Recovery Act
Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability, an E-supplement to GAO-10-231 (Appendixes) Gao ID: GAO-10-232SP December 10, 2009This supplementary report to GAO-10-231 provides individual state appendixes for 16 states and the District of Columbia for GAO's work on the fourth of its bimonthly reviews of the American Recovery and Reinvestment Act (Recovery Act). GAO's work focused on nine federal programs that are estimated to account for approximately 87 percent of federal Recovery Act outlays in fiscal year 2009 for programs administered by states and localities.
GAO-10-232SP, Recovery Act: Status of States' and Localities' Use of Funds and Efforts to Ensure Accountability (Appendixes)
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Report to the Congress:
United States Government Accountability Office:
GAO:
December 2009:
Recovery Act:
Status of States' and Localities' Use of Funds and Efforts to Ensure
Accountability (Appendixes):
GAO-10-232SP:
Contents:
Appendix I: Arizona:
Appendix II: California:
Appendix III: Colorado:
Appendix IV: District of Columbia:
Appendix V: Florida:
Appendix VI: Georgia:
Appendix VII: Illinois:
Appendix VIII: Iowa:
Appendix IX: Massachusetts:
Appendix X: Michigan:
Appendix XI: Mississippi:
Appendix XII: New Jersey:
Appendix XIII: New York:
Appendix XIV: North Carolina:
Appendix XV: Ohio:
Appendix XVI: Pennsylvania:
Appendix XVII: Texas:
Appendix XVIII: Program Descriptions:
[End of section]
United States Government Accountability Office:
Washington, DC 20548:
[End of section]
Appendix I: Arizona:
Overview:
This appendix summarizes GAO‘s work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Arizona. The full report covering all of GAO‘s work in
16 states and the District of Columbia may be found at [hyperlink,
http://www.gao.gov/recovery].
What We Did:
We reviewed three specific program areas”Education, Highway
Infrastructure, and Public Housing”funded under the Recovery Act. We
selected these program areas primarily because they have received and
are in the process of obligating Recovery Act funds. Our work focused
on the status of the program area‘s funding, how funds are being used,
and issues that are specific to each program area. (For descriptions
and requirements of the programs we covered see appendix XVIII of GAO-
10-232SP.) As part of our review, we surveyed a representative sample
of local educational agencies (LEAs) from across the nation, including
those in Arizona about their planned uses for Recovery Act funds for
the State Fiscal Stabilization Fund (SFSF); Title I, Part A of the
Elementary and Secondary Education Act of 1965 (ESEA), as amended; and
Part B of the Individuals with Disabilities Education Act (IDEA), as
amended. We also visited five LEAs and two community colleges. For
highway infrastructure work, we spoke with the Arizona Department of
Transportation (ADOT) and the Arizona Division of the Federal Highway
Administration. We also spoke with representatives of two localities
receiving Recovery Act funds. As part of our review, we revisited five
public housing agencies that we reported on earlier in 2009.
To gain an understanding of the state‘s experience in meeting Recovery
Act reporting requirements, we examined documents prepared by and held
discussions with, the Governor‘s Office of Economic Recovery and ADOT.
Because Arizona is a centralized reporting state, each prime recipient
of Recovery Act funds is required to report quarterly on a number of
measures, including the use of funds and estimates of the number of
jobs created and retained. The first quarterly reports were due and
submitted in October 2009.
Our work in Arizona involved monitoring the state‘s fiscal situation
and, for the first time, visiting two counties to review their use of
Recovery Act funds. We chose to visit the counties of Maricopa and
Yavapai because they were among the localities that have experienced
consequences of the economic downturn. According to county officials,
the counties are using the funds to provide critical, timely, and
increased services to households hardest hit by the economic downturn.
What We Found:
* Education. Arizona has received approximately $529 million in
Recovery Act funds as of November 13, 2009, for SFSF, ESEA Title I,
Part A and IDEA Part B education programs. Arizona used SFSF funds to
stabilize the state budget; the state distributed funds to kindergarten
through 12th grade (K-12) LEAs by making a regular state aid payment,
and the community colleges we visited used the money to restore
services and to pay instructional salaries. The LEAs are using the
Recovery Act ESEA Title I, Part A funds to hire new staff and offer
additional educational programs. They also planned to use the Recovery
Act IDEA, Part B funds to hire new staff, to support student needs, and
as seed money for new educational initiatives.
* Recipient reporting. Arizona used a centralized reporting system to
report data for the state agencies that received Recovery Act funds
through the state. Other recipients, such as counties and housing
authorities that received Recovery Act funds directly from federal
agencies, submitted their first quarterly recipient reports directly to
[hyperlink, http://www.federalreporting.gov] (FederalReporting.gov). We
found that the initial recipient reporting was timely with a few
ultimately resolved challenges.
* Arizona‘s fiscal condition. The Recovery Act funds have been used in
Arizona in place of, or to match state contributions for, state-funded
services such as education. In addition, nonfederal funds freed up as a
result of the Recovery Act have been used to cover certain Medicaid
costs. However, despite $750 million in Recovery Act funds in fiscal
year 2009 and $1.13 billion for fiscal year 2010, Arizona is facing an
estimated $2 billion state budget shortfall in this fiscal year,
according to Arizona Joint Legislative Budget Committee staff
estimates.
* Counties‘ use of Recovery Act funds. Maricopa County reported
receiving $55 million and Yavapai County received $1 million in
Recovery Act funds directly from federal agencies. The counties are
using the funds to expand healthcare and human services in response to
demand resulting from the economic downturn and to enhance law
enforcement by upgrading communication and security equipment.
* Highway Infrastructure Investment. As of October 31, 2009, the U.S.
Department of Transportation‘s Federal Highway Administration has
obligated $293 million of the $522 million of Recovery Act funds
apportioned to Arizona. Thirty percent of all apportioned highway funds
are required to be suballocated to metropolitan and local areas of the
state under the Recovery Act, and of the $157 million in these
suballocated funds, only $29 million, or about 18 percent, has been
obligated. Nevertheless, local officials from two metropolitan planning
organizations we spoke to and ADOT said that they expect Arizona to
obligate 100 percent of its apportionment by the March 2010 deadline.
* Public housing. Arizona has 15 public housing agencies that have
received about $12 million from the Public Housing Capital Fund. As of
November 14, 2009, the agencies used funds to complete several projects
that have improved existing public housing sites, such as
rehabilitating kitchens, installing new heating and cooling systems,
and replacing rooftops. Arizona also received one Capital Fund
competitive grant, which the city of Phoenix Housing plans to combine
with other funding to renovate 374 housing units.
Arizona Schools Are Facing Budget Reductions, but Recovery Act Funds
Helped Prevent Potential Layoffs and Provided Seed Money for
Educational Programs:
Arizona has received approximately $529 million in Recovery Act funds
as of November 13, 2009, for the three Recovery Act education programs
GAO reviewed (see table 1). The approximately $12 million from Recovery
Act IDEA, Part B and $17 million from Recovery Act ESEA Title I, Part A
funds were in addition to the regular IDEA and ESEA Title I funds the
state received. The state has also drawn down approximately $500
million in SFSF funds. Due to state budget shortfalls, Arizona used the
SFSF funds to maintain state education funding levels by making a state
aid payment for elementary and secondary education (K-12) and freeing
up state general funds for other needs. In addition, the state‘s
institutions of higher education used the SFSF monies as a
reimbursement for fiscal year 2009 expenses.
Table 1: Allocations, Draw Downs, and Expenditures for the Three
Recovery Act Education Programs Reviewed in Arizona:
Recovery Act program: SFSF education funds;
Made available to Arizona[A]: $557,352,452;
Drawn down by Arizona: $499,519,094;
Expenditures by subrecipients[B]: $499,517,793.
Recovery Act program: ESEA Title I, Part A;
Made available to Arizona[A]: $195,087,321;
Drawn down by Arizona: $17,002,033;
Expenditures by subrecipients[B]: $13,460,217.
Recovery Act program: IDEA Part B;
Made available to Arizona[A]: $184,178,924;
Drawn down by Arizona: $11,986,711;
Expenditures by subrecipients[B]: $10,844,641.
Source: GAO analysis of U.S. Department of Education and Arizona
Department of Education data.
[A] Data as of November 6, 2009.
[B] Data as of November 13, 2009.
[End of table]
Arizona used SFSF funds to stabilize the state budget and distributed
funds to K-12 LEAs equal to one regular state education aid payment. We
visited five LEAs for this report, and officials at the LEAs said they
primarily used the SFSF funds to pay teachers and other district
staff.[Footnote 1] One LEA also used some of its SFSF funds to pay for
utilities at its elementary schools.
Since our discussion of the impact of SFSF on Arizona‘s universities in
our September 2009 report, we also visited two community college
districts.[Footnote 2] The officials at these community college
districts stated that they used the SFSF funds as reimbursement for
fiscal year 2009 instructional salaries, and have plans to use the
resulting freed-up funds to stabilize their educational programs. Both
community college districts reported reductions in state education aid
over the past 2 years, and one expressed concerns regarding additional
mid-year cuts expected to occur in fiscal year 2010. One community
college district chose to keep the state funds freed-up by SFSF as a
cash reserve to prevent having to reduce educational programs if the
anticipated mid-year cuts occur. The other community college district
planned to restore educational programs that had been reduced by budget
cuts in fiscal year 2009. For example, the community college district
would like to restore summer school course offerings, which had been
reduced by 35 percent. Officials in neither community college district
planned to use the funding to begin new educational programs out of
concern that they would not be able to sustain new programs when the
SFSF funding was no longer available.
The LEA officials we interviewed said they are using the additional
Recovery Act ESEA Title I, Part A funds to hire new staff and offer
additional educational programs. For example, Arlington Elementary
District is using its ESEA Title I, Part A money to fund a reading and
writing specialist to improve students‘ performance on the state
standardized tests. Another LEA, Buckeye Elementary District, is using
its ESEA Title I, Part A funds to purchase software for a longitudinal
data system that it had been developing in collaboration with several
other Arizona districts over the past 10 years to help bring students
up to grade level or beyond. The LEA did not have the funding to
purchase the necessary software and train its staff until the Recovery
Act ESEA Title I, Part A funding was made available.
The LEAs we visited planned to use the Recovery Act IDEA, Part B funds
to hire new staff, to support student needs, and as seed money for new
educational initiatives. For example, several LEAs planned to increase
the number of specialty teachers, such as a reading specialist, thereby
serving more students. Buckeye Elementary District plans to use its
funding to implement a new educational initiative, called Response to
Intervention. This program targets struggling students and provides
them with instructional assistants who can address the students‘
learning needs, thereby preventing them from needing more intensive
special education services. The Recovery Act IDEA, Part B funds will
also serve as seed money for this district to purchase software for the
program and to hire six instructional assistants specializing in
communication and emotional difficulties.
In addition to visiting the Arizona LEAs, we surveyed a representative
sample of LEAs”generally school districts” nationally and in Arizona
about their planned uses of Recovery Act funds. Table 2 shows Arizona
and national GAO survey results on the estimated percentages of LEAs
that (1) plan to use more than 50 percent of their Recovery Act funds
from three education programs to retain staff, (2) anticipate job
losses even with SFSF monies, and (3) reported a total funding decrease
of 5 percent or more since last school year. In Arizona, an estimated
61 percent of LEAs said they planned to use more than 50 percent of
their SFSF funds to retain staff. Because the SFSF funds were
distributed to LEAs to restore a shortfall in state education aid,
these funds did not represent increased funding levels for LEAs, and an
estimated 34 percent of Arizona LEAs anticipated they would lose staff,
even with SFSF funds.
Table 2: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: IDEA funds;
Estimated percentages of LEAs, Arizona: 29%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: Title I funds;
Estimated percentages of LEAs, Arizona: 23%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: SFSF funds;
Estimated percentages of LEAs, Arizona: 61%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipated job losses, even with SFSF
funds;
Estimated percentages of LEAs, Arizona: 34%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Arizona: 22%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Arizona have margins of error, at the 95
percent confidence level, of plus or minus 13 percentage points or
less. The nation-wide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
Because in Arizona the SFSF monies did not increase overall K-12
education funding levels but instead were used to make a regular state
education funding payment, there was confusion among some of the LEAs
we visited regarding the impact of SFSF on jobs retained. Without the
state payment, some LEAs we visited said they would have had to reduce
costs, which could have included reducing jobs. However, because the
SFSF money was provided instead of state funding, some LEAs were not
sure how to calculate the number of retained jobs for the Recovery Act‘
s Section 1512 recipient reporting. A Governor‘s Office of Economic
Recovery (OER) official said they were concerned that this confusion
among LEAs could lead to inconsistent jobs data reporting. Therefore,
the OER did not delegate subrecipient reporting to the LEAs. Instead,
the OER prepared the report and determined the number of jobs retained
through SFSF funds using the actual SFSF expenditures and the average
educational employees‘ total compensation that included average salary
and benefits.
First Quarterly Recipient Reporting Completed and Met October Reporting
Deadlines:
Under the Recovery Act, all prime and subrecipients are to report
quarterly, with the first report due on October 10, 2009. For the first
quarterly recipient report, Arizona used a centralized reporting system
to submit data for Arizona agencies that received Recovery Act funds
through the state. Other recipients, such as counties and housing
authorities, that received Recovery Act funds directly from federal
agencies, submitted their first quarterly recipient reports directly to
the respective federal agencies that provided those funds. Under both
methods, data were submitted using FederalReporting.gov. Arizona and
the other recipients that we spoke with”Yavapai County, Maricopa
County, and five housing authorities[Footnote 3]”submitted their
project-level data on time to meet the required October 10, 2009,
deadline. The data were made available to the public at [hyperlink,
http://www.recovery.gov] on October 31, 2009.
Initial Recipient Reporting Was Timely with a Few Ultimately Resolved
Challenges:
As stated in our September report,[Footnote 4] Arizona planned to use a
centralized reporting approach, known as Stimulus 360, for reporting
the Recovery Act funds that the state received. Using this centralized
approach, the OER compiled more than 400 Section 1512 reports from its
18 prime recipients, including all of its state agencies and Arizona‘s
institutions of higher education. Close to half of the recipient
reports that were submitted, according to OER officials, were for ADOT
Recovery Act highway projects. According to OER officials, several
challenges occurred initially while compiling the data for the
submission deadline. These challenges included such issues as
recipients not having the required DUNS numbers[Footnote 5] and lengthy
wait-times for answers from the Office of Management and Budget (OMB)
help site on technical questions. The OER team was able to overcome
these issues and submitted its Section 1512 reporting data on time.
Subsequent to the submission, the OER team continued to make
corrections and identified data that did not conform to the expected
data ranges during the time specified by OMB for corrections. OMB
guidance set aside the period between the initial submission on October
10, 2009, and October 21, 2009, as the period for prime recipients”in
this case, the state agencies”to make corrections and revisions, and
the period between October 22, 2009, and October 29, 2009, as the
period for the respective federal agencies to make corrections and
revisions. The OER received corrections and revisions from both the
state and federal agencies. An OER official said that by working with
both sources, the data, overall, were more accurate. According to these
officials, one of the positive outcomes of the reporting process was
that representatives of many different state agencies developed new and
improved working relationships by collaborating to help ensure data
reliability.
OER officials reported data centrally for each state agency. For
example, ADOT provided its data to the OER but was responsible for
calculating the number of jobs retained or created for its Recovery Act
highway funds. According to one of the contractors we met with, ADOT
receives detailed information from its contractors on the number of
employees working on Recovery Act projects, along with the payroll data
ADOT uses to calculate the full-time equivalents reported to
FederalReporting.gov. Additionally, ADOT itself had oversight staff on
these Recovery Act projects who reported on the activities and the
status of the contractors‘ data. On the other hand, OER calculated the
number of jobs retained or created for SFSF using data from the Arizona
Department of Education‘s data system.
The two local governments”Maricopa County and Yavapai County”and the
five housing authorities that we visited received Recovery Act funds
directly from various federal agencies and did not participate in the
state‘s centralized recipient reporting. County officials submitted the
counties‘ relevant recipient reporting data directly to
FederalReporting.gov. According to officials from both Maricopa and
Yavapai counties, they had some initial challenges. For example,
Maricopa county officials said that it was challenging to report data
by the October 10, 2009, deadline because the accounting period ended
only 10 days prior, on September 30, 2009. However, according to both
counties‘ officials, they overcame the challenges and were able to
submit their report data on time. Officials from the five public
housing authorities that we met with stated that they were prepared
with the appropriate information to enter project and job data and did
successfully submit data on time, but also encountered various access
and data entry challenges. For example, two of the housing officials
said that they had difficulty obtaining codes to access the reporting
system, and one official stated that data were lost during
transmission. These issues, however, were resolved. Most of the housing
officials we visited with commented that the recipient reporting was
not an easy process for the first reporting round, but believe that the
next reporting round should be easier as a result of this first
experience.
Recovery Act Funds Providing Some Relief While Arizona Faces Ongoing
Fiscal Challenges:
Arizona has used Recovery Act funds in place of or to match state
contributions for state-funded services such as education. In addition,
nonfederal funds freed up as a result of the Recovery Act have been
used to cover certain Medicaid costs. These offsets of general fund
spending have allowed the state to reduce anticipated state budget
shortfalls. However, despite $750 million in Recovery Act funds in
fiscal year 2009 and $1.13 billion anticipated for fiscal year 2010,
Arizona is facing a $2 billion state budget shortfall in fiscal year
2010, according to Arizona Joint Legislative Budget Committee (JLBC)
staff estimates.
Facing these fiscal conditions, Recovery Act funding for fiscal year
2010 provides Arizona with some relief and has prevented deeper state
agency budget cuts. For example, as of November 20, 2009, the state
used $320 million of Recovery Act SFSF monies rather than Arizona
general fund monies to make a payment for K-12 education state aid.
This kept the average daily balance for the state‘s operating fund
positive in September, according to the JLBC. Actions such as this
temporarily ease the burdens placed on the state‘s general fund and
help Arizona to continue meeting the needs of its citizens.
Yavapai and Maricopa Counties Use Recovery Act Funds to Expand
Services, Especially to Low- and Moderate-Income Households Hit Hardest
by the Economic Downturn:
Given that Recovery Act funds now flow to localities, we visited two
counties in Arizona”Yavapai County and Maricopa County”to review their
use of these funds.[Footnote 6] Both counties have experienced
consequences of the economic downturn. According to county officials,
the two counties have used Recovery Act funds to provide critical,
timely, and increased services to low- and moderate-income households
hit hardest by the economic downturn. Recovery Act funds have also
enhanced law enforcement operations in both counties.
Yavapai County:
Spanning more than 8,000 square miles in central Arizona, Yavapai
County is a sparsely populated rural county with a population of
215,503 and an unemployment rate of 9.5 percent.[Footnote 7] The county
government is one of the largest employers in the area, with more than
1,600 employees. As of November 18, 2009, Yavapai County was awarded
three Recovery Act grants”two grants were awarded to the Yavapai
Community Health Center (CHC) for health care and a third was awarded
to the Sheriff‘s Office for public safety (see table 3).
Table 3: Recovery Act Grants Awarded to Yavapai County Government:
Category: Health;
Number of grants: 2;
Award amounts: $839,326.
Category: Public safety;
Number of grants: 1;
Award amounts: $173,853.
Category: Total;
Number of grants: 3;
Award amounts: $1,013,179.
Source: GAO presentation of Yavapai County government data.
[End of table]
According to county officials, Yavapai CHC has expanded dental care
services from 2 to 4 days a week, with new staff funded by the $254,166
Increased Demand for Services Grant;[Footnote 8] and the $585,160
Capital Improvement Grant,[Footnote 9] along with funds from the county
and CHC reserves, will be used to build a new health care facility.
Yavapai County spent more than 50 percent of general fund expenditures
in fiscal year 2009 on criminal justice. According to county officials,
its Edward Byrne Memorial Justice Assistance Grant[Footnote 10] (JAG)
will be used to enhance its law enforcement operations through
upgrading communication and security equipment.
Maricopa County:
Located in south central Arizona, Maricopa County is the state‘s most
heavily populated county with a population of 3,954,598 and an
unemployment rate of 8.5 percent.[Footnote 11] Phoenix is the county
seat, and the county is also home to other metropolitan areas, such as
Mesa, Scottsdale, and Tempe. The county spans more than 9,000 square
miles.
As of October 16, 2009, more than $55 million in Recovery Act funds
have been awarded to Maricopa County across six categories, spanning
human services, public safety, workforce training, transportation,
energy and environment, and health care. Table 4 presents a summary of
the awards.
Table 4: Recovery Act Grants Awarded to Maricopa County Government:
Category: Human services[A];
Number of grants: 7;
Award amounts: $19,854,623.
Category: Public safety;
Number of grants: 11;
Award amounts: $15,867,354.
Category: Workforce training;
Number of grants: 2;
Award amounts: $7,874,563.
Category: Transportation;
Number of grants: 3;
Award amounts: $7,219,193.
Category: Energy and environment;
Number of grants: 3;
Award amounts: $3,567,800.
Category: Health;
Number of grants: 3;
Award amounts: $1,006,250.
Category: Total;
Number of grants: 29;
Award amounts: $55,389,783.
Source: GAO presentation of Maricopa County Government data.
[A] Human services includes Head Start/Early Head Start, Community
Services Block Grant, Community Development Block Grant, Homeless
Prevention Rapid Re-housing, and Weatherization.
[End of table]
Recovery Act funds allow the county to provide critical, timely, and
increased services to low- and moderate-income households hardest hit
by the economic downturn, according to county officials. In particular,
county officials have observed an increase in demand for human services
programs, such as education, as well as workforce training programs.
According to county officials, Recovery Act funds have allowed the
county to expand some services to residents, particularly in areas
where demand has increased:
* Recovery Act funds will support an increase in enrollment and create
new teaching and other positions in Head Start and Early Head Start
programs. Contract employees are being used to help administer programs
that are funded through the Recovery Act for the duration of the grant.
* With rising unemployment in the county, visits to the county‘s
workforce centers have increased significantly, according to county
officials. Under the Workforce Investment Act, Recovery Act funds allow
the county to expand services that support the entry or re-entry of
dislocated adults into the job market and encourage young people to
complete their education.[Footnote 12]
Recovery Act funds also support law enforcement programs that
previously were reliant on declining state resources. Maricopa County
had $1.25 billion for public safety in its 2010 budget and received a
total of $15.9 million in public safety grants in that period, $10.5
million of which are JAG grants. Agencies and municipalities formed a
partnership within Maricopa County to allocate the $10.5 million in JAG
funds among the members and to coordinate the programs to fund, such as
the following:
* County agencies are using roughly 70 percent of the JAG funds to
retain and hire personnel, including hiring a specialized prosecutor
and retaining two juvenile probation officers that were on a reduction-
in-force list.
* Municipalities within the county are using their more than $8 million
in JAG funds for security and communications equipment to enhance areas
such as surveillance, patrolling, information software, and community
outreach.
Both Counties”Yavapai and Maricopa”Are Preparing for the End of
Recovery Act Funds:
According to the county officials, both counties recognize that
Recovery Act funds are temporary and are developing plans for the end
of the grant period. Yavapai CHC believes that once the economy begins
to recover, its new facility will have the resources necessary to serve
the population‘s needs. CHC officials also recognize that the Increased
Demand for Services grant is temporary and intended to enable CHC to
meet the surge in demand for patient services resulting from the
increase in unemployment. Maricopa county officials said that all new
positions funded by Recovery Act funds are contract positions for the
duration of the grant and that the program activity will be monitored
and assessed to determine if the program is worthy of non-stimulus
funding in the future.
In the case of JAG grants, Yavapai County‘s plans for the funds are,
generally, for one-time expenditures for the duration of the grant;
therefore, the county would face limited, if any, problems when
Recovery Act funds are no longer available. However, Maricopa County
officials noted the potential for a ’cliff effect“ at the end of the
grant period and hope that the economy will improve and that the
programs can then be sustained”otherwise programs will have to be
eliminated.
Highway Funds in Arizona Continue to be Obligated, but Obligations for
Local Area Projects Continue to Lag and Steps are Being Taken to Comply
with Federal Guidance:
The Federal Highway Administration (FHWA) apportioned $522 million in
Recovery Act funds to Arizona, 30 percent of which is required to be
suballocated to metropolitan and local areas. As of October 31, 2009,
the federal government has obligated[Footnote 13] $293 million to
Arizona, and reimbursed the state[Footnote 14] $56 million.
Table 5: Arizona Recovery Act Federal Aid Highway Amounts as of October
31, 2009 (in millions):
Total apportionment = $522;
Amount obligated = $293;
Amount reimbursed = $56.
Suballocated amount = $157;
Amount obligated = $29;
Amount reimbursed = $0.7.
Source: GAO analysis of FHWA data.
[End of table]
Recovery Act highway funds were apportioned to Arizona, which was then
required to suballocate 30 percent of those funds to metropolitan and
local areas. As we stated in our September 2009 report, these local
projects lagged behind statewide projects and only three contracts had
been awarded with those suballocated dollars. This is because
localities did not have ’ready-to-go“ projects, and were largely
unfamiliar with federal highway requirements. Between September 1 and
October 31, 2009, only one additional locality‘s solicitation had been
publicized. Overall, only $29 million of the $157 million suballocated
to localities has been obligated. ADOT has instituted a December 2,
2009, deadline for localities to submit their proposals for
suballocated highway projects in localities and said that it would have
a better idea of where those projects stand after that date. ADOT
reported that if it finds that projects in localities are not able to
be advertised for construction prior to the March 2010 deadline,
[Footnote 15] ADOT would use Recovery Act funds on ’ready-to-go“
statewide highway projects in order to not lose any Recovery Act
highway funding. Similarly, officials from two localities we visited
said that if the projects intended for Recovery Act funds were in
danger of not having funds obligated by the March 2010 deadline, they
would use the funds on projects whose designs are complete but were not
initially targeted for Recovery Act funds. The localities would also do
this in order to not lose Recovery Act funding. We will follow-up on
these matters in a future report.
To meet Recovery Act reporting requirements, ADOT officials state that
they included in all of ADOT‘s contracts a mandate that contractors
report on the number and types of jobs created or preserved through
this work. Contractors we spoke to said that they reported on the jobs
and pay of both laborers and office staff working on Recovery Act
projects, and ADOT said that it converted the hours and pay reported to
them into full time equivalent positions for recipient reporting to the
Office of Management and Budget.[Footnote 16]
Arizona is Taking Steps to Ensure Compliance with Updated Federal
Guidance on Maintenance of Effort Requirements and Support to
Economically-Distressed Areas:
Arizona is working to comply with Recovery Act requirements on both
maintaining state levels of transportation spending and giving priority
to projects located in economically-distressed areas. First, as part of
Section 1201 (a) of the Recovery Act, states are required to certify to
the Secretary of Transportation that the state will maintain the level
of state transportation spending that it had planned on the day the
Recovery Act was passed. This is known as the maintenance-of-effort
(MOE) requirement. Arizona has submitted two certifications that were
reviewed by FHWA. However, on September 24, 2009, FHWA issued
supplemental guidance on MOE, which clarified that states should
include in their MOE-certified amounts the level of funding that the
state provided to local governments or agencies for transportation
projects; Arizona did not provide this information in its initial
submission because the state was unaware that the state transportation
funding to local governments were part of its MOE requirement. As a
result, Arizona plans to recalculate and recertify its highway MOE
amount, although the U.S. Department of Transportation (DOT) has not
yet set a submission deadline for the revised MOE certification.
According to a FHWA official in Arizona, this recertification most
likely would not have an impact on ADOT meeting its MOE requirement.
Second, under the Recovery Act, states are required to give priority to
highway projects that can be completed within 3 years and that are
located in economically-distressed areas. When the Recovery Act was
enacted, ADOT based the identification of economically-distressed areas
on home foreclosure rates and other factors”data not specified in the
Public Works Act. We recommended that DOT develop criteria for states
to identify ’special need“ areas that do not meet the statutory
economically distressed criteria in the Public Works Act. In response
to our recommendation, DOT, in consultation with the Department of
Commerce, developed such criteria and issued guidance to the states in
August 2009.[Footnote 17] Applying this revised guidance, the state‘s
calculation again concluded that all 15 counties in Arizona are
economically distressed, so ADOT does not believe it will have to
revise how it is distributing funding across the state.
Arizona is Using Public Housing Funds to Rehabilitate Housing; However,
Jobs Created are Expected to be Temporary:
Arizona has 15 public housing agencies that received a total of
$12,068,449 in Recovery Act Public Housing Capital Fund formula grants
(see figure 1). As of November 14, 2009, 13 public housing agencies
have obligated $5,819,738 and have drawn down $2,585,851 of the total.
