Recovery Act Education Programs
Funding Retained Teachers, but Education Could More Consistently Communicate Stabilization Monitoring Issues
Gao ID: GAO-11-804 September 22, 2011
The American Recovery and Reinvestment Act of 2009 (Recovery Act) provided $70.3 billion for three education programs--the State Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and Secondary Education Act (Title I); and Individuals with Disabilities Education Act (IDEA), Part B. One goal of the Recovery Act was to save and create jobs, and SFSF also requires states to report information expected to increase transparency and advance educational reform. This report responds to two ongoing GAO mandates under the Recovery Act. It examines (1) how selected states and local recipients used the funds; (2) what plans the Department of Education (Education) and selected states have to assess the impact of the funds; (3) what approaches are being used to ensure accountability of the funds; and (4) how Education and states ensure the accuracy of recipient reported data. To conduct this review, GAO gathered information from 14 states and the District of Columbia, conducted a nationally representative survey of local educational agencies (LEA), interviewed Education officials, examined recipient reports, and reviewed relevant policy documents.
As of September 9, 2011, in the 50 states and the District of Columbia, about 4 percent of the obligated Recovery Act funds remain available for expenditure. Teacher retention was the primary use of Recovery Act education funds according to GAO's nationally representative survey of LEAs. The funds also allowed recipients to restore state budget shortfalls and maintain or increase services. However, the expiration of funds and state budget decreases may cause LEAs to decrease services, such as laying off teachers. We also found that nearly a quarter of LEAs reported lowering their local spending on special education, as allowed for under IDEA provisions that provide eligible LEAs the flexibility to reduce local spending on students with disabilities by up to half of the amount of any increase in federal IDEA funding from the prior year. However, even with this flexibility, many LEAs reported having difficulty maintaining required levels of local special education spending. In addition, two states have not been able to meet required state spending levels for IDEA or obtain a federal waiver from these requirements. States whose waivers were denied and cannot make up the shortfall in the fiscal year in question face a reduction in their IDEA funding equal to the shortfall, which may be long-lasting. Education plans to conduct two types of systematic program assessments to gauge the results of Recovery Act-funded programs that focus on educational reform: program evaluation and performance measurement. In the coming years, Education plans to produce an evaluation that will provide an in-depth examination of various Recovery Act programs' performance in addressing educational reform. In addition, for the SFSF program, Education plans to measure states' ability to collect and publicly report data on preestablished indicators and descriptors of educational reform, and it plans to provide a national view of states' progress. Education intends for this reporting to be a means for improving accountability to the public in the shorter term. Further, Education officials plan to use states' progress to determine whether a state is qualified to receive funds under other future reform-oriented grant competitions. Numerous entities help ensure accountability of Recovery Act funds through monitoring, audits, and other means, which have helped identify areas for improvement. Given the short time frame for spending these funds, Education's new SFSF monitoring approach prioritized helping states resolve monitoring issues and allowed Education to target technical assistance to some states. However, some states did not receive monitoring feedback promptly and this feedback was not communicated consistently because Education's monitoring protocol lacked internal time frames for following up with states. Education and state officials reported using a variety of methods to ensure recipient reported data are accurate. They also use recipient reported data to enhance their oversight and monitoring efforts. According to Recovery.gov, the Recovery Act funded approximately 286,000 full-time equivalents (FTE) during the eighth round of reporting, which ended June 30, 2011, for the education programs GAO reviewed. Despite the limitations associated with FTE data, Education found these data to be useful in assessing the impact of grant programs on saving and creating jobs. GAO recommends that the Secretary of Education establish mechanisms to improve the consistency of communicating SFSF monitoring feedback to states. Education agreed with our recommendation.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director:
George A. Scott
Team:
Government Accountability Office: Education, Workforce, and Income Security
Phone:
(202) 512-5932
GAO-11-804, Recovery Act Education Programs: Funding Retained Teachers, but Education Could More Consistently Communicate Stabilization Monitoring Issues
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United States Government Accountability Office:
GAO:
Report to Congress:
September 2011:
Recovery Act Education Programs:
Funding Retained Teachers, but Education Could More Consistently
Communicate Stabilization Monitoring Issues:
GAO-11-804:
GAO Highlights:
Highlights of GAO-11-804, a report to Congress.
Why GAO Did This Study:
The American Recovery and Reinvestment Act of 2009 (Recovery Act)
provided $70.3 billion for three education programs”the State Fiscal
Stabilization Fund (SFSF); Title I, Part A of the Elementary and
Secondary Education Act (Title I); and Individuals with Disabilities
Education Act (IDEA), Part B. One goal of the Recovery Act was to save
and create jobs, and SFSF also requires states to report information
expected to increase transparency and advance educational reform.
This report responds to two ongoing GAO mandates under the Recovery
Act. It examines (1) how selected states and local recipients used the
funds; (2) what plans the Department of Education (Education) and
selected states have to assess the impact of the funds; (3) what
approaches are being used to ensure accountability of the funds; and
(4) how Education and states ensure the accuracy of recipient reported
data.
To conduct this review, GAO gathered information from 14 states and the
District of Columbia, conducted a nationally representative survey of
local educational agencies (LEA), interviewed Education officials,
examined recipient reports, and reviewed relevant policy documents.
What GAO Found:
As of September 9, 2011, in the 50 states and the District of
Columbia, about 4 percent of the obligated Recovery Act funds remain
available for expenditure. Teacher retention was the primary use of
Recovery Act education funds according to GAO‘s nationally
representative survey of LEAs. The funds also allowed recipients to
restore state budget shortfalls and maintain or increase services.
However, the expiration of funds and state budget decreases may cause
LEAs to decrease services, such as laying off teachers. We also found
that nearly a quarter of LEAs reported lowering their local spending
on special education, as allowed for under IDEA provisions that
provide eligible LEAs the flexibility to reduce local spending on
students with disabilities by up to half of the amount of any increase
in federal IDEA funding from the prior year. However, even with this
flexibility, many LEAs reported having difficulty maintaining required
levels of local special education spending. In addition, two states have
not been able to meet required state spending levels for IDEA or
obtain a federal waiver from these requirements. States whose waivers
were denied and cannot make up the shortfall in the fiscal year in
question face a reduction in their IDEA funding equal to the
shortfall, which may be long-lasting.
Education plans to conduct two types of systematic program assessments
to gauge the results of Recovery Act-funded programs that focus on
educational reform: program evaluation and performance measurement. In
the coming years, Education plans to produce an evaluation that will
provide an in-depth examination of various Recovery Act programs‘
performance in addressing educational reform. In addition, for the
SFSF program, Education plans to measure states‘ ability to collect
and publicly report data on preestablished indicators and descriptors
of educational reform, and it plans to provide a national view of
states‘ progress. Education intends for this reporting to be a means
for improving accountability to the public in the shorter term. Further,
Education officials plan to use states‘ progress to determine whether
a state is qualified to receive funds under other future reform-
oriented grant competitions.
Numerous entities help ensure accountability of Recovery Act funds
through monitoring, audits, and other means, which have helped
identify areas for improvement. Given the short time frame for
spending these funds, Education‘s new SFSF monitoring approach
prioritized helping states resolve monitoring issues and allowed
Education to target technical assistance to some states. However, some
states did not receive monitoring feedback promptly and this
feedback was not communicated consistently because Education‘s
monitoring protocol lacked internal time frames for following up with
states.
Education and state officials reported using a variety of methods to
ensure recipient reported data are accurate. They also use recipient
reported data to enhance their oversight and monitoring efforts.
According to Recovery.gov, the Recovery Act funded approximately
286,000 full-time equivalents (FTE) during the eighth round of
reporting, which ended June 30, 2011, for the education programs GAO
reviewed. Despite the limitations associated with FTE data, Education
found these data to be useful in assessing the impact of grant
programs on saving and creating jobs.
What GAO Recommends:
GAO recommends that the Secretary of Education establish mechanisms to
improve the consistency of communicating SFSF monitoring feedback to
states. Education agreed with our recommendation.
To view the e-supplement online click on [hyperlink,
http://www.gao.gov/products/GAO-11-885SP]. View [hyperlink,
http://www.gao.gov/products/GAO-11-804] or key components. For more
information, contact George A.Scott at (202) 512-7215 or
scottg@gao.gov.
[End of section]
Contents:
Letter:
Background:
LEAs Have Obligated Most of Their Funds, Primarily on Retaining
Teachers, but the Funding Cliff May Reduce Educational Services:
Education Plans to Assess Results of Recovery Act Funds:
Education and States Help Ensure Accountability, but Education Did Not
Consistently Communicate SFSF Monitoring Concerns to States:
Education and States Continue to Oversee the Quality of Recipient
Reporting Data in Eighth Round of Reporting:
Conclusions:
Recommendation for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Drawdown Rates by Program:
Appendix III: Comments from the Department of Education:
Appendix IV: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Estimated Percentage of LEAs Reporting Maintaining,
Increasing, or Decreasing Level of Service:
Table 2: Approval Status and Outcomes for IDEA MOE Waivers as of
August 2011:
Table 3: Education's Planned Reports as Part of Evaluation of Recovery
Act Programs That Include SFSF; IDEA, Part B; and, ESEA Title I, Part
A:
Table 4: Estimated Percentage of LEAs with and without Plans to
Collect Data for Evaluation Purposes:
Table 5: Percentage of Awarded Recovery Act SFSF; ESEA Title I, Part
A; and IDEA, Part B Funds Drawn Down by States as of September 9, 2011:
Figures:
Figure 1: Estimated Percentage of LEAs That Used Various Amounts of
SFSF Funds; ESEA Title I, Part A; and IDEA, Part B Recovery Act Funds
to Retain Staff over the Entire Grant Period:
Figure 2: Examples from Selected States of How LEAs Spent SFSF; ESEA
Title I, Part A; and IDEA, Part B Recovery Act Funding:
Figure 3: Estimated Percentage of LEAs with Funding-Level Changes in
School Years 2009-2010 and 2010-2011, and Anticipated Funding Changes
for School Year 2011-2012:
Figure 4: Selected Actions Taken in School Year 2010-2011 and Likely
Actions LEAs Will Take in School Year 2011-2012 Reported by LEAs
Experiencing or Expecting Funding Decreases:
Figure 5: Estimated Percentage of LEAs Reporting Recovery Act
Monitoring by Various Entities:
Figure 6: Number of Days between SFSF Monitoring Review and Issuance
of Draft Report to State (as of 9/16/11):
Figure 7: Status of Education's SFSF Monitoring Reviews and Reports
(as of 8/31/11):
Figure 8: FTEs Reported for Recovery Act SFSF; Title I, Part A; and
IDEA, Part B in 50 States and DC for Quarters Ending December 2009
through June 2011:
Abbreviations:
CCD: U.S. Department of Education's Common Core of Data:
DATA Act: Digital Accountability and Transparency Act of 2011:
Education: U.S. Department of Education:
ESEA: Elementary and Secondary Education Act of 1965:
FTE: full-time equivalent:
IDEA: Individuals with Disabilities Education Act, as amended:
IHE: institutions of higher education:
LEA: local educational agencies:
MOE: maintenance of effort:
OIG: Office of Inspector General:
SEA: state educational agencies:
SFSF: State Fiscal Stabilization Fund:
United States Government Accountability Office:
Washington, DC 20548:
September 22, 2011:
Report to Congress:
With the most severe recession in decades, states and school
governments around the country faced record budget shortfalls that
threatened to adversely affect services. In response to the economic
crisis facing the nation and the fiscal challenges facing state and
local governments, Congress enacted the American Recovery and
Reinvestment Act of 2009 (Recovery Act).[Footnote 1] Among other
things, the purposes of the Recovery Act were to preserve and create
jobs, promote national economic recovery, and provide long-term
economic benefits through infrastructure investments, including
education.[Footnote 2] The Recovery Act provided nearly $100 billion
in fiscal year 2009 for elementary, secondary, and postsecondary
education programs-”a major responsibility for state and local
governments”-in an effort to ensure students continue to receive
quality educational services.[Footnote 3] While a key purpose of these
funds was to help address short-term fiscal challenges, newly created
education programs also promoted progress on educational reform and
the U.S. Department of Education encouraged recipients to invest in
long-term capacity. We previously reported that school districts have
used Recovery Act education funds primarily to fund jobs, but also
that they have reported progress in key reform areas and have used
funds for one-time investments in equipment and training. The funds
are available until September 30, 2011, but the impact of how those
funds were spent will not be clear for several more years. However,
how school districts used the funds to invest in sustainable reform
efforts could affect their ability to mitigate the effects of
potential funding reductions.
Our 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) ($48.6 billion); Title I, Part A of the
Elementary and Secondary Education Act of 1965, as amended (ESEA)
($10 billion); and the Individuals with Disabilities Education Act, as
amended (IDEA) Part B ($11.7 billion).[Footnote 4] We chose to review
these programs because, collectively, funding for these programs
accounts for approximately $70.3 billion of the $275 billion in
Recovery Act funding distributed through contracts, grants, and loans.
Although all grants have been awarded, recipients have until September
30, 2011, to obligate the remainder of their funds. Most recipients
have obligated the majority of their funds already, but some
recipients may continue to spend their funds after September 30, 2011,
as they pay off their obligations.
The Recovery Act mandates that GAO conduct bimonthly reviews of the
funds used by states and determine whether the act is achieving its
stated purposes.[Footnote 5] The Recovery Act also requires GAO to
comment and report quarterly on, among other things, estimates of job
creation and retention, counted as full-time equivalent (FTE), as
reported by recipients of Recovery Act funds.[Footnote 6] Consistent
with the mandates in the Recovery Act, we determined: (1) how selected
states and local educational agencies (LEA) are using Recovery Act
SFSF, ESEA Title I, and IDEA, Part B funds; (2) what plans Education
and selected states have to assess the effect of the Recovery Act
education funds and what is known about the resulting outcomes; (3)
what approaches Education, selected states, and LEAs are taking to
ensure accountability for Recovery Act education funds; and (4) what
procedures Education and states are using to ensure required recipient
reports contain accurate FTE information for education programs.
To obtain national-level information on how Recovery Act funds made
available by Education under SFSF; ESEA, Title I; and IDEA, Part B,
were used at the local level, we selected a stratified random sample of
LEAs”generally school districts”in all 50 states and the District of
Columbia, and administered a Web-based survey.[Footnote 7] We
conducted our survey between March and May 2011, with a 78 percent
final weighted response rate at the national level. The results of our
sample have a 95 percent confidence interval, with a margin of error
of plus or minus 7 percentage points or less, unless otherwise noted.
We stratified the population into strata based on size, urban status,
and poverty status. Regarding size, we identified and included the 100
largest LEAs in the country. This report does not contain all the
results from the survey. The survey and a more complete tabulation of
the results can be viewed at GAO-11-885SP. For further information on
our survey, see appendix I. Furthermore, at the state and local level,
we gathered information from 14 states and the District of Columbia to
discuss how they were using, monitoring and planning to evaluate the
effect of their Recovery Act funds. We conducted site visits to four
states (California, Iowa, Massachusetts, and Mississippi), and
contacted an additional seven states (Alaska, Arizona, Georgia,
Hawaii, North Carolina, New York, and Wyoming) and the District of
Columbia to discuss how they were using, monitoring, and planning to
evaluate the effect of their Recovery Act funds. We selected these
states based on drawdown rates, economic response to the recession,
and data availability, with consideration of geography and recent
federal monitoring coverage. In addition, we contacted officials from
Florida, Kansas, and South Carolina for information regarding IDEA,
Part B waivers. We also met with program officials at Education to
discuss ongoing monitoring and evaluation efforts for Recovery Act
funds provided through SFSF; ESEA Title I; and IDEA, Part B. We
assessed recipient reports for these programs for the quarter
ending June 30, 2011, for completeness and accuracy and found them
sufficiently reliable for the purposes of this report.[Footnote 8] We
also analyzed the reported FTE jobs data from recipient reports.
Lastly, we reviewed relevant federal laws and regulations, as well as
information on education reform efforts the four states we visited
submitted for their SFSF applications.
Our oversight of programs funded by the Recovery Act has resulted in
more than 100 related products with numerous recommendations since
we began reporting on the Recovery Act.[Footnote 9] This report
updates agency actions in response to recommendations from previous
bimonthly and recipient reporting reviews that have not been fully
implemented (referred to as open recommendations) in appendix IV.
We conducted our work from October 2010 to September 2011 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:
Of the Education programs funded in the Recovery Act, the newly
created SFSF program was the largest in terms of funding. It included
approximately $48.6 billion awarded to states by formula and up to $5
billion awarded as competitive grants.[Footnote 10] SFSF was created,
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. SFSF funds for education
distributed under the Recovery Act were required to first be used to
alleviate shortfalls in state support for education to LEAs and public
institutions of higher education (IHE).
States were required to use SFSF 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 maintain broad discretion in how they can use
education stabilization funds, but states have some ability to direct
IHEs in how to use these funds.
Several other programs received additional funding through the
Recovery Act. For example, the Recovery Act provided $10 billion to
help LEAs educate disadvantaged youth by making additional funds
available beyond those regularly allocated for ESEA Title I, Part A.
These additional funds are 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.
The Recovery Act also provided $12.2 billion in supplemental funding
for programs authorized by IDEA, the major federal statute that
supports the provisions of early intervention and special education
and related services for infants, toddlers, children, and youth with
disabilities. Part B of IDEA funds programs that ensure preschool and
school-aged children with disabilities have access to a free
appropriate public education and is divided into two separate grants--
Part B grants to states (for school-age children) and Part B preschool
grants.[Footnote 11]
While one purpose of the Recovery Act was to preserve and create jobs,
it also required states to report information quarterly to increase
transparency and SFSF required recipients to make assurances relating
to progress on educational reforms. To receive SFSF, states were also
required to provide several assurances, including that they will
maintain state support for education at least at fiscal year 2006
levels; and that they would implement strategies to advance four core
areas of education reform. The four core areas of education reform, as
described by Education, are:
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/or
disabilities.
4. Provide targeted, intensive support, and effective interventions to
turn around schools identified for corrective action or restructuring.
Education required states receiving SFSF funds to report about their
collection and reporting of 34 different indicators and 3 descriptors
related to these four core areas of education reform or provide plans
for making information related to the education reforms publicly
available no later than September 30, 2011. Previously, we reported
that, while states are responsible for assuring advancement of these
reform areas, LEAs were generally given broad discretion in how to
spend the SFSF funds. It is not clear how LEA progress in advancing
these four reforms would affect states' progress toward meeting their
assurances.[Footnote 12]
Additionally, Recovery Act recipients and subrecipients are
responsible for complying with other requirements as a condition of
receiving federal funds. For example, for Recovery Act education
programs we reviewed, states and LEAs must meet applicable maintenance
of effort (MOE) requirements, which generally mandate them to maintain
their previous level of spending on these programs.[Footnote 13]
Generally, this also helps to ensure that states continue to fund
education even with the influx of the Recovery Act funds.
