09-580] (Washington, D.C.:
Apr. 23, 2009); Recovery Act: States' and Localities' Current and
Planned Uses of Funds While Facing Fiscal Stresses, GAO-09-829
(Washington, D.C.: July 8, 2009); and Recovery Act: Funds Continue to
Provide Fiscal Relief to States and Localities, While Accountability
and Reporting Challenges Need to Be Fully Addressed, [hyperlink,
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C.: Sept. 23,
2009).
[4] GAO, Recovery Act: Recipient Reported Jobs Data Provided Some
Insight into Use of Recovery Act Funding, but Data Quality and
Reporting Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009).
[5] Recovery Act, div. B, title V, § 5001.
[6] In order to qualify for the increased FMAP, states generally may
not apply eligibility standards, methodologies, or procedures that are
more restrictive than those in effect under their state Medicaid plans
or waivers on July 1, 2008. See Recovery Act, div. B, title V,
§5001(f)(1)(A).
[7] Under the Recovery Act, states are not eligible to receive the
increased FMAP for certain claims for days during any period in which
that state has failed to meet the prompt payment requirement under the
Medicaid statute as applied to those claims. See Recovery Act, div. B,
title V, §5001(f)(2). Prompt payment requires states to pay 90 percent
of clean claims from health care practitioners and certain other
providers within 30 days of receipt and 99 percent of these claims
within 90 days of receipt. See 42 U.S.C. §1396a(a)(37)(A).
[8] A state is not eligible for certain elements of increased FMAP if
any amounts attributable directly or indirectly to them are deposited
or credited into a state reserve or rainy-day fund. Recovery Act, div.
B, title V, §5001(f)(3).
[9] In some states, political subdivisions--such as cities and
counties--may be required to help finance the state's share of Medicaid
spending. Under the Recovery Act, a state that has such financing
arrangements is not eligible for certain elements of the increased FMAP
if it requires subdivisions to pay during a quarter of the recession
adjustment period a greater percentage of the nonfederal share than the
percentage that would have otherwise been required under the state plan
on September 30, 2008. See Recovery Act, div. B., title V, §
5001(g)(2). The recession adjustment period is the period beginning
October 1, 2008, and ending December 31, 2010.
[10] See GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed, [hyperlink,
http://www.gao.gov/products/GAO-09-1016] (Washington D.C.: Sept. 23,
2009).
[11] Two states that reported preliminary enrollment data for the
fourth quarter of 2009 indicated that once finalized, their reported
enrollment would likely increase. Therefore, our analysis of Medicaid
enrollment for this time period potentially understates the change in
overall enrollment.
[12] The percentage increase is based on state reported enrollment data
for April 2009 to September 2009. Because the District did not provide
Medicaid enrollment data for September 2009, we estimated enrollment
for the District for this month.
[13] As part of the normal Medicaid grant award process, CMS reconciles
states' quarterly estimated and actual Medicaid expenditures and
finalizes the quarterly grants once the reconciliation is complete.
[14] Pennsylvania Medicaid officials told us that the state intends to
draw from its 2010 increased FMAP grant award; however, the state
typically draws available funds retroactively to coincide with the
submission of its quarterly expenditure report. For example, the state
drew from its 2009 fourth quarter grant award on November 17, 2009.
[15] See [hyperlink, http://www.gao.gov/products/GAO-09-1016].
[16] See [hyperlink, http://www.gao.gov/products/GAO-09-1016].
[17] CMS officials told us that they do not have specific plans for
issuing additional formal guidance; however, CMS officials continue to
work with states to identify issues and, as appropriate, may issue
further guidance regarding compliance with Recovery Act requirements
such as political subdivisions and rainy-day funds. In addition, the
agency recently asked states to complete a report that includes
detailed questions about their receipt and use of increased FMAP. CMS
officials indicated they hope to collect this information quarterly and
plan to use the state data to inform CMS oversight of issues related to
the Recovery Act.
[18] Under federal law, states are required to make disproportionate
share hospital payments to hospitals that treat large numbers of low-
income patients with special needs. See 42 U.S.C. §§ 1396(a)(13)(A),
1396r-4.