On average, housing agencies in Arizona are obligating funds at about
the same rate as other housing agencies nationally. We visited the
following five housing agencies to determine the progress of projects:
the city of Glendale Community Housing Division, the city of Phoenix
Housing Department, the Housing Authority of Maricopa County, the
Housing and Community Development Department of the city of Tucson, and
the Pinal County Housing Department.
Figure 1: Percentage of Public Housing Capital Funds Allocated by HUD
that Have Been Obligated and Drawn Down in Arizona, as of November 14,
2009:
[Refer to PDF for image: 3 pie-charts; 1 horizontal bra graph]
Funds obligated by HUD: 100%; $12,068,449;
Funds obligated by public housing agencies: 48.2%; $5,819,738;
Funds drawn down by public housing agencies: 21.4% $2,585,851.
Number of public housing agencies:
Entering into agreements for funds: 15;
Obligating funds: 13;
Drawing down funds: 13.
Source: GAO analysis of HUD data.
[End of figure]
Housing Agencies Are Using Recovery Act Formula Capital Funds on
Various Rehabilitation Projects and Are on Track to Meet Recovery Act
Time Frames:
The five housing agencies that we visited in Arizona received
$8,840,880 in Capital Fund formula grants. Officials at each housing
agency stated that they expect to meet the March 17, 2010, Recovery Act
Capital Fund formula obligation deadline. As of November 14, 2009,
these five housing agencies had obligated $3,675,832 and had drawn down
$1,295,686 of the total award. The housing agencies we visited had
completed 13 projects and had 22 projects underway that continue to
follow their 5-year plans and most of the contracts were awarded within
120 days of when the funding was made available.[Footnote 18] Some
housing officials received contract bids for projects that were lower
than cost estimates and were able to use the savings to reinvest in
additional Recovery Act-funded projects. Housing officials believe that
bids submitted below original estimated costs were caused by the
current low levels of economic activity in the construction industry.
Also, according to housing officials we met with, because all the
projects were previously unfunded, the Recovery Act funds were used to
supplement, not replace or supplant other funds, in accordance with the
Recovery Act.
One of the five public housing agencies”the city of Glendale Community
Housing Division”expended all $319,325 of its allocated funds by
completing the rehabilitation of 50 kitchens. The other four public
housing agencies have completed at least one project.
* The city of Phoenix has expended a total of $352,877 on several
projects such as interior and exterior painting, sidewalk repairs, roof
replacements, and completed a roof seal coating project on two public
housing sites which is expected to maintain the integrity of the roof
and promote energy efficiency.
* Maricopa County installed new evaporative coolers, refrigerators, and
stoves across several of its public housing sites at a cost of $45,141.
* The city of Tucson completed the interior and exterior rehabilitation
of a single-family home at a cost of $46,700, which improved the
physical condition of the home and installed water and energy efficient
appliances.
* Pinal County completed two roof replacement projects at a cost of
$132,403.
The Short-Term Nature of Recovery Act-Funded Projects in These Five
Locations Yield Only Temporary Relief from Unemployment:
According to housing officials and one contractor we spoke with, the
types of formula-funded projects completed or currently underway have
only temporarily created jobs and, in some cases, individuals that were
hired for project work have already been laid off or let go. For
example, city of Glendale officials stated that five out of seven newly-
hired workers were laid off immediately after their 7-week kitchen
rehabilitation project ended because no other work was available. In
another example, a Pinal County housing official stated that an
unemployed roofer worked on its first roofing project but once the 4-
week project was completed, he again became unemployed. Also, according
to a painting company owner in Phoenix, she hired three unemployed
painters but after the 5-week project ended, she laid them off because
the work was temporary and new work was not available to sustain their
employment.
Arizona Received One Competitive Grant to Make Energy Efficient
Upgrades:
HUD awarded one Capital Fund competitive grant in Arizona to the city
of Phoenix Housing Department for $3.4 million under the category for
creating energy efficient public housing units. Of the five public
housing agencies we met with, two stated they applied for the
competitive grant, while the other three stated they did not apply
because their priority was managing existing housing projects, they
believed that their applications may not be as competitive, and they
did not have enough time or staff available to complete the application
within the required timeframe. The city of Glendale Community Housing
Division submitted one application, which was not awarded, and the
Phoenix Housing Department submitted three applications, one of which
was awarded. Phoenix housing officials plan to combine their
competitive grant award with other funding to renovate 374 units at the
Marcos de Niza public housing site. According to the grant application,
the total development cost is approximately $24.7 million and
construction work is expected to begin in May 2010 and be completed by
June 2011. Specifically, the project includes, among other things,
converting evaporative cooling systems to geothermal-powered central
heating and cooling systems, and installing water- and energy-
conserving fixtures and appliances in units.
State Comments on This Summary:
We provided the Governor of Arizona with a draft of this appendix on
November 18, 2009. The Director of the Office of Economic Recovery
responded for the Governor on November 20, 2009. The state agreed with
our draft and provided some clarifying information which we
incorporated.
GAO Contacts:
Eileen Larence, (202) 512-6510 or larencee@gao.gov:
Thomas Brew, (206) 963-3371 or brewt@gao.gov:
Staff Acknowledgments:
In addition to the contacts named above, Steven Calvo, Assistant
Director; Lisa Brownson, auditor-in-charge; Rebecca Bolnick; Aisha
Cabrer; Steven Rabinowitz; Jeff Schmerling; Radha Seshagiri; James
Solomon; and Ann Walker made major contributions to this report.
[End of section]
Footnotes: Appendix I: Arizona:
[1] One LEA we visited was only eligible for $622 of SFSF funding, and
so declined the funding.
[2] Arizona‘s Community College system is organized as districts. One
district we visited has 6 campuses, while the other district is
comprised of 10 individually accredited colleges.
[3] City of Phoenix Housing Department, Pinal County Housing
Department, City of Glendale Community Housing Division, City of Tucson
Department of Housing and Community Development, and Housing Authority
of Maricopa County.
[4] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to be Fully Addressed (Arizona), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: September
2009).
[5] A data universal numbering system (DUNS) is a number issued by Dun
and Bradstreet that provides business information.
[6] GAO‘s examination of Recovery Act funds counties received includes
only funds received by the local governments directly from federal
agencies.
[7] According to U.S. Census Bureau of Labor Statistics, population
data are from July 1, 2008; and, unemployment rates are preliminary
estimates for September 2009, have not been seasonally adjusted, and
are shown as a percentage of the labor force.
[8] The U.S. Department of Health and Human Services Increased Demand
for Community Health Center Services grants support the expansion of
services offered by Community Health Centers and allow them to serve
more patients, as more Americans join the ranks of the uninsured.
[9] The U.S. Department of Health and Human Services made Capital
Improvement Program grants available to Community Health Centers to
support their efforts to upgrade and expand their facilities and open
their doors to more patients.
[10] The JAG program within the Department of Justice‘s Bureau of
Justice Assistance provides federal grants to state and local
governments for law enforcement and other criminal justice activities,
such as crime prevention and domestic violence programs, corrections,
treatment, justice information sharing initiatives, and victims‘
services. JAG funds are allocated based on a statutory formula
determined by population and violent crime statistics, in combination
with a minimum allocation to ensure that each state and territory
receives some funding.
[11] According to U.S. Census and Bureau of Labor Statistics,
population data are from July 1, 2008; and, unemployment rates are
preliminary estimates for September 2009, have not been seasonally
adjusted, and are shown as a percentage of the labor force.
[12] Recovery Act, 123 Stat. 172-173.
[13] For the Highway Infrastructure Investment Program, the U.S.
Department of Transportation has interpreted the term ’obligation of
funds“ to mean the federal government‘s commitment to pay for the
federal share of the project. This commitment occurs at the time the
federal government signs a project agreement. This does not include
obligations associated with $1 million of apportioned funds that were
transferred from FHWA to Federal Transit Administration (FTA) for
transit projects. Generally, FHWA has authority pursuant to 23 U.S.C. §
104(k)(1) to transfer funds made available for transit projects to FTA.
[14] States request reimbursement from FHWA as the state makes payments
to contractors working on approved projects.
[15] The Recovery Act mandates that all apportioned funds, including
suballocated funds, need to be obligated before March 2, 2010, one year
from apportionment or they will be subject to withdrawal by FHWA.
[16] Recipients of Recovery Act funds are required to submit quarterly
reports under Section 1512 of the act to the federal agencies
apportioning those Recovery Act funds.
[17] As we reported, the criteria align closely with special need
criteria used by the Department of Commerce‘s Economic Development
Administration in its own grant programs, including factors such as
actual or threatened business closures (including job loss thresholds),
military base closures, and natural disasters or emergencies.
[18] The 5-year plan addresses the housing agencies‘ mission and their
overall plan and priority list of projects to achieve their mission
goals.
[End of Appendix I: Arizona]
Appendix II: California:
Overview:
This appendix summarizes GAO‘s work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in California. The full report covering all of GAO‘s work
in 16 states and the District of Columbia may be found at [hyperlink,
http://www.gao.gov/recovery].
What We Did:
GAO‘s work in California included reviewing three specific programs
funded under the Recovery Act”Highway Infrastructure Investment funds,
Transit Capital Assistance Program, and Weatherization Assistance
Program. These programs were selected primarily because they are in the
process of obligating Recovery Act funds in California. Our work
focused on the status of the programs‘ funding, how funds are being
used, and issues that are specific to each program. In addition to
these programs, we updated information on three Recovery Act education
programs with significant funds being disbursed”the State Fiscal
Stabilization Fund (SFSF) and Recovery Act funds for Title I, Part A of
the Elementary and Secondary Education Act of 1965 (ESEA), as amended,
and Part B of the Individuals with Disabilities Education Act (IDEA),
as amended. For descriptions and requirements of the programs we
covered, see appendix XVIII of GAO-10-232SP.
We also met with the California Recovery Act Task Force (Task Force) to
understand the state‘s experience in meeting Recovery Act reporting
requirements and preparing the state‘s quarterly report in October
2009. In addition, we visited two California local governments to
discuss the amount of Recovery Act funds each is receiving directly
from federal agencies and to learn how those funds are being used. We
chose to visit the city of Los Angeles and the county of Sacramento. We
selected Los Angeles because it is Southern California‘s most populous
city, with an unemployment rate above the state‘s average of 12.0
percent. We selected the county of Sacramento because it is located in
Northern California‘s central valley, encompasses the State Capitol,
and also has an unemployment rate above the state average.
What We Found:
* Highway Infrastructure Investment. As of October 31, 2009, the U.S.
Department of Transportation (DOT) Federal Highway Administration
(FHWA) has obligated $2.079 billion of the $2.570 billion apportioned
to California in Recovery Act funds and $90 million had been reimbursed
by FHWA. The majority of these projects involve pavement widening and
improvement projects, but the state is also using highway
infrastructure funds for numerous safety and transportation enhancement
projects. California has awarded contracts for 364 projects worth
$1.647 billion and advertised an additional 119 projects for bid.
Overall, 90 percent of Recovery Act contracts are being awarded for
less than the state engineer‘s estimated costs and the California
Department of Transportation (Caltrans) plans to request FHWA obligate
excess funds for additional highway projects. While the pace of federal
outlays for California highway projects continues to be slower than the
national average, the amount reimbursed grew from $22 million in
September to $90 million as of October 31, 2009, and officials expect
it to increase in the near future as a number of large state highway
projects are under way.
* Transit Capital Assistance Program. As of November 5, 2009, DOT‘s
Federal Transit Administration (FTA) has obligated $916 million of the
$1.002 billion in Transit Capital Assistance Program Recovery Act funds
apportioned to California and urbanized areas in the state for transit
projects. Transit agencies in California are using Transit Capital
Assistance Program Recovery Act funds for preventive maintenance,
vehicle purchases and rehabilitation, equipment replacement, and large
capital projects. The transit agencies we visited, the San Francisco
Municipal Transportation Agency (SFMTA) and the San Diego Association
of Governments (SANDAG), are in the process of awarding contracts for
Recovery Act funded projects and are using Transit Capital Assistance
Program Recovery Act funds for a variety of capital projects, which
otherwise might not have been funded until future fiscal years.
* Selected education programs. As of October 31, 2009, California has
distributed about $3.2 billion in Recovery Act funding to local
education agencies (LEA), and special education local plan areas
through three education programs. This includes SFSF education
stabilization funds ($2.5 billion), ESEA Title I, Part A funds ($463
million), and IDEA, Part B funds ($269 million). California LEAs are
generally using Recovery Act funding to retain jobs for teachers,
teacher aides, and other staff, as well as for training and purchasing
instructional materials and equipment. However, as we have previously
reported, Recovery Act funding was distributed to some LEAs prior to
their being ready to spend it, and the concerns we raised in our
previous reports about cash management, including the appropriate
process for calculating interest on federal cash balances, have yet to
be fully resolved.
* Weatherization Assistance Program. California awarded almost $57
million to 35 local service providers throughout the state for Recovery
Act weatherization activities. The state has required service providers
to adopt an amendment to their Recovery Act weatherization contracts to
ensure that they comply with Recovery Act requirements before they are
provided Recovery Act funds to weatherize homes. Most service providers
did not adopt the amendment by the October 30 deadline, due to ongoing
negotiations with the state regarding concerns about some amendment
provisions. On October 30, the state announced it would issue a
modified amendment within 30 days incorporating changes agreed upon by
the state and service providers. As of November 10, no homes in
California had been weatherized with Recovery Act funds.
* Recipient reporting. Task Force officials believe that, using their
centralized reporting system, they successfully reported jobs created
or retained as a result of Recovery Act funds received through state
agencies, but faced several challenges in doing so. One such challenge
related to differing interpretations of federal guidance on jobs
reporting, which resulted in variations in the number of jobs reported.
On behalf of the Task Force, the state‘s Chief Information Officer
(CIO) was responsible for collecting the data from state agencies,
validating it, and uploading the data to www.federalreporting.gov
(FederalReporting.gov).
* Localities‘ use of Recovery Act funds. Los Angeles City and
Sacramento County reported using Recovery Act funds to preserve the
delivery of essential local government services. For example, Los
Angeles has been awarded $178.6 million in Recovery Act grants and
Sacramento $21.0 million that are funding airport improvement,
anticrime programs, art agencies, community development projects,
community policing, diesel emission reduction, energy efficiency
projects, homelessness and foreclosure relief, port security, purchases
of buses, and public housing rehabilitation. According to officials in
both localities, activities funded with Recovery Act funds will not
require ongoing financial support after the funds are spent.
Over 80 Percent of Apportioned Highway Funds Have Been Obligated and
California Has Awarded More than 300 Highway Contracts:
The U.S. Department of Transportation‘s (DOT) Federal Highway
Administration (FHWA) apportioned about $2.570 billion in Recovery Act
funds to California in March 2009. As of October 31, 2009, more than 80
percent of these funds had been obligated ($2.079 billion)[Footnote 1]
and $90 million had been reimbursed by FHWA. As of October 31, 2009,
Caltrans awarded 364 contracts for state and local highway projects
with a total value of $1.647 billion. Of these, 49 have been completed
and 250 are under construction. Contracts have not yet been awarded for
an additional 119 projects or proposals that are in the bid review
process. As part of our review, we visited the site of a new road
construction project intended to reduce congestion on State Route 905
in San Diego County. Construction on the Recovery Act-funded portion of
the project began in July 2009 and, according to Caltrans, the
construction phases of the project are expected to be completed by
summer 2012 (see figure 1).
Figure 1: Construction of State Route 905 in San Diego County:
[Refer to PDF for image: map and associated data]
The map depicts Route 905, the Otay Mesa point of entry and the border
of the U.S. and Mexico. Route 905 is further depicted in portions as
follows:
Funded through Recovery Act;
Funded through other sources;
Interchange (on/off ramp).
Project: Construction of new road;
Lead agency: Caltrans;
Description: Construction of 3.4 miles (out of approximately 6.2 miles)
of a new six-lane freeway, State Route 905, from Interstate 805 to the
Otay Mesa Port of Entry at the U.S.-Mexico Border. The general purpose
of the route is to reduce congestion; provide for the effective
transportation of people, goods, and services; and improve the mobility
of local, regional, interregional, and international traffic;
Location: San Diego County, California;
Recovery Act Funds: $78.3 million obligated to Caltrans for this phase
of the project, approximately 13 percent of the total estimated cost
for all phases;
Status: Caltrans awarded a contract for this phase of the project on
May 8, 2009 and construction began in July 2009.
Source: Caltrans; Map Resources; GAO.
[End of figure]
Our analysis of contract bid data for state highway projects found that
approximately 90 percent of Recovery Act bids on contracts issued as of
October 31, 2009, have come in under state estimated costs.[Footnote 2]
On average, these contracts have been awarded for approximately 26
percent less than the state engineer‘s estimated costs for the project.
According to Caltrans officials, lower material costs and increased
competition among contractors due to the weak economy in California are
among the reasons bids are under the state engineer‘s estimated costs.
Caltrans plans to request that FHWA obligate funds made available as a
result of savings from receiving bids lower than state estimated costs
and use those funds for other projects, specifically projects from its
State Highway Operations and Protection Program (SHOPP) and Highway
Maintenance Program. As of November 1, 2009, FHWA deobligated
approximately $108.5 million from state and local projects, which
Caltrans plans to use to fund 16 additional state projects”13 SHOPP and
3 Highway Maintenance Program projects”for which additional funding has
been sought using deobligated Recovery Act funds.
We discussed contracts for two Recovery Act-funded highway projects,
including State Route 905 and a resurfacing project in Burlingame, with
state and local officials (see table 1). According to Caltrans
officials we spoke with about these contracts, California continues to
use its existing contracting procedures to help ensure funds are used
appropriately. As we reported in September, Caltrans officials stated
that California has well-defined contract requirements for all highway
projects, and Caltrans awards all highway contracts competitively to
the lowest responsive and responsible bidder. Caltrans officials also
stated that requirements specific to the Recovery Act, such as
reporting requirements, were added to Recovery Act contracts.
Table 1: Summary of Contract Information for Two Highway Projects
Visited:
State Route 905 project:
* Construction of a 3.4-mile segment of a new six-lane freeway in San
Diego County, California;
* Estimated contract value: $57 million;
* Fixed unit price contract awarded competitively; 6 bidders;
* Estimated project duration: approximately 4 years or 990 days.
Resurfacing of Airport Boulevard and Trousdale Drive in Burlingame,
California:
* Road resurfacing project;
* Estimated contract value: $660,731;
* Fixed unit price contract awarded competitively; 10 bidders;
* Estimated project duration: August to September 2009; completed
September 18.
Source: GAO analysis of information provided by Caltrans and the City
of Burlingame.
[End of table]
According to FHWA data, as of October 31, 2009, the rate of
reimbursement for California highway projects, 4.3 percent ($90
million) of the $2.079 billion obligated to California, is lower than
the amount reimbursed nationwide, 18.4 percent ($3.661 billion) of the
$19.88 billion obligated. However, federal reimbursements in California
have increased since September 2009 from $22 million to $90 million,
and Caltrans officials stated that more reimbursements are expected as
a number of large state highway projects begin construction in the
coming months. Caltrans officials attributed the lower reimbursement
percentage to having a majority of its projects administered by local
governments, which are often reimbursed more slowly than state-
administered projects.[Footnote 3] Thus far, most of the
reimbursements, approximately 93 percent ($84.5 million) of the $90
million, are for state projects. Caltrans officials noted that locally-
administered highway projects may take longer to reach the
reimbursement phase than state projects due to additional steps
required to approve local highway projects. For example, highway
construction contracts administrated by local agencies call for a local
review and local public notice period, which can add nearly 6 weeks to
the process. In addition, Caltrans officials stated that localities
with relatively small projects tend to seek reimbursement in one lump
sum at the end of a project to minimize time and administrative cost,
which can contribute to reimbursement rates not matching levels of
ongoing construction.
Caltrans has also been working to adhere to revised FHWA guidance for
meeting Recovery Act requirements in two areas: (1) identification of
economically distressed areas and (2) maintenance of effort.
* Based on findings in our July 2009 Recovery Act report that state
DOTs, including Caltrans, used variable methodologies to identify
economically distressed areas, we recommended that DOT provide clear
guidance. Caltrans revised its economically distressed area
determination using guidance issued by FHWA in consultation with the
Department of Commerce on August 24, 2009. According to the
recalculation, all 58 counties in California are designated as
economically distressed, which results in no change to how Caltrans
funds and administers Recovery Act projects.
* Under the Recovery Act, states are required to certify that they will
maintain the level of spending planned on the day the Recovery Act was
enacted. On September 24, 2009, FHWA issued supplemental guidance on
maintenance of effort (MOE) requirements, which clarified that states
should include in their MOE certified amounts the funding the state
provides to local governments for transportation projects. Caltrans
officials stated that they are working with FHWA on this issue and are
prepared to submit a revised MOE certification when requested. Caltrans
officials do not anticipate difficulty in meeting the MOE requirement
even after adjusting the certification amount to include those funds.
Transit Agencies in California Are in the Process of Awarding Transit
Capital Assistance Program Recovery Act Contracts for a Variety of
Projects:
In March 2009, $1.002 billion in Transit Capital Assistance Program
Recovery Act funds were apportioned to California and urbanized areas
in the state for transit projects. As of November 5, 2009, $916 million
had been obligated. Transit agencies in California are using Transit
Capital Assistance Program Recovery Act funds for preventive
maintenance, vehicle purchases and rehabilitation, equipment
replacement, and large capital projects.
The two transit agencies we visited”San Francisco Municipal
Transportation Agency (SFMTA) and San Diego Association of Governments
(SANDAG)”are using their Transit Capital Assistance Program Recovery
Act funds for a variety of capital projects, which otherwise may not
have been funded until future fiscal years. Officials at both SFMTA and
SANDAG stated that project readiness and the relative need for projects
within the region informed project selection.
* SFMTA distributed its Transit Capital Assistance Program Recovery Act
funds, approximately $72 million, for 13 projects, including preventive
maintenance and equipment replacement. For example, SFMTA plans to
spend $11 million in Transit Capital Assistance Program Recovery Act
funds to replace fare collection equipment. SFMTA officials stated that
the availability of Transit Capital Assistance Program Recovery Act
funds allowed the agency to move forward on high-priority fleet
maintenance projects that could not have been funded with their annual
FTA apportionment.
* SANDAG distributed approximately $70 million in Transit Capital
Assistance Program Recovery Act funds among four large construction
projects, including replacement of a segment of a railroad bridge and
construction of a transit center (see table 2). SANDAG officials stated
that the bridge replacement project would not have been funded for
years without the help of Transit Capital Assistance Program Recovery
Act funds.
Table 2: Overview of SANDAG Transit Capital Assistance Program Recovery
Act Projects:
Project name: System contact wire;
Project description: Investigate existing contact wire conditions on
the South Line of the San Diego Trolley and replace worn out sections
of contact wire from 12th and Imperial to San Ysidro;
Transit Capital Assistance Program Recovery Act funds: $12,000,000;
Total estimated project cost: $17,643,000;
Percent of project funded with Transit Capital Assistance Program
Recovery Act funds: 68%.
Project name: Blue Line upgrade;
Project description: Design and construction for trolley and trackway
modifications, including stations to support new low-floor vehicle
operations;
Transit Capital Assistance Program Recovery Act funds: $44,560,000;
Total estimated project cost: $114,695,000;
Percent of project funded with Transit Capital Assistance Program
Recovery Act funds: 39%.
Project name: Railroad trestle bridge replacement;
Project description: Replace the north segment of a railroad trestle
bridge in the Los Angeles to San Diego rail corridor that is used by
Amtrak, Burlington Northern Santa Fe, and Metrolink trains;
Transit Capital Assistance Program Recovery Act funds: $12,000,000;
Total estimated project cost: $12,000,000;
Percent of project funded with Transit Capital Assistance Program
Recovery Act funds: 100%.
Project name: San Luis Rey Transit Center;
Project description: Construct a 12-bay transit center in suburban
North San Diego County;
Transit Capital Assistance Program Recovery Act funds: $1,500,000;
Total estimated project cost: $2,700,000;
Percent of project funded with Transit Capital Assistance Program
Recovery Act funds: 56%.
Project name: Total;
Transit Capital Assistance Program Recovery Act funds: $70,060,000;
Total estimated project cost: $147,038,000.
Source: GAO analysis of SANDAG data.
[End of table]
The transit agencies we visited are in the process of awarding
contracts for Recovery Act-funded projects. SFMTA officials stated that
they plan to award contracts for all projects receiving Transit Capital
Assistance Program Recovery Act funds by November 30, 2009, and SANDAG
officials reported that one project had been advertised for bid and the
other three projects would be advertised for bid in the coming months.
Transit agency officials stated that they will use existing processes,
including site inspections, to manage Recovery Act contracts.
Recovery Act Education Funding Is Supporting Jobs and Programs, but
Issues Surrounding Cash Management Practices Have Yet to Be Resolved:
As of October 31, 2009, California had distributed approximately $3.2
billion in Recovery Act funds to local educational agencies (LEA) and
other K-12 state funded learning institutions through the three
education programs included in our review” ESEA Title I, Part A; IDEA,
Part B; and SFSF. LEAs in California report that they are using
Recovery Act funding to retain jobs for teachers and other staff, to
provide training, and to buy a variety of instructional materials and
equipment. However, as previously reported, funds were distributed
before some LEAs were ready to spend them, and the cash management
issues we raised in previous reports, including the appropriate method
for calculating interest on federal cash balances, have not been fully
resolved.
LEAs Plan to Use Recovery Act Funds to Help Retain Jobs and Improve
Programs but Will Still Lose Staff Overall:
We surveyed a representative sample of LEAs”-generally school
districts”-nationally and in California about their planned uses of
Recovery Act funds. Table 3 shows California and national survey
results on the estimated percentages of LEAs that (1) plan to use more
than 50 percent of their Recovery Act funds from three education
programs to retain staff, (2) anticipate job losses even with SFSF
monies, and (3) reported a total funding decrease of 5 percent or more
since last school year. Notably, two-thirds of California LEAs reported
a funding decrease of more than 5 percent versus 17 percent of LEAs
nationwide.
Table 3: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: IDEA funds;
Estimated percentages of LEAs: California: 17%;
Estimated percentages of LEAs: Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: Title I funds
Estimated percentages of LEAs: California: 29%;
Estimated percentages of LEAs: Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: SFSF funds
Estimated percentages of LEAs: California: 52%;
Estimated percentages of LEAs: Nation: 63%.
Responses from GAO survey: Anticipated job losses, even with SFSF funds
Estimated percentages of LEAs: California: 50%;
Estimated percentages of LEAs: Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2009-2009
Estimated percentages of LEAs: California: 67%;
Estimated percentages of LEAs: Nation: 17%.
Source: GAO survey of LEAs.
Notes: Percentage estimates for California have margins of error, at
the 95 percent confidence level, of plus or minus 11 percentage points
or less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
We visited two LEAs in California”the largest LEA in the state and a
small charter school”to find out more detail about how they are
spending Recovery Act funds (see table 4). Los Angeles Unified School
District (LA Unified) serves over 600,000 students and has received
about $530 million in Recovery Act funds for the three programs we
examined. Alvina Elementary Charter School, in Fresno County, (also an
LEA) serves about 200 students and has received about $88,000 in
Recovery Act funds for the ESEA Title I, Part A and SFSF programs.
Table 4: Planned Uses of Recovery Act Funds at the LEAs Reviewed by
GAO:
LEA: LA Unified;
ESEA Title I, Part A: Individual school councils determine how funds
are used and select from a district approved list that includes staff
positions (such as teacher, teacher‘s assistant, school nurse, and
psychiatric social worker); parent training; instructional materials;
and classroom equipment;
IDEA, Part B: Funds are being used to:
* reduce reliance on contracting by training on-site staff;
* train teachers to meet the instructional, social, emotional, and
behavioral needs of students with disabilities integrated into the
general education program;
* provide special education leadership training for elementary and
secondary site administrators; and;
* train teachers in practices to improve outcomes for students
identified with autism;
SFSF: All funds are being used for salaries, including salaries for
2,558 teachers and 210 administrative and other support positions.
LEA: Alvina;
ESEA Title I, Part A: Funds are being used to increase K-3
instructional aide hours and to hire a new teacher and a new
instructional aide, allowing Alvina to increase student enrollment;
IDEA, Part B: No IDEA funds received;
SFSF: Funds are being used for staff retention, hiring
paraprofessionals, and buying math text books.
Source: GAO analysis of information provided by LA Unified and Alvina.