Specifically, the newly created SFSF program required states to
maintain support for elementary and secondary education, in fiscal
years 2009, 2010, and 2011, at least at the level that the state
provided in fiscal year 2006, but did not place any MOE requirements
on subrecipients.[Footnote 14] IDEA generally prohibits states and
LEAs from reducing their financial support, or MOE, for special
education and related services for children with disabilities below
the level of that support for the preceding year.[Footnote 15] For
ESEA, Title I, states[Footnote 16] and LEAs are also required to
maintain their previous level of funding with respect to the provision
of free public education.[Footnote 17] As long as states met certain
criteria, including that the states maintained MOE for SFSF funding,
this funding could be counted to meet MOE for other programs including
ESEA, Title I, and IDEA.
In addition, section 1512 of the Recovery Act requires recipients to
report certain information quarterly. Specifically, the Act requires,
among other types of information, that recipients report the total
amount of Recovery Act funds received, associated obligations and
expenditures, and a detailed list of the projects or activities for
which these obligations and expenditures were made. For each project
or activity, the information must include the name and description of
the project or activity, an evaluation of its completion status, and
an estimate of the number of jobs funded through that project or
activity. The job calculations are based on the total hours worked
divided by the number of hours in a full-time schedule, expressed in
FTEs--but they do not account for the total employment arising from
the expenditure of Recovery Act funds. The prime recipient is
responsible for the reporting of all data required by section 1512 of
the Recovery Act each quarter for each of the grants it received under
the act.
LEAs Have Obligated Most of Their Funds, Primarily on Retaining
Teachers, but the Funding Cliff May Reduce Educational Services:
According to our nationally representative survey of LEAs conducted in
spring 2011, nearly all LEAs reported that they had obligated the
majority of their Recovery Act funds, primarily for retaining
instructional positions, which assisted LEAs in restoring shortfalls
in state and local budgets that LEAs have had to cope with over the
past few school years. As a result of the fiscal stress states faced
during the recession, a number of state educational agencies (SEA) and
LEAs have had difficulty meeting their required MOE requirements for
IDEA. States that do not either fully meet their MOE requirements or
receive a waiver from Education may face a reduction in future IDEA
allocations. State and LEA officials we visited stated that the
actions they have taken to deal with decreased budgets and the
expiration of their Recovery Act funds--such as reducing instructional
supplies and equipment and cutting instructional positions--could have
a negative impact on the educational services they provide to students.
Most LEAs Have Obligated the Majority of Their Recovery Act Education
Funds:
According to our survey, the majority of LEAs reported they had
already obligated most of their SFSF; ESEA Title I, Part A; and IDEA,
Part B funds. Nearly all of the LEAs--99 percent for SFSF; and 97
percent for ESEA Title I and IDEA, Part B--reported that they expected
to obligate all of their Recovery Act funds prior to September 30,
2011.[Footnote 18] However, approximately one-quarter (23 percent) of
LEAs reported that uncertainty about allowable uses of the funds
impacted their ability to expend them in a timely and effective manner.
According to data from Education, as of September 9, 2011, about 4
percent of the states' obligated Recovery Act funds remain available
for expenditure[Footnote 19]. See appendix II for percentages of
awarded Recovery Act funds drawn down by states. As of September 9,
2011, two states had drawn down 100 percent of their ESEA Title I,
Part A funds. Additionally, 27 states had drawn down all of their SFSF
education stabilization funds, while Wyoming, for example, had the
lowest drawdown rate for SFSF--34 percent. Drawdowns can lag behind
actual expenditures for various reasons. For example, SEA officials in
Wyoming stated that funds for certain uses, such as professional
development, tended to be expended in large amounts during the middle
and end of the school year which did not require them to draw down
funds at a constant rate throughout the school year. Additionally, SEA
officials in Alaska told us their drawdown rates appeared low because
the state draws down funds on a quarterly basis to reimburse LEAs
after their allocations have been spent.
SEA officials in the states we visited told us they provided guidance
on obligating Recovery Act funds in an effort to assist LEAs in
meeting the deadline for obligation of the funds. For example, SEA
officials in Massachusetts told us that they sent four communiqués and
conducted teleconferences with LEAs with the goal of ensuring that
SFSF funds were spent appropriately and in a timely fashion. In
Wyoming, SEA officials stated they requested that districts submit
Periodic Expenditure Reports on a quarterly basis so that they could
assess districts' spending of Recovery Act funds. They also told us
that they contacted districts to determine if they were having
challenges obligating the funds by the September 2011 deadline and
sent e-mails to their districts notifying them of the amount of funds
they had remaining.
Recipients Used Most of Their Recovery Act Funds to Retain Teachers,
Build Capacity, and Maintain Educational Services:
Retaining staff was the top use cited by LEAs of SFSF; IDEA, Part B;
and ESEA Title I, Part A Recovery Act funding over the entire grant
period. According to our survey, about three-quarters of LEAs spent 51
percent or more of their SFSF funds on job retention (see figure 1). A
smaller, but substantial, percentage of LEAs also reported using 51
percent or more of their ESEA Title I, Part A and IDEA, Part B
Recovery Act funding--an estimated 43 percent and 38 percent,
respectively--for job retention. Specifically, in the 2010-2011 school
year, the large majority of LEAs (84 percent) used Recovery Act funds
to retain instructional positions, which typically include classroom
teachers and paraprofessionals. Salaries and benefits comprise the
majority of public school's budgets, and funds authorized by the
Recovery Act provided LEAs additional funds to pay for the retention
of education staff.
Figure 1: Estimated Percentage of LEAs That Used Various Amounts of
SFSF Funds; ESEA Title I, Part A; and IDEA, Part B Recovery Act Funds
to Retain Staff over the Entire Grant Period:
[Refer to PDF for image: 3 pie-charts]
Percentage of funds used:
SFSF:
51% to 100%: 74%;
26% to 50%: 7%;
1% to 25%: 5%;
0%: 10%;
Not applicable or ’don't know“: 3%.
ESEA Title I, Part A:
51% to 100%: 43%;
26% to 50%: 14%;
1% to 25%: 15%;
0%: 23%;
Not applicable or ’don't know“: 4%.
IDEA, Part B:
51% to 100%: 38%;
26% to 50%: 20%;
1% to 25%: 16%;
0%: 21%;
Not applicable or ’don't know“: 5%.
Source: GAO survey of LEAs in school year 2010-11.
[End of figure]
In addition to retaining instructional positions, LEAs spent Recovery
Act funds on one-time, nonrecurring purchases and sustainable items
that built capacity without creating recurring costs. According to our
survey, 78 percent of LEAs reported using 1 to 25 percent of at least
one of their Recovery Act funding sources--SFSF; ESEA Title I, Part A;
or IDEA, Part B--on one-time expenditures, such as professional
development for instructional staff, computer technology, and
instructional materials. For example, LEA officials in one district in
Mississippi told us that they used Recovery Act funds to invest in
technology, security equipment, and a handicapped-accessible school
bus for students with special needs. In the New Bedford Public Schools
district in Massachusetts, LEA officials stated that Recovery Act
funds were used to rehabilitate and redeploy computers around the
district, purchase iPad connections to enable online learning, and
provide professional development to teachers on various technological
efforts. See figure 2.
Figure 2: Examples from Selected States of How LEAs Spent SFSF; ESEA
Title I, Part A; and IDEA, Part B Recovery Act Funding:
[Refer to PDF for image: 5 photographs]
1) Mississippi summer school students work in a computer lab in a
Water Valley elementary school.
2) A classroom in Fairfield-Suisun in California that helps students
with cognitive disabilities and significant behavorial issues learn
life skills, such as cooking and cleaning.
3) A display showing images from security cameras around a school in
Mississippi.
4) A New Bedford School District teacher in Massachusetts using a
Smart Board to help students with a writing assignment.
5) A ’Sensory Room“ designed to aid the physical and cognitive
development of students with special needs in New Bedford School
District in Massachusetts.
Source: GAO.
[End of figure]
Other one-time purchases made with Recovery Act funds enhanced
districts' capacity to provide services in the future, sometimes with
anticipated long-term cost savings. In Massachusetts, we visited two
LEAs--Newton Public Schools and New Bedford Public Schools--that used
IDEA, Part B Recovery Act funds to provide or expand their services
for students with special needs instead of paying more expensive
schools or facilities to provide the alternative programs and
services. LEA officials in Fairfield-Suisun Unified School District in
California told us they used IDEA, Part B Recovery Act funds to
implement two initiatives they expected to lead to significant cost
savings in the future. The first initiative involved partnering with
the nearby University of the Pacific to recruit recent speech
pathology graduates. In exchange for externships and student loan
stipends paid for with Recovery Act funds, the students committed to
working in the district for 3 years upon graduation. These newly
licensed therapists would be paid salaries around $45,000 per year,
considerably less than the contracted therapists that cost the
district over $100,000 per year. Further, because of the 3-year
commitment, officials stated the graduates were more likely to
continue working in the district as permanent employees. Officials
estimated that this initiative could save them $800,000 in the 2011-
2012 school year. The second initiative used IDEA, Part B Recovery Act
funds to start a public school for emotionally disturbed students who
previously attended non-public schools at the district's expense.
According to the officials, remodeling the old school building was
both cost-effective and programmatically effective, since non-public
schools for emotionally disturbed students could cost up to $85,000
per student, with additional costs for occupational and speech therapy
if needed. The new public school costs from $25,000 to $35,000 per
student, according to district officials. Additionally, officials at
Hinds Community College in Mississippi used SFSF education
stabilization funds to invest in energy conservation. Specifically,
the college contracted with an organization to help educate students
and staff on energy conservation efforts, such as turning off lights
and computers. The officials stated that they saved approximately $1
million on utilities in fiscal year 2010, which offset the need to
increase tuition.
Compared to the year prior to receiving Recovery Act funds, a large
majority of LEAs reported being able to, with the use of Recovery Act
funds, maintain or increase the level of service they could provide to
students (see table 1). LEA officials in the Center Point-Urbana
Community School District in Iowa told us that Recovery Act funds
allowed the district to maintain its core curriculum, provide
professional development to instructional staff, and maintain the
collection of assessment data that helps them align the district's
curriculum with the state's core curriculum. LEA officials in the
Water Valley School District in Mississippi stated that SFSF funds
allowed the district to maintain its reform efforts because they
allowed students greater access to teachers. They explained that
saving those teacher positions allowed them to keep class sizes small
and offer more subjects, such as foreign language, fine arts, and
business classes.
However, an estimated 13 percent of LEAs were not able to maintain the
same level of service even with Recovery Act SFSF funds. These LEAs
reported a number of factors that had an effect on their decreased
level of service, including increases in class size, reductions in
instructional and non-instructional programs, and reductions in staff
development. For example, LEA officials at the Tipton Community School
District in Iowa stated that, even with Recovery Act funding, they
could not afford to maintain their high school agriculture program and
middle school vocal music program on a full-time basis.
Table 1: Estimated Percentage of LEAs Reporting Maintaining,
Increasing, or Decreasing Level of Service:
ESEA Title I, Part A;
Maintain: 50%;
Increase: 46%;
Decrease: 3%.
IDEA, Part B;
Maintain: 58%;
Increase: 38%;
Decrease: 2%.
SFSF;
Maintain: 71%;
Increase: 14%;
Decrease: 13%.
Source: GAO survey of LEAs in school year 2010-11.
Note: There were variations in the wording of the survey questions
that were used to create this table. We asked respondents about the
overall effect of their Title I, Part A funds on education reform
efforts and the overall effect of their IDEA, Part B funds on
education reform for students with disabilities. We asked respondents
how their SFSF funds affected their ability to maintain or raise the
level of service in their LEA.
[End of table]
LEAs Reported Anticipating Continued Fiscal Constraints and Being
Likely to Reduce Educational Services:
The fiscal condition of LEAs across the country is mixed, but many
school districts continued to face funding challenges in the 2010-2011
school year. One sign of state fiscal stress has been mid-year budget
reductions resulting from lower revenues than those forecasted.
Nationwide, in state fiscal year 2011, one of the program areas where
many states made mid-year general fund expenditure reductions was K-12
education, according to the Fiscal Survey of States.[Footnote 20] Out
of the 23 states that reported making mid-year reductions, 18 states
reduced K-12 education funding. Looking forward to fiscal year 2012,
reductions for K-12 education had been proposed in 16 states,
according to the Fiscal Survey of States.[Footnote 21] Given that
nearly half of education funding, on average, is provided by the
states, the impact of state-level reductions to education could
significantly affect LEA budgets.
Over the course of our work on the Recovery Act, our surveys of LEAs
have shown a mixed but deteriorating fiscal situation for the nation's
LEAs. Specifically, our survey of LEAs conducted in the 2009-2010
school year indicated that an estimated one-third of LEAs reported
experiencing funding decreases in that year. Our survey conducted in
the 2010-2011 school year showed that an estimated 41 percent of LEAs
reported experiencing funding decreases in that year. Moreover, nearly
three-quarters (72 percent) anticipated experiencing funding-level
decreases in school year 2011-2012 (see figure 3). Further, LEAs
anticipated decreases of varying amounts--24 percent expected
decreases between 1 and 5 percent, 29 percent expected decreases
between 6 and 10 percent, and 19 percent expected decreases over 10
percent.
Figure 3: Estimated Percentage of LEAs with Funding-Level Changes in
School Years 2009-2010 and 2010-2011, and Anticipated Funding Changes
for School Year 2011-2012:
[Refer to PDF for image: horizontal bar graph]
Estimated Percentage of LEAs:
School year: 2009-10 (actual);
Decrease in funding: 33%;
No change in funding: 12%;
Increase in funding: 61%.
School year: 2010-11 (actual);
Decrease in funding: 41%;
No change in funding: 14%;
Increase in funding: 40%.
School year: 2011-12 (anticipated);
Decrease in funding: 72%;
No change in funding: 10%;
Increase in funding: 15%.
Source: GAO survey of LEAs in school years 2009-10 and 2010-11.
[End of figure]
All types of LEAs have had to cope with declining budgets in the past
few school years, but LEAs with high student poverty rates were
especially hard hit. LEAs that had high student poverty rates (54
percent) more often reported experiencing funding decreases compared
to those with low student poverty rates (38 percent).[Footnote 22]
Additionally, 45 percent of suburban LEAs reported experiencing a
decrease in funding from the 2009-2010 school year to the 2010-2011
school year.[Footnote 23] Likewise, 41 percent of rural LEAs and 33
percent of urban LEAs reported experiencing funding decreases in the
same year.[Footnote 24] In addition, 62 percent of LEAs that
experienced a decrease in funding in the 2010-2011 school year
reported that they formed or planned to form an advisory committee or
hold meetings with community stakeholders to develop budget
recommendations as a cost-saving strategy.[Footnote 25]
To address their funding decreases in school year 2010-2011, about one-
quarter or more of LEAs reported taking actions such as reducing
instructional supplies and equipment and cutting instructional
positions. Moreover, about one-half of LEAs that expected a decrease
in funding in the upcoming 2011-2012 school year reported that they
would likely have to reduce instructional supplies and equipment or
cut instructional and non-instructional positions in the 2011-2012
school year to address the budget shortfall (see figure 4).
Figure 4: Selected Actions Taken in School Year 2010-2011 and Likely
Actions LEAs Will Take in School Year 2011-2012 Reported by LEAs
Experiencing or Expecting Funding Decreases:
[Refer to PDF for image: horizontal bar graph]
Estimated percentage of LEAs with decreased funding:
Reduce instructional supplies/equipment:
Actions taken by LEAs in school year 2010-11: 27%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 54%.
Cut instructional positions:
Actions taken by LEAs in school year 2010-11: 24%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 51%.
Cut non-instructional positions:
Actions taken by LEAs in school year 2010-11: 25%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 51%.
Reduce energy consumption:
Actions taken by LEAs in school year 2010-11: 26%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 50%.
Increase class size:
Actions taken by LEAs in school year 2010-11: 22%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 49%.
Defer maintenance:
Actions taken by LEAs in school year 2010-11: 23%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 45%.
Reduce professional development/teacher training:
Actions taken by LEAs in school year 2010-11: 17%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 43%.
Freeze pay:
Actions taken by LEAs in school year 2010-11: 15%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 40%.
Reduce custodial services:
Actions taken by LEAs in school year 2010-11: 15%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 34%.
Eliminate summer/alternate programs:
Actions taken by LEAs in school year 2010-11: 11%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 28%.
Reduce transportation services:
Actions taken by LEAs in school year 2010-11: 11%;
Actions LEAs are ’likely to take“ in school year 2011-12, as reported
in school year 2010-11: 26%.
Source: GAO survey of LEAs in school year 2010-11.
Note: The LEAs who responded that they took actions in school year
2010-11 may not be the same LEAs that reported that they anticipated
being likely to take actions in school year 2011-12.
[End of figure]
LEAs across the country will soon exhaust their SFSF; ESEA Title I,
Part A; and IDEA, Part B Recovery Act funds, which will place them at
the edge of a funding cliff--meaning that they will not have these
funds to help cushion budget declines in the upcoming 2011-2012 school
year. However, many LEAs planned to spend Education Jobs Fund awards,
which could mitigate some of the effects of the funding cliff.
Congress created the Education Jobs Fund in 2010, which generally
provides $10 billion to states to save or create education jobs for
the 2010-2011 school year.[Footnote 26] States distribute the funds to
LEAs, which may use the funds to pay salaries and benefits, and to
hire, rehire, or retain education-related employees for the 2010-2011
school year. According to our survey, an estimated 51 percent of LEAs
spent or planned to spend 75 to 100 percent of their Education Jobs
fund allocation in the 2010-2011 school year and about 49 percent
planned to spend the same amount in the 2011-2012 school year. The
large majority of LEAs (72 percent) spent or planned to spend most of
the funds on retaining jobs, as opposed to hiring new staff or
rehiring former staff.
State and LEA officials we visited stated that the actions they have
taken to deal with decreased budgets and the expiration of their
Recovery Act funds could have an impact on the educational services
they provide. For example, officials at the Fairfield-Suisun Unified
School District in California told us that they tried to make cuts
that had the least impact on the classroom, but they had begun making
cuts that would impact the students. For example, they reported that
they will increase class sizes, cut administrative and student support
staff, eliminate summer school programs, and close schools because of
their decreased budget. LEA officials at the Newton Public School
District in Massachusetts stated that they cut many support services
and were reviewing under-enrolled classes to determine which programs
to eliminate. They stated that they tried to insulate cuts to mitigate
the impact on student learning, but stated that the cuts would
nonetheless negatively impact the students' educational services. In
Hawaii, SEA officials told us that their state was considering certain
cost-saving scenarios to help mitigate the state's strained fiscal
climate, including decreasing wages for all SEA employees, increasing
class size, and eliminating school bus transportation for all students
except those with special needs.[Footnote 27] Officials noted that
eliminating bus transportation could lead to increased student
absences and could be a challenge for students living in rural areas.