[19] For the Federal Highway Program, the U.S. Department of
Transportation (DOT) has interpreted the term obligation of funds to
mean the federal government's commitment to pay for the federal share
of the project. This commitment occurs at the time the federal
government signs a project agreement. States request reimbursement from
FHWA as the state makes payments to contractors working on approved
projects.
[20] For the Transit Capital Assistance Program and the Fixed Guideway
Infrastructure Investment program, the U.S. DOT has interpreted the
term obligation of funds to mean the federal government's commitment to
pay for the federal share of the project. This commitment occurs at the
time the federal government signs a grant agreement.
[21] Once the contract is awarded and contractors mobilize and begin
work, states make payments to these contractors for completed work;
states may request reimbursement from FHWA. FHWA, through the U.S.
Department of the Treasury, is required to pay the state promptly after
the state pays out of its own funds for project-related purposes.
[22] Data is as of October 31, 2009. A total of $19.9 billion had been
obligated nationwide as of that date.
[23] The Highway Bridge Program classifies bridge conditions as
deficient or not. A structurally deficient bridge is defined as a
bridge with at least one or more components in poor condition.
[24] See GAO, Highway Bridge Program: Clearer Program Goals and
Performance Measures Needed for a More Focused and Sustainable Program,
[hyperlink, http://www.gao.gov/products/GAO-08-1043] (Washington, D.C.:
Sept. 10, 2008).
[25] The Recovery Act provides that states that have had their
statewide funds obligated before March 2, 2010, will be eligible to
receive redistributed funds even if their suballocated funds have not
been obligated. Recovery Act, div. A, title XII, 123 Stat. 115, 206.
[26] Recovery Act, div. A, §1603.
[27] 42 U.S.C. § 3161.
[28] As we reported in September 2009, the criteria align closely with
special need criteria used by the Department of Commerce's Economic
Development Administration in its own grant programs, including factors
such as actual or threatened business closures (including job loss
thresholds), military base closures, and natural disasters or
emergencies.
[29] Recovery Act, div. A, § 1201(a).
[30] The data provided included projects that had been awarded
contracts and projects where contracts had not yet been awarded. Our
analysis included projects that had official engineer's estimates and
the contract award amount. Therefore, only projects that had values for
the estimate and award amounts were included in our analysis. Although
we examined the data for obvious discrepancies, the data we collected
are self-reported by individual states. Therefore, the data may not be
complete and we consider the reliability of these data undetermined.
Because of this, we are only reporting ranges and approximate
percentages. Our analysis included data from states that had the data
available as of November 19, 2009. In all, we reviewed 1880 contracts
ranging from 12 contracts in the District to 587 contracts in Illinois.
In addition, some states provided data for only state awarded
contracts, while other states provided both state and locally awarded
contract data.
[31] Specifically, within 90 days after determining that the estimated
federal share of project costs has decreased by $250,000 or more,
states shall revise the federal funds obligated for a project. 23
C.F.R. § 630.106(a)(4). The funds deobligated through this process may
be used for other FHWA-approved projects once the funds have been
obligated by FHWA.
[32] See [hyperlink, http://www.gao.gov/products/GAO-09-1016].
[33] As we reported, the criteria align closely with special need
criteria used by the Department of Commerce's Economic Development
Administration in its own grant programs, including factors such as
actual or threatened business closures (including job loss thresholds),
military base closures, and natural disasters or emergencies.
[34] For example, Arizona identified these areas based in part on home
foreclosure rates--data not specified in the Public Works Act.
[35] The other public transit program receiving Recovery Act funds is
the Capital Investment Grant program, which was appropriated $750
million. The Transit Capital Assistance Program and the Fixed Guideway
Infrastructure Investment program are formula grant programs, which
allocate funds to states or their subdivisions by law. Grant recipients
may then be reimbursed for expenditures for specific projects based on
program eligibility guidelines. The Capital Investment Grant program is
a discretionary grant program, which provides funds to recipients for
projects based on eligibility and selection criteria.