[End of table]
Ongoing Cash Management Issues Have Yet to Be Fully Resolved:
In our September 2009 report, we highlighted concerns related to ESEA
Title I, Part A cash management practices of the California Department
of Education (CDE) and LEAs, specifically related to early distribution
of funds to LEAs and the calculation and remittance of interest on
unspent cash balances.[Footnote 4] At that time, CDE was uncertain
whether unspent ESEA Title I, Part A Recovery Act balances could be
offset against unreimbursed expenses in LEAs‘ non-Recovery Act ESEA
Title I funding accounts for purposes of calculating the interest due
on unspent federal funds. U.S. Department of Education (Education)
officials had not yet made a formal determination on this approach at
the time of our September report. In our recent discussions, Education
officials told us that unreimbursed expenses for one federal fund can
be offset against positive cash balances in another federal fund”
including, for example, regular ESEA Title I and Recovery Act ESEA
Title I fund balances. Education officials told us they will finalize
their decision on CDE‘s proposed interest calculation procedures once
they receive the proposal in writing from CDE.
California Has Awarded Contracts to Local Service Providers, but
Providers‘ Concerns about Contract Amendments Have Delayed Home
Weatherization:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the U.S. Department of Energy (DOE) is
distributing to each of the states, the District of Columbia, and seven
territories and Indian tribes, to be spent over a 3-year period. This
program enables low-income families to reduce their utility bills by
making long-term energy efficiency improvements to their homes by, for
example, installing insulation or modernizing heating or air
conditioning equipment. On September 22, 2009, DOE obligated all the
funds allocated to the states, but it has limited the states‘ access to
50 percent of these funds.[Footnote 5] DOE allocated about $186 million
of Recovery Act funds for weatherization in California.[Footnote 6] By
June 2009, DOE had provided 50 percent”about $93 million”of these funds
to the California Department of Community Services and Development
(CSD), the state agency responsible for administering the state‘s
weatherization program. Of this amount, CSD retained about $16 million
to support oversight, training, and other state activities. CSD also
awarded almost $57 million to 35 local service providers throughout the
state[Footnote 7] for planning, purchasing equipment, hiring and
training, and weatherizing homes.[Footnote 8] As of November 10, CSD
and its service providers spent approximately $3 million of Recovery
Act funds on weatherization-related activities.
CSD requires service providers to adopt an amendment to their Recovery
Act weatherization contracts to ensure that they comply with the
Recovery Act, including certifying that they comply with the Davis-
Bacon Act, before providing Recovery Act funds to them to weatherize
homes. Only two providers adopted the amendment by the initial October
30 deadline. According to CSD, many providers did not adopt the
amendment because they objected to some of its provisions, including
those pertaining to compensation, cost controls, and performance
requirements. As a result, CSD entered into negotiations with providers
and, on October 30, announced it will release a modified amendment
incorporating agreed upon changes within 30 days. CSD also announced
steps that providers can take to accept the modified amendment in
advance of its formal issuance and begin weatherizing homes sooner. As
of November 10, nine providers had adopted the modified amendment in
advance of the formal issuance, but no homes in California had yet been
weatherized with Recovery Act funds.[Footnote 9]
We selected 4 of the 35 service providers to discuss their Recovery Act
weatherization programs[Footnote 10] (see table 5). Each of these
providers received a substantial increase in weatherization funding
through the Recovery Act and they vary in size and expected start dates
for weatherizing homes. Officials from these providers initially
expressed concerns about wage rates, payroll, cost controls, and other
provisions of the CSD contract amendment. Subsequently, these officials
told us that they anticipated their concerns would be addressed by the
forthcoming modifications.
Three of these providers adopted, or plan to adopt, the modified
amendment in advance of the formal issuance”one provider met the
October 30 deadline. Officials from the remaining provider stated that
they will wait for the formal issuance. Officials from each of these
providers stated, and CSD agreed, that they have processes and plans
aimed at ensuring that funds are used for their intended purposes and
in accordance with Recovery Act requirements. In addition, each has
created new employment positions and has plans to hire additional
employees in order to implement the Recovery Act weatherization
program.
Table 5: Overview of Selected Local Service Providers, as of November
10, 2009:
Service provider: Service area;
Project GO, Inc.: Placer County;
Community Action Partnership of Orange County: Orange County;
Community Action Partnership of Riverside County: Riverside County;
Pacific Asian Consortium in Employment: Parts of Los Angeles County.
Service provider: Organization type;
Project GO, Inc.: Nonprofit;
Community Action Partnership of Orange County: Community action agency;
Community Action Partnership of Riverside County: County government;
Pacific Asian Consortium in Employment: Nonprofit.
Service provider: Primary labor and supply source;
Project GO, Inc.: In-house;
Community Action Partnership of Orange County: In-house;
Community Action Partnership of Riverside County: Subcontractors;
Pacific Asian Consortium in Employment: In-house.
Service provider: 2009 annually appropriated weatherization allocation;
Project GO, Inc.: $87,851;
Community Action Partnership of Orange County: $485,704;
Community Action Partnership of Riverside County: $552,737;
Pacific Asian Consortium in Employment: $568,413.
Service provider: Recovery Act weatherization allocation;
Project GO, Inc.: $998,278;
Community Action Partnership of Orange County: $6,002,530;
Community Action Partnership of Riverside County: $7,616,998;
Pacific Asian Consortium in Employment: $7,034,492.
Service provider: Recovery Act weatherization funds awarded;
Project GO, Inc.: $498,516;
Community Action Partnership of Orange County: $2,997,522;
Community Action Partnership of Riverside County: $3,803,748;
Pacific Asian Consortium in Employment: $3,512,859.
Service provider: Recovery Act weatherization funds spent;
Project GO, Inc.: $40,164;
Community Action Partnership of Orange County: $110,241;
Community Action Partnership of Riverside County: $450,428;
Pacific Asian Consortium in Employment: $107,969.
Service provider: Number of homes projected to be weatherized with
Recovery Act funds
Project GO, Inc.: 360
Community Action Partnership of Orange County: 550
Community Action Partnership of Riverside County: 1,680
Pacific Asian Consortium in Employment: 1,700
Service provider: Estimated date to begin weatherizing homes with
Recovery Act funds;
Project GO, Inc.: January 2010;
Community Action Partnership of Orange County: Between January and
March 2010;
Community Action Partnership of Riverside County: November 2009;
Pacific Asian Consortium in Employment: December 2009.
Source: CSD; Project GO, Inc.; Community Action Partnership of Orange
County; Community Action Partnership of Riverside County; and Pacific
Asian Consortium in Employment.
[End of table]
Despite Challenges, California Officials Believe That They Successfully
Met Recovery Act Reporting Requirements:
California Recovery Act Task Force (Task Force) officials believe that,
while facing some challenges, overall, they were successful in
reporting jobs created or retained in California, as well as other
information required under the Recovery Act. California established a
centralized reporting system, the California ARRA Accountability Tool
(CAAT), for Recovery Act funds received through state agencies. All
state agencies receiving Recovery Act funds reported to the Task Force
using the CAAT. The state‘s Chief Information Officer (CIO), on behalf
of the Task Force, was responsible for collecting the data from state
agencies, validating it, and uploading the data to
FederalReporting.gov. The Task Force performed a pretest by working
with the technical team at FederalReporting.gov and then uploaded by
award all data by the October 10 deadline. Data corrections were made
to improve the accuracy of reports from October 11 through October 20.
State officials cited several benefits of the centralized process,
including establishing the CIO as the liaison between
FederalReporting.gov and the state, which eliminated the need for each
state agency to reconcile issues one at a time with
FederalReporting.gov. It also allowed greater control of the process at
the state level and helped state officials follow the flow and impact
of Recovery Act funds in California. (Figure 2 provides a simplified
example of how information flowed for two state-run highway projects
that we selected.) However, local governments and other entities which
directly received Recovery Act funds that bypassed the state reported
those funds directly to FederalReporting.gov. Therefore, the Task Force
had little or no visibility over these funds.
Figure 2: Basic Flow of Recipient Reporting Information for Two State-
Run Highway Projects in California That GAO Selected:
[Refer to PDF for image: illustration]
Subcontractor reports to prime contractor:
* Number of employees, hours worked, and payroll information for
existing employees and new hires;
Prime contractor reports to Caltrans:
* Subcontractor information;
* Employee, hour, and payroll information for prime contractor.
Caltrans reports to state CIO:
* Information from each prime contractor and subcontractor;
* Employee, hour, and payroll information for Caltrans employees.
State CIO uploads reports to federalreporting.gov:
* Upload occurs within 10 days after the end of the reporting quarter.
OMB reports information from federalreporting.gov:
* Number of jobs created or retained and other information on Recovery
Act funds flowing through the state of California.
Source: GAO analysis of information provided by contractors, Caltrans,
CIO, and the Task Force.
Note: Flow of recipient reporting information for locally-managed
highway projects in California included additional steps.
[End of figure]
State officials said they faced some challenges, especially in
collecting required information on Dun and Bradstreet Universal
Numbering System (D-U-N-S®[Footnote 11]) numbers for recipients and
subrecipients and overcoming changing reporting requirements from
federal agencies. For example, in some cases, the Office of Management
and Budget (OMB) did not have D-U-N-S numbers in its system, which
prevented the state from uploading job information from recipients and
subrecipients. The OMB reporting system not only rejected the
subrecipients‘ incorrect D-U-N-S numbers, but also all recipient data
for that award, including correct D-U-N-S numbers, which numbered in
the hundreds or thousands, without identifying the reason for the
rejection. California officials also had to contend with federal
agencies making last-minute changes to the reporting requirements
including to the award amounts, award identification numbers, Central
Contract Registration numbers, and Catalog of Federal Domestic
Assistance numbers.
Another challenge Task Force officials noted is that the number of jobs
reported can vary depending on how federal job reporting guidance is
applied, as was the case with California‘s two university systems. For
example, the California State University (CSU) system reported 26,156
jobs paid with Recovery Act funds based on $268.5 million in SFSF
grants awarded and disbursed over 2 months, while the University of
California (UC) officials reported 8,356 jobs paid with Recovery Act
funds based on $518.5 million in SFSF grants disbursed out of the
$717.5 million awarded. A CSU official said that their estimate is
based on paying 26,156 full-time equivalent positions for the 2 months,
May and June 2009, in which the Recovery Act funds were received. A UC
official said that in contrast, the UC based its estimate on paying the
8,356 full-time equivalent positions for the full year, not just the
months in which the funds were received, and by not counting tenured
and other positions that would not have been cut otherwise. The CSU
officials said that, on the advice of the CSU consultants, CSU followed
Education guidance exactly as written without adjustments. The UC
official said that UC adjusted its estimate to make it more realistic
in reflecting the number of jobs retained. Task Force officials
reviewed both estimates and told us that both are, in their opinion,
within applicable federal agency guidance.
Task Force officials stated that the reporting process would be
improved if OMB provided a comprehensive list of awards within
California, so that the Task Force can be sure that all awards were
reported. However, Task Force officials told us OMB informed them that
there was not a master list of Recovery Act awards that agencies have
made to each state and to recipients within the state. Task Force
officials also believed that a list of all state and local Recovery Act
awards provided to California would help them better assess the impact
of the Recovery Act in California. We previously recommended that OMB
should develop an approach that provides dependable notification to
states”where the state is not the primary recipient of funds but has a
statewide interest in the information.[Footnote 12]
Select California Localities Are Using Recovery Act Funds to Preserve
Services:
We met with officials in the city of Los Angeles (Los Angeles) and the
county of Sacramento to discuss how Recovery Act funds are being used
in these localities. (Figure 3 highlights information about the two
local governments we reviewed.) Officials said that they face budget
shortfalls this fiscal year due to declines in state funding for
programs, property tax revenues, sales tax revenues, and other local
tax revenues and fees. According to government officials in both
localities, Recovery Act funds are helping to preserve the delivery of
essential services and repair infrastructure, but have generally not
helped stabilize their base budgets.
Figure 3: Information about Los Angeles and Sacramento, and Recovery
Act Funds:
[Refer to PDF for image: illustration and associated data]
Demographics:
Estimated population (2008):
Sacramento: 1,394,154;
Los Angeles: 3,833,995.
Unemployment rate (Sept. 2009):
Sacramento: 12.2%;
Los Angeles: 14.0%.
Budget FY10: (change from FY09):
Sacramento: $4.3 billion (-19.0%);
Los Angeles: $7.0 billion (-1.0%).
Locality type:
Sacramento: County;
Los Angeles: Metropolitan city.
Recovery Act funding reported by Los Angeles and Sacramento
County:
Sacramento:
Awarded: $21.0 million (19.2%);
Not awarded: $46.4 million (42.4%);
Application pending: $42.0 million (38.4%);
Total: $109.4 million.
Los Angeles:
Awarded: $178.6 million (18.1%;);
Not awarded: $397.6 million (40.3%);
Application pending: $410.1 million (41.6%);
Total: $986.3 million.
Sources: U.S. Census Bureau and U.S. Department of Labor (demographic
information); Sacramento County and Los Angeles City(funding
information); Map Resources (map); and GAO.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
Funding awards include both Recovery Act formula and competitive grants
directly awarded to localities. Los Angeles data are as of November 9,
2009. Sacramento data are as of November 10, 2009.
[End of figure]
As of November 9, 2009, Los Angeles officials reported the city had
been awarded about $178.6 million in Recovery Act grants. This included
about $135.2 million in formula grants to support anticrime programs,
community development projects, energy-efficiency projects,
homelessness and foreclosure relief, purchases of buses, and public
housing rehabilitation.[Footnote 13] Additionally, the city reported it
had been awarded $43.4 million in competitive grants to support airport
improvement, art agencies, community policing, diesel emission
reduction, port security, and public housing capital construction.
Officials also reported that Los Angeles has applied for about $410
million in additional Recovery Act grants for broadband and smart grid
projects, a neighborhood stabilization program, strengthening
communities affected by the economic downturn, training workers for
careers in the energy sector, and transportation infrastructure.
According to officials, Los Angeles is planning to use Recovery Act
funds to enhance community services rather than to fund ongoing
projects that require future financial support.
* As of November 10, 2009, Sacramento County officials reported the
county had been awarded about $21.0 million in Recovery Act formula
grants. This includes about $20.8 million in Recovery Act formula
grants to provide support for law enforcement programs such as gang
suppression and prevention of Internet crimes against children, energy
efficiency improvements, and airport security improvements.[Footnote
14] The county also reported receiving a $259,000 Edward Byrne Memorial
Competitive Grant to supervise sexual assault offenders on probation.
The county has applied for an additional $42.0 million in competitive
grants for highway and airport improvements and for crime
investigations support, and plans to pursue additional competitive
grants. County officials said they have not developed a formal exit
strategy from Recovery Act funding but are using the funds on projects
that will not require local financial support after the Recovery Act
funds are spent.
State Comments on This Summary:
We provided the Governor of California with a draft of this appendix on
November 17, 2009.
In general, California state officials agreed with our draft and
provided some clarifying information, which we incorporated.
GAO Contacts:
Linda Calbom, (206) 287-4809 or calboml@gao.gov.
Randy Williamson, (206) 287-4860 or williamsonr@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Paul Aussendorf, Assistant
Director; Joonho Choi; Guillermo Gonzalez; Chad Gorman; Richard
Griswold; Don Hunts; Delwen Jones; Susan Lawless; Brooke Leary; Heather
MacLeod; Joshua Ormond; Emmy Rhine; Eddie Uyekawa; and Lacy Vong made
major contributions to this report.
[End of section]
Footnotes: Appendix II: California:
[1] This does not include obligations associated with $27 million of
apportioned funds that were transferred from FHWA to FTA for transit
projects. Generally, FHWA has authority pursuant to 23 U.S.C. §
104(k)(1) to transfer funds made available for transit projects to FTA.
[2] Although we examined the data for obvious discrepancies, the data
we collected are self-reported by individual states. Therefore, the
data may not be complete and we consider the reliability of these data
undetermined.
[3] Of the $2.570 billion apportioned to California under the Recovery
Act, $1.799 billion (70 percent) was allocated to state-level projects
and another $771 million (30 percent) was suballocated to local
projects. According to state sources, under a state law enacted in late
March 2009, 62.5 percent of the $2.570 billion ($1.606 billion) will go
to local governments for projects of their selection.
[4] While our prior report focused on ESEA Title I, Part A funds, these
cash management concerns extend to other Recovery Act funds drawn down
by CDE, as reported by the U.S. Department of Education‘s Office of
Inspector General in its October 2009 Alert Memorandum–ED-OIG/L09J0007.
[5] DOE currently plans to make the remaining funds available to the
states once 30 percent of the housing units identified in the state
plans are weatherized.
[6] California also received about $14 million for its fiscal year 2009
annually appropriated Weatherization Assistance Program.
[7] CSD delivers weatherization services through a network of local
service providers, including community action agencies, nonprofit
organizations, and local governments.
[8] CSD has not yet awarded the remaining funds”approximately $20
million”to service providers for parts of Alameda County, parts of Los
Angeles County, Santa Clara County, San Francisco County, and San Mateo
County. For these areas, CSD is either seeking a new service provider
or is withholding funds pending the completion of an investigation of
the designated service provider.
[9] CSD currently estimates that 50,330 homes will be weatherized with
Recovery Act funds in California. However, as of November 10, 2009,
California had not begun measuring the impact of its weatherization
program because no homes in California had been weatherized with
Recovery Act funds.
[10] We selected these providers to capture a variety of service area
characteristics, such as the amount of Recovery Act funds allocated;
the number of clients served; climate zones; and a mix of rural, urban,
and suburban areas.
[11] According to Dun and Bradstreet, a D&B® D-U-N-S® number is a
unique nine-digit sequence recognized as the universal standard for
identifying and keeping track of over 100 million businesses worldwide.
[12] 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).
[13] Formula grants include: Community Development Block Grant ($19.2
million), Edward Byrne Memorial Justice Assistance Grants ($30.5
million), Emergency Shelter Grants ($29.4 million), Energy Efficiency
and Conservation Block Grant ($250,000), Internet Crimes Against
Children ($1.4 million), Public Housing Capital ($25.1 million), and
Transportation Infrastructure ($8.0 million).
[14] Formula grants include: Airport Security Grant ($11.3 million),
Edward Byrne Memorial Justice Assistance Grants ($2.6 million), and
Energy Efficiency and Conservation Block Grant ($5.4 million), Health
Centers Increase Demand for Services ($546,318), Capital Improvement
Program ($890,220), and Internet Crimes Against Children ($702,838).
[End of Appendix II: California]
Appendix III: Colorado:
Overview:
This appendix summarizes GAO‘s work on the fourth of its bimonthly
reviews of Colorado‘s spending under the American Recovery and
Reinvestment Act (Recovery Act) of 2009. The full report covering all
of GAO‘s work in 16 states and the District of Columbia may be found at
[hyperlink, http://www.gao.gov/recovery].
What We Did:
Our work in Colorado included reviewing the state‘s use of Recovery Act
funds and its experience reporting Recovery Act expenditures and
results to federal agencies under Office of Management and Budget (OMB)
guidance. We continued our review of several programs that we have been
reviewing on an ongoing basis, in part because of the large amount of
funds designated for these programs. These programs include the State
Fiscal Stabilization Fund (SFSF); Individuals with Disabilities
Education Act (IDEA), Part B; Elementary and Secondary Education Act
(ESEA) of 1965, as amended, Title I, Part A; Highway Infrastructure
Investment; Transit Capital Assistance; and the Public Housing Capital
Fund. For descriptions and requirements of the programs we covered, see
appendix XVIII of GAO-10-232SP.
To understand the state‘s experience reporting Recovery Act
expenditures and results for the first quarterly report issued by the
federal government on October 30, 2009, we examined documents prepared
by state officials responsible for centrally gathering and reporting to
federal agencies. We discussed these documents, and the experience of
reporting, with several state and local agencies, including Colorado‘s
Departments of Education and Transportation, two transit agencies, and
three housing agencies. In particular, we focused on understanding the
agencies‘ methods for identifying and verifying expenditures and
counting jobs created and retained.
Finally, for the first time, we visited local governments to better
understand their use of Recovery Act funds. All regions of Colorado are
experiencing economic stress. We chose to visit three local governments
based on, in part, these localities‘ size, location, Recovery Act
funding, and unemployment rates. Specifically, we selected the City and
County of Denver because it is the state‘s largest city and has an
unemployment rate above the state‘s average, which is now 6.7 percent.
We also selected two county governments: Adams County because its
unemployment rate is higher than the state‘s average and Garfield
County because its rate is lower than the state‘s average.
What We Found:
* State Fiscal Stabilization Fund. Since we reported in September 2009,
the state has changed its plans for the more than $620 million of
education stabilization funds allocated to the state.[Footnote 1] The
state now plans to spend all its SFSF education stabilization funds on
higher education and none on K-12 programs. The state plans to submit a
revised application to the U.S. Department of Education to waive state
spending requirements, called maintenance of effort, for education in
fiscal year 2010.
* Education programs. The pace of Colorado‘s spending for the IDEA,
Part B program and the ESEA Title I, Part A program has slowed since we
reported in September 2009. State education officials said that their
review of the ESEA Title I, Part A applications and IDEA, Part B
applications has taken time and that spending depends on local
educational agencies (LEA). The state has reviewed all applications and
LEAs have begun seeking reimbursements for expenditures made in fiscal
year 2010.
* Highway Infrastructure Investment. As of October 31, 2009, the U.S.
Department of Transportation (DOT) Federal Highway Administration
(FHWA) has obligated $335 million of the $404 million of Recovery Act
funds apportioned to Colorado for highway projects.[Footnote 2] Of the
$335 million obligated, FHWA has reimbursed Colorado $61 million. At
the same time, FHWA issued guidance requiring Colorado, as well as
other states, to recalculate the amount of state funds used to certify
that it would maintain state spending at a certain level in accordance
with Recovery Act requirements. Colorado has devised a method to
recalculate this maintenance-of-effort amount but has not yet made it
final.
* Transit Capital Assistance. As of November 1, 2009, DOT‘s Federal
Transit Administration (FTA) apportioned $103 million in Transit
Capital Assistance funds to Colorado and urbanized areas located in the
state and has obligated nearly all of these funds. Denver‘s Regional
Transportation District, Fort Collins‘s Transfort, and the Colorado
Department of Transportation‘s (CDOT) rural transit program plan to use
their share of transit funds to contract for numerous projects,
including purchasing buses.
* Public Housing Capital Fund. Colorado has 43 public housing agencies
that have been allocated about $17.6 million from the Public Housing
Capital Fund. The U.S. Department of Housing and Urban Development
(HUD) awarded $7.9 million to the three housing agencies we reviewed
and the housing agencies had obligated approximately $1.7 million as of
November 14, 2009. Of the three housing agencies we reviewed, one has
completed all projects using Recovery Act funds, one has projects
underway, and one has yet to carry out any projects.
* State and local use of Recovery Act funds. In addition to paying for
specific programs such as transportation and education, Recovery Act
funds are helping the state stabilize its fiscal year 2010 budget as it
deals with declining revenues and two rounds of budget cuts.[Footnote
3] Local governments are using Recovery Act funds to bolster programs
that provide needed services but not to stabilize their budgets, as
funds available to local entities cannot be used to pay for local
entities‘ general operating expenses. Denver reported they received
awards totaling $55 million in Recovery Act funds, half of which were
competitive grants and the other half of which were formula grants.
[Footnote 4] Adams County reported awards of $9 million and Garfield
County reported awards of $347,000.
* Recipient reporting. Colorado officials, for the most part, viewed
their experience with the first quarterly Recovery Act recipient report
as successful but difficult. The state‘s reporting efforts are a good
first step. However, officials reported a number of technical problems
uploading data to the official federal Web site and federal guidance
changes that complicated their reporting experience. Our review of a
small selection of reported items found some errors in calculating jobs
associated with Recovery Act expenditures, suggesting that further
review of the reporting results is needed.
Colorado Will Use All SFSF Education Stabilization Funds for Higher
Education and Will Submit a Revised Waiver for Maintenance-of-Effort
Requirements in Fiscal Year 2010:
Since we reported in September 2009, Colorado officials have decided to
disburse all of the SFSF education stabilization funds allocated to the
state to institutions of higher education (IHE). The Recovery Act
created SFSF in part to help state and local governments stabilize
their budgets by minimizing budgetary cuts in education and other
essential government services. The state has been allocated a total of
$760 million in SFSF funds, $622 million of which will be for education
stabilization and $138 million of which will fund government services.
In taking action to cut its fiscal year 2010 budget, the state cut
almost $377 million from its contribution to higher education, which it
has restored with SFSF education stabilization funds. As of November
10, 2009, Colorado planned to disburse all its SFSF funds to IHEs: $150
million in fiscal year 2009, $377 million in fiscal year 2010, and the
remainder in fiscal year 2011. Although the state‘s original plan for
SFSF education stabilization funds allocated almost $170 million to K-
12 programs for fiscal years 2010 and 2011, these changes result in no
SFSF funds being spent on K-12 education.[Footnote 5]
The state plans to submit a revised SFSF application to the U.S.
Department of Education requesting a waiver from maintenance-of-effort
requirements for fiscal year 2010. The Recovery Act requires that
states assure that they will maintain state education spending at least
at the level of fiscal year 2006 spending, or receive a waiver from
this requirement. To receive a waiver from this maintenance-of-effort
requirement, a state has to show that its share of education spending
as a percentage of total state revenues is equal to or greater than
that of the previous year. As we reported in September 2009, the state
requested a waiver of this maintenance-of-effort requirement for SFSF
funds in fiscal year 2010 after an initial round of cuts to the higher
education budget in August caused the state‘s higher education spending
to drop below fiscal year 2006 spending.
According to Education officials, Colorado‘s waiver request was not yet
approved as of November 19, 2009, because the state‘s spending and
revenue figures for fiscal year 2010 were not yet final. According to
state officials, Education officials said that if the numbers do not
change, the waiver would be approved. State officials also said,
however, that spending and revenue figures would not be considered
final until August 2010, after the fiscal year ends on June 30.
Further, state officials said the numbers required by the waiver are
projected estimates that will likely change. In the meantime, the state
has made additional cuts to its higher education budget and plans to
submit a revised SFSF waiver request reflecting the latest spending
levels. As of November 19, 2009, the state had not heard anything more
from Education regarding the first waiver or submitted a revised
waiver.
Colorado LEAs Are Spending Recovery Act Funds Allocated for Education
Programs Slowly, but Some Plan to Use Funds to Retain Staff:
Colorado‘s LEAs continue to spend Recovery Act education funds,
although the pace of spending has slowed since we last reported. The
Recovery Act provided supplemental funding for education programs
authorized under IDEA, Part B, a major federal program that supports
early intervention and special education for children and youth with
disabilities, and under ESEA Title I, Part A, which provides funding to
help educate disadvantaged youth. The state‘s Department of Education
has finished its reviews of LEAs‘ applications for both programs but
the process took additional time. In addition, the department has been
meeting with LEAs to discuss specific IDEA, Part B authorities and
reviewing ESEA Title I, Part A waiver applications. When they expend
the funds, about 14 percent of Colorado‘s LEAs plan to use more than 50
percent of education funds to retain jobs.
Colorado LEAs Are Spending Education Funds Slowly as State Reviews
Applications and Establishes Guidance:
Spending on education programs has slowed since we reported in
September 2009. According to department officials, as of November 13,
2009, Colorado LEAs had been reimbursed about $4.1 million or 3 percent
of the state‘s $154 million IDEA, Part B allocation and about $280,000
or 0.25 percent of the state‘s $111 million allocation for ESEA Title
I, Part A. While these amounts have not changed since we last reported
in September 2009, as of November 23, 2009, the state has obligated an
additional $2.1 million for the IDEA, Part B program and $977,000 for
the ESEA Title I, Part A program. Under ESEA Title I, LEAs must
obligate at least 85 percent of ESEA Title I, Part A funds by September
30, 2010, unless they receive a waiver, and must obligate all of their
funds by September 30, 2011.[Footnote 6] States and LEAs must obligate
all IDEA, Part B Recovery Act funds by September 30, 2011.
Expenditures have not increased since we last reported because the
Colorado Department of Education has been reviewing applications for
the programs, and in addition, department officials said that
expenditures depend on LEAs. Department officials said that the review
of LEA applications for ESEA Title I, Part A and IDEA, Part B doubled
their workload, but that the review is complete, although LEAs are
permitted to revise the narrative and budget portions of the IDEA, Part
B applications, requiring further review throughout the course of the
year.[Footnote 7] Department officials said the reimbursement of
Recovery Act funds depends on requests from LEAs and historically, LEAs
often wait several months to accumulate expenses prior to requesting
reimbursement. Officials said this delay may slow down the recording
and reporting of expenditures. Colorado LEAs have begun requesting
reimbursement for expenditures made in the state‘s current fiscal year
under both programs.