Additionally, officials at the Center Point-Urbana School District in
Iowa told us that they made several adjustments to save costs and be
more efficient, such as reducing custodial staff. Because it is a
small, rural district, Center Point-Urbana officials told us that any
further cuts would jeopardize the quality of education it can provide
to students.
Further, a recent Center on Education Policy report found funding cuts
also hampered progress on school reform.[Footnote 28] According to
their national survey of school districts, they estimate that 66
percent of school districts with budget shortfalls in 2010-2011
responded to the cuts by either slowing progress on planned reform, or
postponing or stopping reform initiatives. Further, about half (54
percent) of the districts that anticipated shortfalls in 2011-2012
expected to take the same actions next school year.
LEAs Reduced Support for Special Education Due to Flexibility Allowed
under IDEA:
According to our survey, over a quarter of LEAs decreased their
spending on special education because of the local MOE spending
flexibility allowed under IDEA and the large influx of Recovery Act
IDEA funds. Under IDEA, LEAs must generally not reduce the level of
local expenditures for children with disabilities below the level of
those expenditures for the preceding year.[Footnote 29] The law allows
LEAs the flexibility to adjust local expenditures, however, in certain
circumstances. Specifically, in any fiscal year in which an LEA's
federal IDEA, Part B Grants to States allocation exceeds the amount
the LEA received in the previous year, an eligible LEA[Footnote 30]
may reduce local spending on students with disabilities by up to 50
percent of the amount of the increase.[Footnote 31] If an LEA elects
to reduce local spending, those freed up funds must be used for
activities authorized under the ESEA. Because Recovery Act funds for
IDEA count as part of the LEA's overall federal IDEA allocation,
[Footnote 32] the total increase in IDEA funding for LEAs was far
larger than the increases in previous years, which allowed many LEAs
the opportunity to reduce their local spending.
As we have previously reported, the decision by LEAs to decrease their
local spending may have implications for future spending on special
education.[Footnote 33] Because LEAs are required to assure that they
will maintain their previous year's level of local, or state and
local, spending on the education of children with disabilities to
continue to receive IDEA funds, if an LEA lowers its spending using
this flexibility, the spending level that it must meet in the
following year will be at this reduced level. If LEAs that use the
flexibility to decrease their local spending do not voluntarily
increase their spending in future years--after Recovery Act funds have
expired--the total local, or state and local, spending for the
education of students with disabilities may decrease, compared to
spending before the Recovery Act.
Many LEAs Anticipate Difficulty Meeting IDEA MOE Requirements, Which
May Result in Financial Consequences:
Many LEAs anticipate difficulty meeting the IDEA MOE requirement for
the next few years and could experience financial consequences if they
do not comply. Through our survey, we found that 10 percent of LEAs
expected to have trouble meeting their MOE for school year 2010-11
and, in the 2011-12 school year, this percentage jumps to 24 percent
of LEAs. For example, Florida officials reported that nearly two-
thirds of the LEAs in their state may be in jeopardy of not meeting
their MOE requirement. Further, Education officials told us the LEA
MOE amount can be difficult to calculate because there are various
exceptions and adjustments LEAs can make, such as considering spending
changes in the case of students with high-cost services leaving a
program, hiring lower salary staff to replace retirees, and extensive
one-time expenditures like a computer system. Education officials
reported that they provided technical assistance to help states and
LEAs understand how to include these exceptions and adjustments in
their MOE calculations.
Of LEAs that exercised the flexibility to adjust their IDEA MOE
amount, 15 percent reported they anticipated having difficulty meeting
MOE in 2010-11 even though their required local spending level was
reduced.[Footnote 34] And in 2011-12, 33 percent of the LEAs that took
advantage of the MOE adjustment still expected difficulty in meeting
their MOE level.[Footnote 35]
According to Education's guidance, if an LEA is found to have not
maintained its MOE, the state is required to return to Education an
amount equal to the amount by which the LEA failed to maintain effort.
Additionally, IDEA does not provide LEAs an opportunity to receive a
waiver from MOE requirements.
Several States Applied for IDEA MOE Waivers, but Two States May
Receive a Long-Lasting Reduction of IDEA Funding Because Full Waivers
Were Not Approved:
As of August 2011, seven states had applied for a total of 11 waivers
of IDEA MOE requirements and other states reported they were
considering applying for a waiver because of fiscal declines in their
states. In addition to LEAs, states must also meet MOE requirements.
To be eligible for Part B funding, states must provide an assurance
that they will not reduce the amount of state financial support for
special education below the amount of that support for the preceding
fiscal year,[Footnote 36] and must operate consistent with that
assurance. However, Education may waive this state MOE requirement
under certain circumstances.[Footnote 37] While Education has granted
full waivers for five instances, it has also denied or partially
granted[Footnote 38] waivers in five instances for Iowa, Kansas,
Oregon, and South Carolina (twice) and is currently reviewing an
additional waiver request from Kansas (see table 2). In their waiver
requests, all seven states cited declining fiscal resources as the
reason for not being able to maintain their spending on special
education, but waiver requests varied in amount from nearly half a
million dollars in West Virginia to over $75 million in South Carolina.
Table 2: Approval Status and Outcomes for IDEA MOE Waivers as of
August 2011:
State: Alabama;
State fiscal year: 2010;
Amount requested: $9,204,462;
Amount waived: $9,204,462;
Approval status and outcome: Approved.
State: Iowa[A];
State fiscal year: 2010;
Amount requested: $38,102,897;
Amount waived: $38,102,897;
Approval status and outcome: Approved.
State: Iowa[A];
State fiscal year: 2011;
Amount requested: $4,082,923;
Amount waived: 0;
Approval status and outcome: Denied--state recalculated MOE and no
shortfall remained.[A].
State: Kansas;
State fiscal year: 2010;
Amount requested: $55,492,707;
Amount waived: $53,306,253;
Approval status and outcome: Partially granted--shortfall of about $2
million.
State: Kansas;
State fiscal year: 2011;
Amount requested: $34,193,605;
Amount waived: [B];
Approval status and outcome: Currently under review.
State: New Jersey;
State fiscal year: 2010;
Amount requested: $25,671,915;
Amount waived: $25,671,915;
Approval status and outcome: Approved.
State: Oregon;
State fiscal year: 2011;
Amount requested: $15,674,579;
Amount waived: 0;
Approval status and outcome: Denied--state restored shortfall.
State: South Carolina;
State fiscal year: 2009;
Amount requested: $20,312,122;
Amount waived: $20,312,122;
Approval status and outcome: Approved.
State: South Carolina;
State fiscal year: 2010;
Amount requested: $67,402,525;
Amount waived: $31,199,616;
Approval status and outcome: Partially granted--shortfall of about $36
million.
State: South Carolina;
State fiscal year: 2011;
Amount requested: $75,343,070;
Amount waived: 0;
Approval status and outcome: Denied--state restored the entire
shortfall.
State: West Virginia;
State fiscal year: 2010;
Amount requested: $491,580;
Amount waived: $491,580;
Approval status and outcome: Approved.
Source: GAO analysis of state waiver requests and Education's waiver
determination letters.
[A] According to Education officials, Iowa recalculated its MOE based
and was able to meet the MOE requirement.
[B] Kansas applied for a waiver on August 17, 2011, and is currently
being reviewed by Education officials.
[End of table]
Education's guidance states that it considers waiver requests on a
case-by-case basis and seeks to ensure that reductions in the level of
state support for special education are not greater in proportion than
the reduction in state revenues. In addition, as part of its review of
waiver requests, Education seeks to ensure that states are not
reducing spending on special education programs more severely than
other areas. When Education receives a request for a waiver, officials
told us they request state budget data to better understand the
state's calculation of MOE, and to assess whether granting a waiver
would be appropriate. According to Education officials, as well as
state officials, this process can be lengthy and may involve a lot of
back-and-forth between the department and the state to acquire the
necessary information, understand the state's financial situation, and
determine the state's required MOE level.[Footnote 39] Once all the
data have been collected and reviewed to determine whether the state
experienced exceptional or uncontrollable circumstances and whether
granting a waiver would be equitable due to those circumstances,
Education officials inform states that their waiver has either been
approved, partially granted, or denied.
For states whose waivers are denied or are partially granted,
according to Education officials, the state must provide the amount of
the MOE shortfall for special education during the state fiscal year
in question or face a reduction in its federal IDEA grant award by the
amount equal to the MOE shortfall.[Footnote 40] Education officials
told us that because a state must maintain financial support for
special education during a fiscal year, IDEA does not permit a state
to make up this shortfall after that fiscal year is over. Education
officials also told us that once a state's funding is reduced, the
effect may be long-lasting in that the IDEA requires that each
subsequent year's state allocation be based, in part, on the amount
the state received in the prior year.[Footnote 41] Both Kansas and
South Carolina now face reductions of IDEA awards for fiscal year 2012
of approximately $2 million and $36 million, respectively. Education
officials reported that it is impossible to predict with certainty the
effect this may have on the states' future IDEA awards, but they
indicated that these reductions may have a long-lasting negative
effect on future IDEA awards. South Carolina has filed an "Appeal of
Denial of Waiver Request/Reduction in Funds" with Education's Office
of Hearings and Appeals regarding Education's decision to partially
grant its waiver request for 2009-2010.
Education Plans to Assess Results of Recovery Act Funds:
Education plans to conduct two common types of systematic program
assessment: program evaluation and performance measurement. In the
coming years, Education plans to produce an evaluation that will
provide an in-depth examination of various Recovery Act programs'
performance in addressing educational reform. In addition to this
overall assessment of the programs' results, for the SFSF program,
Education plans to measure states' ability to collect and publicly
report data on preestablished indicators and descriptors of
educational reform. Education intends for this reporting to be a means
for improving accountability to the public in the shorter term.
Education's Planned Evaluations Are Intended to Assess Recovery Act-
Funded Outcomes:
Education plans to conduct a national evaluation to assess the results
of Recovery Act-funded programs and initiatives addressing educational
reform. The evaluation is intended to focus on efforts to drive
innovation, improve school performance, and reduce student achievement
gaps.[Footnote 42] According to Education officials, the programs
covered by the evaluation include SFSF; IDEA, Part B; ESEA Title I,
Part A; Race to the Top; the Teacher Incentive Fund; and Ed Tech.
[Footnote 43] Including these Recovery Act education programs in one
evaluation will allow for a broad view of the results of programs
focused on education reform.
As part of this integrated evaluation, Education plans to issue four
reports over the next several years that are descriptive in nature,
with the final report in 2014 including analysis of outcome data. The
four planned reports are described in table 3.
Table 3: Education's Planned Reports as Part of Evaluation of Recovery
Act Programs That Include SFSF; IDEA, Part B; and, ESEA Title I, Part
A:
Type of report and planned completion:
* Descriptive;
* Winter 2012;
Focus of report: Analysis of the variation in funding to states, LEAs,
and schools and how funds were distributed (e.g., from states to LEAs,
directly to LEAs, etc.).
Type of report and planned completion:
* Descriptive;
* Spring 2012;
Focus of report: The extent to which the key strategies, such as the
four reform assurances, are implemented over time and whether the
funding seems related to the scope and pace of the activity. How the
emphasis and extent of implementation varies by fiscal conditions,
other state and LEA characteristics, and the types of Recovery Act
program funds received.
Type of report and planned completion:
* Descriptive;
* Spring 2013;
Focus of report: The extent of support provided by one educational
level to another and the match in implementation priorities across
them. May also assess whether such factors as clear guidance,
technical assistance, or shared priorities are associated with fewer
challenges and greater implementation of Recovery Act strategies.
Type of report and planned completion:
* Descriptive and outcome;
* Summer 2014;
Focus of report: Relationships between levels of Recovery Act funding
and implementation of specific reform strategies and how these may be
associated with key outcomes (e.g., gains in student achievement,
graduation rates). However, definitive causal conclusions cannot be
drawn from this study.
Source: GAO analysis of information provided by Education officials.
Notes: For this evaluation, IES contracted with external research
professionals, led by Westat.
[End of table]
In addition, studies are planned related to measuring progress in
meeting performance goals under the Recovery Act, according to
Education officials. For example, Education's Policy and Program
Studies Service will issue a report in 2012 that will examine teacher
evaluation and other teacher-related issues based on state reported
data under SFSF and through Education's EDFacts database.[Footnote 44]
Although the Recovery Act does not require states and LEAs to conduct
evaluations of their Recovery Act-funded reform activities, officials
in a few states and LEAs we talked with said they are considering
conducting evaluations. For example, Mississippi has implemented LEA
program evaluations of some Recovery Act funded initiatives using
student achievement data. At the local level, between about 43 and 56
percent of LEAs reported that they are neither collecting nor planning
to collect data that would allow for the evaluation of the use of
SFSF; IDEA, Part B; or ESEA Title I, Part A funds, while between about
19 and 31 percent of LEAs indicated they were either collecting or
planning to collect information for this purpose. (See table 4.) For
example, officials at one LEA in Massachusetts said that they are
evaluating their use of IDEA Recovery Act funds to provide special
education programs within the district rather than through private
schools.[Footnote 45]
Table 4: Estimated Percentage of LEAs with and without Plans to
Collect Data for Evaluation Purposes:
Program : SFSF;
Not collecting or planning to collect: 56;
Collecting or planning to collect: 19;
Don't know: 25.
Program : ESEA Title I, Part A;
Not collecting or planning to collect: 43;
Collecting or planning to collect: 31;
Don't know: 26.
Program : IDEA, Part B;
Not collecting or planning to collect: 47;
Collecting or planning to collect: 24;
Don't know: 29.
Source: GAO survey of LEAs.
[End of table]
Education Plans to Measure States' Progress on Reporting SFSF Reform
Data:
In addition to the more comprehensive evaluation, Education intends to
assess each state's progress on collecting and publicly reporting data
on all of the 37 SFSF-required indicators and descriptors of
educational reform because, according to Education officials, the
public will benefit from having access to that information.[Footnote
46] States have until September 30, 2011, to report this performance
data. As part of that assessment, Education officials said they have
reviewed states' SFSF applications and self-reported annual progress
reports on uses of funds and the results of those funds on education
reform and other areas. Coupled with reviews of the applications and
annual reports, Education requires states that receive SFSF funds to
maintain a public Web site that displays information responsive to the
37 indicator and descriptor requirements in the four reform areas.
[Footnote 47] For example, on its Web site as of August 2011, Iowa's
SEA reported that it includes 9 of the 12 required reporting
indicators for its statewide longitudinal data system.[Footnote 48]
These Web-based, publicly-available data are intended for use within
each state, according to Education officials, because individual
states and communities have the greatest power to hold their SEAs and
LEAs accountable for reforms. Specifically, Education intended this
information to be available to state policymakers, educators, parents,
and other stakeholders to assist in their efforts to further reforms
by publicly displaying the strengths and weaknesses in education
systems.[Footnote 49] Officials in most of the states we talked with
said that the requirements to report this information are useful. For
example, some state officials pointed out that publicly reporting such
data could serve as a catalyst of reform by pointing out areas where
the state could improve.[Footnote 50]
In addition to each state publicly reporting this information,
Education plans to report states' progress toward complying with the
conditions of the SFSF grant at the national level. Education
officials said they will summarize states' ability to collect and
report on the required indicators and descriptors across the four
reform areas. Not all states were able to collect and report this
information as of March 2011, but states have until September 30,
2011, to do so. If a state could not report the information, it was
required to create a plan to do so as soon as possible and by the
September deadline.[Footnote 51] As part of its reporting, Education
will summarize states' responses for certain indicators and
descriptors and present it on Education's Web site.[Footnote 52]
For many other indicators and all three descriptors, Education
officials said that it faces challenges in presenting a national
perspective on states' progress. For example, there are no uniform
teacher performance ratings among LEAs within states and across
states, which limits Education's ability to present comparisons.
Moreover, states are not required to present information in a
consistent manner, making it difficult to present aggregated or
comparative data for many of the indicators. Also, Education officials
said that because information addressing the three descriptors is
presented in narrative, it is difficult to provide summary
information. According to Education officials, they did not provide
specific guidance on how states are to report the other data elements
because they did not want to be too prescriptive. However, according
to Education officials, through their reviews of state Web sites they
found cases where the sites do not clearly provide the information,
and states have acted on Education's suggested improvements to the
sites.
Additionally, Education plans to use states' progress toward
collecting and reporting this information to inform whether states are
qualified to participate in or receive funds under future reform-
oriented grant competitions, such as they did for the Race to the Top
program.[Footnote 53] GAO has found that using applicant's past
performance to inform eligibility for future grant competitions can be
a useful performance accountability mechanism.[Footnote 54] Education
communicated its intention to use this mechanism in the final
requirements published in the Federal Register on November 12, 2009,
but Education has not yet specified how this mechanism will be
used.[Footnote 55] As a result, officials in most of the states we
spoke with said they were unaware of how Education planned to use the
indicators or how Education would assess them with regards to their
efforts to meet assurances. Education officials said they also plan to
use the information to inform future policy and technical assistance
to states and LEAs.
Education and States Help Ensure Accountability, but Education Did Not
Consistently Communicate SFSF Monitoring Concerns to States:
A Range of Accountability Efforts Are in Place and Identified Areas
for Improvement:
To help ensure accountability of Recovery Act funds, a wide variety of
entities oversee and audit Recovery Act programs,[Footnote 56] and
Education officials told us they routinely review monitoring and audit
results from many of these sources. Federal and state entities we
spoke with described various accountability mechanisms in place over
Recovery Act education programs, including financial reviews, program
compliance reviews, and recipient report reviews. For example, state
auditors and independent public accountants conduct single audits that
include tests of internal control over and compliance with grant
requirements such as allowable costs, maintenance of effort, and cash
management practices.[Footnote 57] The Department of Education, the
Education Office of Inspector General (OIG), and various state
entities also examine internal controls and financial management
practices, as well as data provided quarterly by grant recipients and
subrecipients as required by section 1512 of the Recovery Act.
Additionally, many of these entities conduct programmatic reviews that
include monitoring compliance with program requirements, such as
funding allowable activities and achieving intended program goals.
These accountability efforts have helped identify areas for
improvement at the state and local levels, such as issues with cash
management, subrecipient monitoring, and reporting requirements. For
example, since 2009 the Education OIG has recommended that several
states improve their cash management procedures after finding that
states did not have adequate processes to both minimize LEA cash
balances and ensure that LEAs were properly remitting interest earned
on federal cash advances.[Footnote 58] The Education OIG also found
that several states had not developed plans to monitor certain
Recovery Act funds or had not incorporated Recovery Act-specific
requirements into their existing monitoring protocols. With regard to
recipient reporting, various recipients had difficulty complying with
enhanced reporting requirements associated with Recovery Act grants.