[36] Urbanized areas are areas encompassing a population of not less
than 50,000 people that have been defined and designated in the most
recent decennial census as an "urbanized area" by the Secretary of
Commerce. Nonurbanized areas are other areas, i.e., areas that do not
have population densities of at least 50,000 people.
[37] The 2009 Supplemental Appropriations Act authorizes the use of up
to 10 percent of funds apportioned to urbanized and nonurbanized areas
for operating expenses. Pub. L. No. 111-32, § 1202, 123 Stat. 1859,
1908 (June 24, 2009). Usually, operating assistance is not an eligible
expense for transit agencies within urbanized areas with populations of
200,000 or more.
[38] Generally, to qualify for funding under the applicable formula
grant program, an urbanized area must have a fixed guideway system that
has been in operation for at least 7 years and is more than one mile in
length. Fixed guideway systems are permanent transit facilities that
may use and occupy a separate right-of-way for the exclusive use of
public transportation services. These fixed guideway systems include
rail (light, heavy, commuter, and streetcar) and may include busways
(such as bus rapid transit).
[39] This may include the purchase or rehabilitation of rolling stock,
track, equipment, or facilities. These funds are specifically provided
for fixed guideway modernization and cannot be used for investment in
new fixed-guideway capital projects.
[40] Designated recipients are entities designated by the chief
executive officer of a state, responsible local officials, and publicly
owned operators of public transportation to receive and apportion
amounts that are attributable to transportation management areas.
Transportation management areas are areas designated by the Secretary
of Transportation as having an urbanized area population of more than
200,000, or upon request from the governor and metropolitan planning
organizations designated for the area. Metropolitan planning
organizations are federally mandated regional organizations,
representing local governments and working in coordination with state
departments of transportation, that are responsible for comprehensive
transportation planning and programming in urbanized areas. MPOs
facilitate decision making on regional transportation issues, including
major capital investment projects and priorities. To be eligible for
Recovery Act funding, projects must be included in the region's
Transportation Improvement Program and the approved State
Transportation Improvement Program (STIP).
[41] The sections 1201(c) and 1512 reporting requirements differ
significantly. Under section 1201(c)(2)(F), FTA is required to collect
and compile grantee data, including "the number of direct, on-project
jobs created or sustained —" as well as "to the extent possible, the
estimated indirect jobs created or sustained in the associated
supplying industries, including the number of job-years created and the
total increase in employment..." As implemented by FTA, FTA's grantees
report on direct on-site jobs only; FTA calculates indirect and induced
jobs such as manufacturing jobs from the purchase of buses. In
contrast, section 1512 places the burden on recipients to report "an
estimate of the number of jobs created and the number of jobs retained
by the project or activity," language that DOT has interpreted to
require reporting of manufacturing jobs when a purchase is sufficient
to impact the manufacturer's labor force requirements. Moreover the
reporting processes differ under the two provisions. FTA grantees must
complete their Section 1201 report in TEAM, which is FTA's grant
management system.
[42] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some
Insight into Use of Recovery Act Funding, but Data Quality and
Reporting Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009).
[43] We conducted our survey from August to October 2009, with a 73
percent final weighted response rate at the national level. The results
of our sample have a 95 percent confidence interval.
[44] Beginning July 1, 2009, Education awarded the remaining government
services funds to states with approved applications.
[45] Schools identified for corrective action have missed academic
targets for 4 consecutive years and schools implementing restructuring
have missed academic targets for 6 consecutive years.
[46] For the purposes of this report, "Title I" refers to Title I, Part
A of the Elementary and Secondary Education Act of 1965 (ESEA), as
amended.
[47] LEAs must obligate at least 85 percent of their Recovery Act ESEA
Title I, Part A funds by September 30, 2010, unless granted a waiver,
and must obligate all of their funds by September 30, 2011.
[48] For purposes of this report, unless stated otherwise, when we
refer to IDEA Recovery Act funds, we are referring to funds provided
for IDEA, Part B.
[49] The percentages do not add to 100 percent due to rounding. L.