Department officials said that, in addition to reviewing and approving
IDEA, Part B and ESEA Title I, Part A applications, they have been
establishing additional guidance for certain provisions of IDEA and
reviewing and approving waiver applications related to ESEA Title I,
Part A. In particular, state officials have been meeting with local
officials to discuss how to manage the increase in IDEA funds under the
Recovery Act, given existing authority under IDEA to decrease local
expenditures. Specifically, under IDEA, Part B, eligible LEAs may
decrease their local expenditures by up to half of the amount of the
increase in their IDEA allocation, freeing up these funds for non-
special education expenditures.[Footnote 8] For example, by using the
authority granted under IDEA, LEAs can direct Recovery Act funds to
salaries and redirect local funds from salaries to other purposes, such
as acquiring curriculum materials that are not specifically related to
special education. Almost half of the state‘s LEAs will be allowed to
spend local funds more flexibly, according to state officials. Although
the decision is made at the local level, and state officials did not
know exactly how many will utilize the flexibility, state education
officials said that all of the eligible LEAs in Colorado plan to use
this authority.
Department officials also said that they have been working with LEAs to
apply for waivers of certain requirements under ESEA Title I, Part A
that will provide the LEAs with flexibility in using those funds. The
state received approval for the use of four waivers in August 2009, but
now LEAs have to apply to the state to use these waivers. As of
November 17, 2009, a number of LEAs have been granted waivers by the
Colorado Department of Education as follows:
* Thirty-three were granted approval for waivers of the requirement for
LEAs to spend an amount equal to 20 percent of their fiscal year 2009
ESEA Title I, Part A, Subpart 2 funds for public school choice-related
transportation and supplemental educational services.[Footnote 9]
* Twenty-six were granted approval for waivers of the requirement for
LEAs identified for improvement to spend 10 percent of their fiscal
year 2009 ESEA Title I, Part A, Subpart 2 funds on professional
development.
* Twenty-three were granted approval for waivers of professional
development spending requirements for schools that are identified for
improvement.[Footnote 10] (Like LEAs, schools in improvement are also
required to spend 10 percent of their fiscal year 2009 ESEA Title I,
Part A funds on professional development.)
* Twenty-four were granted approval for waivers of the requirement that
LEAs include some or all of the ESEA Title I, Part A Recovery Act funds
in calculating the per-pupil amount for supplemental educational
services.
Colorado Department of Education officials said that LEAs that are
granted waivers have more flexibility in ensuring the funds are used to
support increased student achievement in the short term, as opposed to
being set aside for specific uses and possibly left unused for an
unspecified amount of time. Department officials said that they use a
three-step process to review and approve LEA waiver requests, which
includes (1) determining if all assurances and supporting evidence are
provided; (2) reviewing data used by LEAs to identify needs for other
uses of the funds, which includes looking for multiple data sources,
such as assessments and evaluations; and (3) working with LEAs to
improve the requests or sending approval letters.
Colorado LEAs Plan to Use Education Funds to Retain Jobs:
We surveyed a representative sample of LEAs”generally school districts”
nationally and in Colorado about their planned uses of Recovery Act
funds. Table 1 shows Colorado and national GAO survey results on the
estimated percentages of LEAs that (1) plan to use more than 50 percent
of their Recovery Act funds from three Education programs to retain
staff, (2) anticipate job losses even with SFSF funds, and (3) reported
a total funding decrease of 5 percent or more since last school year.
[Footnote 11]
Table 1: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs, Colorado: 14%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs, Colorado: 15%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs, Colorado: NA[A];
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipate job losses, even with SFSF funds;
Estimated percentages of LEAs, Colorado: NA[A];
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Colorado: 13%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Colorado have margins of error, at the
95 percent confidence level, ranging from plus or minus 11 to 23
percentage points. The nationwide percentage estimates have a margin of
error of plus or minus 5 percentage points.
[A] Colorado plans to use its full allocation of SFSF education
stabilization funds for higher education, making the responses from
LEAs regarding SFSF not applicable.
[End of table]
Colorado‘s Highway Infrastructure Work Continues, Although the State
Also Plans to Revise the Amount of State Spending Needed to Meet
Recovery Act Requirements:
Colorado‘s highway work using Highway Infrastructure Investment funds
continues. Of the $404 million apportioned to Colorado in March 2009,
$18.6 million was transferred to FTA for transit projects, leaving $385
million for highway projects in the state. As of October 31, 2009, FHWA
had obligated almost $335 million of this amount and had reimbursed $61
million to the state.[Footnote 12] As of the same date, CDOT planned
100 projects, and FHWA had approved or committed funding for 79 of
these projects. The number of planned projects has increased by eight
since we reported in September 2009. Table 2 shows the status of the
100 projects that CDOT has planned as of October 31, 2009.
Table 2: Status of CDOT‘s Use of Recovery Act Funds for Highway
Infrastructure Projects:
Planned: 100;
Projects approved[A]: 79;
Obligations (millions): $335;
Awarded contracts: 68;
Construction underway[B]: 55;
Completed: 8;
Savings (millions): $32.6.
Source: GAO analysis of CDOT data.
[A] CDOT also received $250,000 for a project FHWA approved to provide
on-the-job training in highway construction to individuals from
traditionally underutilized communities throughout northern Colorado.
[B] For five of the awarded contracts, construction has not yet begun.
[End of table]
CDOT plans to complete the additional eight projects in areas across
the state, including six projects in economically distressed areas of
the state. In our last report, we noted that CDOT planned 36 projects
in economically distressed areas, which are those areas experiencing
relatively low income levels or relatively high unemployment rates, or
experiencing a ’special need“ arising from actual or threatened severe
unemployment or economic adjustment problems resulting from severe
short-term or long-term changes in economic conditions.[Footnote 13]
The additional projects in distressed areas include pavement
improvement projects and construction of a pedestrian bridge.
Five of the additional planned projects will be funded from savings
accumulated by CDOT. Savings, in this case, represent the difference
between the amount of Recovery Act funds CDOT allocated to spend on
highway projects and the amount FHWA has obligated for these same
projects, which takes into account funds that have been deobligated. As
of October 31, 2009, Colorado had awarded 68 contracts, a number of
which were awarded for less than the amount the state had allocated for
these projects, representing savings totaling $32.6 million. CDOT
officials told us that the difference is due, among other reasons, to
larger numbers of contractors bidding on work in fiscal year 2009 than
in fiscal year 2008, bringing down the average bid amount. CDOT has
asked FHWA to deobligate funds on an ongoing basis.
While CDOT continues to award contracts and carry out projects, it is
also revising its calculation of state highway infrastructure funding
needed to meet Recovery Act requirements. The Recovery Act requires
states to certify that they will maintain state spending at a certain
level, called maintenance of effort, to qualify for a planned
redistribution of highway infrastructure funds that will occur after
August 1, 2010, for fiscal year 2011. States that do not maintain
spending will be prohibited from participating in the August
redistribution of federal-aid highway and highway safety construction
program obligational authority for fiscal year 2011. Colorado provided
its certification to DOT on March 19, 2009.
In response to new guidance from FHWA on maintenance-of-effort
certifications, CDOT plans to revise its calculation to include
revenues collected by the state but allocated directly to local
entities. On September 24, 2009, FHWA issued guidance to states,
including Colorado, to report state transportation funding allocated to
local governments. In Colorado, these revenues are the local share”40
percent”of funds received from a state gas tax that are to be used to
improve public roads and highways in the state. CDOT originally
calculated its maintenance of effort using the amount of state funds
planned, as of February 17, 2009, to be expended through September 30,
2010. According to CDOT officials, they did not include locally planned
expenditures in this calculation because the agency has no direct
knowledge of or control over how localities spend the portion allocated
to them by the state. CDOT officials said that to revise the
calculation, the agency plans to work with the State Treasury to
identify the amount of tax funds transferred to local entities. CDOT
has not yet resubmitted its certification with this new maintenance-of-
effort amount to DOT because it is waiting for DOT to give states final
guidance.
Although some state officials expressed concern that gas tax revenues
could fall significantly, thus lowering the state‘s planned spending,
CDOT officials said they expect to meet the maintenance-of-effort
amount. They said that CDOT has a long history of qualifying for and
receiving redistribution funds through the annual process and that the
state passed a new vehicle registration fee within the last year that
is helping to make up for lower gas tax revenues in the state.
According to CDOT officials, the agency could potentially receive $10
million to $20 million of the redistributed funds.
State Transit Agencies Continue to Use Recovery Act Funds for High-
Priority Projects, Including Bus Purchases:
State transit agencies continue to use Recovery Act funds for a variety
of high-priority Transit Capital Assistance projects. As of November 1,
2009, nearly all of the $103 million apportioned to the state and
urbanized areas for such projects had been obligated. We reviewed and
discussed with officials projects at three of Colorado‘s transit
agencies, including Denver‘s Regional Transportation District (RTD);
Fort Collins‘s transit agency, Transfort, which serves the city of Fort
Collins in northeastern Colorado; and CDOT‘s rural transit program. RTD
officials said that they plan to use the agency‘s $72 million in
Recovery Act funds for projects such as expanding light rail service
and buying buses. Transfort officials said that they plan to use $3.4
million in Recovery Act funds for, among other projects, purchasing
buses and improving bus corridors.[Footnote 14] And, as we reported in
September 2009, CDOT is using its transit funds to build a bus
maintenance facility and purchase buses in nonurbanized areas of state.
Colorado‘s transit agencies are using a portion of their Recovery Act
funds to purchase buses primarily to replace an aging fleet. We
reviewed and discussed with officials plans for bus purchases at two
Colorado transit agencies, RTD and Transfort. According to agency
officials, both agencies are purchasing replacement buses under the
terms of existing contracts: RTD plans to use $3 million to purchase
six 45-foot intercity buses and Transfort is using $2.4 million to
purchase six 40-foot city buses. Transfort also provided $700,000 in
Recovery Act funds to Loveland to buy two buses, including one to
replace an older bus and another to provide new bus service between the
cities of Longmont and Loveland.
As we reported in September 2009, RTD and CDOT plan to use their
existing internal controls and processes to manage and expend Recovery
Act funds. Officials at Transfort also stated that they are using their
existing internal controls and processes to manage and expend Recovery
Act funds. However, FTA reviewed Transfort‘s compliance with statutory
and administrative requirements in 2009 and identified deficiencies in
eight areas, including oversight of subrecipients. In particular, the
review found that Transfort does not monitor its subrecipients to
ensure that they comply with FTA requirements. Transfort is taking
action to address this deficiency by having subrecipients sign
supplemental agreements that make them responsible for seeking
reimbursement directly from FTA and reporting directly to FTA on
expenditures.
In addition to their planned bus purchases, RTD and Fort Collins
officials said they have awarded contracts for other projects.
Specifically, RTD officials told us that they have awarded contracts to
undertake safety improvements along a bus corridor, replace a roof on a
maintenance facility, upgrade a computer system, enhance light rail
service in several locations, and extend train platforms. Transfort
officials told us that they plan to upgrade the agency‘s fare
collection system and have provided funds for other transit projects in
the cities of Loveland and Berthoud. Finally, CDOT officials told us
that they have awarded a contract to a rural transit agency in Summit
County to seek a contractor to build the bus maintenance facility.
Summit County in turn contracted with a private firm to build the
facility (see figure 1 for a picture of the facility under
construction).
Figure 1: Summit County Bus Maintenance Facility under Construction:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
We reviewed and discussed with agency officials the contract for
Transfort bus purchases and the Summit County contract to build the bus
maintenance facility. Contracting officials with the city of Fort
Collins and Summit County provided us the following information about
the contracts:
* On April 27, 2009, the city of Fort Collins modified an existing
contract with North American Bus Industries to supply six 40-foot city
buses by March 31, 2010. The new buses, fueled by compressed natural
gas, will reduce carbon emissions as they are replacing diesel buses.
The estimated cost of the modification is $2.4 million, to be paid
after inspection, on delivery. The original contract was awarded
competitively in 2007 and is a fixed-price contract in that the price
of each bus is $406,000.
* On August 13, 2009, Summit County entered into an $8.4 million
contract with AP Mountain States, LLC, to construct a new multiuse
fleet maintenance facility by July 28, 2010, with a possible extension
if needed due to variable weather conditions. This fixed-price contract
was awarded competitively.
Colorado Housing Agencies Continue to Make Progress on Recovery Act
Projects:
Colorado has 43 public housing agencies that have received Recovery Act
formula grants. In total, these public housing agencies received almost
$17.6 million in Public Housing Capital Fund formula grants. As of
November 14, 2009, these public housing agencies had obligated almost
$5.9 million and had drawn down approximately $2.8 million (see fig.
2). On average, housing agencies in Colorado are obligating formula
funds more slowly than housing agencies nationally. In addition to the
Capital Fund formula grants, HUD awarded nine competitive grants to
housing agencies in Colorado, including five to the Housing Authority
of the City and County of Denver. We reviewed the following three
housing agencies for this report: the Housing Authority of the City and
County of Denver, Holyoke Housing Authority, and the Housing Authority
of the Town of Kersey. We reviewed these three housing agencies because
we visited them for our July 2009 report.[Footnote 15]
Figure 2: Percentage of Public Housing Capital Funds Allocated by HUD
that Have Been Obligated and Drawn Down in Colorado, as of November 14,
2009:
[Refer to PDF for image: 3 pie-charts and 1 horizontal bar graph]
Funds obligated by HUD: 96.4%; $16,949,529;
Funds drawn down by public housing agencies: 33.4%; $5,887,381;
Funds obligated by public housing agencies: 16.3%; $2,863,838.
Number of public housing agencies:
Entering into agreements for funds: 43;
Obligating funds: 36;
Drawing down funds: 24.
Source: GAO analysis of HUD data.
[End of figure]
The three public housing agencies we visited in Colorado received
Capital Fund formula grants totaling almost $7.9 million. HUD allocated
approximately $7.8 million in formula capital funds to the Denver
Housing Authority, $59,934 to the Holyoke Housing Authority, and
$29,193 to the Kersey Housing Authority. As of November 14, 2009, the
Denver Housing Authority had obligated about $1.7 million and drawn
down about $795,000 in Recovery Act funds, the Holyoke Housing
Authority had both obligated and drawn down its full allocation, and
the Kersey Housing Authority had not obligated or drawn down any
Recovery Act funds. Only one of the housing agencies we visited”Denver”
was awarded competitive grants; it received all five of the grants”
totaling $27 million”for which it applied.
The Denver Housing Authority originally planned to complete five to
eight projects with formula funds, but reprioritized this workload to
include more projects when it found out that it had won the five
competitive grants for which it applied. Three of the five projects
funded with competitive grants had been scheduled as priorities to be
completed with formula funds; the receipt of the competitive funds
freed up formula funds to be used for other projects. Because of the
competitive grant application process, Denver Housing Authority was
flexible about which projects would be funded with formula grants until
the agency found out which competitive awards it would receive.
Officials said they plan to use the competitive grant funds to pay for
activities such as renovation of public housing units, new construction
of senior/disabled public housing units, and community center
enhancements and site work. They plan to use formula grants to
undertake rehabilitation and replacement of public housing units' water
heaters, as well as deferred maintenance work on four housing projects.
Because the Denver Housing Authority decided to use competitive funds
for projects that had been scheduled for formula funds, the time frames
for these newly converted competitive projects were revised while the
time frames for new formula funded projects were accelerated. Despite
the changes to time frames, housing officials do not anticipate any
problems in meeting the March 17, 2010, deadline for obligating 100
percent of formula funds. Officials said that they had begun planning
work on selected projects in anticipation of receiving competitive
funds.
During our review of the three public housing agencies, we updated the
status of projects we reported on in July 2009. At that time, the
Denver Housing Authority planned to use $250,000 of formula funds to
pay for replacing water heaters in 200 units with energy-efficient
water heaters, and to complete exterior painting. The project was
scheduled to begin in June 2009, and to be completed by December 2009.
In the interim, Denver officials decided not to advertise and
competitively award the contract for this project until September 2009
because they were waiting for Buy American guidance which was issued on
August 21, 2009. Consequently, the officials revised the project's
schedule for completion to February 2010. To date, the water heaters
have been ordered and the exterior painting, which was part of the
initial scope of work, was dropped.
The Housing Authorities of Holyoke and the Town of Kersey are small,
rural housing authorities that have used or are planning to use
Recovery Act funds for smaller-scale projects. For example, we reported
in July 2009 that the Holyoke Housing Authority planned to use about
$14,000 in Recovery Act funds to replace wooden patio fences at 30
units with vinyl fences and attached solar lights. This project was
completed on July 14, 2009. Holyoke Housing Authority officials told us
that they have spent 100 percent of the agency's allocation, and as
such, do not have an issue in meeting the March deadline. As we
reported in July 2009, the Kersey Housing Authority planned to use some
of its Recovery Act funds to replace older windows in 18 units with
energy-efficient windows. The agency has not yet spent any Recovery Act
funds because its directorship recently changed, delaying the start of
projects.
We reviewed three housing contracts, two managed by the Denver Housing
Authority and one managed by the Holyoke Housing Authority. Housing
agency officials provided the following information about the
contracts:
* On March 30, 2009, the Denver Housing Authority awarded a $295,926
contract to PS Arch Incorporated to provide architectural and
engineering design services for its Westwood Homes Project by December
5, 2009. This contract was awarded competitively as an indefinite-
delivery, indefinite-quantity contract, and officials said it contained
a fixed hourly labor rate.
* On September 9, 2009, the Denver Housing Authority awarded a $24,800
contract to Wholesale Specialties Incorporated to supply 64 40-gallon
hot water heaters for its Columbine Homes Project by December 31, 2009.
This fixed-price contract was awarded competitively.
* On September 14, 2009, the Holyoke Housing Authority awarded a
$27,409 contract to Whittaker Construction to replace hinged patio
doors at its Sunset View Apartment Project. This fixed-price contract
was awarded competitively.
Recovery Act Funds Help Colorado Make Up for Additional Budget Cuts,
While Local Governments Use Recovery Act Funds in Other Ways:
As Colorado's revenues continue to decline, Recovery Act funds have
helped stabilize the state's budget by making up for reductions in the
state's general fund. As we reported in September 2009, Colorado had
already planned to use more than $600 million in Recovery Act funds in
fiscal year 2010.[Footnote 16] It now plans to use an additional $190
million in SFSF funds to offset proposed cuts in budgets for higher
education and corrections. We reported in September that Colorado's
Governor had begun making $318 million in budget cuts and adjustments,
including eliminating 300 full-time equivalent jobs, to the state's
fiscal year 2010 general fund budget of $7.48 billion. After a new
economic forecast released in September showed further declines
expected in state revenues, the Governor announced a second set of
actions, totaling $286 million, to balance the state's general fund
budget. Colorado officials expect the state's budget to continue to be
challenging in fiscal year 2011, as the flow of Recovery Act funds that
have helped stabilize the budget stops and the financial requirements
of Medicaid and other caseloads continue to increase.
The three local governments we visited”Denver, Adams County, and
Garfield County”each used Recovery Act funds to support local programs,
although they differed significantly in terms of their economic
situations and budgets as shown in table 3.[Footnote 17] As a result of
these different conditions, local officials expressed different levels
of interest in applying for Recovery Act funds. For example, officials
with Denver's Recovery Act management team said that although Recovery
Act funds cannot be used to backfill cuts in their general operating
budget, they are actively seeking grants for social services and other
programs that provide critical services during a recession. On the
other hand, officials with Garfield County said that the county's
reserve funds are healthy and while they have received funds from
formula grants, they are not actively applying for competitive grants.
Adams County officials indicated that they knew of opportunities for
grants, but said they did not have people in positions to apply for or
manage those grants. For example, the officials mentioned that they do
not have someone in a position to research or apply for grants to
expand broadband Internet coverage. This potential lack of capacity at
the local level may signal an opportunity for state officials to offer
assistance and leverage Recovery Act funds across several smaller
entities. State officials said that they have had many outreach
sessions and that they will continue to do so.
Table 3: Information on Three Local Governments Visited by GAO:
Locality: City and County of Denver;
Population: 598,707;
Unemployment rate[A]: 7.7%;
Budget (millions): $2,100;
Recovery Act funds reported (millions)[B]: $55.3.
Locality: Adams County;
Population: 430,836;
Unemployment rate[A]: 8.1%;
Budget (millions): $426.2;
Recovery Act funds reported (millions)[B]: $9.
Locality: Garfield County;
Population: 55,426;
Unemployment rate[A]: 5.8%;
Budget (millions): $135.7;
Recovery Act funds reported (millions)[B]: $0.35.
Source: U.S. Census Bureau, U.S. Department of Labor, and local
governments.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009, and have not been seasonally
adjusted. Rates shown are a percentage of the labor force. Estimates
are subject to subsequent revision.
[A] The state's average unemployment rate is 6.7 percent.
[B] We did not look at Recovery Act funds that went to separate
jurisdictions within the counties, such as school districts and transit
or housing agencies.
[End of table]
Denver: Denver officials said the city faces a difficult economic and
budget situation and is actively applying for Recovery Act funds. The
city had to close a $120 million funding gap in its fiscal year 2010
budget created by declining revenues and increasing costs associated
with law enforcement, fuel, and health insurance. As a result, the city
is taking such actions as eliminating over 600 positions, of which 176
are layoffs, and implementing program efficiencies. Although Denver
reported $55.3 million in Recovery Act awards, according to city
officials, these funds are having a limited effect on the city's
general fund budget because the funds cannot be used for general
operating expenses. City departments are actively applying for Recovery
Act funds, however. According to officials, the funds support needed
services, such as law enforcement and emergency food and shelter. As a
result, Denver has dedicated resources to grant screening and
applications and, according to officials, half of the city's Recovery
Act funds have been competitively awarded based on proposals submitted
by the city and half are formula grants. Table 4 shows the benefits
beyond job creation that officials said have resulted from Recovery Act
spending.
Table 4: Examples of Recovery Act Programs and Benefits in Denver,
Colorado:
Program: Child Care Assistance;
Funding: $5 million;
Description: Provided child care subsidies for 874 children;
Full-time equivalent jobs created or retained: 0;
Benefits beyond jobs created or retained: Allowed parents to seek or
retain jobs.
Program: Airport Improvement Program (three projects);
Funding: $11.5 million;
Description: Denver International Airport runway repair and widening;
Full-time equivalent jobs created or retained: 128 private jobs;
Benefits beyond jobs created or retained: Will enable larger planes to
use runway.
Program: Workforce Investment Act”Youth program;
Funding: $1.9 million;
Description: Support summer youth employment and training;
Full-time equivalent jobs created or retained: 280, of which 279 were
in the private or nonprofit sector;
Benefits beyond jobs created or retained: 716 youth enrolled and
employed.
Source: GAO analysis of Denver's Recovery Act management team data.
[End of table]
Adams County: Adams County, facing high unemployment and decreased tax
revenues, plans to use $9 million in Recovery Act funds to provide
social and other services during the current economic downturn. As of
October 31, 2009, Adams County spent the majority of its Recovery Act
funds (approximately 88 percent of $3.8 million) for workforce
investment (including job training) and social services (including
child care and food assistance). While declining revenues may cause
county officials to reduce the county's general fund budget in fiscal
year 2010 in an attempt to avoid layoffs, the county maintains a
substantial general fund balance to help it through major economic
downturns, according to officials. However, the county has made limited
efforts to apply for competitive Recovery Act funds (almost 9 percent,
or approximately $791,000, of Adams County's total awarded Recovery Act
funds are competitive grants), applying for grants that individual
departments identify and select if the grants fit within the
department's existing strategic plan. County officials have not applied
for more Recovery Act grants because, according to officials, the
county does not have staff dedicated to identifying and applying for
such grants. For example, officials said they would not compete for
broadband funding because they do not have an existing county
department that would determine eligibility, develop the application,
and implement the program.
Garfield County: Garfield County officials plan to use the Recovery Act
funds they have been awarded for different programs, but county
officials said that they are not actively applying for competitive
Recovery Act funds. The county's economy and revenues, which depend on
oil and gas production, have allowed it to maintain a large fund
balance to deal with economic downturns. According to county officials,
Garfield County tries to maintain at least 50 percent of the following
year's expected expenditures in reserve. Although county officials
expect these revenues to decline in fiscal years 2011 and 2012, they
believe the fund balance will cover the loss in revenues. Through
October 31, 2009, the county reported receiving $347,000 in Recovery
Act funds, including a $227,500 Energy Efficiency and Conservation
Block Grant.[Footnote 18] This block grant is intended to assist U.S.
cities, counties, states, territories, and Indian tribes to develop,
promote, implement, and manage energy efficiency and conservation
projects and programs. The Garfield New Energy Communities Initiative,
a regional collaborative group composed of representatives from state
and local agencies, nonprofits, and clean energy businesses, will use
this grant to build a residential and commercial energy efficiency
program started under a state initiative. According to county
officials, the remaining Recovery Act funds are for job training and
law enforcement equipment.
Officials in Colorado Deemed Their Initial Reporting Successful,
Although They Expressed Concerns About Jobs Data and Guidance:
State officials said they experienced difficulties in the overall
process of reporting their use of Recovery Act funds but were able to
successfully upload the state's data for the first quarterly Recovery
Act report. OMB guidance describes how recipients and subrecipients of
Recovery Act funds are to report on their use of those funds.
Generally, prime recipients”nonfederal entities that receive Recovery
Act funds from federal agencies”are to submit information to
www.federalreporting.gov, an online portal managed by the Recovery
Accountability and Transparency Board that collects Recovery Act
information. Subrecipients”any nonfederal entity that is responsible
for program requirements and spends federal funds awarded by a prime
recipient”may be delegated reporting responsibility by a prime
recipient. Colorado used its centralized reporting process, which we
described in our September 2009 report, to gather data from state
agency recipients and subrecipients and provide it to
www.federalreporting.gov.[Footnote 19] This data was then made public
on www.recovery.gov on October 30, 2009.
State and Local Officials Declared Their Recipient Reporting Successful
Despite Difficulties:
Although they described the overall process of reporting to the federal
Web site as frustrating, time-consuming, and burdensome, Colorado
officials expressed satisfaction with the results of their centralized
reporting process. As we previously reported, state officials believed
a centralized process afforded the best opportunity to ensure that
complete, reliable, and non-duplicative information was submitted for
state agencies. Colorado's Office of Information Technology (01T) was
the central point for collecting information from state agencies and
uploading it to the federal Web site. To control data submissions and
corrections, the state used OIT as the central point (with one Dun and
Bradstreet (DUNS) number) to gather and submit data. OIT uploaded the
information for over 400 grants on October 9 and 10, 2009, the original
deadline for state submissions. The data consisted of 340 zipped files
from state agencies and IHEs, and another 75 separate files from CDOT.
Subsequently, Colorado submitted an additional 22 files raising the
total to 437.
Officials responsible for Colorado's centralized reporting experienced
difficulties before, during, and after reporting, as described below.
In certain cases, Colorado officials offered suggestions to remedy the
difficulties.
* The process for registering as an authorized user on
www.federalreporting.gov was difficult, with no way of gaining
assurance the steps in the process were completed. According to state
officials, obtaining DUNS numbers was time-consuming and delayed the
DUNS numbers being available for registration in the Central Contractor
Registration system, an interim step necessary to use the federal Web
site.
* The federal Web site rejected numerous files that OIT uploaded but
did not always identify the problem that caused the rejection. As a
result, OIT had to review the files, look for issues that appeared
problematic, make changes or corrections, and resubmit the data. Some
problems that caused rejections were technical, pertaining to batch
processing, and others were simple, such as words not being
capitalized. Officials stated that more explicit feedback from the Web
site would have been helpful to diagnose the problems more quickly.
* OIT received late information on 23 grants because the grants were
awarded in late September and the grant recipients had to collect and
report information for them in October. State officials said they would
like the federal government to establish a mid-month cut off date for
awarding grants at the end of the quarterly reporting period to allow
adequate processing time.
* The Controller's office had to relinquish an internal control
designed for state reporting because of federal policy changes that
occurred. State officials originally planned to have state agencies
view their data on www.recovery.gov on October 11, but the plan had to
be changed when the Recovery Accountability and Transparency Board
announced on September 14, 2009, that Web site data would not be
available until October 30, 2009, the day following the end of the
review period. State officials then planned to have agencies review
their data on www.federalreporting.gov using the DUNS numbers
associated with their awards. However, because this function was not
available, the data was viewable by the state agencies only if the
Controller's office provided them with OIT's DUNS number. In making the
OIT DUNS number available to state agencies, the Controller
relinquished one of his planned internal controls over reporting”
limited access to the state's data. The Controller provided the OIT
DUNS number to all agencies and also downloaded the information from
the www.federalreporting.gov Web site and provided it to all state
agencies for their review.