For example, an independent public accounting firm contracted by the
Mississippi Office of the State Auditor found 32 instances of
noncompliance with reporting requirements in the 43 LEAs it tested.
Some of the findings included failure to file quarterly recipient
reports on Recovery Act funds as required and providing data in the
quarterly reports that differed from supporting documentation.
During the fiscal year 2010 single audits of the state governments we
visited, auditors identified noncompliance with certain requirements
that could have a direct and material effect on major programs,
including some education programs in California and Massachusetts.
[Footnote 59] In Iowa and Mississippi, the auditors found that the
states complied in all material respects with federal requirements
applicable to each of the federal programs selected by the auditors
for compliance testing. Auditors also identified material weaknesses
and significant deficiencies in internal control over compliance with
SFSF; ESEA Title I, Part A; and IDEA, Part B, for some SEAs and LEAs
we visited.[Footnote 60] For example, auditors reported that
California's SEA continued to have a material weakness because it
lacked an adequate process of determining the cash needs of its ESEA
Title I subrecipients.[Footnote 61] At the state level, Iowa,
Massachusetts, and Mississippi were found to have no material
weaknesses in internal control over compliance related to Recovery Act
education funds, though auditors did identify significant deficiencies
in Iowa. For example, in Iowa auditors found several instances of
excess cash balances for the SFSF grant. According to our survey of
LEAs, nearly 8 percent of all LEAs reported having Single Audit
findings related to Recovery Act education funds. For example, an
auditor found that one LEA in Iowa had a material weakness because it
did not properly segregate duties for SFSF--one employee was tasked
with both preparing checks and recording transactions in the general
ledger. In Massachusetts, the auditors identified a material weakness
because an LEA was not complying with Davis-Bacon Act
requirements,[Footnote 62] such as failing to obtain certified
payrolls for vendors contracted for special education construction
projects in order to verify that employees were being paid in
accordance with prevailing wage rates. As part of the single audit
process, grantees are responsible for follow-up and corrective action
on all audit findings reported by their auditor, which includes
preparing a corrective action plan at the completion of the audit. For
all the 2010 single audit findings described above, the recipients
submitted corrective action plans.
Our survey of LEAs showed that federal and state entities also have
been monitoring and auditing their Recovery Act funds through both
site visits and desk reviews. As figure 5 indicates, over a third of
LEAs reported their SEA conducted a desk review to oversee their use
of Recovery Act funds, and nearly a fifth reported their SEA conducted
a site visit. States are responsible for ensuring appropriate use of
funds and compliance with program requirements at the subrecipient
level, and Education in turn works to ensure that the states are
monitoring and implementing federal funds appropriately. Education
does select some school districts for desk reviews and site visits, as
shown in figure 5.
Figure 5: Estimated Percentage of LEAs Reporting Recovery Act
Monitoring by Various Entities:
[Refer to PDF for image: horizontal bar graph]
Estimated percentage of LEAs:
Department of Education:
Desk review: 3.2%;
Site visit: 2.9%.
State Educational Agency:
Desk review: 34.6%;
Site visit: 18.0%.
State Auditor Office:
Desk review: 10.8%;
Site visit: 12.8%.
State Recovery Leader:
Desk review: 2.1%;
Site visit: 1.5%.
Source: GAO survey of LEAs in school year 2010-11.
Note: Percentages in figure may be underestimates, as survey
respondents were instructed to check only one monitoring entity per
type of review.
[End of figure]
While few LEAs reported that Education monitored their Recovery Act
funds directly, Education program offices told us that as part of
their oversight efforts, they routinely review and follow up on
information from a broad range of other entities' monitoring and audit
reports. SFSF; ESEA Title I, Part A; and IDEA, Part B program
officials told us that information drawn from multiple sources helps
to (1) inform their monitoring priorities, (2) ensure states follow up
on monitoring findings, and (3) target technical assistance in some
cases.
Education's New SFSF Oversight Approach Helped Some States Address
Findings Quickly but Communication Varied:
Education's approach to ensuring accountability of SFSF funds, which
was designed to take into consideration the short timeframes for
implementing this one-time stimulus program, as well as the need for
unprecedented levels of accountability, has helped some states address
issues quickly. Two of Education's goals in monitoring these funds are
to (1) identify potential or existing problem areas or weaknesses and
(2) identify areas where additional technical assistance is warranted.
SFSF officials told us that they have prioritized providing upfront
technical assistance to help states resolve management issues before
they publish monitoring reports. This is intended to be an iterative
process of communicating with states about issues found during
monitoring, helping them develop action plans to address findings, and
working with them to ensure successful completion of any corrections
needed.
Some states we spoke with told us that Education's approach to SFSF
monitoring allowed them to resolve issues prior to Education issuing a
final monitoring report to the state, and also allowed them to correct
systemic or cross-programmatic issues beyond SFSF. For example, New
York officials told us that after their monitoring review, Education
provided a thorough explanation of the corrective actions that were
required. This allowed the state the opportunity to resolve the
issues, which were specific to individual subrecipients, prior to the
issuance of Education's final monitoring report. North Carolina
officials said Education's monitoring helped them to implement new
cash management practices, and reported that Education staff were
proactive about communicating with the state to enable the issue to be
resolved. District of Columbia officials also stated that Education's
SFSF monitoring raised awareness of subgrantee cash management
requirements and the need for state policies for those requirements
across programs. District of Columbia, New York, and North Carolina
officials all reported that the technical assistance they received as
part of Education's SFSF monitoring follow up was timely and effective.
While some states reported helpful and timely contact from Education
after their monitoring reviews were completed, we found that
communication varied during the follow-up process, which left some
states waiting for information about potential issues. According to
data provided by Education, most states that were monitored before
June 2011 received contact at least once before the department issued
a draft report with monitoring results. However, several states
received no contact from Education before they received draft reports
presenting areas of concern. Education officials explained that if
complete documentation was available by the end of the state's
monitoring review, the situation would require less follow-up
communication than if the state needed to submit additional
documentation. Additionally, while the department did contact most
states after monitoring reviews, they did not consistently communicate
feedback to states regarding their reviews. Some states that did not
receive monitoring feedback promptly, either orally or in writing,
have expressed concerns about their ability to take action on
potential issues. For example, an Arizona official told us in June
2011 that the state had not been contacted about the results of its
monitoring visit in December 2010 and that follow up contact from
Education would have been helpful to make any necessary adjustments
during the final months of the SFSF program in the state. According to
Education officials, the department did communicate with Arizona on
several occasions following the monitoring visit, primarily to request
additional information or clarification on such things as the state's
method for calculating MOE. Education officials told us in that as a
result of receiving further information and documentation from the
state, they were finalizing the state's draft report and would share
the information with the state as soon as possible. In July 2011
California officials told us they had not heard about the results of
the monitoring review that was completed 10 months earlier in
September 2010. California officials told us that Education raised a
question during its review, but the state was unsure about the
resolution and whether they would be required to take corrective
action. Education officials told us in September 2011 that they had
numerous communications with California officials, often to clarify
issues such as the state's method for calculating MOE, and that they
were still in communication with the state as part of the process of
identifying an appropriate resolution.
As a result of Education's approach to monitoring, the length of time
between the Department's monitoring reviews and the issuance of the
monitoring reports varied greatly--from as few as 25 business days to
as many as 265 business days (see figure 6). The need to address
issues identified during monitoring and the subsequent frequency of
communication during monitoring follow up can affect the amount of
time it takes to issue reports with monitoring results. For example,
after Maine's desk review in September 2010, Education contacted the
state 10 times to request additional information and clarification
before sending the state a draft interim report 7 months later in
April 2011. In contrast, Rhode Island was contacted once after its
site visit, and Education provided a draft report with results about a
month later. In part because of the need for continuous collaboration
with states, Education's written SFSF monitoring plan does not include
specific internal time frames for when it will communicate the status
of monitoring issues to states after desk reviews and site visits. In
the absence of such time frames, the length of time between
Education's monitoring reviews and issuance of draft interim reports
with monitoring feedback varied widely across states. Education
officials told us they believe states benefit more from the iterative
monitoring process that emphasizes early resolution of issues than
through the issuance of written monitoring reports.
Figure 6: Number of Days between SFSF Monitoring Review and Issuance
of Draft Report to State (as of 9/16/11):
[Refer to PDF for image: illustrated U.S. map]
Number of business days waiting: 0-100;
Alabama:
Indiana:
New Hampshire:
Rhode Island:
Utah:
Washington:
Wisconsin:
Number of business days waiting: 101-150;
Connecticut:
Kansas:
Minnesota:
Missouri:
Montana:
Nebraska:
New York:
North Carolina:
Tennessee:
Virginia:
West Virginia:
Number of business days waiting: 151-200;
Arizona[A]:
Arkansas:
Colorado:
Georgia:
Kentucky:
Louisiana:
Maine:
Maryland:
New Jersey:
New Mexico:
North Dakota:
Ohio:
Puerto Rico:
South Carolina:
Vermont[A]:
Number of business days waiting: 201 or more;
Alaska:
California[A]:
Delaware:
District of Columbia:
Idaho:
Nevada:
South Dakota:
States not monitored before June 2011:
Florida:
Hawaii:
Illinois:
Iowa:
Massachusetts:
Michigan:
Mississippi:
Oklahoma:
Oregon:
Pennsylvania:
Texas:
Wyoming:
[A] State had not received findings as of Sept. 16, 2011
Source: GAO analysis of US Department of Education data.
[End of figure]
Due to its SFSF monitoring approach, Education has provided limited
information publicly on the results of its oversight efforts, but it
has plans to provide more detailed reports on what it has found during
monitoring in the future and has taken steps to share information on
common issues found among the states. While most SFSF monitoring
reviews have been completed for the 2010-2011 cycle, Education has not
communicated information about most of these reviews to the public and
the states' governors. Of the 48 completed reviews, only three reports
for site visits and 12 reports for desk reviews have been published
(see figure 7). Additionally, the reports that have been published are
brief and present a general description of the area of concern without
detailing what the specific issues and their severity were. For
example, in Tennessee's final letter report, Education wrote that it
found issues with LEA funding applications, fiscal oversight,
allowable activities, cash management, and subrecipient monitoring.
However, Education officials told us that they planned to publish more
detailed final reports after the 2011-2012 SFSF monitoring cycle, at
which point they would have completed both a desk review and a site
visit for each state. In the meantime, to help other states learn from
common issues found during SFSF monitoring reviews, Education provided
technical assistance to all states via a webinar in February 2011. The
webinar highlighted lessons learned during monitoring reviews,
including best practices for cash management and separate tracking of
funds.
Figure 17: Status of Education's SFSF Monitoring Reviews and Reports
(as of 8/31/11):
[Refer to PDF for image: list]
Site visits:
Review not completed (1):
Pennsylvania.
Review complete, report not published[A] (15):
Arizona:
District of Columbia:
Florida:
Hawaii:
Illinois:
Iowa:
Massachusetts:
Nevada:
New Jersey:
New Mexico:
Puerto Rico:
South Carolina:
South Dakota:
Texas:
Washington:
Report published (3):
Maryland:
Rhode Island:
Tennessee:
Desk reviews:
Review not completed (3):
Michigan:
Mississippi:
Oklahoma:
Review complete, report not published[B] (18):
Alaska:
Arkansas:
California:
Connecticut:
Delaware:
Idaho:
Indiana:
Kansas:
Kentucky:
Louisiana:
Montana:
North Dakota:
Ohio:
Oregon:
Utah:
Vermont:
Virginia:
Wyoming:
Report published (12):
Alabama:
Colorado:
Georgia:
Maine:
Minnesota:
Missouri:
Nebraska:
New Hampshire:
New York:
North Carolina:
West Virginia:
Wisconsin:
Source: GAO analysis of U.S. Department of Education data.
[A] For the completed site visits, Education has issued draft interim
reports to seven states.
[B] For the completed desk reviews, Education has issued draft interim
reports to 12 states.
[End of figure]
Education and States Continue to Oversee the Quality of Recipient
Reporting Data in Eighth Round of Reporting:
To meet our mandate to comment on recipient reports, we continued to
monitor recipient-reported data, including data on jobs funded. For
this report, we focused our review on the quality of data reported by
SFSF; ESEA Title I, Part A; and IDEA Part B education grant
recipients. Using education recipient data from the eighth reporting
period, which ended June 30, 2011, we continued to check for errors or
potential problems by repeating analyses and edit checks reported in
previous reports.
Education and States Continue to Review Data Quality and Use Recipient
Reports for Monitoring:
Education uses various methods to review the accuracy of recipient
reported data to help ensure data quality. Specifically, Education
compared data from the agency's grant database and financial
management system with recipient reported data. These systems contain
internal data for every award made to states, including the award
identification number, award date, award amount, outlays,[Footnote 63]
and recipient names. Education program officials told us they verified
expenditure data in states' quarterly reports by comparing it to data
in their internal grants management system. Education officials told
us that state expenditures can vary from outlays depending on how the
state reimburses its subrecipients, but Education officials review the
figures to determine if they are reasonable. In addition, SFSF
officials told us they cross-walked the recipient reported data with
previous quarterly reports to check for reasonableness. For example,
the officials told us they compared the number of subrecipients and
vendors from quarter to quarter to see if they increased or stayed the
same, as would be expected for a cumulative data point. Education
officials stated they worked directly with states to correct any
issues found during their checks of recipient reported data. Overall,
Education officials agreed that they have made significant progress in
ensuring data quality, as compared to the early quarters when they had
to focus on helping states understand basic reporting requirements. At
this point, the program officials told us they do not generally see
significant data quality issues or mistakes when they review recipient
reports.[Footnote 64] In August 2011, the Education OIG reported that
they performed 49,150 data quality tests of recipient reported data
for grant awards and found anomalies in 4 percent of the tests.
[Footnote 65] The OIG reported that the Department's processes to
ensure the accuracy and completeness of recipient reported data were
generally effective.
In addition to Education's efforts to ensure data quality, selected
state officials we spoke with said they examined recipient reports of
individual subrecipients. For example, Georgia officials told us they
reviewed FTE data for reasonableness, compared revenues and
expenditures, and ensured all vendors were included in vendor payment
reports. The officials stated that they followed up on any
questionable items with district staff. As we previously reported,
calculating FTE data presented initial challenges for many LEAs, and
states worked to ensure the accuracy of the data through a variety of
checks and systems. For example, the Mississippi Department of
Education helped LEAs calculate FTE data correctly by providing LEAs
spreadsheets with ready-made formulas. New York officials told us they
examined the calculation of FTEs funded and compared that data with
payroll records. North Carolina officials told us that through their
review of LEA data, they identified issues with FTE figures that were
budgeted but not ultimately verified against actual figures. To
improve the accuracy of the data, the state now compares LEA payroll
records to their budgeted figures.
Education and selected states told us they used recipient reports to
obtain data on expenditures, FTEs, and other activities funded to
enhance their oversight and management efforts. For example,
Education's special education program officials and most selected
states used recipient reported data to track the amount of Recovery
Act funds LEAs spent.
In particular, Education officials that administer the IDEA, Part B
grant told us they monitored LEA expenditures through recipient
reports because it was the only information they had on how much
subrecipients had spent. Education and several selected states also
told us they examined recipient reports as part of their monitoring
efforts. For example, SFSF program officials reviewed recipient
reports, particularly expenditure data and the subrecipient award
amount, to help choose subrecipients for monitoring. Officials from
Arizona, the District of Columbia, and North Carolina told us they
used recipient reported data to assess risk and inform their
monitoring efforts. For example, the District of Columbia tracks
spending rates to ensure subrecipients meet the deadline for using the
funds. If a subrecipient has lower than expected spending rates, they
are subject to increased monitoring. Arizona uses recipient reported
data to verify that internal controls are working, for instance by
examining expenditure rates to see whether there may be cash
management issues. In addition, Iowa and New York officials said they
used recipient reported data to ensure appropriate uses of funds.
State and LEA officials we spoke with continued to report greater ease
in collecting and reporting data for recipient reports. As we
previously reported, recipients told us they have gained more
experience reporting and the reporting process was becoming routine.
[Footnote 66] For example, Arizona officials told us that their
centralized reporting process now runs with very little effort or
burden on state and local recipients of Recovery Act education funds.
Alaska officials stated that the early quarters were challenging for
reporting, but the state training sessions with LEAs helped establish
a smooth process by the third quarter. At the local level, an LEA
official in Iowa told us that while recipient reporting was confusing
in the beginning, her district changed some internal procedures and
automated some calculations to make the process more efficient. One
measure of recipients' understanding of the reporting process is the
number of noncompliant recipients. There were no non-compliers in the
eighth reporting period for recipients of SFSF, ESEA Title I, Part A
or IDEA, Part B funds.[Footnote 67]
Although the recipient reporting process has become smoother over
time, some states and LEAs noted that there continues to be a burden
associated with meeting reporting requirements, particularly due to
limited resources. For example, California officials stated it had
been burdensome to collect data from over 1,500 LEAs when there were
significant budget cuts. Officials from the Massachusetts SEA stated
that the most burdensome aspect of recipient reporting was the short
time frame for collecting data from nearly 400 LEAs when local staff
were already stretched thin. At the local level, officials at a rural
Mississippi school district stated that gathering the supporting
documents for their quarterly reports was cumbersome and took a
significant amount of time. For example, in the previous quarter one
staff member had to upload more than 70 supporting documents to the
state's centralized reporting system. Further, Education officials
noted that the improvements in the process for recipient reporting
have not eliminated the burden on LEAs. Moreover, according to
Education officials, although the primary goal of the Recovery Act
grants was not reporting, grantees were spending significant amounts
of time complying with the reporting process when the Department
already had some data elements, such as grant awards and drawdowns,
from other sources.
Two recent actions indicate that recipient reporting could be expanded
to funds beyond those from the Recovery Act. A White House Executive
Order dated June 13, 2011, established a Government Accountability and
Transparency Board (Board) to provide strategic direction for
enhancing the transparency of federal spending and advance efforts to
detect and remediate fraud, waste, and abuse in federal programs,
among other things.[Footnote 68] By December 2011, the Board is
required to develop guidelines for integrating systems that support
the collection and display of government spending data, ensuring the
reliability of those data, and broadening the deployment of fraud
detection technologies. In addition, one of the objectives of proposed
legislation--the Digital Accountability and Transparency Act of 2011
(DATA Act)--is to enhance transparency by broadening the requirement
for reporting to include recipients of non-Recovery Act funds.
[Footnote 69]
While FTE Data Have Limitations, Education Found These Data to Be
Useful:
According to Recovery.gov, during the quarter beginning April 1, 2011,
and ending June 30, 2011, the Recovery Act funded approximately
286,000 FTEs using funds under the programs in our review (see figure
8).[Footnote 70] Further, for this eighth round of reporting, similar
to what we observed in previous rounds, education FTEs for these
programs accounted for about half of all FTEs reported for the
quarter. Following OMB guidance, states reported on FTEs directly paid
for with Recovery Act funding, not the employment impact on suppliers
of materials (indirect jobs) or on the local communities (induced
jobs). According to Education officials, FTE numbers were expected to
decrease over time because fewer prime recipients would be reporting
as they exhaust all of their Recovery Act funds.