Zhou, Revenues and Expenditures for Public Elementary and Secondary
Education: School Year 2006-07 (Fiscal Year 2007) (NCES 2009 337)
(Washington D.C.: National Center for Education Statistics, U.S.
Department of Education), [hyperlink
http://nces.ed.gov/pubsearch/pubsinfo.asp?pubid=2009337] (accessed Nov.
16. 2009).
[50] For the purposes of our survey, total or overall education funding
is defined as the combination of federal, state and local funding that
an LEA received and does not include private funding for education.
[51] An estimated 9 percent of LEAs responded "don't know" or "not
applicable" to our survey question about their funding changes.
[52] Our state-level results do not include Pennsylvania, Michigan and
Arizona because at the time our survey was available--from August to
October 2009--their state budgets had not been finalized, and
therefore, a large percentage of LEAs--33 percent for Pennsylvania, 28
percent for Michigan, and 21 percent for Arizona--responded "don't
know" to this funding question on the survey.
[53] Education, The Condition of Education 2009.
[54] The national estimate of 6.2 million education staff is based on
2006-2007 school year data and is taken from Education's 2008 Digest of
Education Statistics. The 4 percent of the workforce estimate is GAO's
calculation using Education's 6.2 million estimate and employment
projections by the U.S. Bureau of Labor Statistics.
[55] An estimated 18 percent and 20 percent of LEAs reported that they
expected job losses even with IDEA and Title I Recovery Act funds,
respectively. Our analysis focused on the percentage of LEAs reporting
job losses even with SFSF funds because, according to Education,
averting job cuts and retaining staff are explicit goals of the State
Fiscal Stabilization Fund.
[56] "Largest LEAs" refers to the 10-largest LEAs in each state, based
on enrollment.
[57] In April 2009, Education released guidance that asked LEA
officials to consider whether their proposed use of Recovery Act funds
would (1) improve results for students, including students in poverty,
students with disabilities, and English language learners; (2) increase
educators' long-term capacity to improve results for students; (3)
advance state, district, or school improvement plans and the reform
goals encompassed in the Recovery Act; (4) avoid recurring costs that
states, school systems, and schools are unprepared to assume when this
funding ends; and (5) include approaches to measure and track
implementation and results.
[58] Differences between these uses of funds were determined not to be
statistically significant.
[59] Hereafter in this section, "local" will refer to "local, or state
and local" funds.
[60] LEAs must budget at least the same total or per capita amount of
local funds for the education of children with disabilities as the LEA
spent in the most recent prior year for which information is available.
[61] Mississippi and the District of Columbia had not made
determinations for this year. Mississippi officials said they were
planning to use last year's determinations to establish eligibility for
the flexibility this year, based on guidance from Education.
[62] Education currently requires states to use indicators related to
compliance with the law, but state educational agencies are not
required to use indicators related to LEA performance in other areas,
such as graduation rates or performance on assessments.
[63] Changing the performance plan can be done for many reasons, and in
prior years, some states were changing their plans and targets each
year. Officials in Pennsylvania said that data on given indicators can
change significantly year-to-year, often because sample sizes of
students in special education may be small, and therefore it is
difficult to judge LEAs' performance on that basis.
[64] The "largest LEAs" refers to the 10-largest LEAs in each state,
based on enrollment.
[65] As of November 4, 2009, drawdowns by the states covered by our
review of all SFSF funds, including both education stabilization and
government services funds, were about $10.5 billion or 44 percent of
awarded funds.
[66] Education Department General Administrative Regulations (EDGAR),
at 34 C.F.R. Part 80, address the financial administration of
Department of Education grants to state and local governments,
including cash management requirements for grantees and subgrantees.
Cash management requirements applicable specifically to states are
contained in Department of the Treasury regulations, 31 C.F.R. Part
205.
[67] On January 18, 2007, the Office of Management and Budget issued a
document entitled the "Final Bulletin for Agency Good Guidance
Practices." This bulletin established policies and procedures for the
development, issuance, and use of significant guidance documents by
executive branch departments and agencies and is intended to increase
the quality and transparency of agency guidance practices and the
significant guidance documents produced through them.