* During the federal review period (October 22 to 29), the state
received numerous comments that were difficult to manage. The majority
of federal comments received by the state related to reported full-time
equivalent (FTE)[Footnote 20] numbers. Certain federal agencies
questioned the reported FTEs using parameters they had developed for
the review process to determine whether the numbers were in acceptable
ranges. However, according to the Controller, it was unclear from the
review comments what the parameters were based on, which made it
difficult for his office to assist agency personnel in making any
necessary changes. The state also received comments from federal
agencies (1) demanding changes in expenditure amounts that the state
could not support with its records; (2) presenting conflicting comments
on the same grant; and (3) providing comments by phone and email rather
than in the www.federalreporting.gov system.
* According to the State Controller and other officials, the
Departments of Education and Justice issued guidance on reporting that
conflicts with the state's Recovery Act reporting guidance. If
implemented, the directives would have degraded or eliminated certain
of the state's internal controls over Recovery Act data. One of the
core control elements of the Controller's centralized reporting process
is the use of separate accounting codes and indicators to identify and
track Recovery Act receipts, expenditures, and other data for reporting
to federal agencies and for reporting on the state's financial
statements.[Footnote 21] The federal agencies' directives, if followed,
would have required the state to change the indicator used for state
IHEs and justice agencies. This would have caused Recovery Act funds to
be reported as expenditures rather than as transfers to other agencies,
which would be incorrect for the purpose of the state's financial
statements. As a result, the Controller's Office would have had to
perform considerable manual reviews and reconciliations of the data to
prevent gaps or duplications in the state's reporting records.
According to the State Controller, this issue did not affect the
October reporting cycle because the state asked to hold off on applying
the directives in the first reporting cycle. As the directives are
still in effect, however, the state would like to resolve the matter
before the next reporting cycle.
Officials with local entities also deemed the reporting process a
success despite difficulties they faced in reporting. Local agencies
are not included in the state's centralized reporting process, but we
inquired about recipient reporting as part of our visits to two transit
agencies and one county. Examples of their experiences included:
* A transit official encountered problems when trying to upload
subrecipient financial information to www.federalreporting.gov. He was
instructed by help desk personnel to enter the total amount of the
grant under one recipient, not for the subrecipients.
* A county official said that she had problems with her password
logging on to the system and did not receive a call back for several
days from the help desk. She finally called the Colorado Governor's
Office contact who connected her to the state's OMB liaison.
Some State and Local Officials Expressed Concerns about Jobs Data and
Guidance and Our Review Found Some Data Errors:
Some state and local officials had the following concerns about jobs
data and guidance provided on jobs reporting:
* CDOT officials expressed concerns that the public would compare the
FTE figures reported on www.recovery.gov and the number of jobs CDOT is
reporting monthly to the House Committee on Transportation and
Infrastructure and would not understand the wide discrepancies between
the figures, which are calculated differently.[Footnote 22] They said
that this will create a public relations challenge for their agency
that could be minimized with further explanations of FTEs and jobs
created or retained on the www.recovery.gov Web site.
* Local transit officials expressed concern about conflicting FTA
guidance on how to count jobs associated with the manufacturing of
buses being purchased with Recovery Act funds. Specifically, FTA's
guidance for the OMB Recovery Act report stated that jobs associated
with manufacturing buses should be counted as direct jobs resulting
from Recovery Act expenditures. On the other hand, FTA guidance for
another report required of transportation agencies”called the 1201(c)
report for the section in the Recovery Act that requires it”directs
agencies not to count jobs associated with manufacturing buses. Local
officials believe the guidance should be clarified to remove the
conflict.
* Colorado Department of Education officials stated that jobs-related
guidance they received in September from the U.S. Department of
Education was late and contradicted OMB guidance provided in June,
particularly as it pertained to how LEAs should count jobs with
contractors. Officials said that OMB's June reporting guidance
indicated not to report these jobs, but guidance issued by Education in
August and September directed that these jobs be counted. While the
Colorado Department of Education issued reporting guidance on September
16, 2009, directing that the jobs be counted, state education officials
were concerned that LEAs did not have time to incorporate the new
guidance into their reporting. Specifically, because the state reported
centrally, LEA data were due to the Colorado Department of Education by
September 25, 2009, to report to the Controller's Office by September
29, 2009.
While we did not conduct a full review of data reported by Colorado
state agencies in October 2009, we reviewed jobs data for a selection
of projects and found discrepancies. We reviewed jobs data for three
highway construction projects with expenditures that represented over
50 percent of Colorado's highway project expenditures of $17.5 million
as of September 4, 2009. We found several discrepancies in the reported
data. For two of the projects we examined, CDOT officials reviewed
their file information and found that almost 1,400 work hours had been
overlooked in the calculation of FTEs and would have to be corrected
during the next reporting cycle. For the third project, CDOT officials
stated that additional review was necessary because they could not
explain hourly and payroll discrepancies between CDOT and FHWA data.
They said any necessary corrections will be made as part of the next
quarter's data submission. We also reviewed jobs information reported
by RTD and Transfort for two transit projects and found that the jobs
numbers were incorrect. RTD officials said that FTA instructed them to
prorate the jobs based on the Recovery Act funds in the project. As a
result, they revised the jobs number from 670 to 296 and resubmitted
the data to www.federalreporting.gov. FTA also instructed Transfort to
revise its jobs data so that the expenditures and the jobs numbers
would match. According to a Transfort official, he misinterpreted FTA
guidance when responding to the FTA instructions and reported 1.4 jobs
when he should have reported no jobs. The jobs reported were estimated
for the purchase of passenger vans from a dealer's inventory which is
not in compliance with FTA guidance.
Given the limited time frames to gather and report such a large amount
of state and local data using a newly developed, centralized process,
the state's efforts are a good first step. State officials described
having to deal with last-minute changes in guidance that they believed
could cause confusion and errors. We did not conduct a full review of
the data to determine reliability and therefore cannot confirm the
sources of the errors. However, the circumstances and the errors we
encountered indicate the need for further review of the data.
Colorado's Comments on This Summary:
We provided officials in the Colorado Governor's Recovery Office, as
well as other pertinent state officials, with a draft of this appendix
for comment. State officials agreed with this summary of Colorado's
recovery efforts to date. The officials provided technical comments,
which were incorporated into the appendix as appropriate.
GAO Contacts:
Robin M. Nazzaro, (202) 512-3841 or nazzaror@gao.gov.
Brian J. Lepore, (202) 512-4523 or leporeb@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Paul Begnaud, Steve Gaty,
Kathy Hale, Kay Harnish-Ladd, Susan Iott, Jennifer Leone, Tony Padilla,
Kathleen Richardson, Lesley Rinner, and Mary Welch made significant
contributions to this report.
[End of section]
Footnotes: Appendix III: Colorado:
[1] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed (Colorado), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: September
23, 2009).
[2] The apportioned funds include $18.6 million that was transferred
from FHWA to the Federal Transit Administration (FTA) for transit
projects in accordance with 23 U.S.C. § 104(k)(1). This leaves $385
million for highway projects in the state. FTA reported that the $18.6
million has been obligated
[3] The state‘s fiscal year runs from July to June and localities‘
fiscal years run from January to December.
[4] Two methods of distributing federal grant funds are by formula and
through competition. Congress can direct that funds be apportioned
among eligible recipients on the basis of a statutorily defined formula
or it can authorize federal agencies to award funding competitively.
[5] According to state budget documents, the state‘s fiscal year 2010
budget increases K-12 funding 5 percent from fiscal year 2009 spending.
According to a Colorado state legislative study, in 2000, Colorado
voters approved a measure to increase education spending in the state;
this amendment directed a portion of state tax revenues to the State
Education Fund through fiscal year 2011. The amendment requires an
annual increase in per-pupil funding and requires the state general
fund appropriation for state aid to schools to increase by 5 percent
per year, unless state personal income increased by less than 4.5
percent during the previous year.
[6] Colorado has received a statewide waiver for all LEAs to carry over
for obligation more than 15 percent of their total ESEA Title I, Part A
funds, including their ESEA Title I, Part A Recovery Act funds, until
September 30, 2011.
[7] In Colorado, special education programs are organized into 61
administrative units, which, according to Colorado officials, are
considered LEAs for the purposes of IDEA. Colorado also has five state-
operated programs that are considered LEAs under IDEA, including two
mental health institutes, two correction facilities, and one school for
the deaf and blind.
[8] To be eligible for the funding flexibility, an LEA must receive a
determination of ’Meets Requirements“ by the state, which is
established by meeting the measurable targets established in Colorado‘s
2005-2010 State Performance Plan. LEAs must spend the ’freed-up“ state
and local funds on activities that are authorized under ESEA.
[9] Schools that have missed academic achievement targets for 3
consecutive years must offer students public school choice or
supplemental education services, which are additional academic
services, such as tutoring or remediation, designed to increase the
academic achievement of students.
[10] An LEA is identified for improvement if it has missed academic
achievement targets for 2 consecutive years.
[11] GAO‘s survey asked LEAs about their use of SFSF funds. However,
because Colorado plans to use its full allocation of SFSF education
stabilization funds for higher education, the responses from LEAs
regarding SFSF are not applicable.
[12] Obligations refer to the federal government‘s commitment to pay
for the federal share of a project. An obligation occurs when the
federal government signs a project agreement. States request
reimbursement from FHWA as the state makes payments to contractors
working on approved projects.
[13] 42.U.S.C.§ 3161(a).
[14] FTA apportioned Transit Capital Assistance funds to Fort Collins
(the urbanized area). The funds were then made available for obligation
by transit agencies in the urbanized area, which includes the cities of
Fort Collins and Loveland.
[15] For the July report, we selected three housing agencies throughout
the state that received varying amounts of Recovery Act funds and were
of varying sizes; the Housing Authority of the City and County of
Denver is a large housing authority that received almost $7.8 million
in Recovery Act funds, whereas the Housing Authorities of Holyoke and
the Town of Kersey are very small housing authorities that each
received well under $100,000 in Recovery Act funds. We also selected
these housing agencies because one had already spent Recovery Act funds
at the time of our first visit while the other two had not.
[16] These funds include SFSF and the increased Federal Medical
Assistance Percentage (FMAP) for Medicaid, which Colorado used to pay
expenses related to its increased Medicaid caseload. According to state
officials, the most direct sources of Recovery Act funds in alleviating
the state's budget crisis are SFSF and the increased FMAP.
[17] We did not look at Recovery Act funds that went to separate
jurisdictions within the counties, such as school districts and transit
or housing agencies.
[18] Garfield County is not centrally tracking or reporting Recovery
Act funds, but compiled this data upon our request.
[19] State guidance instructed recipients not to delegate reporting
responsibilities to subrecipients.
[20] FTEs are calculated by dividing total hours worked in a period by
the number of total hours in a full-time schedule. This is done to
avoid overstating the number of less than full-time positions.
[21] Colorado's centralized reporting process uses indicators to
distinguish between reportable and non-reportable Recovery Act
transactions. To record Recovery Act transactions, state agencies use
an indicator to identify internal transfers of funds, which are not
reported under the act, and external transfers of funds, which are
reported under the act. Internal transfers generally occur among state
agencies, including IHEs, and external transfers refer to funds
provided to subrecipients, vendors, or state expenditures.
[22] Jobs reported to the House Committee on Transportation and
Infrastructure consist of worker counts and hours worked.
[End of Appendix III: Colorado:
Appendix IV: District of Columbia:
Overview:
The following summarizes GAO's work on the fourth of its bimonthly
reviews of the American Recovery and Reinvestment Act of 2009 (Recovery
Act)[Footnote 1] spending in the District of Columbia (District). The
full report on all of our work in 16 states and the District is
available at [hyperlink, http://www.gao.gov/recovery].
What We Did:
GAO's work in the District focused on specific programs funded under
the Recovery Act, as well as general issues involving the effect of
Recovery Act funds on the District's budget and the District's
readiness to report on the use and effect of these funds by program.
The programs we reviewed”three Recovery Act programs funded by the U.S.
Department of Education (Education), and the Weatherization Assistance
Program funded by the U.S. Department of Energy”were selected primarily
because they include existing programs receiving significant amounts of
Recovery Act funds or programs receiving significant increases in
funding from the Recovery Act. We also updated information on the use
of Highway Infrastructure Investment funds, and Public Housing Capital
funds. In addition, we reviewed contracting procedures and selected and
discussed with officials four contracts awarded with Recovery Act funds”
two for highway infrastructure projects, and two for public housing
projects”to examine how District agencies were implementing the
Recovery Act. Our work focused on the status of the program's funding,
how the funds were being used, and issues that were specific to each
program. We also reviewed the District's experience in meeting Recovery
Act reporting requirements concerning jobs created and sustained. For
descriptions and requirements of the programs we covered, see appendix
XVIII of GAO-10-232SP.
What We Found:
* U.S. Department of Education (Education) State Fiscal Stabilization
Fund: Education awarded the District about $65.3 million of the
District's total State Fiscal Stabilization Fund (SFSF) allocation of
about $89.3 million. As of November 6, 2009, the District had not
distributed any of these funds to local educational agencies (LEA)
* Title I, Part A, of the Elementary and Secondary Education Act of
1965 (ESEA), as amended: Education allocated about $37.6 million in
Recovery Act funds to the District to be used to help improve teaching,
learning, and academic achievement for disadvantaged students. As of
November 6, 2009, the District had not yet drawn down any of its ESEA
Title I Recovery Act funds.
* Individuals with Disabilities Education Act (IDEA), Part B: Education
allocated about $16.7 million to the District to be used to support
special education and related services for children with disabilities.
As of November 6, 2009, the District had not yet drawn down these
funds.
* Highway Infrastructure Investment Funds: The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned $124
million to the District in March 2009 for highway infrastructure and
other eligible projects. As of October 31, 2009, $106 million had been
obligated, and $3 million had been reimbursed by the federal
government. The District Department of Transportation (DDOT) is using
its apportioned funds for 13 "ready-to-go" projects to repave streets
and interstates, rehabilitate bridges, improve and replace sidewalks
and roadways, and expand the city's bike-share program. We selected two
contracts to discuss in greater depth with the relevant agency
contracting officials. One contract we reviewed was for the
construction portion of the "Great Streets" project, which includes
reconstruction and streetscape improvements of Pennsylvania Avenue, and
the other for construction and demolition of the New York Avenue
Bridge.[Footnote 2]
* Public Housing Capital Fund: The U.S. Department of Housing and Urban
Development (HUD) has allocated $27 million to the District of Columbia
Housing Authority (DCHA). DCHA plans to use Recovery Act funds on 20
projects to be performed at 13 different public housing developments.
The projects include the rehabilitation of nearly 2,000 housing units
and the installation of new energy-efficient projects at public housing
facilities. We selected two contracts to discuss in greater depth with
the relevant agency contracting officials. The first contract we
reviewed was for window replacement at the Regency House public housing
community, and the second contract we reviewed was for unit renovations
at the Horizon House public housing community.[Footnote 3]
* Weatherization Assistance Program: The U.S. Department of Energy
(DOE) allocated about $8 million in Recovery Act weatherization funds
to the District for a 3-year period. The District Department of the
Environment (DDOE), which is responsible for administering the program
for the District, has not yet obligated or spent the weatherization
funds. According to DDOE officials, they have been developing the
capacity and infrastructure to administer the program, such as hiring
new staff and adding three new community-based organizations to manage
the weatherization projects that are funded through the Recovery Act.
DDOE plans to use the funds to weatherize and improve the energy
efficiency of about 785 low-income families' homes and rental units.
* Recipient reporting: The District met the October 10, 2009, quarterly
Recovery Act recipient reporting deadline after modifying its approach
when the federal reporting Web site did not have the capability to
permit the District to submit data in a batch format. Officials within
the Office of the City Administrator took steps to help ensure the
quality and completeness of the recipient data, including reviewing the
data for reasonableness and potential inaccuracies, before allowing
District agencies to submit the reporting information. Overall,
District officials told us that the reporting process went smoothly,
and District agencies generally did not have issues with the report
submission process or submission deadline.
* The District's use of Recovery Act funds: While the infusion of
Recovery Act funds have helped mitigate the negative effects of the
recession on the District's budget, the District continues to face
fiscal challenges. As a result of deteriorating economic conditions and
a decrease in expected revenues, in June 2009 the District faced a
projected budget shortfall of $150 million for fiscal year 2010. The
District closed this budget shortfall using a combination of measures
including Recovery Act funds, reduced spending by District agencies,
and tax increases.
The District Has Yet to Disburse Any Recovery Act Education Funds
The U.S. Department of Education (Education) has allocated $143.6
million in Recovery Act funds to the District for three programs:
* State Fiscal Stabilization Fund (SFSF), which was created under the
Recovery Act, in part to help state and local governments stabilize
their budgets by minimizing budgetary cuts in education and other
essential government services;
* Title I, Part A, of the Elementary and Secondary Education Act of
1965 (ESEA), as amended, which provides funding to help educate
disadvantaged youth; and;
* Part B of the Individuals with Disabilities Education Act (IDEA), as
amended, which provides funding for special education and related
services for children with disabilities.[Footnote 4]
The District Has Not Distributed Any SFSF Funds:
The District's Office of the State Superintendent of Education (OSSE)
has not yet distributed SFSF funds to the District's 58 local
educational agencies (LEA) OSSE officials told us that the SFSF funds
had not been distributed because the District had amended its
application and was waiting for Education to approve the amendment
prior to distributing funds. As noted in our September 2009 report, the
District's SFSF application was modified to allocate a larger
percentage of SFSF funds to restore the District's fiscal year 2010
funding for elementary and secondary education to the fiscal year 2008
funding level. In addition, OSSE had not yet requested assurances from
the LEAs that SFSF funds would be used in accordance with federal
requirements. OSSE requires that LEAs submit such assurances before
LEAs obligate federal funds, including SFSF funds.
SFSF funds will be used to restore the District's primary elementary
and secondary funding to the fiscal year 2008 level, and will be
distributed across LEAs through the District's Uniform Per Student
Funding Formula. Currently, LEAs receive District funds periodically
throughout the year, and OSSE officials told us that LEAs will receive
SFSF funds in a similar manner. In addition, OSSE officials told us
that LEAs can use SFSF funds in the same manner that they use the
District's funds”provided that the uses are for purposes specified in
the Recovery Act LEAs do not report to OSSE on their use of the
District's funds; however, OSSE will require LEAs to report on their
use of SFSF funds through detailed workbooks delineating their
expenditures. OSSE officials told us that they plan to monitor the
LEAs' use of SFSF funds along with other Recovery Act funds, though
officials noted that they are still developing guidance related to
using and reporting the use of SFSF funds.
In general, LEAs have broad discretion in how they can use SFSF funds.
We contacted 3 of the District's 58 LEAs[Footnote 5] and found 2 of the
3 LEAs had preliminary plans for using the SFSF funds. Officials at one
LEA told us they plan to use the funds to cover the salaries and
benefits of approximately 475 educators; and an official at the other
LEA told us they plan to implement a character development and violence
prevention program for students in prekindergarten through eighth
grade, including purchasing program materials and providing staff
development courses. The third LEA, a public charter school, did not as
yet have specific plans for using SFSF funds. With regard to SFSF,
officials at the 3 LEAs we contacted told us that they required
additional guidance from OSSE on appropriate uses of the funds and
reporting on the impact of the funds.
The District Has Not Drawn Down Its ESEA Title I Recovery Act Funds:
Education allocated about $37.6 million in ESEA Title I Recovery Act
funds to the District; however, as of November 6, 2009, OSSE had not
yet drawn down any of these funds. According to OSSE officials, they
have not yet finished reviewing the LEAs' applications describing the
planned uses of the ESEA Title I Recovery Act funds, which OSSE must
approve before any of these funds can be drawn down. OSSE officials
told us it was necessary to provide the LEAs with more guidance on
completing the application and on how best to use these federal funds.
For example, OSSE officials told us that they were concerned that many
of the LEAs had proposed using the ESEA Title I Recovery Act funds to
pay salaries for positions that could extend after the Recovery Act
funds expire. OSSE officials told us that while they could encourage
the LEAs to use the funds differently, OSSE did not have the authority
to deny applications solely because they proposed using funds for
expenses that might continue after the Recovery Act funds expire. OSSE
officials told us that they will monitor the use of ESEA Title I funds,
including Recovery Act funds, beginning in December 2009 by visiting
each LEA at least one time in the next 2 years, and more frequently if
warranted. In addition, OSSE officials told us they plan to conduct
document reviews, including proof of actual expenditures submitted by
LEAs.
The three LEAs we contacted plan to use ESEA Title I Recovery Act funds
to improve student achievement. For example, two LEAs planned to use
the funds to purchase new software to compile and disseminate student-
level data, such as test scores and other performance measures,
allowing teachers to make informed data-driven decisions regarding
student progress. The third LEA planned to use the funds for a variety
of activities to improve student achievement, including expanding after-
school academic activities, Saturday classes, and programs to increase
math and reading levels. All three LEAs also planned to use some of
these funds to retain or hire a total of about 17 staff, including
instructors, technology specialists, and other support staff, to
improve student achievement.
Officials from the three LEAs we contacted told us that guidance for
ESEA Title I Recovery Act funds was generally adequate, although each
requested additional guidance in specific areas, including reporting
the impact of these funds and requesting waivers. Officials at all
three LEAs described OSSE as responsive and helpful in terms of
providing guidance.
The District Has Not Drawn Down Its IDEA Part B Recovery Act Funds:
The District was allocated $16.7 million in IDEA Part B Recovery Act
funds; however, as of November 6, 2009, OSSE had not yet drawn down any
of these funds.[Footnote 6] OSSE officials said that their distribution
of IDEA applications was delayed because they had sought additional
guidance from Education on how to characterize schools that had both
preschool and elementary grades for grant eligibility. According to
OSSE officials, they have not yet finished reviewing the LEAs'
applications describing how they planned to use the IDEA Recovery Act
funds, which OSSE must approve before these funds can be drawn down.
OSSE officials told us that it was necessary to provide the LEAs with
more guidance on completing applications to ensure that LEAs fully
understood both their programmatic and fiscal obligations. OSSE
officials told us that they also intend to monitor LEAs' use of IDEA
funds, including Recovery Act funds, to ensure funds are spent
appropriately, but they had yet to finalize the schedule and the
protocols.
Officials from the LEAs we contacted told us they planned to use IDEA
Recovery Act funds for jobs, services, and materials. For example, uses
of the IDEA Recovery Act funds include:
* hiring instructional and support staff;
* supporting a program for young children who could benefit from early
interventions, but had not been identified as having special needs;
* supporting programs for struggling students with emotional
disabilities;
* purchasing materials for listening centers, which help students with
disabilities improve their language development, including reading,
speaking, and listening skills;
* contracting certain resource services, such as physical and speech
therapists; and;
* improving data systems, which would help LEAs organize and track an
array of information about students with special needs.
The District Continues to Award Highway Contracts Using Existing
Contracting Procedures to Ensure Proper Use of Funds:
In March 2009, the District was apportioned $124 million in Recovery
Act funds for highway infrastructure and other eligible projects. As of
October 31, 2009, $106 million had been obligated, and $3 million had
been reimbursed by the Federal Highway Administration (FHWA).[Footnote
7] Figure 1 shows obligations by the types of road and bridge
improvements being made.
Figure 1: Highway Obligations for the District of Columbia by Project
Improvement Type as of October 31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (37 percent, $39.7 million):
Pavement improvement: reconstruction/rehabilitation ($31.6 million):
30%;
Pavement improvement: resurface ($5.2 million): 5%;
Pavement widening ($3 million): 3%.
Bridge projects total (29 percent, $31 million):
Bridge improvement ($31 million): 29%.
Other (33 percent, $35.3 million):
Other ($35.3 million): 33%.
Source: GAO analysis of Federal Highway Administration data.
Note: Totals may not add due to rounding. "Other" includes safety
projects, such as improving safety at railroad grade crossings, and
transportation enhancement projects, such as pedestrian and bicycle
facilities, engineering, and right-of-way purchases.
[End of figure]
Funds appropriated for highway infrastructure spending must be used as
required by the Recovery Act. States are required to ensure that all
apportioned Recovery Act funds”including suballocated funds”are
obligated within 1 year. The Secretary of Transportation is to withdraw
and redistribute to other states any amount that is not obligated
within these time frames.[Footnote 8] As of November 6, 2009, DDOT has
awarded contracts and issued task orders for 10 projects worth $84
million and advertised an additional 3 projects worth $8.1 million for
bid. According to DDOT officials, bids continue to come in lower than
DDOT's original estimated costs due to the poor state of the economy,
greater price competition among contractors, and falling prices for
materials. DDOT typically requests that FHWA deobligate excess funds
when bids for contracts come in lower than the original estimated
costs. Being able to award contracts for less than original estimated
costs has allowed DDOT to apply $9 million to other transportation
projects in the District. DDOT has received FHWA's approval to use
these funds for additional paving and sidewalk restoration work, and
DDOT is identifying more "ready-to-go" projects should further funds
become available.
We selected two contracts for ongoing projects to discuss in greater
depth with the relevant agency contracting officials. One contract we
reviewed was for the construction portion of the "Great Streets"
project, which includes reconstruction and streetscape improvements of
Pennsylvania Avenue. The contract has an award value of $25.2 million
and has a period of performance from October 15, 2009, to November 26,
2010. According to the DDOT grant manager, the contract was competed
and DDOT awarded the work using a fixed-price contract. Another
contract we reviewed was for the construction and demolition of the New
York Avenue Bridge, which is considered fracture-critical.[Footnote 9]
Work on this project will include rebuilding the bridge deck to include
a wider sidewalk and new lighting and installing new piers. The
contract has an award value of $24.9 million and has a period of
performance from October 31, 2009, to February 1, 2011. According to
the DDOT grant manager, this work was also awarded competitively as a
fixed-price contract.
DDOT's Chief Contracting Officer stated that no changes have been made
to the contracting or financial management processes specifically for
Recovery Act contracts because DDOT officials deemed its existing
processes suitable to track the use of funds. According to DDOT
officials, the agency has standard procedures for oversight on all
contracts. These procedures include having DDOT personnel or qualified
consultants retained by DDOT, or both, perform regular inspections on
each project, as well as monthly reports submitted by the contractor.
In addition, DDOT personnel or qualified consultants are on-site on a
daily basis checking on the project status and progress. They are
responsible for generating a daily report that describes the number of
tasks completed that day, workers present, and equipment used.
The District Continues to Award Public Housing Contracts Using Existing
Contracting Procedures to Ensure Proper Use of Funds:
The U.S. Department of Housing and Urban Development (HUD) has
allocated $27 million in Recovery Act funds to the District of Columbia
Housing Authority (DCHA). As of November 14, 2009, DCHA had obligated
about $12 million or about 44 percent of the $27 million it received in
capital grant funds, and drawn down about $3 million from DCHA's
Electronic Line of Credit Control System account with HUD.
As of November 14, 2009, DCHA has awarded 20 job orders for projects to
be performed at 13 different public housing developments. The projects
include the rehabilitation of nearly 2,000 housing units, the
installation of new energy-efficient equipment (such as solar-powered
irrigation, energy-efficient windows, and boiler upgrades), and public
space upgrades.
DCHA continues to use its existing contracting management procedures to
monitor and safeguard the use of Recovery Act funds. According to the
DCHA Contracting Officer, no changes have been made to contracting or
financial management processes specifically for Recovery Act contracts
because DCHA believes its existing processes are suitable to monitor
the use of the funds. In addition, according to DCHA officials, the
agency has standard procedures for oversight on all contracts. These
procedures include having DCHA contracting personnel perform regular
inspections on each project and contractors filing weekly progress
reports.
We selected two contracts for ongoing projects to discuss in greater
depth with the relevant agency contracting officials. One contract we
reviewed was for window replacement at the Regency House public housing
community. According to contract documentation and DCHA officials, the
fixed-price job order was placed on August 10, 2009, for an amount not
to exceed $750,000, for work including, but not limited to, removing
all existing windows and frames, providing and installing new windows,
installing new fiberglass panels over the existing panels, and
providing and installing new vertical blinds for all windows (see
figure 2). The period of performance for the job order is August 2009
to February 2010.
Figure 2: Window Replacement at the Regency Public Housing Community:
[Refer to PDF for image: 2 photographs, before and after]
Source: GAO.