Figure 8: FTEs Reported for Recovery Act SFSF; Title I, Part A; and
IDEA, Part B in 50 States and DC for Quarters Ending December 2009
through June 2011:
[Refer to PDF for image: stacked vertical bar graph]
FTEs (in thousands):
Reporting quarter end date: December 2009;
SFSF education stabilization: 245.07;
SFSF government services: 43.37;
IDEA, Part B: 47.71;
ESEA Title I, Part A: 47.47.
Reporting quarter end date: March 2010;
SFSF education stabilization: 291.49;
SFSF government services: 50.95;
IDEA, Part B: 55.61;
ESEA Title I, Part A: 44.52
Reporting quarter end date: June 2010;
SFSF education stabilization: 265.38;
SFSF government services: 54.59;
IDEA, Part B: 63.3;
ESEA Title I, Part A: 48.02.
Reporting quarter end date: September 2010;
SFSF education stabilization: 171.1;
SFSF government services: 59.14;
IDEA, Part B: 49.03;
ESEA Title I, Part A: 44.79.
Reporting quarter end date: December 2010;
SFSF education stabilization: 179.09;
SFSF government services: 16.29;
IDEA, Part B: 49.08;
ESEA Title I, Part A: 41.5.
Reporting quarter end date: March 2011;
SFSF education stabilization: 175.31;
SFSF government services: 20.19;
IDEA, Part B: 52.2;
ESEA Title I, Part A: 45.04.
Reporting quarter end date: June 2011;
SFSF education stabilization: 156.51;
SFSF government services: 26.67;
IDEA, Part B: 56.83;
ESEA Title I, Part A: 46.13.
Source: GAO analysis of recipient reported data from Recovery.gov.
Note: Recipient reported data were downloaded from Recovery.gov on
July 30, 2011. We did not include FTE data from the first reporting
quarter due to concerns about comparability. We did not include FTE
counts associated with the Education Jobs Fund.
[End of figure]
FTE data provide an overall indication of the extent to which the
Recovery Act met one of its intended goals of saving and creating jobs
in order to help economic recovery, although some limitations with
these data may make it difficult to determine the impact the Recovery
Act made in any one particular reporting period. In May 2010, GAO
identified a number of issues that could lead to under-or over-
reporting of FTEs.[Footnote 71]
Our analysis of the data on Recovery.gov showed variations in the
number of FTEs reported, which Education officials said could be
explained by states' broad flexibility in determining what they used
Recovery Act SFSF funds on and when they allocated those funds. For
example, Illinois reported less than 1 FTE in the second reporting
round and over 40,000 in the third reporting round for the SFSF
education stabilization funds. Education officials stated that rarely
would the districts in one state hire 40,000 teachers in 1 quarter.
Rather, Education officials said the state likely made a decision to
allocate those funds in that quarter to teacher salaries. Similarly,
from the fourth to fifth reporting rounds, the number of FTEs more
than doubled in Arkansas and nearly doubled in Florida for the SFSF
education stabilization funds. Education officials explained that any
significant increase or decrease in FTEs likely reflects the state's
decision to allocate the funds in one quarter rather than during
another quarter. They noted that some states used their funds
consistently over time, whereas others used a large portion of the
funds at the beginning or end of a school year. Therefore, sharp
increases or decreases in the FTE data are not uncommon or unexpected.
Delaware reported no FTEs for SFSF government services funds in the
eighth reporting round. Education officials stated that Delaware
decided to use those funds on operating costs, not salaries.
Education officials told us that recipient reported FTE data were
useful to them when assessing the impact of grants on jobs funded.
Education does not have any comparable data on jobs funded. Therefore,
FTE data provided them a measure of the extent to which the Recovery
Act programs, particularly SFSF, accomplished that specific goal of
funding jobs. According to Education officials, determining jobs
funded was an important, but secondary impact of the Recovery Act
funding for the ESEA Title I, Part A and IDEA, Part B grants. The
purpose of ESEA Title I is to ensure that all children have a fair,
equal, and significant opportunity to obtain a high-quality education
by providing financial assistance to LEAs and schools with high
numbers or percentages of poor children. The purpose of IDEA, Part B
is to ensure that all students with disabilities have available to
them a free appropriate public education that emphasizes special
education and related services designed to meet their unique needs.
According to Education officials, some of the services provided to
students using the ESEA Title I, Part A and IDEA, Part B Recovery Act
funds led to the creation of jobs while others served the needs of
children but did not directly create jobs. Therefore, while FTE data
did provide a useful indication of jobs funded for those programs
under the Recovery Act, other measures such as student outcomes will
be more useful after the Recovery Act ends when assessing the impact
of programs with education-related goals.
Conclusions:
A key goal of Recovery Act funding was to create and retain jobs and,
for SFSF, to advance education reforms, and our work has consistently
shown that LEAs primarily used their funding to cover the cost of
retaining jobs. Additionally, the transparency required by Recovery
Act reporting allowed the public access to data on the number of jobs
funded and the amount of funds spent, but as the deadline for
obligating funds approaches, little is currently known nationally
about the advancement of the four areas of educational reform.
Education's planned evaluation could make an important contribution to
understanding any outcomes related to reform. This national evaluation
could be especially important considering that officials in many of
our selected states have not planned evaluations, and many LEAs
reported that they are neither collecting nor planning to collect data
to evaluate the effect of SFSF on education reform efforts. While
Education will assess results through its own evaluation, it will not
be fully completed for several years. In the shorter term, state
reporting on the SFSF indicators and descriptors of reform is the
mechanism through which Education and the public track the extent to
which a state is making progress. As these final data become available
at the end of this fiscal year, Education has plans for assessing
state compliance and analyzing the results in order to present, where
possible, information to policymakers and the public. Given the
accountability and transparency required by the Recovery Act, we feel
it is important for Education to follow through with its plans to hold
states accountable for presenting performance information and in its
efforts to assist the public and policymakers in understanding the
reform progress made by states.
In addition to evaluations and reporting, program accountability can
be facilitated through monitoring and taking corrective action on
audit findings. Because of the historic amount of Education funding
included in the Recovery Act, effective oversight and internal
controls are of fundamental importance in assuring the proper and
effective use of federal funds to achieve program goals. Education's
new SFSF monitoring process took into account the one-time nature of
these funds and was designed to make states aware of monitoring and
audit findings to help them resolve any issues or make improvements to
their program prior to Education publishing a final report. However,
Education's implementation of this process has varied, with some
states waiting months to get feedback on monitoring results. When
states do not receive timely feedback on monitoring findings, they may
not have time to resolve these issues before they have obligated their
SFSF funds.
Recommendation for Executive Action:
To ensure all states receive appropriate communication and technical
assistance for SFSF, consistent with what some states received in
response to SFSF monitoring reviews, we recommend that the Secretary
of Education establish mechanisms to improve the consistency of
communicating monitoring feedback to states, such as establishing
internal time frames for conveying information found during monitoring.
Agency Comments and Our Evaluation:
We provided a draft copy of this report to Education for review and
comment. Education's comments are reproduced in appendix III.
Education agreed with our recommendation to improve the consistency of
communicating SFSF monitoring feedback to states. Specifically,
Education responded that their SFSF monitoring protocols should
include procedures for effectively communicating the status of
monitoring feedback to states. Additionally, Education officials
reiterated that the new SFSF monitoring approach was designed as an
iterative method to take into consideration the large amount of
funding, the complexities of state budget situations, the need to
expeditiously resolve monitoring issues due to the short time frames,
and the large numbers and diverse types of grantees. Through this
monitoring approach, Education officials noted that the department has
completed reviews of all but one state and is currently planning the
second cycle of monitoring. Education officials reported that the
feedback provided to states through this new approach was ongoing and
that not all states have required the same level of follow up
discussions. GAO agrees that this approach is appropriate given the
one-time nature of the SFSF program and, as we point out in our
report, this approach has helped states to quickly address potential
issues. Since the amount of contact between Education and the states
can be numerous and involve multiple officials and agencies, we
believe that any actions taken by the department to improve the
consistency of communication with states will improve its monitoring
process.
Education also provided some additional and updated information about
their monitoring efforts and we modified the report to reflect the
data they provided. In addition, Education provided us with several
technical comments that we incorporated, as appropriate.
We are sending copies of this report to relevant congressional
committees, the Secretary of Education, and other interested parties.
In addition, this report will be available at no charge on GAO's Web
site at [hyperlink, http://www.gao.gov].
If you or your staff have any questions about this report, please
contact me at (202) 512-7215 or scottg@gao.gov. 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 key contributions to
this report are listed in appendix V.
Signed by:
George A. Scott, Director:
Education, Workforce, and Income Security Issues:
List of Addressees:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate:
The Honorable Harold Rogers:
Chairman:
The Honorable Norman D. Dicks:
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 Darrell E. Issa:
Chairman:
The Honorable Elijah Cummings:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Tom Harkin:
Chairman:
The Honorable Michael B. Enzi:
Ranking Member:
Senate Heath, Education, Labor and Pensions:
United States Senate:
The Honorable John Kline:
Chairman:
The Honorable George Miller:
Ranking Member:
Committee on Education and the Workforce:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
To obtain national level information on how Recovery Act funds made
available by the U.S. Department of Education (Education) under SFSF;
ESEA Title I, Part A; and IDEA, Part B were used at the local level,
we designed and administered a Web-based survey of local educational
agencies (LEA) in the 50 states and the District of Columbia. We
surveyed school district superintendents across the country to learn
how Recovery Act funding was used and what impact these funds had on
school districts. We selected a stratified[Footnote 72] random sample
of 688 LEAs from the population of 15,994 LEAs included in our sample
frame of data obtained from Education's Common Core of Data (CCD) in
2008-09. We conducted our survey between March and May 2011, with a 78
percent final weighted response rate.
We took steps to minimize nonsampling errors by pretesting the survey
instrument with officials in three LEAs in January 2011 and February
2011. 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. 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 7
percentage points or less for our sample, unless otherwise noted. We
excluded nine of the sampled LEAs because they were no longer
operating in the 2010-11 school year or were not an LEA, and therefore
were considered out of scope. This report does not contain all the
results from the survey. The survey and a more complete tabulation of
the results can be viewed at GAO-11-885SP.
At the state and local level, we conducted site visits to four states
(California, Iowa, Massachusetts, and Mississippi), and contacted an
additional seven states (Alaska, Arizona, Georgia, Hawaii, North
Carolina, New York, and Wyoming) and the District of Columbia to
discuss how they were using, monitoring, and planning to evaluate the
effect of their Recovery Act funds. In addition, we contacted
officials from Florida, Kansas, and South Carolina for information
regarding IDEA, Part B waivers. We selected these states in order to
have an appropriate mix of recipients that varied across certain
factors, such as drawdown rates, economic response to the recession,
and data availability, with consideration of geography and recent
federal monitoring coverage.
During our site visits, we met with SFSF, ESEA Title I, and IDEA
officials at the state level as well as LEAs and an Institution of
Higher Education (IHE). For the additional seven states, we gathered
information by phone or e-mail from state education program officials
on fund uses, monitoring, and evaluation. We also met with program
officials at Education to discuss ongoing monitoring and evaluation
efforts for Recovery Act funds provided through SFSF, ESEA Title I,
and IDEA. We also interviewed officials at Education and reviewed
relevant federal laws, regulations, guidance, and communications to
the states. Further, we obtained information from Education's Web site
about the amount of funds these states have drawn down from their
accounts with Education.
The recipient reporting section of this report responds to the
Recovery Act's mandate that we comment on the estimates of jobs
created or retained by direct recipients of Recovery Act funds.
[Footnote 73] For our review of the eighth submission of recipient
reports covering the period from April 1, 2011, through June 30, 2011,
we built on findings from our prior reviews of the reports. We
performed edit checks and basic analyses on the eighth submission of
recipient report data that became publicly available at Recovery.gov
on July 30, 2011.[Footnote 74] To understand how the quality of jobs
data reported by Recovery Act education grantees has changed over
time, we compared the 8 quarters of recipient reporting data that were
publicly available at Recovery.gov on July 30, 2011.
In addition, we also reviewed documentation and interviewed federal
agency officials from Education who have responsibility for ensuring a
reasonable degree of quality across their programs' recipient reports.
Due to the limited number of recipients reviewed and the judgmental
nature of the selection, the information we gathered about state
reporting and oversight of FTEs is limited to those selected states in
our review and not generalizable to other states. GAO's findings based
on analyses of FTE data are limited to those Recovery Act education
programs and time periods examined and are not generalizable to any
other programs' FTE reporting.
We compared, at the aggregate and state level, funding data reported
directly by recipients on their quarterly reports against the
recipient funding data maintained by Education. The cumulative funding
data reported by the recipients aligned closely with the funding data
maintained by the Department of Education. An Education Inspector
General report included a similar analysis comparing agency data to
recipient reported data from the first quarter of 2010.[Footnote 75]
Although not directly comparable to our analysis, their assessment
identified various discrepancies between agency and recipient reported
data. We also noted some discrepancies across the education programs
we reviewed where the state recipients' reported expenditures were
either greater or less than 10 percent of the respective outlays
reported by Education. In general, however, we consider the recipient
report data to be sufficiently reliable for the purpose of providing
summary, descriptive information about FTEs or other information
submitted on grantees' recipient reports.
To update the status of open recommendations from previous bimonthly
and recipient reporting reviews, we obtained information from agency
officials on actions taken in response to the recommendations.
We conducted this performance audit from October 2010 to September
2011 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: Drawdown Rates by Program:
Table 5: Percentage of Awarded Recovery Act SFSF; ESEA Title I, Part
A; and IDEA, Part B Funds Drawn Down by States as of September 9, 2011:
Alaska:
SFSF education stabilization funds: 87%;
SFSF government services funds: 92%;
SFSF education stabilization and government services funds: 88%;
ESEA Title I, Part A: 95%;
IDEA, Part B: 93%.
Alabama:
SFSF education stabilization funds: 95%;
SFSF government services funds: 99%;
SFSF education stabilization and government services funds: 96%;
ESEA Title I, Part A: 93%;
IDEA, Part B: 94%.
Arkansas:
SFSF education stabilization funds: 88%;
SFSF government services funds: 85%;
SFSF education stabilization and government services funds: 87%;
ESEA Title I, Part A: 86%;
IDEA, Part B: 86%;
Arizona:
SFSF education stabilization funds: 100%;
SFSF government services funds: 82%;
SFSF education stabilization and government services funds: 97%;
ESEA Title I, Part A: 92%;
IDEA, Part B: 92%;
California:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 98%;
IDEA, Part B: 92%;
Colorado:
SFSF education stabilization funds: 98%;
SFSF government services funds: 90%;
SFSF education stabilization and government services funds: 97%;
ESEA Title I, Part A: 89%;
IDEA, Part B: 90%;
Connecticut:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 100%;
IDEA, Part B: 99%;
District of Columbia:
SFSF education stabilization funds: 99%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 99%;
ESEA Title I, Part A: 65%;
IDEA, Part B: 97%;
Delaware:
SFSF education stabilization funds: 90%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 92%;
ESEA Title I, Part A: 86%;
IDEA, Part B: 81%;
Florida:
SFSF education stabilization funds: 100%;
SFSF government services funds: 99%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 94%;
IDEA, Part B: 97%;
Georgia:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 84%;
IDEA, Part B: 88%;
Hawaii:
SFSF education stabilization funds: 100%;
SFSF government services funds: 93%;
SFSF education stabilization and government services funds: 99%;
ESEA Title I, Part A: 84%;
IDEA, Part B: 92%;
Iowa:
SFSF education stabilization funds: 100%;
SFSF government services funds: 99%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 96%;
IDEA, Part B: 100%;
Idaho:
SFSF education stabilization funds: 100%;
SFSF government services funds: 90%;
SFSF education stabilization and government services funds: 98%;
ESEA Title I, Part A: 90%;
IDEA, Part B: 95%;
Illinois:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 95%;
IDEA, Part B: 94%;
Indiana:
SFSF education stabilization funds: 95%;
SFSF government services funds: 94%;
SFSF education stabilization and government services funds: 95%;
ESEA Title I, Part A: 90%;
IDEA, Part B: 90%;
Kansas:
SFSF education stabilization funds: 96%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 96%;
ESEA Title I, Part A: 99%;
IDEA, Part B: 100%;
Kentucky:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 95%;
IDEA, Part B: 93%;
Louisiana:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 92%;
IDEA, Part B: 88%;
Massachusetts:
SFSF education stabilization funds: 100%;
SFSF government services funds: 96%;
SFSF education stabilization and government services funds: 99%;
ESEA Title I, Part A: 100%;
IDEA, Part B: 100%;
Maryland:
SFSF education stabilization funds: 96%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 97%;
ESEA Title I, Part A: 91%;
IDEA, Part B: 86%;
Maine:
SFSF education stabilization funds: 95%;
SFSF government services funds: 99%;
SFSF education stabilization and government services funds: 96%;
ESEA Title I, Part A: 93%;
IDEA, Part B: 92%;
Michigan:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 94%;
IDEA, Part B: 94%;
Minnesota:
SFSF education stabilization funds: 99%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 99%;
ESEA Title I, Part A: 89%;
IDEA, Part B: 92%;
Missouri:
SFSF education stabilization funds: 91%;
SFSF government services funds: 98%;
SFSF education stabilization and government services funds: 93%;
ESEA Title I, Part A: 95%;
IDEA, Part B: 89%;
Mississippi:
SFSF education stabilization funds: 100%;
SFSF government services funds: 81%;
SFSF education stabilization and government services funds: 97%;
ESEA Title I, Part A: 85%;
IDEA, Part B: 81%;
Montana:
SFSF education stabilization funds: 100%;
SFSF government services funds: 98%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 94%;
IDEA, Part B: 95%;
North Carolina:
SFSF education stabilization funds: 99%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 99%;
ESEA Title I, Part A: 98%;
IDEA, Part B: 99%;
North Dakota:
SFSF education stabilization funds: 100%;
SFSF government services funds: 88%;
SFSF education stabilization and government services funds: 98%;
ESEA Title I, Part A: 85%;
IDEA, Part B: 94%;
Nebraska:
SFSF education stabilization funds: 94%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 95%;
ESEA Title I, Part A: 61%;
IDEA, Part B: 74%;
New Hampshire:
SFSF education stabilization funds: 100%;
SFSF government services funds: 99%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 76%;
IDEA, Part B: 80%;
New Jersey:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 80%;
IDEA, Part B: 81%;
New Mexico:
SFSF education stabilization funds: 100%;
SFSF government services funds: 86%;
SFSF education stabilization and government services funds: 98%;
ESEA Title I, Part A: 93%;
IDEA, Part B: 86%;
Nevada:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 95%;
IDEA, Part B: 98%;
New York:
SFSF education stabilization funds: 94%;
SFSF government services funds: 97%;
SFSF education stabilization and government services funds: 95%;
ESEA Title I, Part A: 90%;
IDEA, Part B: 85%;
Ohio:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 93%;
IDEA, Part B: 95%;
Oklahoma:
SFSF education stabilization funds: 100%;
SFSF government services funds: 74%;
SFSF education stabilization and government services funds: 95%;
ESEA Title I, Part A: 89%;
IDEA, Part B: 97%;
Oregon:
SFSF education stabilization funds: 98%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 99%;
ESEA Title I, Part A: 97%;
IDEA, Part B: 95%;
Pennsylvania:
SFSF education stabilization funds: 93%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 95%;
ESEA Title I, Part A: 82%;
IDEA, Part B: 92%;
Rhode Island:
SFSF education stabilization funds: 84%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 87%;
ESEA Title I, Part A: 93%;
IDEA, Part B: 92%;
South Carolina:
SFSF education stabilization funds: 96%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 97%;
ESEA Title I, Part A: 90%;
IDEA, Part B: 83%;
South Dakota:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 99%;
IDEA, Part B: 100%;
Tennessee:
SFSF education stabilization funds: 99%;
SFSF government services funds: 85%;
SFSF education stabilization and government services funds: 96%;
ESEA Title I, Part A: 94%;
IDEA, Part B: 91%;
Texas:
SFSF education stabilization funds: 95%;
SFSF government services funds: 99%;
SFSF education stabilization and government services funds: 96%;
ESEA Title I, Part A: 92%;
IDEA, Part B: 90%;
Utah:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 87%;
IDEA, Part B: 77%;
Virginia:
SFSF education stabilization funds: 89%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 91%;
ESEA Title I, Part A: 79%;
IDEA, Part B: 76%;
Vermont:
SFSF education stabilization funds: 97%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 98%;
ESEA Title I, Part A: 98%;
IDEA, Part B: 95%;
Washington:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 90%;
IDEA, Part B: 93%;
Wisconsin:
SFSF education stabilization funds: 100%;
SFSF government services funds: 100%;
SFSF education stabilization and government services funds: 100%;
ESEA Title I, Part A: 89%;
IDEA, Part B: 89%;
West Virginia:
SFSF education stabilization funds: 100%;
SFSF government services funds: 64%;
SFSF education stabilization and government services funds: 94%;
ESEA Title I, Part A: 96%;
IDEA, Part B: 90%;
Wyoming:
SFSF education stabilization funds: 34%;
SFSF government services funds: 64%;
SFSF education stabilization and government services funds: 39%;
ESEA Title I, Part A: 84%;
IDEA, Part B: 79%;
Total:
SFSF education stabilization funds: 98%;
SFSF government services funds: 97%;
SFSF education stabilization and government services funds: 98%;
ESEA Title I, Part A: 91%;
IDEA, Part B: 91%%;
Source: GAO analysis of U.S. Department of Education data.