[68] It is important to note that these survey results show LEAs'
assessments made sometime between late August and early October when
the survey was conducted (as shown in figure 17); therefore, these
results do not capture assessments of Education's subsequently released
guidance.
[69] These responses were given in answer to survey questions worded as
follows: "In your opinion, has the guidance your LEA received from the
Department of Education regarding the allowable uses of [IDEA/ESEA
Title I/SFSF] Recovery Act funds been adequate or inadequate in the
following way: Content of guidance was understandable and useful."
[70] "Largest LEAs" refers to the 10-largest LEAs in each state, based
on enrollment.
[71] The sixth is a territory, Puerto Rico, and is not covered by GAO's
review.
[72] Single Audits are prepared to meet the requirements of the Single
Audit Act, as amended, and provide a source of information on internal
control and compliance findings and the underlying causes and risks.
The Single Audit Act requires states, local governments, and nonprofit
organizations expending $500,000 or more in federal awards in a year to
obtain an audit in accordance with the requirements set forth in the
act. A Single Audit consists of (1) an audit and opinions on the fair
presentation of the financial statements and the Schedule of
Expenditures of Federal Awards; (2) gaining an understanding of and
testing internal control over financial reporting and the entity's
compliance with laws, regulations, and contract or grant provisions
that have a direct and material effect on certain federal programs
(i.e., the program requirements); and (3) an audit and an opinion on
compliance with applicable program requirements for certain federal
programs. See, 31 U.S.C. ch. 75.
[73] HUD allocated Capital Fund formula dollars from the Recovery Act
to 3,134 public housing agencies, but as of November 14, 2009, 13
housing agencies chose not to accept Recovery Act funding or no longer
had eligible public housing projects that could utilize the funds.
[74] We analyzed the rates at which housing agencies had obligated and
drawn down funds, grouping housing agencies by the size of the Recovery
Act formula grant they had received and calculating the average
percentage of funds obligated and drawn down for each group. We
selected these amounts as thresholds for comparing groups of housing
agencies because they were more and less than the median grant amount
($192,198). Under 24 CFR Part 85, the "simplified acquisition
threshold" is $100,000. We compared various thresholds greater than the
median and determined that $500,000--which is the minimum amount of
federal funds expended for nonfederal entities to be subject to Single
Audits--was an appropriate threshold, in part because the number of
housing agencies with grants of more than $500,000 is similar to the
number of housing agencies with grants of less than $100,000.
[75] HUD developed PHAS to evaluate the overall condition of housing
agencies and to measure performance in major operational areas of the
public housing program. These include financial condition, management
operations, and physical condition of the housing agencies' public
housing programs. Housing agencies that are deficient in one or more of
these areas are designated as troubled performers by HUD and are
statutorily subject to increased monitoring.
[76] The Recovery Act provided HUD with the authority to decide whether
to provide troubled housing agencies with Recovery Act funds. Although
HUD determined that troubled housing agencies have a need for Recovery
Act funding, it acknowledged that troubled housing agencies would
require increased monitoring and oversight in order to meet Recovery
Act requirements.
[77] The total number of nontroubled housing agencies to be monitored
by HUD excludes 13 housing agencies that chose not to accept Recovery
Act funding, no longer had eligible public housing projects that could
utilize the funds, or had not yet entered into an agreement with HUD
for the funds.
[78] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some
Insight into Use of Recovery Act Funding, but Data Quality and
Reporting Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009).
[79] DOE officials plan to allow a state access to the remaining
Recovery Act funds once it has completed weatherizing 30 percent of the
homes identified in its state weatherization plan.
[80] September 30, 2009, is the most recent quarter for which the
states are required to report data under the Recovery Act. DOE has
requested that OMB authorize monthly reporting. DOE officials noted
that the states and territories also have access to annually
appropriated funds for weatherization activities.
[81] This report does not include information from Arizona, Colorado,
Florida, Georgia, Illinois, Mississippi, New Jersey, North Carolina,
and Texas because the weatherization program is only in the early
stages of implementation.