[End of figure]
Another contract we reviewed was for unit renovations at the Horizon
House public housing community. According to contract documentation and
DCHA officials, the fixed-price job order was placed on August 17,
2009, for an amount not to exceed $2,613,868, for work including, but
not limited to, renovating kitchens and bathrooms, replacing flooring,
upgrading lighting and electrical equipment, and installing
audio/visual smoke detectors in each selected unit (see figure 3). The
period of performance for the job order is August 2009 to May 2010.
Figure 3: Kitchen Renovation at the Horizon House Public Housing
Community:
[Refer to PDF for image: 3 photographs, before, during, and after]
Source: District of Columbia Housing Authority and GAO.
[End of figure]
DCHA stated that it involves residents in the oversight of the projects
at their development throughout the life of the project. They are
invited to all DCHA monthly board meetings to discuss their thoughts on
the progress of the projects and quality of the contractor. DCHA also
hires residents as project monitors to oversee the daily progress of
the project and its effect on the quality of life for the residents in
that community.
The District Has Not Yet Expended Recovery Act Funds for the
Weatherization Assistance Program:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the U.S. Department of Energy (DOE) is
distributing to each of the states, the District, and seven territories
and Indian tribes, to be spent over a 3-year period. This program
enables low-income families to reduce their utility bills by making
long-term energy-efficiency improvements to their homes by, for
example, installing insulation or modernizing heating or air
conditioning equipment. DOE allocated about $8 million in Recovery Act
funds to the District for the weatherization program for a 3-year
period.[Footnote 10] The District Department of the Environment (DDOE)
is responsible for administering the program for the District. As of
October 7, 2009, DDOE had received the final 50 percent of its total
allocation of Recovery Act weatherization funding.[Footnote 11] DDOE
plans to spend about $6.5 million to weatherize approximately 785 homes
over 3 years. The remaining $1.5 million will be used for salaries and
other administrative expenses, such as training and technical
assistance.
As of November 15, 2009, DDOE has not obligated or expended the
weatherization funds. DDOE officials explained that weatherization
funds have not yet been spent because they have been developing the
infrastructure to administer the program. For example, DDOE is in the
process of hiring six new staff members to oversee and manage the
program. According to DDOE officials, they had hoped to hire these new
staff members sooner, but there were delays in posting the job
announcements. In addition, DDOE has added three new community-based
organizations (CBO)-”for a total of seven”-to manage the weatherization
projects that are funded through the Recovery Act. DDOE selected these
three additional CBOs based on certain criteria, such as the CBOs'
experience and performance in weatherization work, as well as their
experience in assisting low-income persons. The CBOs are responsible
for hiring and monitoring the local contractors that weatherize homes.
According to DDOE officials, each CBO will receive about
$935,000 in Recovery Act funds for weatherization activities. On
November 17, 2009, DDOE provided the CBOs and their contractors with
training and information regarding the administration of the
weatherization program, including the requirements associated with
Recovery Act funding. Because Recovery Act weatherization funds have
not yet been expended, the impact of these funds on job creation or
energy savings cannot be measured at this time.
DDOE and the CBOs have a number of internal control procedures in place
or planned to monitor the weatherization program. To ensure quality
weatherization work is being performed by the contractors, currently
DDOE auditors randomly inspect 30 percent of the weatherized homes,
which exceeds the DOE requirement of inspecting 10 percent of the
homes. For the new CBOs, DDOE officials told us they anticipate
inspecting between 60 and 70 percent of weatherized homes. DDOE
officials also told us they intend to perform annual monitoring
inspections at each of the CBOs, which involve file reviews of records
and payments. In addition to DDOE's oversight of the program, the CBOs
plan to monitor the performance of contractors by conducting spot
checks or surprise visits to the work site, as well as performing
postinstallation inspections on 100 percent of weatherization projects.
According to officials from one CBO, they have multiple entities that
conduct inspections of the weatherized homes, including a third-party
audit agency and an internal quality assurance unit. Officials from one
CBO we met with said that it will use its own employees for
weatherization projects, and that each employee will be trained at an
in-house weatherization training center. DDOE officials said they have
not identified problems with the internal control processes for any of
the CBOs.
Officials from DDOE and CBOs expressed some concerns about Davis-Bacon
Act requirements, citing the potential effect of wage and payroll
requirements on their administrative costs. For example, DDOE officials
stated that although Recovery Act wage rates are similar to the
previous wage rates, understanding and ensuring compliance with the
wage rate requirements would create more work for both DDOE and the
CBOs.
The District Was Able to Meet the Recipient Reporting Deadline, but Had
to Modify Its Planned Approach:
The District met the October 2009 quarterly Recovery Act recipient
reporting deadline after modifying its approach when the federal
reporting Web site did not have the capability to permit the District
to submit data in a batch format. In our September report, we noted
that the District planned to centrally report data for all District
agencies receiving Recovery Act funds to address recipient reporting
requirements, and had developed a centralized Web-based system to
collect all required data. The intent of this Web site
(reporting.dc.gov) was to allow officials in the District's Office of
the City Administrator (OCA) to review the aggregate data for accuracy
and completeness and to have OCA submit the data directly into the
federal recipient reporting Web site. However, OCA officials modified
their planned reporting approach when they learned”several months
before the reporting deadline”that the federal reporting Web site did
not have the capability to receive the District's preferred process of
batch data submissions. Instead, District agencies individually
submitted recipient reporting information to the federal reporting Web
site. The files for individual agency submissions were generated by
reporting.dc.gov based on the information entered into the District's
reporting system. OCA officials told us that it would help simplify
their reporting process if the federal reporting Web site could
accommodate the District's batch data submission process”submitting one
consolidated file for all District agencies”for future rounds of
recipient reporting.
Overall, the District's reporting process went smoothly, according to
OCA officials. These officials stated that the trial run of the
District's reporting Web site during September 2009 was a key factor in
successfully submitting recipient reporting data by the October 10,
2009, reporting deadline, because it allowed OCA officials and District
agencies to address issues, revise data, and finalize reports before
submitting data to the federal reporting Web site. To help ensure data
quality, OCA officials performed a high-level review of the data for
reasonableness and potential inaccuracies, and validated data before
allowing District agencies to submit the reporting information.
According to OCA officials, most of the errors found during their
internal review and validation process were minor, such as the letter
"0" recorded for the number zero, an agency misreporting a grant title,
or an agency clarifying a job description reported.
Figure 4: Flow of the District's Recipient Reporting Data:
[Refer to PDF for image: illustration]
Office of the City Administrator:
Conducts quality review and validates data;
District agencies:
Review and input recipient reporting data;
District reporting Web site: reporting.dc.gov;
District agencies:
District agencies download validated data; Submit validated data to:
Federal reporting Web site: federalreporting.gov., which generates e-
mails indicating successful data submission;
District agencies:
Forward e-mails documenting successful data submission to:
Office of the City Administrator:
Source: GAO analysis based on information provided by the Office of the
City Administrator.
[End of figure]
Although the District and its agencies generally did not have issues
with the report submission process or submission deadline, some
agencies encountered data errors in their submissions. For example,
during the period set aside for the federal review of the data
submitted (October 2130, 2009) the U.S. Department of Transportation
notified the District Department of Transportation (DDOT) that DDOT
reported an inaccurate jobs count. Specifically, DDOT had reported
expenditures of $37,717 for an engineering project, but there were no
associated job-creation data reported. A DDOT official responsible for
reporting this information explained that the expenditures were used
for in-house contract administration costs, which he thought were not
subject to recipient reporting requirements. DDOT officials stated that
the agency corrected the report once the discrepancy was brought to its
attention.
OCA officials were generally satisfied with the District's first
quarter of reporting and are discussing possible improvements to their
reporting process for future reports. For example, officials plan to
add data fields to the District's reporting Web site to collect
information that would be useful to the District, such as whether a
Recovery Act grant was competitively awarded. In addition, officials
stated they want to use the District's Recovery Act reporting Web site
and reporting process as a system to collect and manage all of the
District's federal grants.
Recovery Act Funds Continue to Help the District Address Fiscal
Challenges:
While the infusion of Recovery Act funds have helped mitigate the
negative effects of the recession on the District's budget, the
District continues to face fiscal challenges. As we previously
reported, in June 2009 the District's Chief Financial Officer
identified a projected revenue shortfall of $150 million for fiscal
year 2010, as a result of deteriorating economic conditions and a
decrease in expected revenues.[Footnote 12] The District's amended
fiscal year 2010 budget”sent to Congress for approval on September 23,
2009”addressed the revenue shortfalls and balanced the District's
budget. Specifically, the District addressed its $150 million budget
shortfall through a combination of reduced spending by District
agencies, using $36 million in Recovery Act State Fiscal Stabilization
Fund (SFSF) funds in fiscal year 2010, using funds from the District's
general fund, and generating revenue through tax increases.
According to the District's Chief of Budget Execution, overall, the
District eliminated approximately 1,850 positions across the District's
government”about 460 vacant positions and 1,390 filled positions
eliminated through attrition, retirement, and reductions-in-force”to
help balance the fiscal year 2010 budget. The official told us that
originally the District planned on eliminating about 1,600 positions;
however, the District eliminated an additional 250 positions after the
$150 million revenue shortfall was identified. In addition to the 1,850
positions eliminated, on October 2, 2009, the Chancellor of the
District of Columbia Public Schools (DCPS) announced that DCPS laid off
388 school employees, citing a funding shortfall in the District's 2010
education budget for DCPS. The District's Chief of Budget Execution
noted that without the Recovery Act funds, job cuts throughout District
agencies would have been much larger. For example, SFSF funds stemmed
the loss of jobs in DCPS, and without the availability of about $39
million in SFSF funds for DCPS for fiscal year 2010 under the Recovery
Act, the District may have had to cut additional positions from DCPS,
according to the Chief of Budget Execution.
In September 2009, the District's Chief Financial Officer reported that
revenue estimates for fiscal year 2009 through fiscal year 2013 had not
changed since the June 2009 quarterly revenue estimates. According to
the Chief of Budget Execution, these revenue projections are contingent
upon economic conditions staying relatively constant. However, this
official noted that if economic conditions in the District worsen and
revenue estimates decrease, the District may need to take further
actions to close any projected budget shortfall.
The District has developed a strategy to prepare for when Recovery Act
funds are phased out because the District is required by law to prepare
an annual balanced budget and multiyear plan. As a result, District
officials have accounted for the future decrease in Recovery Act funds
in planning budgets for fiscal years 2011 to 2013. In addition, the
Chief of Budget Execution told us that all District agencies have been
instructed to decrease their expenditures for fiscal year 2011 to
facilitate balancing the District's budget. This official said that
specific percentage reductions will be determined by District agencies
on a case-by-case basis, with a maximum reduction of 10 percent.
District Comments on This Summary:
We provided the Office of the Mayor of the District, and the District
agencies for the programs we examined, with a draft of this summary on
November 18, 2009. On November 20 and 23, 2009, the Office of the Mayor
and the District agencies provided technical comments, which we have
incorporated where appropriate.
GAO Contact:
William 0. Jenkins, Jr., (202) 512-8757 or jenkinswo@gao.gov.
Staff Acknowledgments:
In addition to the contact named above, John Hansen, Assistant
Director; Adam Hoffman, analyst-in-charge; Laurel Beedon; Sunny Chang;
Marisol Cruz; Nagla'a El-Hodiri; Mattias Fenton; LaToya King; and Linda
Miller made major contributions to this report.
[End of section]
Footnotes: Appendix IV: District of Columbia:
[1] Pub. L. No. 111-5, 123 Stat. 115 (2009).
[2] We selected these contracts managed by DDOT for review because they
were the largest dollar contracts that had been awarded as of October
8, 2009.
[3] We selected one contract managed by DCHA because it was for a new
and higher dollar value project in a housing complex GAO visited for a
prior Recovery Act report, and the other because it was the largest
dollar contract awarded as of October 19, 2009.
[4] GAO surveyed a representative sample of local educational agencies
(LEA) nationally and in the District about their use of Recovery Act
funds for three education programs: SFSF, ESEA Title I, and IDEA Part
B. The response rate for the LEAs in the District was too low for GAO
to generalize the results of the survey to the District. Accordingly,
the District's survey responses are not discussed in this appendix.
[5] The three LEAs included the District of Columbia Public Schools
(DCPS)”the District's largest LEA representing about 65 percent of
District students”and two public charter schools that each constitute
their own LEA. To determine which LEAs to contact, we selected the two
largest LEAs in the District and one LEA that included all grade levels
and used DCPS as its LEA for IDEA.
[6] As we reported in September 2009, Education planned to withhold
$500,000 in IDEA funding from OSSE because of past incidents of grant
mismanagement. As of November 3, 2009, OSSE officials told us that they
were in the process of negotiating a settlement on this matter with
Education that they hoped would resolve the issue, and also had a
scheduled hearing to present their appeal.
[7] States request reimbursement from FHWA as the state makes payments
to contractors working on approved projects.
[8] Pub. L. No. 111-5, 123 Stat. 115, 209 (Feb. 17, 2009).
[9] Fracture-critical bridges are bridges that contain elements whose
failure would be expected to result in the collapse of the bridge.
[10] On September 22, 2009, DOE obligated all the funds allocated to
the states and the District, but it has limited the states' and the
Districts' access to 50 percent of these funds. DOE currently plans to
make the remaining funds available to the states and the District once
30 percent of the housing units identified in the state plans are
weatherized.
[11] DDOE was provided 10 percent of Recovery Act funding on March 30,
2009, and an additional 40 percent on June 18, 2009.
[12] The District's fiscal year begins on October 1 and ends on
September 30. Each February the Office of the Chief Financial Officer
issues a revenue estimate that is used to develop the budget for the
next fiscal year. The estimate is revised as the new fiscal year begins
and at regular intervals afterward.
[End of Appendix IV: District of Columbia]
Appendix V: Florida:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Florida.[Footnote 1] The full report on our work in 16
states and the District of Columbia is available at [hyperlink,
http://www.gao.gov/recovery].
What We Did:
Our work in Florida focused on specific programs funded under the
Recovery Act: the Highway Infrastructure Investment Program; the State
Fiscal Stabilization Fund (SFSF); Title I, Part A of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended; and the Individuals
with Disabilities Education Act (IDEA), as amended. We looked at the
status of program funding, how funds are being used, and other issues
specific to each program.
For our review of highway investment, we selected two Florida
Department of Transportation (FDOT) districts”one in northeast Florida
(District 2) and another in central Florida (District 5)”to understand
the pace of contract awards for local highway projects. We selected
these districts because they varied in terms of having projects
administered mainly either by FDOT or local agencies. To gain an
understanding of the state's experience in meeting Recovery Act
recipient reporting requirements, we examined documents prepared by,
and held discussions with, officials in FDOT, the Florida Office of
Economic Recovery, and the office of Florida's Chief Inspector General.
We specifically focused our work on FDOT's methodology for collecting
data on job creation and retention, and on FDOT's experience in
preparing the first quarterly report due to federalreporting.gov and
submitted by October 10, 2009. We also examined recipient reporting,
use of Recovery Act funds in local government budget stabilization in
southwest Florida, and contract management practices. We visited one
city, Fort Myers (population 65,394), and one county, Lee (population
593,136), to determine the amount of Recovery Act funds each is
receiving and how those funds are being used. We selected these local
governments because they have high unemployment and foreclosure rates
relative to the state average. In September 2009, unemployment in Fort
Myers and Lee County was 12.1 percent and 13.9 percent, respectively”
higher than Florida's average rate of 11.2 percent and the United
States' rate of 9.8 percent for that period.[Footnote 2]
To review education programs, we gathered information on Florida's plan
to monitor the use of SFSF allocations by local educational agencies
(LEAs) and to seek waivers on ESEA Title I, Part A funds, which are
made available for programs for disadvantaged students. In addition, we
briefed state officials and obtained their comments on the results of
GAO's nationwide survey of LEAs and on the Florida results
specifically. We also talked to the Inspectors General of several
Florida agencies about their oversight role for Recovery Act funds. For
descriptions and requirements of the programs we covered, see appendix
XVIII of GAO-10-232SP.
What We Found:
* Highway Infrastructure Investment. The pace of awarding contracts is
generally lower in FDOT districts with large numbers of projects
suballocated for metropolitan and local use in conjunction with
projects administered by local agencies rather than by the state,
according to FDOT officials. FDOT officials said projects managed by
local agencies may face delays because additional time is required to
educate local agencies on federal requirements and for project
coordination and required reviews and approvals by FDOT. In addition,
statewide, FDOT has identified excess funds of about $202 million as
the result of construction contracts awarded for less than the official
project estimate, according to FDOT officials. The excess funds can be
used to fund other highway projects. FDOT officials said they plan to
seek Federal Highway Administration (FHWA) approval for obligating the
funds by December 31, 2009.
* Contract management and oversight. According to FDOT officials, FDOT
uses its standard procedures and processes to award and manage Recovery
Act-funded highway construction projects. FDOT's Inspector General said
the office's recent audits related to contract management and
oversight, such as single source[Footnote 3] and limited competition
contracts,[Footnote 4] incentive payment analysis, and contract
estimating, have not identified weaknesses that would affect FDOT's
ability to award and manage contracts.
* Recipient reporting. According to state officials, Florida state
agencies experienced no significant issues collecting and reporting
recipient information for the first required quarterly report due
October 10, 2009. At FDOT”the one agency at which we examined reporting
in greater detail”officials said there were no significant problems.
Florida has a centralized system into which all 17 pertinent state
agencies report Recovery Act data. The state developed and tested the
system well in advance of reporting deadlines. Agencies took steps to
validate data, such as recipient name, address, number of
subrecipients/vendors, and Recovery Act funds received and expended.
However, for one agency we looked at, FDOT, subrecipients and vendors
were not required to submit verification of their job data, but were
advised to maintain documentation, according to FDOT officials. For two
subrecipients we visited, both kept documentation of tabulated hours
and wages associated with Recovery Act projects for regular employees,
but only one did so for management employees. The Florida state
Recovery Czar expressed concerns that the federal Office of Management
and Budget (OMB) methodology for calculating jobs created and retained
will underestimate the numbers, and that guidance provided to state
agencies by various federal agencies may differ with that of OMB.
* Local governments' use of Recovery Act funds. Officials from Lee
County and, to a lesser extent, the City of Fort Myers, said they
anticipate using available Recovery Act funds primarily to expand
existing services or fund new initiatives on a nonrecurring basis.
Recovery Act funding contributed only a small amount to the county's
and city's budgets. As of November 18, 2009, the county had been
awarded $16.3 million and the city $4.5 million for use over multiple
years, a small amount of a single fiscal year (2010) operating budget
of about $1 billion county and $241 million city. Lee County and Fort
Myers have largely used their own financial reserves rather than
Recovery Act funds to stabilize their annual budgets because, according
to local officials, the type of funding available to fill budget gaps
does not meet their greatest needs and certain grants require local
governments to use their own funds when the grant period expires.
* Education funding and monitoring. Florida LEAs largely used Recovery
Act funding to retain teachers and staff. An estimated 86 percent of
Florida LEAs are planning to use over half of their SFSF funding to
retain staff compared with an estimated 63 percent of LEAs nationally.
A senior Florida official reported that the state successfully
implemented a three-part monitoring plan for the largest portion of
Recovery Act education funding, the SFSF; however, officials said the
monitoring requirements doubled staff workload. State education
officials also said they applied for ESEA Title I, Part A waivers to
provide more flexibility for LEAs on how they spend Recovery Act funds
to improve education.
* Florida Inspector General oversight. The Inspectors General (IG)
community in Florida continues to play a prominent role in providing
oversight for Recovery Act expenditures and reporting, and guidance.
The community has targeted specific areas of emphasis for different
groups of IGs, including fraud deterrence and data quality.
Volume of Projects and Local Administration May Affect Pace of Local
Highway Contract Awards; Overall, Officials Plan to Use Excess Funds
from Contracts Coming in Under Estimate:
As we reported in September 2009, $1.35 billion in Recovery Act funds
were apportioned to Florida for highway infrastructure and other
eligible projects. Of this amount, $404 million”or 30 percent”was
suballocated for metropolitan and local use while approximately $943
million remained available for use in any area of the state (statewide
projects). As of October 31, 2009, 77 percent (or about $1 billion) has
been obligated for highway projects. Specifically, $707.3 million has
been obligated for statewide projects and $12.7 million has been
reimbursed by FHWA.[Footnote 5] The remaining $330.9 million has been
obligated for local projects; $4.5 million has been reimbursed by FHWA.
Compared to the national average of 18.4 percent, the overall rate of
reimbursement in Florida (1.7 percent) is among the lowest in the
nation.[Footnote 6] The state has until March 2, 2010 to obligate all
apportioned highway funds.
Project Volume and Administration May Affect Pace of Contract Awards:
The $330.9 million obligated for projects in metropolitan and local
areas in Florida represents 82 percent of the $404 million suballocated
for this purpose. Also, the number of contracts awarded using Recovery
Act funds obligated for this purpose has increased since September 1,
2009. As of October 28, 2009, 149 of 395 planned projects were awarded
construction contracts compared to 5 contracts when we last reported in
September, according to officials.
According to FDOT officials, the award of contracts is generally lower
in FDOT districts with large numbers of local projects in conjunction
with projects administered by local agencies.[Footnote 7] The state had
the option of administering Recovery Act projects with funds
suballocated for metropolitan and local use or giving that authority to
local qualified agencies, such as towns, cities, and counties, through
the local agency program (LAP) according to these officials.
To better understand the pace of contract awards for local projects, we
reviewed two FDOT districts, which varied in their approach to
administering projects: District 2 in northeast Florida and District 5
in central Florida (see table 1).
Table 1: Number of Suballocated Projects and Type of Administration for
Districts 2 and 5:
District 2:
Number of projects: 40;
Percent administered by locality: 40%;
Percent administered by FDOT: 60%.
District 5:
Number of projects: 81;
Percent administered by locality: 99%;
Percent administered by FDOT: 1%.
Source: FDOT data.
Note: According to FDOT, the total amount obligated by the FHWA for the
40 projects in District 2 is $39,165,034 and $77,884,817 for the 81
projects in District 5.
[End of table]
The relationship between volume of contracts, administering party, and
pace of contracting in these two districts reflects the pattern
observed by FDOT officials in Florida overall. As of October 27, 2009,
District 2 had awarded about 78 percent of its Recovery Act-funded
contracts and District 5 had awarded about 15 percent (see table 2).
Table 2: Status of Construction Contracts for Local Highway Projects in
FDOT Districts 2 and 5 as of October 27, 2009:
FDOT District: District 2;
Administering party: Local:
Total number of projects: 16;
Construction contracts awarded: 8;
FDOT District: District 2;
Administering party: State:
Total number of projects: 24;
Construction contracts awarded: 23;
Total awarded: 31 (78%).
Status of work performance:
FDOT District: District 2;
Administering party: Local:
Completed: 0;
Begun but not completed: 7;
Not begun: 1.
FDOT District: District 2;
Administering party: State:
Completed: 3;
Begun but not completed: 7;
Not begun: 13.
Status of planned contracts:
FDOT District: District 2;
Administering party: Local:
Construction contracts out for bid: 4;
Construction contract solicitation waiting on bids: 4.
FDOT District: District 2;
Administering party: State:
Construction contracts out for bid: 1;
Construction contract solicitation waiting on bids: 0.
FDOT District: District 5;
Administering party: Local:
Total number of projects: 80;
Construction contracts awarded: 12;
FDOT District: District 5;
Administering party: State:
Total number of projects: 1;
Construction contracts awarded: 0;
Total awarded: 12 (15%).
Status of work performance:
FDOT District: District 5;
Administering party: Local:
Completed: 0;
Begun but not completed: 0;
Not begun: 12.
FDOT District: District 5;
Administering party: State:
Completed: 0;
Begun but not completed: 0;
Not begun: 0.
Status of planned contracts:
FDOT District: District 5;
Administering party: Local:
Construction contracts out for bid: 33;
Construction contract solicitation waiting on bids: 35.
FDOT District: District 5;
Administering party: State:
Construction contracts out for bid: 1;
Construction contract solicitation waiting on bids: 0.
Source: GAO analysis of FDOT data through October 27, 2009.
Note: According to FDOT officials, multiple contracts may be associated
with a project; however, each project in District 2 and 5 has only one
contract associated with it.
[End of table]
Other districts with high numbers of locally administered projects as
in District 5 are experiencing delays in awarding contracts, according
to FDOT officials.[Footnote 8[ FDOT officials offered the following
reasons for why locally administered projects take more time to award
contracts: (1) when local agencies administer a project, the agencies
must coordinate with FDOT and obtain state-level reviews and approval;
(2) some local agencies may have little experience with federally
funded projects; and (3) Recovery Act funding comes with multiple
requirements, and some localities are more prepared than others to meet
the requirements and manage a local project because they have previous
experience with federally funded projects. FDOT certifies a local
agency to administer a project”designing Recovery Act-funded projects,
advertising bid solicitations, and administering contract awards”when
the agency can demonstrate it has sufficient staff and resources to
meet all applicable state and federal requirements, according to the
FDOT LAP manual. According to an official in District 2, local agencies
with previous LAP experience were utilized to administer local
projects. In District 5, the approach was to distribute Recovery Act
funds throughout the district, according to officials. Some FDOT
officials said the time involved in the certification process may
affect the pace of projects. For example, in District 5, nine
localities were certified for the first time and several others had to
be re-certified, according to officials. Each district has been working
with local agencies, providing training and workshops on LAP
certification and federal requirements, according to FDOT officials.
Officials at local agencies we spoke with said the FDOT guidance and
technical assistance were useful.
Florida Plans to Request FHWA to Obligate Excess Funds Resulting from
Contracts Being Awarded for Less than Project Estimates FDOT has
identified excess funds of about $202 million as the result of
construction contracts being awarded for less than the official project
estimate, which could be used to fund other highway projects, according
to FDOT officials. Overall, as of October 28, 2009, FDOT awarded a
total of 194 highway construction contracts with a total value of $676
million, which was 32 percent less than project estimates. FDOT
officials stated that FHWA has been asked to deobligate $2 million of
that amount and obligate it for five new local projects meeting
Recovery Act criteria. For the remaining $200 million, an FDOT official
said FDOT is seeking state and federal approval to deobligate and then
obligate the funding for 12 new state projects. Moreover, 11 of the 12
projects will be obligated by November 30, 2009, and the remaining
project by December 31, 2009, according to the same official.
Florida Uses Existing Procedures and Processes for Awarding and
Managing Recovery Act-Funded Highway Projects:
FDOT uses its existing standard procedures and processes to award and
manage Recovery Act-funded highway construction projects. Specifically,
FDOT officials said that FDOT has processes for requiring that
contracts be linked to Recovery Act objectives, using prequalified
contractors and awarding fixed-price contracts on a competitive basis.
[Footnote 9] State officials said:
* projects were selected with transportation partners at the local
level, including cities, counties, and metropolitan planning
organizations with Recovery Act objectives in mind, and that these
objectives were communicated to prospective bidders;
* prospective bidders were prequalified based on factors such as
experience, performance records, and debarment or suspension by FHWA,
State of Florida, or FDOT from receiving contract awards; and;
* some projects were awarded to the lowest technically responsive
prequalified bidder and some were awarded based on an adjusted score
method, although the winning bid may not necessarily have been the
lowest bid, according to FDOT officials.[Footnote 10]
Figure 1 shows the multiple highway construction management positions
and functions that are assigned to oversee and ensure project quality
and performance.
Figure 1: Oversight of Florida's Highway Construction Contracts:
[Refer to PDF for image: illustration]
Federal Highway Administration: Review and approve project plans,
specifications and cost estimates on jobs with Federal Aid Full
Oversight.
Resident Construction Engineer (FDOT Personnel): Administers FDOT
construction contracts in assigned region.
Construction Project Administrator/Manager (PA) (FDOT Personnel):
Ensures Prime Contractor meets materials and workmanship requirements
and manages payment of the Prime Contractor*;
*Some jobs contract with a Consultant Construction, Engineering and
Inspection (CEI) Project Administrator to oversee the prime contractor.
Design Engineer (FDOT Personnel): Helps PA resolve design issues.
Materials Testing Project Manager (FDOT Personnel): Oversees and pays
verification testing consultants.
District Compliance Office (FDOT Personnel): Monitors project for
violations of workplace law.
Consultant CEI Project Administrator: Ensures Prime Contractor meets
materials and workmanship requirements, manages payment of the Prime
Contractor, and coordinates with key FDOT personnel.
Prime Contractor: Completes awarded contract in substantial compliance
with all plans, specifications, and other contract documents.
Quality Control Testing Laboratory: Provides quality control sampling
and testing.