[End of table]
[End of section]
Appendix III: Comments from the Department of Education:
United States Department Of Education:
Office Of The Deputy Secretary:
400 Maryland Ave. S.W.
Washington, DC 20202:
September 16, 2011:
Mr. George A. Scott:
Director:
Education, Workforce, and Income Security Issues:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Mr. Scott:
I am writing in response to the recommendation made in the draft U.S.
Government Accountability Office (GAO) report, "Recovery Act Education
Programs: Funding Retained Teachers, but Education Could More
Consistently Communicate Stabilization Monitoring Issues" (GA0-11-
804). GAO reviewed the administration, implementation, and oversight
of three programs administered by the U. S. Department of Education
(Department) that received funding under the American Recovery and
Reinvestment Act of 2009 (Recovery Act): the State Fiscal
Stabilization Fund (SFSF); Title I, Part A of the Elementary and
Secondary Education Act of 1965, as amended; and the Individuals with
Disabilities Education Act, as amended (IDEA). The report examines:
(1) how selected States and local recipients used the funds; (2) what
plans the Department and selected States have to assess the impact of
the funds; (3) what approaches are being used to ensure accountability
of the funds; and (4) how the Department and States ensure the
accuracy of recipient reported data.
We appreciate the time and effort that your office devoted to
conducting this review. We are particularly pleased that GAO found
that the Recovery Act funds are helping States save the jobs of
significant numbers of teachers. However, we are concerned that local
educational agencies (LEAs) continue to face challenging fiscal
conditions that may be exacerbated when funds under the Recovery Act
and the Education Jobs Fund program are no longer available.
The report has one recommendation. The Department's response to the
recommendation follows:
Recommendation: To ensure all states receive appropriate communication
and technical assistance for SFSF, consistent with what some states
received in response to SFSF monitoring reviews, we recommend that the
Secretary of Education establish mechanisms to improve the
consistency of communicating monitoring feedback to states, such as
establishing internal timeframes for conveying information found
during monitoring.
Department's Response to the Recommendation: The Department agrees
that it should include in the SFSF monitoring protocols procedures for
communicating more effectively to States the status of outstanding
matters relative to the monitoring reviews.
Through the SFSF program, the Department fostered a new cooperative
relationship with States by working iteratively with them in
implementing and monitoring the program. The Department based its SFSF
monitoring procedures on the following assumptions:
* Because SFSF was a one-time appropriation and States received a
significant amount of funding, the Department's monitoring review
needed to differ from that of other formula grant programs where an
issue can be resolved by applying conditions on a future year's
allocation or requiring States to implement corrective actions at a
later date;
* Due to the frequency of State budgetary changes, the Department had
to provide States with the opportunity to provide updated data
demonstrating compliance with the program's maintenance-of-effort and
allocation requirements;
* To help ensure State compliance with applicable requirements and the
appropriate use of taxpayer resources during the relatively short life
of the program, the Department should prioritize the expeditious
resolution of issues over the release of monitoring reports; and;
* Since so many different types of entities served as subgrantees
(e.g., LEAs, public institutions of higher education, and State
agencies such as corrections and transportation agencies), the
Department would need to develop a protocol and process that could
address a wide variety of contexts and issues. In addition, since
governors were not accustomed to administering large Department grant
programs, there would be an added level of complexity and the need to
orient governors' staffs to the monitoring process.
The Department has made a concerted effort to monitor every State's
implementation of the SFSF program annually. As of September 1, 2011,
the Department monitored all but one State and is currently planning
the second cycle of monitoring. After each monitoring visit or desk
review, Department staff conducted a detailed "wrap-up call" with
State officials to discuss issues identified during the review.
Depending upon the nature of the issues, there were often numerous
follow up calls with a State to discuss further strategies for
resolving the issues identified. Not all States have required the same
level of follow-up discussions. To date, 34 States have received draft
reports and 28 States have received subsequent interim reports.
The Department believes that States receive benefit significantly from
an iterative monitoring process that emphasizes early resolution of
issues rather than the development and issuance of a monitoring report
by a specific deadline. The Department's ongoing communications with
States during the monitoring process provide them with immediate
feedback on identified issues and opportunities to assist them in
resolving the issues. The final report will summarize the results of
the monitoring process and include an identification of the issues
discovered during the monitoring review and a description of the
actions taken by States to resolve those issues. In the limited
instances when a State has not yet resolved all issues, the report
will specify any corrective actions that are necessary to resolve the
remaining issues.
The Department will refine its monitoring procedures to ensure more
effective communication so that each State understands fully the
current status of its monitoring review. For example, the Department
is developing a template for a form that each program officer would
send to a State immediately after a wrap-up call. This form would
provide the State with, among other things, a list of issues to be
resolved. Further, the Department is including in its monitoring
protocols timeframes for communicating with States on monitoring
issues.
Finally, there are some discussions in the report that the Department
believes could benefit from additional clarification. We are enclosing
suggested technical edits to the report.
We appreciate the opportunity to provide this response. Please let us
know if you need additional information.
Sincerely,
Signed by:
Ann Whalen:
Director, Policy and Program Implementation:
Implementation and Support Unit:
Enclosures:
[End of section]
Appendix IV: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
In this appendix, we update the status of agencies' efforts to
implement the 16 recommendations that remain open and are not
implemented, 8 newly implemented recommendations, and 1 newly closed
recommendation from our previous bimonthly and recipient reporting
reviews.[Footnote 76] Recommendations that were listed as implemented
or closed in a prior report are not repeated here. Lastly, we address
the status of our matters for congressional consideration.
Department of Energy:
Open Recommendations:
Given the concerns we have raised about whether program requirements
were being met, we recommended in May 2010 that the Department of
Energy (DOE), in conjunction with both state and local weatherization
agencies, develop and clarify weatherization program guidance that:
[Footnote 77]
* Clarifies the specific methodology for calculating the average cost
per home weatherized to ensure that the maximum average cost limit is
applied as intended.
* Accelerates current DOE efforts to develop national standards for
weatherization training, certification, and accreditation, which is
currently expected to take 2 years to complete.
* Sets time frames for development and implementation of state
monitoring programs.
* Revisits the various methodologies used in determining the
weatherization work that should be performed based on the
consideration of cost-effectiveness and develops standard
methodologies that ensure that priority is given to the most cost-
effective weatherization work. To validate any methodologies created,
this effort should include the development of standards for accurately
measuring the long-term energy savings resulting from weatherization
work conducted.
In addition, given that state and local agencies have felt pressure to
meet a large increase in production targets while effectively meeting
program requirements and have experienced some confusion over
production targets, funding obligations, and associated consequences
for not meeting production and funding goals, we recommended that DOE
clarify its production targets, funding deadlines, and associated
consequences, while providing a balanced emphasis on the importance of
meeting program requirements.
Agency Actions:
DOE generally concurred with these recommendations and has made some
progress in implementing them. For example, to clarify the methodology
for calculating the average cost per home, DOE has developed draft
guidance to help grantees develop consistency in their average cost
per unit calculations. The guidance further clarifies the general cost
categories that are included in the average cost per unit. DOE had
anticipated issuing this guidance in June 2011, but as of late July
2011 this guidance has not yet been finalized.
Newly Closed Recommendation:
In response to our recommendation that it develop and clarify guidance
that develops a best practice guide for key internal controls, DOE
distributed a memorandum dated May 13, 2011, to grantees reminding
them of their responsibilities to ensure compliance with internal
controls and the consequences of failing to do so. DOE officials
stated that they rely on existing federal, state, and local guidance;
their role is to monitor states to ensure they enforce the rules. DOE
officials felt that there were sufficient documents in place to
require internal controls, such as the grant terms and conditions and
a training module. Because all of the guidance is located in one
place, the WAPTAC Web site, DOE officials commented that a best
practice guide would be redundant. Therefore, DOE officials stated
that they do not intend to fully implement GAO's recommendation.
Open Recommendation:
To better ensure that Energy Efficiency and Conservation Block Grant
(EECBG) funds are used to meet Recovery Act and program goals, we
recommended that DOE explore a means to capture information on the
monitoring processes of all recipients to make certain that recipients
have effective monitoring practices.[Footnote 78]
Agency Actions:
DOE generally concurred with this recommendation, stating that
"implementing the report's recommendations will help ensure that the
Program continues to be well managed and executed." DOE also provided
additional information on changes it has implemented. DOE added
additional questions to the on-site monitoring checklists related to
subrecipient monitoring to help ensure that subrecipients are in
compliance with the terms and conditions of the award. These changes
will help improve DOE's oversight of recipients, especially larger
recipients, which are more likely to be visited by DOE project
officers. However, not all recipients receive on-site visits. As noted
previously, we believe that the program could be more effectively
monitored if DOE captured information on the monitoring practices of
all recipients.
Newly Implemented Recommendation:
To better ensure that Energy EECBG funds are used to meet Recovery Act
and program goals, we recommended that DOE solicit information from
recipients regarding the methodology they used to calculate their
energy-related impact metrics and verify that recipients who use DOE's
estimation tool use the most recent version when calculating these
metrics.[Footnote 79]
In our report, we concluded that DOE needed more information regarding
the recipients' estimating methods in order to assess the
reasonableness of energy-related estimates and thus determine the
extent to which the EECBG program is meeting Recovery Act and program
goals for energy-related outcomes. DOE officials noted that they have
made changes to the way they collect impact metrics in order to apply
one unified methodology to the calculation of impact metrics. DOE
issued guidance effective June 23, 2011, that eliminates the
requirement for grant recipients to calculate and report estimated
energy savings. DOE officials said the calculation of estimated impact
metrics will now be performed centrally by DOE by applying known
national standards to existing grantee-reported performance metrics.
Based on DOE's action, we concluded that DOE has addressed the intent
of this recommendation.
Department of Health and Human Services:
Open Recommendation:
To help ensure that grantees report consistent enrollment figures, we
recommended that the Director of the Department of Health and Human
Services' (HHS) Office of Head Start (OHS) should better communicate a
consistent definition of "enrollment" to grantees for monthly and
yearly reporting and begin verifying grantees' definition of
"enrollment" during triennial reviews.[Footnote 80]
Agency Actions:
OHS issued informal guidance on its Web site clarifying monthly
reporting requirements to make them more consistent with annual
enrollment reporting. This guidance directs grantees to include in
enrollment counts all children and pregnant mothers who are enrolled
and have received a specified minimum of services (emphasis added).
According to officials, OHS is considering further regulatory
clarification.
Newly Implemented Recommendation:
To oversee the extent to which grantees are meeting the program goal
of providing services to children and families and to better track the
initiation of services under the Recovery Act, we recommended that the
Director of OHS should collect data on the extent to which children
and pregnant women actually receive services from Head Start and Early
Head Start grantees.[Footnote 81]
Agency Actions:
OHS has reported that, in order to collect information on services
provided to children and families, it plans to require grantees to
report average daily attendance, beginning in the 2011-2012 school
year.
Newly Implemented Recommendation:
To provide grantees consistent information on how and when they will
be expected to obligate and expend federal funds, we recommended that
the Director of OHS should clearly communicate its policy to grantees
for carrying over or extending the use of Recovery Act funds from one
fiscal year into the next.[Footnote 82]
Agency Actions:
Following our recommendation, HHS indicated that OHS would issue
guidance to grantees on obligation and expenditure requirements, as
well as improve efforts to effectively communicate the mechanisms in
place for grantees to meet the requirements for obligation and
expenditure of funds. HHS has subsequently reported that grantees have
been reminded that the timely use of unobligated balances requires
recipients to use the "first in/first out" principle for recognizing
and recording obligations and expenditures of those funds.
Newly Implemented Recommendation:
To better consider known risks in scoping and staffing required
reviews of Recovery Act grantees, we recommended that the Director of
OHS should direct OHS regional offices to consistently perform and
document Risk Management Meetings and incorporate known risks,
including financial management risks, into the process for staffing
and conducting reviews.[Footnote 83]
Agency Actions:
HHS reported OHS was reviewing the Risk Management process to ensure
it is consistently performed and documented in its centralized data
system and that it had taken related steps, such as requiring the
grant officer to identify known or suspected risks prior to an on-site
review. More recently, HHS has indicated that the results and action
plans from the Risk Management Meetings are documented in the Head
Start Enterprise System and used by reviewers to highlight areas where
special attention is needed during monitoring reviews. HHS also notes
that the Division of Payment Management (DPM) sends OHS monthly
reports on grantees to assist OHS in performing ongoing oversight,
monitoring grantee spending, and assessing associated risks and that
it has incorporated a new fiscal information form as a pre-review
requirement to ensure that fiscal information and concerns known to
the regional office staff are shared with on-site reviewers.
Department of Housing and Urban Development:
Open Recommendation:
Because the absence of third-party investors reduces the amount of
overall scrutiny Tax Credit Assistance Program (TCAP) projects would
receive and the Department of Housing and Urban Development (HUD) is
currently not aware of how many projects lacked third-party investors,
we recommended that HUD should develop a risk-based plan for its role
in overseeing TCAP projects that recognizes the level of oversight
provided by others.[Footnote 84]
Agency Actions:
HUD responded to our recommendation by saying it must wait for final
reports from housing finance agencies on TCAP project financing
sources in order to identify those projects that are in need of
additional monitoring. When the final reports are received, HUD said
it will develop a plan for monitoring those projects. HUD said it will
begin identifying projects that may need additional monitoring at the
end of September 2011 when sufficient information should be available
to determine which projects have little Low-Income Housing Tax Credit
investment and no other leveraged federal funds.
Department of Labor:
Newly Implemented Recommendations:
To enhance the Department of Labor's (Labor) ability to manage its
Recovery Act and regular Workforce Investment Act (WIA) formula grants
and to build on its efforts to improve the accuracy and consistency of
financial reporting, we recommended that the Secretary of Labor take
the following actions:[Footnote 85]
* To determine the extent and nature of reporting inconsistencies
across the states and better target technical assistance, conduct a
one-time assessment of financial reports that examines whether each
state's reported data on obligations meet Labor's requirements.
* To enhance state accountability and to facilitate their progress in
making reporting improvements, routinely review states' reporting on
obligations during regular state comprehensive reviews.
Agency Actions:
Labor reported that it has taken actions to implement our
recommendations. To determine the extent of reporting inconsistencies,
Labor awarded a contract in September 2010 and completed the
assessment of state financial reports in June 2011. Labor is currently
analyzing the findings and expects to have a final report and
recommendations in the fall of 2011. To enhance states' accountability
and facilitate their progress in making improvements in reporting,
Labor issued guidance on federal financial management and reporting
definitions on May 27, 2011, and conducted training on its financial
reporting form and key financial reporting terms such as obligations
and accruals. Labor also reported that it routinely monitors states'
reporting on obligations as part of its oversight process and
comprehensive on-site reviews.
Newly Implemented Recommendation:
Our September 2009 bimonthly report identified a need for additional
federal guidance in defining green jobs and we made the following
recommendation to the Secretary of Labor:[Footnote 86]
* To better support state and local efforts to provide youth with
employment and training in green jobs, provide additional guidance
about the nature of these jobs and the strategies that could be used
to prepare youth for careers in green industries.
Agency Actions:
Labor agreed with our recommendation and has taken several actions to
implement it. Labor's Bureau of Labor Statistics (BLS) has developed a
definition of green jobs, which was finalized and published in the
Federal Register on September 21, 2010. In addition, Labor continues
to host a Green Jobs Community of Practice, an online virtual
community available to all interested parties. The department also
hosted a symposium on April 28 and 29, 2011, with the green jobs state
Labor Market Information Improvement grantees. Symposium participants
shared recent research findings, including efforts to measure green
jobs, occupations, and training in their states. In addition, the
department released a new career exploration tool called "mynextmove"
[hyperlink, http://www.mynextmove.gov] in February 2011 that includes
the Occupational Information Network (O*NET) green leaf symbol to
highlight green occupations. Additional green references have recently
been added and are noted in the latest update, The Greening of the
World of Work: O*NET Project's Book of References. Furthermore, Labor
is planning to release a Training and Employment Notice this fall that
will provide a summary of research and resources that have been
completed by BLS and others on green jobs definitions, labor market
information and tools, and the status of key Labor initiatives focused
on green jobs.