[82] As a basis for selecting an eligible dwelling unit for
weatherization, DOE requires that the long-term benefits in terms of
reduced energy usage at least match the weatherization costs.
[83] Pub. L. No. 89-665, 80 Stat. 915 (codified as amended at 16 U.S.C.
§ 470 et seq.).
[84] The General Services Administration maintains the Excluded Parties
List System, which identifies parties excluded from receiving federal
contracts, certain subcontracts, and certain other assistance and
benefits. In GAO-09-174, Excluded Parties List System: Suspended and
Debarred Businesses and Individuals Improperly Receive Federal Funds,
we recommended that the General Services Administration take actions to
strengthen controls over the system.
[85] Pub. L. No. 100-77, 101 Stat. 482.
[86] According to the act, the members of the EFSP National Board are
the Federal Emergency Management Agency (Chair), American Red Cross,
Catholic Charities USA, National Council of Churches of Christ in the
USA, The Salvation Army, The Council of Jewish Federations Inc. (now
known as The Jewish Federations of North America), and the United Way
of America (now know as United Way Worldwide).
[87] Local Board membership mirrors the National Board, except that a
local government official serves on each local board, rather than a
FEMA representative, and that it must include a homeless or recently
homeless person.
[88] Under terms of the award from the National Board, LROs chosen to
receive any EFSP funds must (1) be private voluntary nonprofits or
units of government, (2) be eligible to receive federal funds, (3) have
an accounting system, (4) practice nondiscrimination, (5) have
demonstrated the capability to deliver emergency food or shelter
programs, and (6) if they are a private voluntary organization, have a
voluntary board.
[89] SSA Committees mirror the Local Boards and include the Governor or
a representative, as well as other state-level private nonprofits.
[90] No LROs in the District received an SSA Recovery Act award.
[91] The LRO's "planned use of funds" dollar amount is based the
applications LROs submitted to the Local Boards.
[92] See appendix III, for a complete list of population and
unemployment rates for the selected local governments.
[93] COPS Hiring Recovery Program grants provide 100 percent funding
for 3 years for approved entry-level salaries and benefits for newly-
hired, full-time sworn officer positions or for rehired officers who
have been laid off, or are scheduled to be laid off on a future date,
as a result of local budget cuts. The grant recipient must agree to
fund the position for at least one year beyond the 3 years of the
grant.
[94] For descriptions of these programs, see appendix II.
[95] A prime recipient is a non-federal entity that receives Recovery
Act funding in the form of a contract, grant, or loan, directly from
the federal government.
[96] Grants may require recipients to match federal funds with state
and local spending or in-kind contributions. The structure and nature
of the matching requirement affects what types of recipients will apply
and how recipients will use the grant funds.
[97] See National Association of Counties, How are Counties Doing? An
Economic Status Survey (Washington, D.C.: November 2009).
[98] Local governments' ability to generate revenues varies based on a
number of criteria, including the taxing authority the local government
is granted by the state; the proportion of total revenues a local
government generates from any particular revenue source; and the amount
of state aid a local government receives relative to its total
revenues. Different states grant their local governments the authority
to levy different types of taxes, including property taxes, sales
taxes, or personal income taxes. According to a National League of
Cities report, no state authorizes the use of all three. See National
League of Cities, Research Report on America's Cities: Cities & State
Fiscal Structure (Washington, D.C.: May 2008).
[99] NGA and NASBO, The Fiscal Survey of States (Washington, D.C.:
December 2009).
[100] The six states are Arizona, California, Florida, Illinois,
Michigan, and New Jersey. See Pew Center on the States, Beyond
California: States in Fiscal Peril (November 2009).
[101] GAO recommended that to leverage Single Audit as an effective
oversight tool for Recovery Act programs, OMB should provide more
direct focus on Recovery Act programs through the Single Audit to help
ensure that smaller programs with higher risk have audit coverage in
the area of internal controls and compliance; develop requirements for
reporting on internal controls during 2009 before significant Recovery
Act expenditures occur, and for ongoing reporting; evaluate options for
providing relief related to audit requirements for low-risk programs to
balance new audit responsibilities associated with the Recovery Act;
and take steps to achieve sufficient participation and coverage in the
Single Audit project discussed in this section, providing for early
written communication of internal control deficiencies and more timely
accountability over Recovery Act funds.