Construction Sub-contractor: Performs construction work under contract
with prime contractor.
Source: FDOT.
Note: FDOT officials said that FHWA full oversight contracts receive
the same level of FDOT scrutiny and oversight as other projects
performed by FDOT staff, but the FHWA Division Office personnel will
review and approve project designs; approve plans, specifications, and
estimates; concur on award selection; approve contracts; and conduct
project inspections.
[End of figure]
FDOT's Inspector General said that his office's recent audits related
to contract management, such as single source and limited competition
contracts, incentive payment analysis, and contract estimating, have
not identified weaknesses that would affect FDOT's ability to award and
manage contracts.
Florida Met Recipient Reporting Deadlines without Significant Problems,
but Expressed Concerns about Federal Methodologies Understating Jobs
Created and Retained:
According to Florida officials there were no significant issues
collecting and reporting the information required under section 1512 of
the Recovery Act[Footnote 11] by the October 10, 2009 reporting
deadline, although it required great effort and diligence.[Footnote 12]
Florida has a centralized system into which all 17 state agencies
report, then the information is uploaded to the federal system,
FederalReporting.gov. Florida developed and tested its centralized
system well in advance of the reporting deadline. In addition, to
ensure the accuracy and completeness of the data, state officials
developed a checklist for use by the state agencies.
Agencies took a range of steps to review data quality.[Footnote 13]
According to state officials, most of the validation for such data as
recipient name, address, and DUNS number[Footnote 14] was done using
source material, for example, original grant agreements or Internet
sources. Most of the 17 agencies were able to perform 100 percent
validation of recipient names and addresses. For verifying jobs created
and retained as reported by subrecipients, the methodologies used by
the agencies' inspectors general covered a broad spectrum, from tracing
the information reported back to source documents, to performing
reasonableness checks of the reported numbers, to simply tracing the
numbers from subrecipients' reports to the state's centralized
reporting system. In addition to the reviews conducted by the agencies,
content experts from the Governor's Office of Policy and Budget (OPB)
reviewed agencies' submissions to the state, according to Florida's
Recovery Czar. The choices made at both the agencies and OPB about how
to conduct reviews were based on the number of staff and amount of time
available in relation to the amount of data required to be reported.
Florida's Chief Inspector General released a report providing a
synopsis of steps taken by agencies to help ensure data quality. In
addition, the Recovery Czar's office, along with the state's IG
community, plans to meet to discuss lessons learned from the first
round of reporting, officials said.
To better understand how reporting worked we focused on FDOT, which has
a large volume of Recovery Act awards, according to Florida officials.
[Footnote 15] FDOT has reporting requirements under both sections 1512
(recipient reporting) and 1201(c) of the Recovery Act.[Footnote 16]
According to Florida officials, although the state had a system in
place for section 1201(c) reporting, officials decided to develop two
additional systems for recipient reporting. One system was created to
assist state agencies in reporting information to the Florida state
Recovery Czar, and a second system to allow subrecipients and vendors
to enter total number of employees, employee hours, and payroll for
Recovery Act-funded FDOT projects.[Footnote 17] FDOT officials said
they provided training and guidance to subrecipients, and conducted
town hall meetings on reporting requirements and processes.
Subrecipients we spoke with told us the employment reporting system was
user-friendly and they did not experience any significant challenges
with collecting and reporting required Recovery Act information.
FDOT officials said they took steps to ensure the quality of data in
recipient reports, such as comparing data to previously submitted
information to find anomalies, omissions, or variances. However,
according to FDOT, subrecipients and vendors were not required to
submit verification of their job data. Instead, according to FDOT
officials, they advised subrecipients and vendors to maintain
documentation in the event that auditors or other officials asked to
view job data, but said they did not specify the nature of the
documentation to be maintained. We found the extent of such
documentation varied for the two subrecipients we visited. For example,
both subrecipients kept documentation of tabulated hours and wages
associated with Recovery Act projects for regular employees, but only
one did so for management employees.[Footnote 18]
Although Florida met recipient reporting deadlines, the Florida state
Recovery Czar expressed concerns that OMB's methodology for using full-
time equivalents (FIT) to calculate jobs created or retained will
understate the actual number of jobs created.[Footnote 19] In addition,
the Florida state Recovery Czar told us that individual federal
agencies distributed guidance with their own interpretation of OMB's
calculation of jobs created or retained to their Florida counterparts
and believes state agencies may have used different variations of the
calculation to report jobs.[Footnote 20] Furthermore, the Florida state
Recovery Czar raised concerns that the federal recovery Web site will
make it appear as if the majority of Recovery Act funds coming to
Florida is being allocated to projects in Tallahassee because there is
no mechanism for recognizing their dispersal through Tallahassee. The
Florida state Recovery Czar said the federal Recovery Accountability
and Transparency Board is aware of this concern.
Lee County and Fort Myers Are Primarily Using Available Recovery Act
Funding for Nonrecurring Expenses:
Officials from Lee County and, to a lesser extent, the City of Fort
Myers, said they anticipate using available Recovery Act funds
primarily to expand existing services or fund new initiatives on a
nonrecurring basis. Recovery Act funding contributed only a small
amount to the county's and city's overall budgets: As of November 18,
2009, the county had been awarded $16.3 million and the city $4.5
million in Recovery Act funds for use over multiple years, a fraction
of even a single fiscal year (2010) operating budget of about $1
billion county and $241 million city. (See table 3.)
Table 3: Recovery Act Funding Reported by Lee County and Fort Myers
Government Officials:
Program area: Highways[A];
Lee County project or federal award: Five road improvement projects,
including turn lanes and paved shoulders; Total: $2.5 million in fiscal
year 2010;
Fort Myers project or federal award: Two road improvement projects to
install culverts; Total: $0.8 million in fiscal year 2010[B].
Program area: Human services and housing;
Lee County project or federal award: Community Development Block Grant
($0.6 million), Homeless Prevention ($0.9 million), Community Service
Block Grant ($0.5 million); Total: $2 million over 3 years;
Fort Myers project or federal award: Community Development Block Grant;
Total: $0.2 million over 3.6 years.
Program area: Transit;
Lee County project or federal award: Buses and bus shelters; Total:
$7.5 million over 3 to 5 years;
Fort Myers project or federal award: Not applicable.
Program area: Energy efficiency;
Lee County project or federal award: Energy Efficiency and Conservation
Block Grant, including a biodiesel plant; ($3 million over 3 years);
Weatherization Assistance ($1.3 million); Total: $4.3 million over 3
years;
Fort Myers project or federal award: Energy Efficiency and Conservation
Block Grant, including installation of a solar power generator, among
other projects; Total: $0.75 million.
Program area: Public safety;
Lee County project or federal award: Not applicable;
Fort Myers project or federal award: Community Oriented Policing
Services (COPS) Hiring Recovery Program grant providing salaries for 9
officers over 3 years ($2.3 million); and Justice Assistance Grant
(JAG) funding ($0.4 million)”added staff, overtime pay, and equipment
for a total of $2.7 million over 4 years.
Program area: Total Recovery Act funding;
Lee County project or federal award: $16.3 million over multiple years;
Fort Myers project or federal award: $4.5 million over multiple years.
Source: Lee County and Fort Myers governments.
[A] As required by the Recovery Act, the state of Florida suballocated
transportation funds for local use. The local projects cited in the
table are being administered by the county and city, according to FDOT
officials.
[B] Although Fort Myers was awarded $800,000 for local highway
projects, city officials said that contracts for the projects are being
awarded for less than the estimated costs and, as a result, excess
funding will be applied to projects that may not be within the city.
[End of table]
In general, these Recovery Act funds were awarded to the city and
county between April and August 2009. However, county officials said
they have not received the majority of these funds, which will be
reimbursed upon service delivery or project completion; city officials
said they have not expended most funds. Fort Myers, which has some
older substandard housing in low-income neighborhoods, reported using
about $8,000 of an approximately $200,000 Community Development Block
Grant awarded under the Recovery Act to install solar water heaters and
energy-efficient windows in owner-occupied buildings.
Officials of Lee County and Fort Myers reported largely using their own
financial reserves rather than Recovery Act funds to stabilize annual
budgets because the type of funding available is limited and certain
grants require local funds when the grant period expires (see table 4).
[Footnote 21] The city is using Community Oriented Policing Services
(COPS) Hiring Recovery Program (CHRP) funding to avoid the layoff of
six police officers, according to city officials. This use of funds
accounts for about 2 percent of the city's police budget in fiscal year
2010.
Table 4: Actions Taken to Close Lee County and Fort Myers General Fund
Shortfalls in Fiscal Year 2010 (Dollars in millions):
Budget actions: Recovery Act funds;
Lee County: Amount: $0;
Lee County: Percent of total budget actions: 0;
Fort Myers: Amount: $0.58;
Fort Myers: Percent of total budget actions: 2.5%.
Budget actions: Budget cuts;
Lee County: Amount: $10;
Lee County: Percent of total budget actions: 13%;
Fort Myers: Amount: $8.7;
Fort Myers: Percent of total budget actions: 43%.
Budget actions: Deferring expenses;
Lee County: Amount: $9.5;
Lee County: Percent of total budget actions: 12%;
Fort Myers: Amount: $0;
Fort Myers: Percent of total budget actions: 0.
Budget actions: Funds shifted;
Lee County: Amount: $0;
Lee County: Percent of total budget actions: 0;
Fort Myers: Amount: $1.0;
Fort Myers: Percent of total budget actions: 5%.
Budget actions: Reserves used;
Lee County: Amount: $60.3;
Lee County: Percent of total budget actions: 76%;
Fort Myers: Amount: $8.8;
Fort Myers: Percent of total budget actions: 44%.
Budget actions: Tax increases;
Lee County: Amount: $0;
Lee County: Percent of total budget actions: 0;
Fort Myers: Amount: $1.2;
Fort Myers: Percent of total budget actions: 6%.
Budget actions: Total[A];
Lee County: Amount: $79.8;
Lee County: Percent of total budget actions: 100%;
Fort Myers: Amount: $20.2;
Fort Myers: Percent of total budget actions: 100%.
Source: Lee County and Fort Myers governments.
[A] A city official said the city used Recovery Act funds to address a
budget gap in the General Fund. The official explained that the city
classified the grant under its Special Revenue Fund, but the grant
funds were for expenses usually paid for out of the General Fund.
[B] Totals may not add due to rounding.
[End of table]
In the fiscal year 2010 budget, Fort Myers officials said the city
exhausted its available reserves. Lee County officials anticipate
having sufficient reserves for the next 2 to 3 fiscal years. According
to officials we interviewed at the Florida League of Cities and the
Florida Association of Counties, if additional revenue is unavailable
and reserves can no longer be tapped, the county and city will face
major cuts to programs and services.
County and city officials cited various reasons for not applying for
competitive grants or using other available Recovery Act grants more
widely to address budget shortfalls. County officials said they did not
want to use Recovery Act funds that might require county funds for
programs in the future. For example, even though public safety is one
of its largest expenditures, Lee County officials said they did not
apply for a COPS CHRP grant, which could have funded 21 officers over 3
years, because a requirement to maintain those positions with state
and/or local funds for a fourth year would cost their taxpayers about
$2 million. Fort Myers officials said available Recovery Act money
generally funds programs that are not part of the city budget, such as
education and health programs, rather than key city responsibilities,
such as replacing aging water and sewer systems and other
infrastructure.[Footnote 22] Of the Recovery Act funding available for
infrastructure”primarily transportation”Fort Myers officials said that
$0.8 million went to the city because state highway projects are a
priority for Recovery Act funds, with 30 percent of highway funds
suballocated for metropolitan and local use.
School Districts Primarily Used Recovery Act Funds to Retain Teachers
and Staff, and the State Implemented Systems to Track Funds, and Sought
Spending Flexibility:
Florida LEAs largely used Recovery Act funds to retain teachers and
staff, and the State Department of Education developed systems to track
how funds are spent as well as sought a federal waiver to provide
greater flexibility in how some funds are allocated. We surveyed a
representative sample of LEAs”generally school districts”nationally and
in Florida about their plans for Recovery Act funds. An estimated 86
percent of Florida LEAs are planning to use over half of their SFSF
funding to retain staff compared with an estimated 63 percent of LEAs
nationally, according to our survey (see table 5). A senior Florida
official said the higher percentage may reflect, in part, the collapse
of the Florida housing market: 50 percent of Florida's LEAs' operating
funds come from local property taxes and property values have fallen
significantly. The official also said that LEAs have greater discretion
with SFSF funds than with ESEA Title I, Part A or IDEA funds, which
target programs for disadvantaged youth and children with disabilities,
respectively.
Despite Recovery Act SFSF funds, an estimated 56 percent of Florida
LEAs reported that their schools will lose staff compared to an
estimated 32 percent of LEAs nationwide. A Florida official attributed
staff reductions at least partially to an overall decline in student
enrollment, requiring fewer teachers in the 2009-2010 school year. The
official added that Recovery Act funding has been critical to
supporting existing teachers, given significant declines in state and
local revenues.
Table 5: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs, Florida: 86%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs, Florida: 34%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs, Florida: 34%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Anticipate job losses, even with SFSF funds;
Estimated percentages of LEAs, Florida: 56%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Florida: 11%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Florida have margins of error, at the 95
percent confidence level, of plus or minus 15 percentage points or
less. The nation-wide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
A senior Florida official also reported the state's successful
implementation of a three-part monitoring plan for SFSF, the largest
portion of the state's Recovery Act education funding. (See figure 2.)
However, the official said the monitoring requirements doubled staff
workloads with no increases in resources. The official said staff has
been particularly challenged to meet the Recovery Act's section 1512
quarterly recipient reporting requirements with respect to SFSF, but
has applied the monitoring plan as written. State education officials
have identified several issues with the first quarterly report
submitted by LEAs on expenditures and jobs retained or created due to
the federal government by October 10, 2009. Florida officials told us
the U.S. Department of Education guidance on converting jobs retained
or created to FTEs, as required, was not issued until September 2009,
shortly before the quarterly report was due, and LEAs did not have
sufficient time to absorb the subtleties of it.[Footnote 23] As a
result, the officials told us the state Education Inspector General's
office 23OMBegun a survey of selected LEAs to identify issues so
technical assistance can be developed for the next quarterly report. In
addition, when state education staff reconciled LEAs' monthly
expenditure reports with their first quarterly reports they found some
discrepancies in a small number, and state education staff are in the
process of contacting those LEAs to identify the cause of those
divergences.
Figure 2: Selected Key Steps from Florida's SFSF Subrecipient
Monitoring Plan:
[Refer to PDF for image: illustration]
Application:
All applications are reviewed by both program and grants management
staff for adherence to program and fiscal requirements.
Applications and award notices are managed through an electronic grants
management system which sends daily updates to the Cash Advance and
Reporting of Disbursement System (CARDS).
School districts make initial cash requests through CARDS and report
monthly expenditures for the prior month for each award.
On-Going Monitoring:
Quarterly reports of expenditures and jobs retained or created are
assembled using data from the on-line application and reporting system.
Program staff review report elements using a "reasonableness" standard.
Any potential compliance issues are referred to Administrative
Services, where a monitoring team reviews the issues and determines the
appropriate action.
Continuous cash draw downs and monthly expenditure reports are
monitored by staff who perform comparative analyses of specific data
points to look for problems.
Fund Reconciliation:
Sub-recipients will be required to submit final expenditure reports
once SFSF use period expires. Those reports are reconciled with cash
draw down and expenditure data in the CARDS system.
Final expenditure reports are reviewed by designated staff looking for
any expenditures which may be unallowable under the SFSF program.
Source: GAO analysis of Florida Department of Education monitoring
plan.
[End of figure]
State education officials told us they applied for authority to grant
ESEA Title I, Part A waivers to LEAs for more flexibility in spending
Recovery Act funds to improve education through innovative strategies.
[Footnote 24] For example, a waiver of the inclusion of Recovery Act
funds in the calculation of the requirement to spend an amount equal to
20 percent of ESEA Title I, Part A funds would allow LEAs to free up
those funds to address specific student needs identified through data
analysis, according to state education officials. Florida officials
told us they completed their online waiver application form for LEAs at
the end of October 2009. Some of the requested waivers have been
approved by the U.S. Department of Education, and LEAs are submitting
applications to the state for those waivers. The state's remaining
waiver requests are under consideration by the U.S. Department of
Education.
Florida Inspectors General Community Is Coordinating Oversight
Activities:
Florida's Inspectors General (IG) community continues to play a
prominent role in providing oversight of Florida's Recovery Act funds.
The Florida IG community has chosen to coordinate across all state
agencies and communicate regularly. To that end, they formed five
committees to work on Recovery Act issues. (See figure 3.)
Figure 3: Steps Reported by IG Community to Provide Statewide
Oversight:
[Refer to PDF for image: illustration]
Inspectors General oversight of Recovery Act funds:
Fraud/deterrence/training:
* Coordinated training of approximately 1,000 auditors, investigators
and procurement professionals on identifying potential fraud;
* Trained 70 staff from OIG community on advanced investigative
techniques;
* Issued alert recommending OIG-state agency procurement staff
coordination regarding prohibition on contracting with convicted
vendors;
* Issued alert requiring OIGs to submit details of investigations into
Recovery Act contracts fraud;
* Transmitted letter advising Florida CPA's of their significance in
single audits of entities receiving Recovery Act funds.
Special issues:
* Engaged Chief Financial Officer staff regarding Recovery Act
oversight administrative costs and other topics;
* Working to verify the capacity of the states financial management
reporting system;
* Working to encourage an assessment of adequacy of staffing levels for
certified procurement and project management professionals;
* Meeting to discuss lessons learned.
Risk readiness:
* Agencies determined which programs would receive funds and which were
most at-risk for fraud waste or abuse;
* For identified programs, IGs are reviewing risk-mitigation
strategies.
Data quality:
* Established protocols and check sheet for reviewing data quality;
* Provided Instruction and technical assistance on ensuring data
quality;
* Discussed data quality reviews with agencies where needs were
atypical;
* Reviewed agency data, both static and variable, prior to submission
to federal system (in some cases, going back to source documents).
Reporting:
* Helped prepare agencies to comply with Recovery Act reporting
requirements;
* Put together a library of federal guidance;
* Completed Analysis of OIG Capacity (e.g, staffing and succession).
Source: GAO analysis of Inspectors General documents.
[End of figure]
State Comments on This Summary:
We provided the Special Advisor to Governor Charlie Crist, Florida
Office of Economic Recovery, with a draft of this appendix on November
18, 2009. The Florida official concurred with the information in the
appendix and provided technical suggestions that were incorporated, as
appropriate. In addition, we provided relevant excerpts to officials of
the state agencies as well as the city and county we visited. They
agreed with our draft and provided some clarifying information, which
we incorporated, as appropriate.
GAO Contacts:
Andrew Sherrill, (202) 512-7252 or sherrilla@gao.gov.
Zina Merritt, (202) 512-5257 or merrittz@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Patrick di Battista, Lisa
Galvan Trevino, Sabur Ibrahim, Kevin Kumanga, Frank Minore, Brenda
Ross, Margaret Weber, and James Whitcomb made major contributions to
this report. Susan Aschoff assisted with writing, and Barbara Steel-
Lowney assisted with quality assurance.
[End of section]
Footnotes: Appendix V: Florida:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] U.S. Census Bureau and U.S. Department of Labor. Population data
are from July 1, 2008. Unemployment rates are preliminary estimates for
September 2009 and have not been seasonally adjusted. Rates are a
percentage of the labor force. Estimates are subject to revision.
[3] According to FDOT's Office of Inspector General, single source
contracts occur when a contract can only be satisfied with commodities
or services from one vendor and there are no known able competitors.
[4] According to FDOT's Office of Inspector General, limited
competition contracts are contracts for construction projects that
receive only one bid.
[5] This figure does not include obligations associated with $0.7
million of apportioned funds that were transferred from FHWA to the
Federal Transit Administration (FTA) for transit projects. Generally,
FHWA has authority pursuant to 23 U.S.C. § 104(k)(1) to transfer funds
made available for transit projects to FTA.
[6] As we reported in September 2009, Florida is using Recovery Act
funds for more complex projects, such as constructing new roads and
bridges and adding lanes to existing highways that require more time
before bids can be requested and contracts can be awarded, according to
Florida officials.
[7] According to the FDOT local agency program manual, a local agency
is defined as a governmental body related to transportation that is
responsible for planning, design, right-of-way acquisition, and
construction.
[8] According to FDOT officials, within each district, projects are
distributed to localities based, in part, on population. District 5 has
almost twice as many residents as District 2.
[9] According to FDOT officials, fixed-price contracting is FDOT's
standard contracting method and all construction workers on federally
funded projects must be compensated according to prevailing wage rates
determined by the United States Department of Labor.
[10] Under FDOT's guidelines, adjusted score means the contract award
is based on the lowest adjusted score, which is determined by dividing
the price proposal by the technical proposal score.
[11] The Recovery Act contains multiple reporting requirements. We
refer to the reports required by section 1512 as recipient reports.
[12] According to the Florida state Recovery Czar, the majority of
Recovery Act funds received by Florida fall under division B of the
Recovery Act and, thus, are not subject to section 1512 reporting
requirements. Division B includes tax provisions, unemployment
compensation, and certain other provisions.
[13] Inspectors general and others involved in the data quality reviews
attended training and technical advisory meetings to explore in detail
data quality issues prior to uploading the data into the Federal
Recovery system, according to Florida's Chief Inspector General.
[14] An identifier assigned applications and proposals for federal
money.
[15] According to the FDOT Office of Inspector General, FDOT IG has
been given responsibility by the state for Recovery Act recipient
reporting. According to the Florida state Recovery Czar, content
experts from the Governor's Office of Policy and Budget were assigned
to each Recovery Act award and no award was uploaded to
FederalReporting.gov without sign-off by the OPB reviewer.
[16] For section 1201(c),the first periodic report was due no later
than 90 days after the date of enactment of the act, with updated
reports due no later than 180 days, 1 year, 2 years, and 3 years after
enactment. Section 1201(c) requires periodic reports, which include
information on the pace at which funds are spent and the status of FDOT
projects.
[17] According to Florida officials, the first system was developed by
the Florida Office of Economic Recovery and titled "FlaReporting
System" and the second system was developed by FDOT titled "FDOT ARRA
Employment Reporting System" for employment reporting. Although FDOT
utilized the FHWA Recovery Act Data System for 1201(c) reporting, it
did not utilize it for 1512 reporting.
[18] At the second subrecipient, of the eight employees associated with
Recovery Act projects, four were management employees. Although
documentation such as time sheets was available for regular employee
hours and wages, no supporting documentation was kept for management
employees.
[19] For example, if a full-time job was created in mid-September”
meaning that it existed for only 2 weeks of the reporting period”
federal instructions require taking those 80 hours and dividing by 520
hours, or the entire quarter. This calculation equals 0.15 of an FTE,
even though one full-time job was created.
[20] According to the Florida state Recovery Czar, some agencies
indicated the hours in the denominator should reflect hours from the
date of the award, some from the beginning of the quarter, and some
from the start of the project.
[21] Lee County and Fort Myers are experiencing gaps remaining between
revenues and expenditures. County officials explained that their budget
gaps are a result of declining revenue sources, such as a 24 percent
decline in property taxes in fiscal year 2010. In fiscal years 2008
through 2010 the city reported increasing property taxes to offset
expenditure pressures that include pension and benefit obligations for
city employees, revenue losses from falling property values, and
declining funds from state revenue-sharing programs.
[22] The city's largest expenses involve infrastructure”such as water
and sewer projects funded through its Utility Fund”as well as public
safety, which is funded through the General Fund. The county's largest
expenses are for public safety, such as the sheriffs office, funded
through the General Fund.
[23] OMB issued reporting guidance on June 22, 2009; however, the U.S.
Department of Education guidance contained additional clarifications on
how to calculate and report jobs created or retained. For example,
Education specifically addressed how a recipient should calculate the
full-time equivalent for a teacher on a contract less than 12 months.
[24] The Department of Education accepts applications from state
educational agencies to apply, on behalf of their LEAs, for waivers of
one or more "set-aside" requirements that are affected by the
availability of ESEA Title I, Part A Recovery Act funds. For example,
LEAs are obligated to spend an amount equal to at least 20 percent of
their ESEA Title I, Part A, Subpart 2 allocation on transportation for
public school choice and supplemental educational services (SES). These
services include tutoring, remediation and other supplemental academic
enrichment services designed to increase the academic achievement of
students. LEAs must offer students in schools that have missed academic
targets for two consecutive years an opportunity to transfer to a high-
performing school in the district (public school choice) and in
addition, must offer SES students from schools that have missed
academic targets for three consecutive years.
[End of Appendix V: Florida:
Appendix VI: Georgia:
Overview:
The following summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Georgia.[Footnote 1] The full report on all of our
work, which covers 16 states and the District of Columbia, is available
at [hyperlink, http://www.gao.gov/recovery].
What We Did:
Our work in Georgia focused on the Public Housing Capital Fund because
projects funded with the formula funds were under way and the
competitive funds had just been awarded. In addition to this program,
we updated information on Highway Infrastructure Investment funds and
three Recovery Act education programs”the State Fiscal Stabilization
Fund; Title I, Part A, of the Elementary and Secondary Education Act of
1965 (ESEA), as amended; and the Individuals with Disabilities
Education Act (IDEA), Parts B and C”because significant Recovery Act
funds had been obligated. For descriptions and requirements of the
programs covered in our review, see appendix XVIII of GAO-10-232SP. We
also focused on the state's initial reporting on the jobs created and
retained with Recovery Act funds and the use of Recovery Act funds in
selected localities.
What We Found:
Following are highlights of our review.
* Public Housing Capital Fund. The U.S. Department of Housing and
http://www.gao.gov/recovery allocated about $113 million in Recovery
Act funding to 184 public housing agencies in Georgia. As of November
14, 2009, 124 of these agencies had obligated $55.8 million, and 100
agencies had drawn down $8.4 million. We visited public housing
agencies in Athens, Atlanta, and Macon. With its formula funds, the
Athens Housing Authority has completed a roofing project and begun work
on modernizing 23 scattered sites. The Atlanta Housing Authority
recently reassessed its design plans for 13 rehabilitation projects to
be funded with formula awards and plans to begin work on them in the
spring of 2010. The Macon Housing Authority plans to use $8.6 million
in competitive grant funds to make a 100-unit housing development more
energy efficient.
* Highway Infrastructure Investment funds. The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned $932
million in Recovery Act funds to Georgia. As of October 31, 2009, the
federal government had obligated $703 million to Georgia,[Footnote 2]
and $43 million had been reimbursed by the federal government.
* Education. Our survey of local educational agencies (LEA) in Georgia
showed that they plan to use Recovery Act funds to retain staff, but
most LEAs still expect to lose staff overall.
* Recipient reporting. Georgia used a decentralized approach to meet
Recovery Act reporting requirements”that is, 18 state agencies reported
directly into the federal government's reporting Web site. The State
Accounting Office monitored the reporting process and identified some
discrepancies, such as jobs associated with zero expenditures, that
needed to be corrected. Although there were last minute changes to
federal guidance that required data to be resubmitted, the State
Accounting Office was generally satisfied with how the state completed
the first round of reporting.
* Selected localities' use of Recovery Act funds. The city of Atlanta,
city of Macon, and Tift County had been awarded Recovery Act funding of
$78 million, $4.5 million, and $378,000, respectively, as of November
12, 2009. For instance, Atlanta and Macon each received funds to hire
additional police officers. Tift County received an award to hire
additional staff in the District Attorney's office.
Housing Agencies Continue to Make Progress on Projects Funded with
Recovery Act Formula Grants:
In Georgia, 184 public housing agencies received about $113 million in
Public Housing Capital Fund formula grants (see fig. 1). Recovery Act
requirements specify that public housing agencies must obligate funds
within 1 year of the date they are made available to public housing
agencies. Agencies are to give priority to projects that (1) can award
contracts based on bids within 120 days from the date the funds are
made available, (2) rehabilitate vacant units, or (3) are already under
way or included in required 5-year Capital Fund plans. As of November
14, 2009, 124 of the public housing agencies in Georgia had obligated
$55.8 million and 100 agencies had drawn down $8.4 million. On average,
public housing agencies in Georgia are obligating funds at about the
same rate as housing agencies nationally. We visited three housing
agencies for this report: the Housing Authority of the City of Athens
(Athens Housing Authority), the Housing Authority of the City of
Atlanta (Atlanta Housing Authority), and the Housing Authority of the
City of Macon (Macon Housing Authority).[Footnote 3]
Figure 1: Percentage of Public Housing Capital Fund Formula Grants
Allocated by HUD That Had Been Obligated and Drawn Down in Georgia, as
of November 14, 2009:
[Refer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100%; $112,675,806;
Funds obligated by HUD by public housing agencies: 49.6%; $55,845,802;
Funds drawn down by public housing agencies: 7.5%; $8,402,602.