Executive Office of the President: Office of Management and Budget:
Open Recommendations:
To leverage Single Audits as an effective oversight tool for Recovery
Act programs, we recommended that the Director of the Office of
Management and Budget (OMB):
1. take additional efforts to provide more timely reporting on
internal controls for Recovery Act programs for 2010 and beyond;
[Footnote 87]
2. evaluate options for providing relief related to audit requirements
for low-risk programs to balance new audit responsibilities associated
with the Recovery Act;[Footnote 88]
3. issue Single Audit guidance in a timely manner so that auditors can
efficiently plan their audit work;[Footnote 89]
4. issue the OMB Circular No. A-133 Compliance Supplement no later
than March 31 of each year;[Footnote 90]
5. explore alternatives to help ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner;[Footnote 91] and:
6. shorten the time frames required for issuing management decisions
by federal agencies to grant recipients.[Footnote 92]
Agency Actions:
GAO's recommendations to OMB are aimed toward improving the Single
Audit's effectiveness as an accountability mechanism for federally
awarded grants from Recovery Act funding. We previously reported that
OMB has taken a number of actions to implement our recommendations
since our first Recovery Act report in April 2009. We also reported
that OMB had undertaken initiatives to examine opportunities for
improving key areas of the single audit process over federal grant
funds administered by state and local governments and nonprofit
organizations based upon the directives in Executive Order 13520,
Reducing Improper Payments and Eliminating Waste in Federal Programs
issued in November 2009. Two sections of the executive order related
to federal grantees, including state and local governments, and
required OMB to establish working groups to make recommendations to
improve (1) the effectiveness of single audits of state and local
governments and non-profit organizations that are expending federal
funds and (2) the incentives and accountability of state and local
governments for reducing improper payments.
OMB formed several working groups as a result of the executive order,
including two separate working groups on issues related to single
audits. These two working groups developed recommendations and
reported them to OMB in May and June of 2010. OMB formed a
"supergroup" to review these recommendations for improving single
audits and to provide a plan for OMB to further consider or implement
them. The "supergroup" finalized its report in August 2011. OMB also
formed a Single Audit Metrics Workgroup as a result of one of the
recommendations made in June 2010 to improve the effectiveness of
single audits. In addition, the President issued a memorandum entitled
"Administrative Flexibility, Lower Costs, and Better Results for
State, Local, and Tribal Governments" (M-11-21) in February 2011 that
directed OMB to, among other things, lead an interagency workgroup to
review OMB circular policies to enable state and local recipients to
most effectively use resources to improve performance and efficiency.
Agencies reported their actions and recommendations to OMB on August
29, 2011. Among the recommendations included in the report were
recommendations aimed toward improving single audits. Since most
Recovery Act funds will be expended by 2013, some of the
recommendations that OMB acts upon may not be implemented in time to
affect single audits of grant programs funded under the Recovery Act.
However, OMB's efforts to enhance single audits could, if properly
implemented, significantly improve the effectiveness of the single
audit as an accountability mechanism. OMB officials stated that they
plan to review the "supergroup's" August 2011 report and develop a
course of action for enhancing the single audit process, but have not
yet developed a time frame for doing so. We will continue to monitor
OMB's efforts in this area.
(1) To address our recommendation to encourage timelier reporting on
internal controls for Recovery Act programs for 2010 and beyond, we
previously reported that OMB had commenced a second voluntary Single
Audit Internal Control Project (project) in August 2010 for states
that received Recovery Act funds in fiscal year 2010.[Footnote 93] The
project has been completed and the results have been compiled as of
July 6, 2011. One of the goals of these projects was to achieve more
timely communication of internal control deficiencies for higher-risk
Recovery Act programs so that corrective action could be taken more
quickly. The project encouraged participating auditors to identify and
communicate deficiencies in internal control to program management 3
months sooner than the 9-month time frame required under statute. The
projects also required that program management provide a corrective
action plan aimed at correcting any deficiencies 2 months earlier than
required under statute to the federal awarding agency. Upon receiving
the corrective action plan, the federal awarding agency had 90 days to
provide a written decision to the cognizant federal agency for audit
detailing any concerns it may have with the plan.[Footnote 94]
Fourteen states volunteered to participate in OMB's second project,
submitted interim internal control reports by December 31, 2010, and
developed auditee corrective action plans on audit findings by January
31, 2011. However, although the federal awarding agencies were to have
provided their interim management decisions to the cognizant agency
for audit by April 30, 2011, only 2 of the 11 federal awarding
agencies had completed the submission of all of their management
decisions, according to an official from the Department of Health and
Human Services, the cognizant agency for audit. In our review of the
2009 project, we had noted similar concerns that federal awarding
agencies' management decisions on proposed corrective actions were
untimely, and our related recommendations are discussed later in this
report.
Overall, we found that the results for both projects were helpful in
communicating internal control deficiencies earlier than required
under statute. The projects' dependence on voluntary participation,
however, limited their scope and coverage. This voluntary
participation may also bias the projects' results by excluding from
analysis states or auditors with practices that cannot accommodate the
project's requirement for early reporting of internal control
deficiencies. Even though the projects' coverage could have been more
comprehensive, the results provided meaningful information to OMB for
better oversight of Recovery Act programs and for making future
improvements to the single audit process. In August 2011, OMB
initiated a third Single Audit Internal Control Project with similar
requirements as the second OMB Single Audit Internal Control Project.
The goal of this project is also to identify material weaknesses and
significant deficiencies for selected Recovery Act programs 3 months
sooner than the 9-month time frame currently required under statute so
that the findings could be addressed by the auditee in a timely
manner. This project also seeks to provide some audit relief for the
auditors that participate in the project as risk assessments for
certain programs are not required. We will continue to monitor the
status of OMB's efforts to implement this recommendation and believe
that OMB needs to continue taking steps to encourage timelier
reporting on internal controls through Single Audits for Recovery Act
programs.
(2) We previously recommended that OMB evaluate options for providing
relief related to audit requirements for low-risk programs to balance
new audit responsibilities associated with the Recovery Act. OMB
officials have stated that they are aware of the increase in workload
for state auditors who perform Single Audits due to the additional
funding to Recovery Act programs subject to audit requirements. OMB
officials also stated that they solicited suggestions from state
auditors to gain further insights to develop measures for providing
audit relief. For state auditors that participated in the second and
third OMB Single Audit Internal Control Projects, OMB provided some
audit relief by modifying the requirements under Circular No. A-133 to
reduce the number of low-risk programs to be included in some project
participants' risk assessment requirements. However, OMB has not yet
put in place a viable alternative that would provide relief to all
state auditors that conduct Single Audits.
(3) (4) With regard to issuing Single Audit guidance, such as the OMB
Circular No. A-133 Compliance Supplement, in a timely manner, OMB has
not yet achieved timeliness in its issuance of Single Audit guidance.
We previously reported that OMB officials intended to issue the 2011
Compliance Supplement by March 31, 2011, but instead issued it in
June. OMB officials stated that the delay of this important guidance
to auditors was due to the refocusing of its efforts to avert a
governmentwide shutdown. OMB officials stated that although they had
prepared to issue the 2011 Compliance Supplement by the end of March
by taking steps such as starting the process earlier in 2010 and
giving agencies strict deadlines for program submissions, they were
not able to issue it until June 1, 2011. OMB officials developed a
timeline for issuing the 2012 Compliance Supplement by March 31, 2012.
In August 2011, they began the process of working with the federal
agencies and others involved in issuing the Compliance Supplement. We
will continue to monitor OMB's efforts in this area.
(5) (6) Regarding the need for agencies to provide timely management
decisions, OMB officials identified alternatives for helping to ensure
that federal awarding agencies provided their management decisions on
the corrective action plans in a timely manner, including possibly
shortening the time frames required for federal agencies to provide
their management decisions to grant recipients.[Footnote 95] OMB
officials acknowledged that this issue continues to be a challenge.
They told us they met individually with several federal awarding
agencies that were late in providing their management decisions in the
2009 project to discuss the measures that the agencies could take to
improve the timeliness of their management decisions. However, as
mentioned earlier in this report, most of the federal awarding
agencies had not submitted all of their management decisions on the
corrective actions by the April 30, 2011, due date in the second
project (and still had not done so by July 6, 2011, when the results
of the completed project were compiled). OMB officials have yet to
decide on the course of action that they will pursue to implement this
recommendation.
OMB formed a Single Audit Metrics Workgroup to develop an
implementation strategy for developing a baseline, metrics, and
targets to track the effectiveness of single audits over time and
increase the effectiveness and timeliness of federal awarding
agencies' actions to resolve single audit findings. This workgroup
reported its recommendations to OMB on June 21, 2011, proposing
metrics that could be applied at the agency level, by program, to
allow for analysis of single audit findings. OMB officials stated that
they plan to initiate a pilot to implement the recommendations of this
workgroup starting with fiscal year 2011 single audit reports.
Newly Implemented Recommendation:
We recommended that the Director of OMB 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;[Footnote 96]
Based on OMB's actions, we have concluded that OMB has addressed the
intent of this recommendation. To provide 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, the OMB Circular No. A-133, Audits of States, Local
Governments, and Non-Profit Organizations Compliance Supplement
(Compliance Supplement) for fiscal years 2009 through 2011 required
all federal programs with expenditures of Recovery Act awards to be
considered as programs with higher risk when performing standard risk-
based tests for selecting programs to be audited.[Footnote 97] The
auditors' determinations of the programs to be audited are based upon
their evaluation of the risks of noncompliance occurring that could be
material to an individual major program. The Compliance Supplement has
been the primary mechanism that OMB has used to provide Recovery Act
requirements and guidance to auditors.[Footnote 98] One presumption
underlying the guidance is that smaller programs with Recovery Act
expenditures could be audited as major programs when using a risk-
based audit approach. The most significant risks are associated with
newer programs that may not yet have the internal controls and
accounting systems in place to help ensure that Recovery Act funds are
distributed and used in accordance with program regulations and
objectives.
Since Recovery Act spending is projected to continue through 2016, we
believe that it is essential that OMB provide direction in Single
Audit guidance to help to ensure that smaller programs with higher
risk are not automatically excluded from receiving audit coverage
based on their size and standard Single Audit Act requirements. We
spoke with OMB officials and reemphasized our concern that future
Single Audit guidance provide instruction that helps to ensure that
smaller programs with higher risk have audit coverage in the area of
internal controls and compliance. OMB officials agreed and stated that
such guidance will continue to be included in future Recovery Act
guidance. We also performed an analysis of Recovery Act program
selection for single audits of 10 states for fiscal year
2010.[Footnote 99] In general, we found that the auditors selected a
relatively greater number of smaller programs with higher risks with
Recovery Act funding when compared to the previous period. Therefore,
this appears to have resulted in a relative increase in the number of
smaller Recovery Act programs being selected for audit for 7 of the 10
states we reviewed.
Department of Transportation:
Open Recommendations:
To ensure that Congress and the public have accurate information on
the extent to which the goals of the Recovery Act are being met, we
recommended that the Secretary of Transportation direct the Department
of Transportations' (DOT) Federal Highway Administration (FHWA) to
take the following two actions:[Footnote 100]
* Develop additional rules and data checks in the Recovery Act Data
System, so that these data will accurately identify contract
milestones such as award dates and amounts, and provide guidance to
states to revise existing contract data.
* Make publicly available--within 60 days after the September 30,
2010, obligation deadline--an accurate accounting and analysis of the
extent to which states directed funds to economically distressed
areas, including corrections to the data initially provided to
Congress in December 2009.
Agency Actions:
In its response, DOT stated that it implemented measures to further
improve data quality in the Recovery Act Data System, including
additional data quality checks, as well as providing states with
additional training and guidance to improve the quality of data
entered into the system. DOT also stated that as part of its efforts
to respond to our draft September 2010 report in which we made this
recommendation on economically distressed areas, it completed a
comprehensive review of projects in these areas, which it provided to
GAO for that report. DOT recently posted an accounting of the extent
to which states directed Recovery Act transportation funds to projects
located in economically distressed areas on its Web site, and we are
in the process of assessing these data.
Open Recommendation:
To better understand the impact of Recovery Act investments in
transportation, we believe that the Secretary of Transportation should
ensure that the results of these projects are assessed and a
determination made about whether these investments produced long-term
benefits.[Footnote 101] Specifically, in the near term, we recommended
that the Secretary direct FHWA and FTA to determine the types of data
and performance measures they would need to assess the impact of the
Recovery Act and the specific authority they may need to collect data
and report on these measures.
Agency Actions:
In its response, DOT noted that it expected to be able to report on
Recovery Act outputs, such as the miles of road paved, bridges
repaired, and transit vehicles purchased, but not on outcomes, such as
reductions in travel time, nor did it commit to assessing whether
transportation investments produced long-term benefits. DOT further
explained that limitations in its data systems, coupled with the
magnitude of Recovery Act funds relative to overall annual federal
investment in transportation, would make assessing the benefits of
Recovery Act funds difficult. DOT indicated that, with these
limitations in mind, it is examining its existing data availability
and, as necessary, would seek additional data collection authority
from Congress if it became apparent that such authority was needed.
DOT plans to take some steps to assess its data needs, but it has not
committed to assessing the long-term benefits of Recovery Act
investments in transportation infrastructure. We are therefore keeping
our recommendation on this matter open.
Matters for Congressional Consideration:
Matter:
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.[Footnote 102]
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter:
To the extent that additional 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.[Footnote
103]
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter:
To provide housing finance agencies (HFA) with greater tools for
enforcing program compliance, in the event the Section 1602 Program is
extended for another year, Congress may want to consider directing the
Department of the Treasury to permit HFAs the flexibility to disburse
Section 1602 Program funds as interest-bearing loans that allow for
repayment.
We have closed this Matter for Congressional Consideration because the
Section 1602 Program has not been extended.
[End of section]
Appendix V: GAO Contact and Staff Acknowledgments:
GAO Contact:
George Scott, (202) 512-5932 or scottg@gao.gov:
Staff Acknowledgments:
Phyllis Anderson, Cornelia Ashby, James Ashley, Thomas Beall, James
Bennett, Deborah Bland, Barbara Bovbjerg, Robert Campbell, Sherwin
Chapman, Andrew Ching, David Chrisinger, Stanley J. Czerwinski, Karen
Febey, Alexander Galuten, Bryon Gordon, Monica Gomez, Sonya Harmeyer,
Laura Heald, Sharon Hogan, Eric Holbrook, Tom James, Yvonne D. Jones,
Jamila Kennedy, Ying Long, Amy Moran Lowe, Jean McSween, Sheila
McCoy,Elizabeth Morrison, Maria Morton, Karen O'Conor, Robert Owens,
Carol Patey, Kathy Peyman, Brenda Rabinowitz, Susan Ragland, Ellen
Phelps Ranen, James Rebbe, Beverly Ross, Michelle Sager, Vernette
Shaw, Glen Slocum, Jonathan Stehle, A.J. Stephens, Najeema Washington,
and James Whitcomb,
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, 123 Stat. 115.
[2] Across the United States, as of August 26, 2011, the Department of
the Treasury has paid out $228.7 billion in Recovery Act funds for use
in states and localities. Of that amount, $64 billion has been paid
out since the beginning of fiscal year 2011 (Oct. 1, 2010). For
updates, see [hyperlink, http://gao.gov/recovery].
[3] CRS-R40151, Funding for Education in the American Recovery and
Reinvestment Act of 2009 (P.L. 111-5), Washington, D.C., April 14,
2009.
[4] There are some Recovery Act education funds that are not included
in the scope of this review. For example, we did not review IDEA Part
C grants or SFSF government services funds.
[5] Pub. L. No. 111-5, § 901(a)(1), 123 Stat. 115, 191.
[6] Pub. L. No. 111-5 § 1512(e) 123 Stat. 115, 288. FTE data provide
insight into the use and impact of the Recovery Act funds, but
recipient reports cover only direct jobs funded by the Recovery Act.
These reports do not include the employment impact on suppliers
(indirect jobs) or on the local community (induced jobs). Both data
reported by recipients and other macroeconomic data and methods are
necessary to understand the overall employment effects of the Recovery
Act.
[7] The 33 geographic districts comprising the New York City Public
Schools were treated as one school district and that one district was
placed in the 100 largest LEAs' stratum.
[8] In addition to our analyses of recipient report data for the
education programs in our review, we continued, as in prior rounds, to
perform edit checks and analyses on all prime recipient reports to
assess data logic and consistency and identify unusual or atypical
data.
[9] See [hyperlink, http://gao.gov/recovery] for related GAO products.
[10] 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 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). The
competitive grants included the Race to the Top program under which
about $3.9 billion was awarded to 11 states and the District of
Columbia, and the Investing in Innovation program under which nearly
$650 million was awarded to 49 eligible entities, including school
districts, non-profit education organizations, and institutions of
higher education.
[11] Part B Section 611 funds are provided to assist states in
providing special education and related services to children with
disabilities aged 3 through 21. Part B Section 619 funds are provided
to assist states in providing special education and related services
to children with disabilities aged 3 through 5. Our review focused on
the use of Part B Section 611 funds.
[12] GAO, Recovery Act: Opportunities to Improve Management and
Strengthen Accountability over States' and Localities' Uses of Funds,
[hyperlink, http://www.gao.gov/products/GAO-10-999] (Washington, D.C.:
Sept. 20, 2010).
[13] For the SFSF program, only states, and not LEAs, have to meet MOE
requirements.
[14] The Recovery Act authorizes the Secretary of Education to waive
the SFSF MOE requirement under certain circumstances. For more
information on SFSF MOE see GAO, Recovery Act: Planned Efforts and
Challenges in Evaluating Compliance with Maintenance of Effort and
Similar Provisions, [hyperlink,
http://www.gao.gov/products/GAO-10-247] (Washington, D.C.: Nov. 30,
2009).
[15] The standard for MOE differs for states and LEAs. IDEA prohibits
states from reducing "state financial support for special education
and related services for children with disabilities below the level of
that support for the preceding fiscal year." 20 U.S.C.
§1412(a)(18)(A). IDEA prohibits LEAs from reducing the level of
expenditures for the education of children with disabilities below the
level of those expenditures for the preceding fiscal year. 20 U.S.C.
§1413(a)(2)(A)(iii). Education may waive the state MOE requirement for
the Part B grants to states program under certain circumstances, but
there is no provision allowing for a waiver for LEAs from the MOE
requirement.