[102] Single Audits are prepared to meet the requirements of the Single
Audit Act, as amended, and provide a source of information on internal
control and compliance findings and the underlying causes and risks.
The Single Audit Act requires states, local governments, and nonprofit
organizations expending $500,000 or more in federal awards in a year to
obtain an audit in accordance with the requirements set forth in the
act. A Single Audit consists of (1) an audit and opinions on the fair
presentation of the financial statements and the Schedule of
Expenditures of Federal Awards; (2) gaining an understanding of and
testing internal control over financial reporting and the entity's
compliance with laws, regulations, and contract or grant provisions
that have a direct and material effect on certain federal programs
(i.e., the program requirements); and (3) an audit and an opinion on
compliance with applicable program requirements for certain federal
programs.
[103] The Single Audit Act requires that a nonfederal entity subject to
the act transmit its reporting package to a federal clearinghouse
designated by OMB no later than 9 months after the end of the period
audited.
[104] The corrective action plan will also include the name and contact
information for a high-level auditee management official who will
assume overall responsibility for ensuring appropriate corrective
action.
[105] OMB's program selections for the project were based on an
analysis of program obligations and discussions with officials from
federal awarding agencies and the Recovery Accountability and
Transparency Board. For selected programs, auditors must perform
internal control testwork required by OMB Circular Number A-133 on
internal control for the following types of compliance requirements, as
applicable: Activities Allowed or Unallowed, Allowable Costs, Cash
Management, Eligibility, Reporting, and Special Tests and Provisions.
[106] Auditors conduct these risk assessments as part of the planning
process to identify which federal programs would be subject to detailed
internal control and compliance testing.
[107] Project participants are exempt from the requirements of OMB
Circular No. A-133.520(e), which establishes the minimum number of
programs that must be audited as major programs. The project
establishes new guidelines for participants that may result in fewer
programs being audited as major programs.
[108] While detailed federal government obligation and expenditure data
at the individual program level have not yet been compiled, it is
possible to obtain higher-level program obligation and outlay amounts
and estimate state and program project amounts for comparison to
Recovery Act totals. Our estimate of $38.1 billion for Recovery Act
obligations included in programs selected by project states as of
October 23, 2009 comprises about 16 percent of the total of $236.5
billion in obligations attributable to states. A similar comparison for
outlays indicates that approximately $24 billion, or 23 percent, of a
total of $106.3 billion in outlays attributable to states was included
in funding within the project's scope as of that date. We estimate
that, as of October 23, 2009, total Recovery Act obligations to project
participants totaled $105.2 billion and total Recovery Act outlays for
participants totaled $47.8 billion.
[109] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed, [hyperlink,
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C.: Sept. 23,
2009).
[110] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some
Insight into Use of Recovery Act Funding, but Data Quality and
Reporting Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009).
[111] [hyperlink, http://www.gao.gov/products/GAO-10-223].
[112] GAO, Recovery Act: Recipient Reported Jobs Data Provide Some
Insight into Use of Recovery Act Funding, but Data Quality and
Reporting Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009).
[113] GAO, Recovery Act: As Initial Implementation Unfolds in States
and Localities, Continued Attention to Accountability Issues Is
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580]
(Washington, D.C.: Apr. 23, 2009).
[114] States selected for our longitudinal analysis are Arizona,
California, Colorado, Florida, Georgia, Illinois, Iowa, Massachusetts,
Michigan, Mississippi, New Jersey, New York, North Carolina, Ohio,
Pennsylvania, and Texas.
[115] We stratified the population into strata based on state, size,
and charter school LEA status.
[116] The states we visited are Arizona, Colorado, Georgia, Illinois,
Iowa, Massachusetts, Mississippi, New Jersey, and Texas.