[16] Generally, states are required to demonstrate "maintenance of
effort" by showing that either their combined fiscal effort per
student or the aggregate expenditures within the state with respect to
the provision of free public education for the preceding fiscal year
were not less than 90 percent of such combined fiscal effort or
aggregate expenditures for the second preceding fiscal year. 20 U.S.C.
§ 6337(e).
[17] An LEA may receive its full allocation of Title I, Part A funds
for any fiscal year only if the state educational agency (SEA)
determines that the LEA has maintained its fiscal effort in accordance
with 20 U.S.C. § 7901. Specifically, an LEA must maintain its total or
per-pupil expenditures in the preceding fiscal year at 90 percent or
more of those expenditures in the second preceding fiscal year.
[18] The Recovery Act education funds must be obligated by September
30, 2011.
[19] U.S. Department of Education, American Recovery and Reinvestment
Act of 2009, Spending Report by Program, [hyperlink,
http://www2.ed.gov/policy/gen/leg/recovery/spending/program.xls],
September 9, 2011.
[20] The National Governors Association and the National Association
of State Budget Officers, The Fiscal Survey of States (Washington,
D.C.: Spring 2011). Forty-six states begin their fiscal years in July
and end them in June. The exceptions are Alabama and Michigan, with
October to September fiscal years; New York, with an April to March
fiscal year; and Texas, with a September to August fiscal year.
[21] The Fiscal Survey of States, Spring 2011, "Table 9. Fiscal 2012
Recommended Program Area Cuts," 11.
[22] We used data from the U.S. Census Bureau's Small Area Income and
Poverty Estimates (SAIPE) program to stratify LEAs by poverty status.
The SAIPE program provides estimates by LEA of poverty rates, the
number of children age 5 to 17 in poverty, and median household
income. We defined an LEA to be high poverty if 20 percent or more of
the children who are age 5 through 17, and served by the local LEA,
are from families with incomes below the poverty line. The margins of
error for the estimates for LEAs with high and low poverty rates were
plus or minus 9.3 and 7.9 percentage points, respectively.
[23] The margin of error for this estimate was plus or minus 9.5
percentage points.
[24] The margins of error for the estimates for rural and urban LEAs
were 8.2 and 8.1 percent, respectively.
[25] The margin of error for this estimate was plus or minus 8.4
percentage points.
[26] Pub. L. No. 111-226, § 101, 124 Stat. 2389 (2010). According to
Education guidance, the funds are available for obligations that occur
as of August 10, 2010 (the date of enactment of the Act). An LEA that
has funds remaining after the 2010-2011 school year may use those
remaining funds through September 30, 2012.
[27] The Hawaii Department of Education is both an LEA and an SEA.
[28] Center on Education Policy, Strained Schools Face Bleak Future:
Districts Foresee Budget Cuts, Teacher Layoffs, and a Slowing of
Education Reform Efforts (Washington, D.C.: June 2011).
[29] 20 U.S.C. § 1413(a)(2)(A)(iii); 34 C.F.R. § 300.203(b).
[30] To be eligible to exercise this flexibility, among other things,
the LEA must be rated as "Meets Requirements" in its performance
evaluation conducted by the SEA pursuant to 20 U.S.C. § 1416(a)(1)(C).
20 U.S.C. § 1416(f).
[31] 20 U.S.C. § 1413(a)(2)(C)(i).
[32] Pub. L. No. 111-5, § 1601, 123 Stat. 115, 302.
[33] 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).
[34] The margin of error for this estimate was plus or minus 9.1
percentage points.
[35] The margin of error for this estimate was plus or minus 10.9
percentage points.
[36] 20 U.S.C. § 1412(a)(18)(A).
[37] The Secretary may waive this requirement if the Secretary
determines that granting a waiver would be equitable due to
exceptional or uncontrollable circumstances, such as a natural
disaster or a precipitous and unforeseen decline in the financial
resources of the state. 20 U.S.C. § 1412(a)(18)(C)(i).
[38] A partial waiver will waive a portion of the amount requested by
the state, but deny the remainder.
[39] Education officials reported that they try to reach agreement
with the state on the amount of a state's required MOE level, the
amount of the state's MOE shortfall, and other state budget data.
[40] According to Education officials, whether and how much this
reduction affects those states' future IDEA awards depends on a
variety of factors contained in the funding formula for IDEA (such as,
for example, changes in federal appropriations for IDEA, or changes in
the population of children in the state, including the number of
children living in poverty).
[41] Education officials told us this result is based on the
interaction of two provisions of IDEA--20 U.S.C. § 1412(a)(18)(B)
(requiring a reduction in a state's IDEA grant for any fiscal year
following the fiscal year in which the state failed to maintain
support) and 20 U.S.C. § 1411(d) (regarding IDEA funding requirements,
which base funding in part upon the amount of IDEA funds a state
received in the preceding fiscal year).
[42] In addition to the integrated evaluation, Education's Institute
of Education Sciences (IES) will conduct other Recovery Act-related
evaluations that do not include SFSF, IDEA, Part B, and ESEA Title I,
Part A. For example, IES will evaluate the implementation and student
outcomes related to the Race to the Top grants as well as an impact
evaluation on the Teacher Incentive Fund mandated by the Recovery Act.
According to IES officials, each evaluation went through an
independent award process and has different contractors.
[43] Education established the $4 billion Race to the Top grant fund
to encourage states to reform their elementary and secondary education
systems and to reward states that have improved student outcomes, such
as high school graduation rates. (For more information on Race to the
Top, see GAO, Race to the Top: Reform Efforts Are Under Way and
Information Sharing Could Be Improved, [hyperlink,
http://www.gao.gov/products/GAO-11-658] (Washington, D.C.: June 30,
2011)). Through the Teacher Incentive Fund, Education awards
competitive grants to states and school districts to support efforts
to develop and implement performance-based teacher and principal
compensation systems in high-need schools. The Ed Tech program is
intended to improve student academic achievement through the use of
technology in elementary and secondary schools.
[44] According to Education, EDFacts is an initiative to put
performance data at the center of policy, management, and budget
decisions for all K-12 education programs. It is a multidimensional
data system that includes: (1) an electronic submission system that
receives data from states, districts, and schools; (2) analytical
tools for analysis of submitted data; and (3) reporting tools for
Education staff and data submitters to ensure better use of those data.
[45] In April 2011, Mathematica Policy Research and the American
Institutes for Research provided guidance to states on evaluating
Recovery Act programs and other educational reforms. The guidance
provides a framework for thinking about evaluations and examples of
how to apply it, such as illustrating how recipients might evaluate
professional development targeted to teachers and instructional
leaders.
[46] To receive the second phase of SFSF funding (Phase II), states
had to complete an application in which they described their ability
to provide data to address 37 indicators and descriptors (34
indicators, 3 descriptors) that support the four assurances they made
to receive their initial SFSF funding: (1) to advance reforms in
achieving equity in teacher distribution; (2) enhancing standards and
assessments; (3) supporting struggling schools; and (4) establishing a
statewide longitudinal data system. Education officials said that
states are only required to sign that they will meet the assurances
and do not have to undertake new initiatives or otherwise indicate
that Recovery Act funds are being directly spent on meeting the
assurances.
[47] As we have reported, finalizing the requirements for the SFSF
program represented a significant effort by Education that will allow
it to document and track the status of the SFSF reform assurances.
Moreover, Education sought to use existing data to populate the
indicators wherever possible so as to minimize the burden on states
and LEAs. GAO, Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010).
[48] Establishing longitudinal data systems that include 12 specific
elements is one of the assurances that states must make to be eligible
to receive their portion of SFSF. One of the 12 elements, for example,
is a teacher identifier system with the ability to match teachers with
students.
[49] GAO has found that entities should use and not simply collect
performance information as a compliance exercise. GAO, Managing for
Results: Enhancing Agency Use of Performance Information for
Management Decision Making, [hyperlink,
http://www.gao.gov/products/GAO-05-927] (Washington, D.C.: Sept. 9,
2005).
[50] As we have reported previously, some of these reform goals, such
as improving standards and assessments, are more likely to be pursued
at the state level than at the local level, while others, such as
supporting struggling schools, may not apply to all LEAs.
[51] As we have reported, some states' applications for SFSF funding
described plans and initiatives that are conditioned on the receipt of
funds, in addition to SFSF, under separate federal competitive grants
that had not been awarded yet. GAO, Recovery Act: States' and
Localities' Uses of Funds and Actions Needed to Address Implementation
Challenges and Bolster Accountability, GAO-10-604 (Washington, D.C.:
May 26, 2010).
[52] Three of the SFSF indicators are part of several other non-SFSF
indicators displayed on a "United States Education Dashboard." The
Dashboard is intended to show how the nation is progressing on the
administration's goal of having the highest proportion of college
graduates in the world. For example, the Dashboard provides the latest
percentage of 4th and 8th graders proficient on the NAEP reading and
mathematics for 2009 and whether this is a change from 2007.
[53] For SFSF, states are responsible for assuring advancement of the
reform areas, but LEAs were generally given broad discretion in how to
spend the SFSF funds. As a result, Education and states bear the bulk
of risk since LEAs have received funds whether or not they have
pursued activities related to the assurances.
[54] GAO, Grants Management: Enhancing Performance Accountability
Provisions Could Lead to Better Results, [hyperlink,
http://www.gao.gov/products/GAO-06-1046] (Washington, D.C.: Sept. 29,
2006).
[55] 74 Fed. Reg. 58,436.
[56] GAO, Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010).
[57] Congress passed the Single Audit Act, codified, as amended, 31
U.S.C. ch. 75, to promote, among other things, sound financial
management, including effective internal controls, with respect to
federal awards administered by nonfederal entities. A single audit
consists of (1) an audit and opinion on the fair presentation of the
financial statements and of the Schedule of Expenditures of Federal
Awards; (2) gaining an understanding of and testing internal control
over financial reporting and over the entity's compliance with laws,
regulations, and contract or grant provisions that have a direct and
material effect on certain federal programs; and (3) an audit and an
opinion on compliance with applicable program requirements for certain
federal programs. The Single Audit Act requirements apply to state and
local governments and non-profit organizations that expend $500,000 or
more of federal awards in a year.
[58] For further information about cash management issues we have
previously reported, see [hyperlink,
http://www.gao.gov/products/GAO-09-1016], 57-59, and [hyperlink,
http://www.gao.gov/products/GAO-10-604], 30-32.
[59] As part of a single audit, auditors opine on whether a recipient
of federal program funds complied in all material respects with
requirements described in the OMB Circular A-133 Compliance Supplement
that are applicable to each of the federal programs selected by the
auditors for compliance testing. A "qualified" opinion indicates that
the audited entity was in material compliance with program
requirements except for certain requirements indicated in the
auditor's report. Auditors qualified their opinion on California's
compliance in part because they found noncompliance with cash
management requirements for the Title I program. Auditors qualified
their opinion on Massachusetts' compliance in part because they found
noncompliance with requirements applicable to its Federal Family
Education Loans, Federal Direct Student Loans, and Vocational
Rehabilitation Cluster programs, which were not included in the scope
of this Recovery Act education program review.
[60] Internal control means a process, effected by an entity's
management and other personnel, designed to provide reasonable
assurance regarding the achievement of objectives in the following
categories: (1) effectiveness and efficiency of operations; (2)
reliability of financial reporting; and (3) compliance with applicable
laws and regulations. A material weakness is a deficiency, or
combination of deficiencies, in internal control, such that there is a
reasonable possibility that a material misstatement of the entity's
financial statements will not be prevented, or detected and corrected
on a timely basis. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe
than a material weakness yet important enough to merit attention by
those charged with governance. We reviewed 2010 Single Audit findings
for the states we visited in-person: California, Iowa, Massachusetts,
and Mississippi, as well as the 2 LEAs and 1 IHE we visited in each
state. Our review covered Catalog of Federal Domestic Assistance
(CFDA) grant numbers 84.010, 84.389, 84.027, 84.391, 84.392, and
84.394.
[61] California's 2009 Single Audit also identified deficiencies in
cash management of Title I funds. GAO has previously reported on the
state's ongoing cash management issues and the actions the SEA has
taken to address them--see [hyperlink,
http://www.gao.gov/products/GAO-09-830SP], [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP], [hyperlink,
http://www.gao.gov/products/GAO-10-232SP], and [hyperlink,
http://www.gao.gov/products/GAO-10-467T]. When we spoke with
California Department of Education officials in May 2011, they stated
they the Web-based reporting system to track LEA cash balances that
they began developing in 2009 had been expanded to include Title I,
and all federal programs.
[62] The Davis-Bacon Act was enacted in 1931 in part to protect
communities and workers from the economic disruption caused by
contractors hiring lower wage workers from outside the local
geographic area, thus obtaining federal construction contracts by
underbidding contractors who pay local wage rates. The act generally
requires that employers pay locally prevailing wage rates, including
fringe benefits, to laborers and mechanics employed on federally-
funded construction projects in excess of $2,000.
[63] Outlays are defined as the amount of funds obligated by Education
and paid to grantees.
[64] We use the term "recipient report" to refer to the reports
required by section 1512 of division A of the Recovery Act. Pub. L.
No. 111-5, § 1512, 123 Stat. 115, 287.
[65] To perform this work, the Education OIG used data from the March
31, 2010, recipient report.
[66] GAO, Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010) 186; and GAO, Recovery Act:
Opportunities to Improve Management and Strengthen Accountability over
States' and Localities' Uses of Funds, [hyperlink,
http://www.gao.gov/products/GAO-10-999] (Washington, D.C.: Sept. 20,
2010) 143.
[67] According to Education officials, there was one recipient,
Minnesota, that did not report during the eighth reporting period
because the Minnesota government was shut down during the grantee
reporting period due to budget issues. Consistent with Office of
Management and Budget and Recovery Act Transparency Board approved
procedures, Education issued Minnesota a waiver for reporting in the
April-June 2011 quarter for all education grants. Although not
required to, Minnesota did report on the SFSF government services
funds.
[68] Exec. Order No. 13,576, § 3, 76 Fed. Reg. 35,297 (June 16, 2011).
[69] H.R. 2146, 112TH Cong. (2011); S. 1222, 112TH Cong. (2011).
[70] We excluded FTE counts associated with grants whose funding
agency was the U.S. Department of Interior.
[71] See GAO, Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010).
[72] We stratified the population into strata based on size, poverty
level, and urban status. Regarding size, we identified and included
the 100 largest LEAs in the country. The 33 geographic districts
comprising the New York City Public Schools were treated as one school
district and that one district was placed in the 100 largest LEAs
stratum.
[73] Pub. L. No. 111-5 § 1512(e), 123 Stat. 115, 288.
[74] As with our previous reviews, we conducted these checks and
analyses on all prime recipient reports to assess data logic and
consistency and identify unusual or atypical data. For this eighth
round of reporting, we continued to see only minor variations in the
number or percent of reports appearing atypical or showing some form
of data discrepancy.
[75] U.S. Department of Education Office of Inspector General,
American Recovery and Reinvestment Act: The Effectiveness of the
Department's Data Quality Review Processes, ED-OIG/A19K0010
(Washington, D.C.: August 2011).
[76] 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, [hyperlink, http://www.gao.gov/products/GAO-09-829]
(Washington, D.C.: July 8, 2009); 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); 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); Recovery Act: Status of States' and Localities' Use of Funds
and Efforts to Ensure Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-231] (Washington, D.C.: Dec. 10,
2009); Recovery Act: One Year Later, States' and Localities' Uses of
Funds and Opportunities to Strengthen Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-437] (Washington, D.C.: Mar. 3,
2010); Recovery Act: States' and Localities' Uses of Funds and Actions
Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010); Recovery Act: Opportunities to
Improve Management and Strengthen Accountability over States' and
Localities' Uses of Funds, [hyperlink,
http://www.gao.gov/products/GAO-10-999] (Washington, D.C.: Sept. 20,
2010); Recovery Act: Head Start Grantees Expand Services, but More
Consistent Communication Could Improve Accountability and Decisions
about Spending, [hyperlink, http://www.gao.gov/products/GAO-11-166]
(Washington, D.C.: Dec. 15, 2010); Recovery Act: Energy Efficiency and
Conservation Block Grant Recipients Face Challenges Meeting
Legislative and Program Goals and Requirements, [hyperlink,
http://www.gao.gov/products/GAO-11-379] (Washington, D.C.: Apr. 7,
2011); Recovery Act: Funding Used for Transportation Infrastructure
Projects, but Some Requirements Proved Challenging, [hyperlink,
http://www.gao.gov/products/GAO-11-600] (Washington, D.C.: June 29,
2011); and Recovery Act: Funds Supported Many Water Projects, and
Federal and State Monitoring Shows Few Compliance Problems, [hyperlink,
http://www.gao.gov/products/GAO-11-608] (Washington, D.C.: June 29,
2011).
[77] [hyperlink, http://www.gao.gov/products/GAO-10-604], 124-125.
[78] [hyperlink, http://www.gao.gov/products/GAO-11-379], 36.
[79] [hyperlink, http://www.gao.gov/products/GAO-11-379], 36-37.
[80] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[81] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[82] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[83] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[84] [hyperlink, http://www.gao.gov/products/GAO-10-999], 189.
[85] [hyperlink, http://www.gao.gov/products/GAO-10-604], 244.
[86] [hyperlink, http://www.gao.gov/products/GAO-09-1016], 78.
[87] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247.
[88] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[89] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247.
[90] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[91] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247-248.
[92] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[93] OMB's second project is similar to its first Single Audit
Internal Control project, which started in October 2009. Sixteen
states participated in the first project. We assessed the results of
the project and reported them in GAO-10-999.
[94] HHS, the cognizant agency for audit, has designated the HHS
Office of the Inspector General to perform certain responsibilities
relating to Single Audits.
[95] The project's guidelines called for the federal awarding agencies
to complete (1) performing a risk assessment of the internal control
deficiency and identify those with the greatest risk to Recovery Act
funding and (2) identifying corrective actions taken or planned by the
auditee. OMB guidance requires this information to be included in a
management decision that the federal agency was to have issued to the
auditee's management, the auditor, and the cognizant agency for audit.
[96] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[97] Congress passed the Single Audit Act, as amended, 31 U.S.C. ch.
75, to promote, among other things, sound financial management,
including effective internal controls, with respect to federal awards
administered by nonfederal entities. 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.
[98] In addition to the annual edition of the Compliance Supplement,
OMB may issue Compliance Supplement addendums during the year to
update or provide further Recovery Act guidance.
[99] Analysis was based on 2010 Single Audit data submitted to the
federal government in accordance with the Single Audit Act for 10
randomly selected state governments.
[100] [hyperlink, http://www.gao.gov/products/GAO-10-999], 187-188.
[101] [hyperlink, http://www.gao.gov/products/GAO-10-604], 241-242.
[102] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[103] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[104] [hyperlink, http://www.gao.gov/products/GAO-10-604], 251.
[End of section]
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