[117] The seven states we collected information from are: California,
Iowa, Michigan, New York, Ohio, Pennsylvania, and Massachusetts.
[118] As part of our bimonthly work, we also collected data on tracking
and recipient reporting of Recovery Act funds and other data by state
and local governments and other entities. See GAO, Recovery Act:
Recipient Reported Jobs Data Provided Some Insight into Use of Recovery
Act Funding, but Data Quality and Reporting Issues Need Attention, GAO-
10-223 (Washington, D.C.: Nov. 19, 2009) for an assessment of recipient
reporting data.
[119] For the Highway Infrastructure Investment program, the U.S.
Department of Transportation has interpreted the term "obligation of
funds" to mean the federal government's commitment to pay for the
federal share of the project. This commitment occurs at the time the
federal government signs a project agreement.
[120] Recovery Act, div. A, title XII, 123 Stat. 206.
[121] Recovery Act, div. A, title XII, § 1201(a).
[122] Fixed guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. They include fixed
rail, exclusive lanes for buses and other high-occupancy vehicles, and
other systems.
[123] Generally, to qualify for funding under the applicable formula
grant program, an urbanized area must have a fixed guideway system that
has been in operation for at least 7 years and is more than one mile in
length.
[124] Metropolitan planning organizations are federally mandated
regional organizations, representing local governments and working in
coordination with state departments of transportation, that are
responsible for comprehensive transportation planning and programming
in urbanized areas. MPOs facilitate decision making on regional
transportation issues, including major capital investment projects and
priorities. To be eligible for Recovery Act funding, projects must be
included in the region's Transportation Improvement and State
Transportation Improvement Programs.
[125] For the Transit Capital Assistance Program and Fixed Guideway
Infrastructure Investment Program, the U.S. Department of
Transportation has interpreted the term obligation of funds to mean the
federal government's commitment to pay for the federal share of the
project. This commitment occurs at the time the federal government
signs a grant agreement.
[126] Recovery Act, div. A, title XII, 123 Stat. 210.
[127] Recovery Act, div. A, title XII, § 1201(a).
[128] Schools identified for corrective action have missed academic
targets for 4 consecutive years and schools implementing restructuring
have missed academic targets for 6 consecutive years.
[129] Beginning on July 1, 2009, Education awarded the remaining
government services funds to states with approved applications.
[130] For the purposes of this report, "Title I" refers to Title I,
Part A of the Elementary and Secondary Education Act of 1965 (ESEA), as
amended.
[131] LEAs must obligate at least 85 percent of their Recovery Act ESEA
Title I, Part A funds by September 30, 2010, unless granted a waiver,
and must obligate all of their funds by September 30, 2011. This will
be referred to as a carryover limitation.
[132] Pub. L. No. 100-77, 101 Stat. 482.
[133] According to the Act, the members of the EFSP National Board are
the Federal Emergency Management Agency (Chair), American Red Cross,
Catholic Charities USA, National Council of Churches of Christ in the
USA, The Salvation Army, The Council of Jewish Federations, Inc., (now
known as the Jewish Federations of North America), and the United Way
of America (now know as United Way Worldwide.)
[134] See Medicaid Federal Medical Assistance Percentage (FMAP)
description earlier in this appendix.
[135] The Recovery Act provided $2 billion to the Health Resources and
Services Administration (HRSA) for grants to health centers. Of this
total, $1.5 billion is for the construction and renovation of health
centers and the acquisition of HIT systems, and the remaining $500
million is for operating grants to health centers. Of the $500 million
for health center operations, HRSA has allocated $157 million for New
Access Point grants to support health centers' new service delivery
sites, and $343 million for Increased Demand for Services grants.
[136] NSP, a term that references the NSP funds authorized under
Division B, Title III of the Housing and Economic Recovery Act (HERA)
of 2008, provides grants to all states and selected local governments
on a formula basis. Under NSP, HUD allocated $3.92 billion on a formula
basis to states, territories, and selected local governments. The term
"NSP2" references the NSP funds authorized under the Recovery Act on a
competitive basis.
[End of section]
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