Number of public housing agencies:
Entering into agreements for funds: 184;
Obligating funds: 124;
Drawing down funds: 100.
Source: GAO analysis of HUD data.
[End of figure]
Athens Housing Authority:
The Athens Housing Authority received about $2.6 million in Recovery
Act formula grant awards. As of November 14, 2009, the housing agency
had obligated about $1.6 million and drawn down approximately $226,000.
It plans to use the majority of its Recovery Act funds to complete
three projects.[Footnote 4] The agency awarded the contracts for the
first two projects”replacing the roofs on 40 units and the
comprehensive modernization of 23 scattered site housing units”within
120 days of the date the funds were released for use. The roofing
project was completed at a cost of about $42,000. The $1.3 million
modernization of scattered sites will include asbestos and lead
abatement and the installation of new windows, doors, cabinets,
appliances, water heaters, and heating and air systems. This work has
begun and is scheduled to be completed by May 2010. The agency also
plans to replace two elevators at a senior high-rise; the agency's
estimated cost for this third project has increased from $330,000 to
$400,000 because the agency decided to upgrade to more energy-efficient
equipment, rather than refurbish the old elevators. The housing agency
expects bids by December 15, 2009, work to begin by January 2010, and
the project to be completed by September 2010. None of the units
affected by these renovations were vacant because the agency's units
are typically at least 98 percent occupied, with the few vacancies
being attributable to turnover. Agency officials stated that while only
the scattered site project was in the agency's 5-year plan prior to the
Recovery Act, all three projects were in an updated plan approved in
May 2009. Athens Housing Authority officials were confident that they
could meet the Recovery Act requirement to obligate 100 percent of
funds by March 17, 2010.
Atlanta Housing Authority:
The Atlanta Housing Authority received about $26.6 million in Recovery
Act formula grant awards. As of November 14, 2009, the agency had
obligated about $26.5 million and drawn down about $730,000. It plans
to use about $19 million of its Recovery Act funds to rehabilitate 13
properties containing a total of 1,953 units and the remaining $8
million to demolish 4 properties. The housing agency recently
reassessed its design plans for the 13 properties to ensure that it
maximized the use of the funds. The work will include energy
conservation measures, renovations to common areas, and exterior and
site improvements. The agency plans to begin this work in the spring of
2010. Because the agency has very few vacancies, only three of the
units to be rehabilitated are vacant. All of the planned projects were
in the Atlanta Housing Authority's fiscal year 2010 annual plan, which
was completed in April 2009.[Footnote 5] The Atlanta Housing Authority
has obligated the majority of its funds through amended contracts with
the private management companies that manage the properties. According
to Atlanta Housing Authority officials, the remaining funds will be
obligated by March 17, 2010.
Macon Housing Authority:
The Macon Housing Authority received about $4.8 million in Recovery Act
formula grant awards. As of November 14, 2009, the agency had obligated
about $150,000 and drawn down about $77,000. The agency plans to use
all of these funds to complete a major rehabilitation of a 250-unit
housing development. The planned work includes replacing the baths,
kitchens, appliances, windows, doors, and flooring; painting;
landscaping; and resurfacing parking lots and streets. The agency
awarded a contract for approximately $4.5 million on October 14, 2009,
and work will begin in December 2009. None of the units to be
rehabilitated were vacant, and the project was in the agency's 5-year
plan prior to the Recovery Act. According to Macon Housing Authority
officials, all of their funds will be obligated by March 17, 2010.
Some Housing Agencies Also Received Competitive Recovery Act Grants:
In addition to the Public Housing Capital Fund formula grants, HUD
awarded six competitive grants to housing agencies in Georgia,
including one to the Macon Housing Authority. The Macon Housing
Authority will use its $8.6 million grant awarded under the Energy
Efficient, Green Community category for substantial rehabilitation of a
100-unit housing development. Agency plans include wrapping the
exterior of the buildings in a ridged insulation system covered with
siding; re-engineering the roof with a higher pitch to allow for more
insulation and more efficient duct work for heating and air systems;
and installing energy-efficient windows and heating and air systems and
water-conserving appliances and fixtures. Also, the units will be
reconfigured to reposition doors and windows to give the appearance of
single-family houses. The agency plans to start the work in April 2010
and complete it by December 2011.
The Athens and Atlanta Housing Authorities chose not to apply for
competitive grants. According to Athens Housing Authority officials,
they did not apply because they were concerned about their ability to
meet the deadlines for obligating and expending funds. Atlanta Housing
Authority officials stated that they chose not to apply because there
were too many restrictions on the use of the funds. For example, only
certain funds could be used to meet the leveraging requirement, and
funds could only be used for demolition if a replacement project was
identified.
Recovery Act Funds Apportioned to Georgia Continue to Be Obligated by
FHWA for Federal-Aid Highway Projects:
As we reported in September 2009, $932 million was apportioned to
Georgia in March 2009 for highway infrastructure and other eligible
projects.[Footnote 6] As of October 31, 2009, $703 million had been
obligated.[Footnote 7] As of the same date, $43 million had been
reimbursed by FHWA.[Footnote 8] Almost 72 percent of Recovery Act
highway obligations for Georgia have been for pavement projects.
Specifically, $505 million of the $703 million obligated as of October
31, 2009, has been for resurfacing, pavement reconstruction and
rehabilitation, pavement widening, and new road construction projects.
[Footnote 9] Another $61 million was obligated for bridge projects.
State officials told us they selected projects based on various
factors, including eligibility requirements, whether the project was
"ready to go," and the geographic dispersion across the state. Figure 2
shows obligations by the types of road and bridge improvements being
made.
Figure 2: Highway Obligations for Georgia by Project Improvement Type,
as of October 31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (72 percent, $504.6 million):
Pavement improvement: resurface ($185.4 million): 26%;
Pavement widening ($125.2 million): 18%;
Pavement improvement: reconstruction/rehabilitation ($99.1 million):
14%;
New road construction ($94.9 million): 13%;
Bridge projects total (9 percent, $61.3 million):
Bridge replacement ($61.3 million): 9%;
Other (20 percent, $137.5 million):
Other ($137.5 million): 20%.
Source: GAO analysis of Federal Highway Administration data.
Note: Percentages may not add due to rounding. "Other" includes safety
projects, such as improving safety at railroad grade crossings, and
transportation enhancement projects, such as pedestrian and bicycle
facilities, engineering, and right-of-way purchases.
[End of figure]
As of November 12, 2009, the Georgia Department of Transportation
(GDOT) had awarded 131 contracts with a total value of $434 million.
[Footnote 10] According to state officials, bids for contracts continue
to come in below the state's estimated costs. For example, 96 percent
of the contracts awarded were below GDOT's estimated cost, and the
savings from awarding contracts for less than the estimated costs
ranged from about 3 percent to 68 percent.[Footnote 11] Officials
explained that bids have been coming in lower than expected costs due
to current economic conditions. GDOT will request that FHWA obligate
the project savings on a monthly basis to other projects. In
anticipation of continued savings, the department has identified
additional projects and developed contingency plans for further
obligation of Recovery Act funds.
Georgia School Districts Plan to Use Recovery Act Funds to Retain
Staff, but Most Districts Expect to Lose Staff Overall:
Our review covers three education programs receiving Recovery Act
funds: (1) the Individuals with Disabilities Education Act (IDEA), as
amended, Parts B and C, which supports early intervention, special
education, and related services for infants, toddlers, children, and
youth with disabilities; (2) Title I, Part A of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended, which provides
financial assistance to help educate disadvantaged youth; and (3) the
State Fiscal Stabilization Fund (SFSF), which was created under the
Recovery Act, in part, to help state and local governments stabilize
their budgets by minimizing budgetary cuts in education and other
essential government services. We surveyed a representative sample of
local educational agencies (LEA)”generally school districts”nationally
and in Georgia about their planned uses of Recovery Act funds.[Footnote
12] Table 1 shows Georgia's and national survey results on the
estimated percentages of LEAs that plan to use more than 50 percent of
their Recovery Act funds under these three education programs to retain
staff. It also shows the estimated percentages of LEAs that anticipate
job losses even with SFSF funds and that reported a total funding
decrease of 5 percent or more since the last school year. In each case,
the percentage for Georgia is higher than the national percentage.
Table 1: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: IDEA funds;
Estimated percentages of LEAs, Georgia: 36%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: Title I funds;
Estimated percentages of LEAs, Georgia: 38%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: SFSF funds;
Estimated percentages of LEAs, Georgia: 92%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipated job losses, even with SFSF
funds;
Estimated percentages of LEAs, Georgia: 65%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Georgia: 39%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Georgia have margins of error, at the 95
percent confidence level, of plus or minus 8 percentage points or less.
The nationwide percentage estimates have a margin of error of plus or
minus 5 percentage points.
[End of table]
Despite a Few Last-Minute Changes to Federal Guidance, Georgia Met Its
Reporting Requirements:
To meet Recovery Act reporting requirements, Georgia used a
decentralized approach”that is, the 18 state agencies that were awarded
Recovery Act funds reported directly into the federal government's
reporting Web site. Prior to the October 10 submission deadline,
Georgia's State Accounting Office (SAO) provided training and held
meetings to help state agencies prepare. During the period designated
for review of initial submissions (Oct. 11-21, 2009), SAO reviewed the
data that each state agency submitted for reasonableness and potential
inaccuracies. Its review identified the following issues:
* In some cases, there was no apparent connection between the number of
jobs created and retained and the amount of Recovery Act funds spent.
For example, one state agency reported that jobs were created or
retained but did not report that any funds were expended. SAO officials
stated that it was an error and the agency revised the report once the
issue was brought to its attention.
* In some instances, the average cost of a job seemed unreasonable. In
these cases, SAO asked the state agency to review its data and revise
them, if necessary.
* In some cases, subrecipients reported to a state agency the number of
jobs created or retained with Recovery Act funds as of September 30,
2009, as required. However, because the state agency had not reimbursed
the subrecipients for their expenditures as of September 30, 2009, the
agency could not report jobs created or retained as the money had not
been expended at the state level.
Although most state agencies did not have issues with the report
submission process and meeting the submission deadline, some state
agencies experienced last-minute challenges. For example, on October 9,
2009, the U.S. Department of Education issued additional guidance to
institutions of higher education with instructions for calculating the
number of jobs created or retained using Federal Work-Study Program
funds.[Footnote 13] However, according to SAO officials, 11
institutions of higher education in Georgia already had submitted their
reports and were required to submit revisions. In another case, FHWA
asked GDOT to resubmit its data in late October 2009. According to GDOT
officials, FHWA identified information to be updated in the data fields
"Total Federal Award" and "Total Federal Recovery Act Funds
Received/Invoiced" during the period set aside for federal review of
the data submitted (Oct. 21-29, 2009). FHWA wanted the Total Federal
Award amount to include all federal funds used in the project,
including non-Recovery Act funds. It also wanted the Total Federal
Recovery Act Funds Received/Invoiced field to match information
captured in its financial management system on the total Recovery Act
award to Georgia, while GDOT had reported the amount of Recovery Act
funds that had been reimbursed to it by FHWA. GDOT officials stated
they were hesitant to make these changes because they thought the
request conflicted with U.S. Office of Management and Budget (OMB)
Recovery Act reporting guidance and following FHWA guidance would
overstate the amount of funding actually received or invoiced in the
state. The agency sought clarification from FHWA and approval from OMB
on this issue. Although GDOT officials told us that they did not
believe their first submission was incorrect or that their concerns
were fully addressed by OMB or FHWA, they elected to amend their 169
highway project reports on October 27, 2009, per FHWA's guidance.
Despite these challenges, SAO generally was satisfied with the state's
first quarter of reporting. However, it identified some areas that
could be improved. For example, SAO officials stated that some state
agencies could benefit from a more in-depth review of the data prior to
submission.
Therefore, SAO plans to develop a tool for agencies to use to review
data prior to submission. In addition, SAO plans to develop additional
training for state agencies on Recovery Act reporting.
Selected Localities in Georgia Have Begun to Receive Recovery Act
Funds, but They Still Have Budget Challenges:
We visited three local governments in Georgia”the city of Atlanta, the
city of Macon, and Tift County”to discuss their fiscal condition and
use of Recovery Act funds.[Footnote 14] The state of Georgia
provides16Otherl direct financial support to local governments”an
estimated 4 percent of their budgets, according to a 2008 National
League of Cities report”and does not have revenue sharing agreements
with them.[Footnote 15]
Atlanta, Georgia:
According to city officials, Atlanta had applied for approximately $530
million in Recovery Act funding as of November 12, 2009 (see fig. 3).
Of that amount, about $298 million is for a grant from the U.S.
Department of Transportation for a streetcar system.[Footnote 16] City
officials told us they had been awarded about $78 million, including
$34 million for security and terminal improvements at the Atlanta
airport and $14.7 million to hire additional police officers through
the COPS Hiring Recovery Program and the Edward Byrne Memorial Justice
Assistance Grant Program ($11.2 million and $3.5 million,
respectively).
Figure 3: City of Atlanta Profile and Status of Formula and Competitive
Recovery Act Funding:
[Refer to PDF for image: map of Georgia indicating Atlanta and
associated data]
Demographics:
Estimated population (2008): 537,958;
Unemployment rate (Sept. 2009): 11.4%;
FY10 budget (change from FY09): $541.0 million (-5.2%);
Locality type: Large city.
Recovery Act funding reported by city of Atlanta:
Transportation:
Awarded: $45.6 million;
Pending: $298.3 million.
Public safety:
Awarded: $14.7 million;
Pending: $68.3 million.
Energy and environment:
Awarded: $7.1 million;
Pending: $26.7 million;
Not awarded: $3.4 million.
Housing and homelessness:
Awarded: $5.7 million;
Pending: $57.9 million;
Not awarded: 3.0 million.
Other:
Awarded: $4.9 million;
Pending: 0.3 million.
Sources: (Demographics) U.S. Census Bureau, U.S. Department of Labor,
and Art Explosion. (Recovery Act funding) City of Atlanta officials.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision. Funds "awarded" represents grants awarded to the
city of Atlanta by federal and state agencies and includes some funds
in excess of the original amount for which the city applied, due to a
redistribution of funds. Funds "not awarded" are grants for which the
city applied but did not receive.
[End of figure]
While the Recovery Act has provided additional funding for Atlanta,
city officials stated that the funds, with the exception of those for
police officers, have not had an impact on the city's operating budget.
Atlanta had to take a number of actions to balance its fiscal year 2009
budget and close a $74 million budget gap. For example, the city
furloughed staff (including public safety officials), eliminated
approximately 300 positions, implemented a hiring freeze, and closed 20
recreation centers. For the fiscal year 2010 budget, officials told us
the city raised the property tax rate to address a projected $56
million budget gap. Given the minimal impact on operating funds, the
city has not developed a strategy for winding down its use of Recovery
Act funds.
Macon, Georgia:
According to city officials, Macon had applied for $15.6 million in
Recovery Act funds, of which the city had received $4.5 million as of
November 12, 2009 (see figure 4)[Footnote 17] Its largest award was
$1.7 million in COPS Hiring Recovery Program funds to hire 14
additional police officers. Given the minimal impact on operating
funds, officials explained that the city has not developed a strategy
for winding down its use of Recovery Act funds.
Figure 4: City of Macon Profile and Status of Formula and Competitive
Recovery Act Funding:
[Refer to PDF for image: map of Georgia indicating Macon and associated
data]
Demographics:
Estimated population (2008): 92,775;
Unemployment rate (Sept. 2009): 11.7%;
FY10 budget (change from FY09): $69.5 million (-1.2%);
Locality type: Midsized city.
Recovery Act funding reported by city of Macon:
Not awarded: $454,639; 2.9%;
Awarded: $4,494,722; 28.8%;
Application pending: $10,680,538; 68.3%;
Total: $15,629,899.
Sources: (Demographics) U.S. Census Bureau, U.S. Department of Labor,
and Art Explosion. (Recovery Act funding) City of Macon officials.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision. Funds "awarded" represents grants awarded directly
to the city of Macon by federal agencies. Funds "not awarded" are
grants for which the city applied but did not receive.
[End of figure]
Macon had a balanced fiscal year 2010 budget of approximately $69.5
million, $860,000 less than its fiscal year 2009 budget. To balance its
budget, Macon increased the health care contribution of all city
employees and retirees, used more than $2 million in targeted sales tax
funds to cover the city's fiscal year 2010 lease payments, and did not
fund 45 authorized positions.
Tift County, Georgia:
According to county officials, Tift County had received approximately
$378,000 in Recovery Act funds through three grant awards as of
November 12, 2009 (see fig. 5). The majority of the funds ($325,000)
were for two positions in the District Attorney's office. About $40,000
will be combined with an award to the city of Tifton to purchase a
backup emergency radio tower and generator, and the remaining $13,000
went to the Sheriffs Office. County officials stated they expect that
some of these awards will have a positive impact on the county's budget
because they freed up funds for other uses. Once the Recovery Act funds
have been depleted, officials plan to maintain the positions at the
District Attorney's office by charging fees for services. Tift County
applied for a COPS Hiring Recovery Program grant to hire additional
police officers but did not receive this award.
Figure 5: Tift County Profile and Status of Formula and Competitive
Recovery Act Funding:
[Refer to PDF for image: map of Georgia indicating Tift County and
associated data]
Demographics:
Estimated population (2008): 42,434;
Unemployment rate (Sept. 2009): 10.6%;
FY10 budget (change from FY09): $30.2 million (-1.4%);
Locality type: Rural county.
Recovery Act funding reported by city of Tift County:
Awarded: $377,967; 38%;
Not awarded: $614,888; 62%;
Total: $992,855.
Sources: (Demographics) U.S. Census Bureau, U.S. Department of Labor,
and Art Explosion. (Recovery Act funding) Tift County officials.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision. Funds "awarded" represents grants awarded directly
to Tift County by federal agencies. Funds "not awarded" are grants for
which county applied but did not receive.
[End of figure]
Tift County had a balanced fiscal year 2010 budget of approximately $30
million, about $420,000 less than its fiscal year 2009 budget. For
fiscal year 2010, the county cut the total budget by 1.4 percent. The
restrained budget did not include funds to purchase capital items, fill
vacancies, or hire new employees (with the exception of the public
safety department).
Georgia's Comments on This Summary:
We provided the Governor of Georgia with a draft of this appendix on
November 19, 2009, and a representative from the Governor's office
responded on November 20, 2009. The official agreed with our draft,
stating that it accurately reflects the current status of the Recovery
Act program in Georgia.
GAO Contacts:
Alicia Puente Cackley, (202) 512-7022 or cackleya@gao.gov.
John Pendleton, (404) 679-1816 or pendletonj@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Paige Smith, Assistant
Director; Nadine Garrick, analyst-in-charge; Waylon Catrett; Chase
Cook; Marc Molino; Daniel Newman; Barbara Roesmann; David Shoemaker;
and Robyn Trotter made major contributions to this report.
[End of section]
Footnotes: Appendix VI: Georgia:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] This does not include obligations associated with $25 million of
apportioned funds that were transferred from FHWA to the Federal
Transit Administration for transit projects.
[3] We visited the Athens and Atlanta Housing Authorities to update
information we reported in July 2009. See GAO, Recovery Act: States'
and Localities' Current and Planned Uses of Funds While Facing Fiscal
Stresses (Georgia), [hyperlink,
http://www.gao.gov/products/GAO-09-830SP] (Washington, D.C.: July 8,
2009). We visited the Macon Housing Authority because it had been
awarded competitive as well as formula grant funds.
[4] The remaining funds will be spent on renovations such as new
kitchen countertops and new windows.
[5] As a Moving to Work agency, the Atlanta Housing Authority is
required to submit a Moving to Work annual plan to HUD in lieu of the 5-
year plan and annual plan traditionally required by section 5A of the
U.S. Housing Act of 1937, as amended. Moving to Work is a demonstration
program established by Congress and administered by HUD, giving
participating public housing agencies the flexibility to design and
test various approaches to facilitating and providing quality
affordable housing opportunities in their localities.
[6] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed (Georgia), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: Sept. 23,
2009).
[7] This does not include obligations associated with $25 million of
apportioned funds that were transferred from FHWA to the Federal
Transit Administration (FTA) for transit projects. Generally, FHWA has
authority pursuant to 23 U.S.C. § 104(k)(1) to transfer funds made
available for transit projects to FTA. For the Highway Infrastructure
Investment Program, the U.S. Department of Transportation has
interpreted the term "obligation of funds" to mean the federal
government's commitment to pay for the federal share of the project.
This commitment occurs at the time the federal government signs a
project agreement.
[8] States request reimbursement from FHWA as the state makes payments
to contractors working on approved projects.
[9] About $185 million (or 26 percent) of the $703 million that had
been obligated as of October 31, 2009, was for resurfacing.
[10] This amount represents only those contracts awarded by GDOT. Some
localities within Georgia also may have awarded contracts with Recovery
Act funds.
[11] We excluded five contracts awarded with other federal funds as
well as Recovery Act funds from these analyses.
[12] We sent the survey to 101 LEAs in Georgia, and 90 percent
responded.
[13] The Federal Work-Study Program provides funds that are earned
through part-time employment to assist students in financing the costs
of postsecondary education.
[14] We chose these locations because they represented a mix of cities
and counties, population sizes, unemployment rates, and amount of
Recovery Act funds received.
[15] Christopher Hoene and Michael A. Pagano, Cities & State Fiscal
Structure, a research report prepared for the National League of Cities
(2008).
[16] Other funds for which Atlanta has applied include funds to improve
broadband technology and renovate fire stations.
[17] The $15.6 million for which Macon had applied includes outstanding
applications for $5 million to purchase and redevelop foreclosed and
abandoned homes and $3.8 million to help individuals transition out of
poverty.
[End of Appendix VI: Georgia:
Appendix VII: Illinois:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Illinois. The full report covering all of GAO's work
in the 16 states and the District of Columbia may be found at
[hyperlink, http://www.gao.gov/recovery].
What We Did:
We conducted work on four specific programs funded under the Recovery
Act”Highway Infrastructure Investment, Transit Capital Assistance,
Fixed Guideway Infrastructure Investment, and the Public Housing
Capital Fund. For descriptions and requirements of the programs we
included in our review, see appendix XVIII of GAO-10-232SP. We selected
the four programs primarily to follow up on issues we reported on in
previous bimonthly reviews. Our work focused on the status of the
programs' funding, how funds are being used, and other issues that were
specific to each program. As part of our review, we visited agencies in
Arlington Heights, Chicago, Springfield, and Ottawa.
To gain an understanding of the state's experience in meeting the
Recovery Act reporting requirements, we held discussions with the
Office of the Governor. Although Illinois is a decentralized reporting
state”meaning each prime recipient of Recovery Act funds is required to
report quarterly to federalreporting.gov on a number of measures,
including the use of funds and estimates of the number of jobs created
and retained”the state plays a role in reviewing the data state
agencies plan to report to federalreporting.gov. The first quarterly
reports were due in October 2009.
Finally, our work in Illinois included monitoring the state's fiscal
situation and visiting three cities”Chicago, Joliet, and Springfield”to
determine the amount of Recovery Act funds each received and learn how
those funds were spent. We selected Chicago because it is the largest
city in Illinois; Joliet because it had an unemployment rate above the
state average; and Springfield because it had an unemployment rate
below the state average.
What We Found:
* Highway Infrastructure Investment Funds. The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned
$935.6 million in Recovery Act funds to Illinois. As of October 31,
2009, the federal government had obligated $772.2 million to Illinois
and $313 million had been reimbursed by the federal government. Because
the Illinois Department of Transportation (DOT) was able to award
contracts for less than the estimated cost of some projects, FHWA has
deobligated $105.5 million and Illinois DOT has requested that these
funds be obligated toward other highway projects. The state also
revised both its definition of economically distressed areas and its
maintenance-of-effort calculation based on new federal guidance.
* Transit Capital Assistance and Fixed Guideway Infrastructure
Investment. The Federal Transit Administration apportioned $375.5
million in Transit Capital Assistance and $95.5 million in Fixed
Guideway Infrastructure Investment funds to Illinois and urbanized
areas within the state for transit projects. Transit agencies under
northeastern Illinois's Regional Transportation Authority were
allocated $414.2 million for transit projects, including $318.7 million
from the Transit Capital Assistance program and $95.5 million from the
Fixed Guideway Infrastructure Investment program. As of October 1,
2009, the three transit agencies that make up the Regional
Transportation Authority had initiated most of the transit projects
they planned to fund with Recovery Act dollars.
* Public Housing Capital Fund. Illinois has 99 public housing agencies
that have received Recovery Act formula grants. In total, these public
housing agencies have received $221.5 million in Public Housing Capital
Fund formula grants. As of November 14, 2009, 89 of these public
housing agencies have obligated $41.8 million and 76 have drawn down
$16.4 million. In addition to the Capital Fund formula grants, HUD
awarded 32 competitive grants to housing agencies in Illinois. Both the
Chicago Housing Authority and the Housing Authority for LaSalle County”-
the two housing agencies we visited for this and previous reports”-
continued to make progress on Recovery Act projects.
* Recipient reporting. The Illinois Office of the Governor requires
state agencies to submit employment and other data to the Illinois
Federal Reporting Test site for review and verification before they
submit their data to federalreporting.gov in order to help ensure that
information reported were correct. Most of the errors the state
identified during its review of agencies' data were relatively minor.
* Illinois's fiscal condition. Recovery Act funds continued to assist
the state primarily in funding its education, infrastructure, and
Medicaid programs and will allow the state to provide an additional
$2.4 billion in assistance this fiscal year. The state plans to reduce
spending and will seek new revenue sources in anticipation of an end to
Recovery Act assistance after fiscal year 2010.
* Cities' use of Recovery Act funds. Chicago, Joliet, and Springfield
have all received Recovery Act grants directly from multiple federal
agencies. Chicago received a total of $1 billion, Joliet received a
total of $3.8 million, and Springfield received a total of $5.3
million. The cities generally used the Recovery Act grants to create or
expand a variety of programs and services that would otherwise have
remained unfunded, such as energy efficiency upgrades.
Illinois's Highway Contracts Awarded for Less than Cost Estimates and
the State Has Revised the Number of Economically Distressed Counties
and Maintenance-of-Effort Estimate:
As we reported in September 2009, $935.6 million was apportioned to
Illinois in March 2009 for highway infrastructure and other eligible
projects.[Footnote 1] As of October 31, 2009, $772.2 million had been
obligated, resulting in 518 highway projects (see table 1). As of
October 31, 2009, $313 million had been reimbursed by FHWA.
Table 1: Illinois's Highway Funds Allocated, Obligated, and Unobligated
as of October 31, 2009:
70 percent for use on state highways:
Allocated: $654,914,893;
Obligated: $617,883,081;
Unobligated: $37,031,812.
30 percent of apportioned funds suballocated for metropolitan,
regional, and local use:
Allocated: $280,677,811;
Obligated: $154,345,074;
Unobligated: $126,332,737.
Total:
Allocated: $935,592,704;
Obligated: $772,228,155;
Unobligated: $163,364,549.
Source: GAO analysis of FHWA data.
[End of table]
Illinois Department of Transportation Continues to Award Contracts for
Highway Projects for Less than the Estimated Cost:
Illinois DOT officials told us that project bids have been about 15
percent less than initial cost estimates on average. According to
Illinois DOT officials, because the agency was able to award contracts
for less than the estimated cost of some projects, FHWA has deobligated
$105.5 million and Illinois DOT has requested that these funds be
obligated toward other highway projects Illinois DOT officials
attribute the lower bids to multiple bids being submitted per project
and contractors' willingness to price their bids competitively.
Illinois Has Revised Its Determination of Economically Distressed Areas
to Include 18 Additional Counties:
FHWA issued new guidance in August 2009 for states to designate
"special need" areas in order to meet the statutory definition of
economically distressed areas. As we reported in September, Illinois
had developed its own criteria based on applicable federal law and
guidance for designating such areas as economically distressed, a key
component for prioritizi2GAO-09-1017SPjects for funding under the
Recovery Act.[Footnote 2] Based on the supplemental guidance issued by
FHWA, Illinois DOT revised its analysis of counties that meet the
definition of economically distressed areas.[Footnote 3] As part of its
new analysis, Illinois DOT determined that 92 of 102 counties in the
state qualified as economically distressed areas-18 more than were
identified in March 2009.[Footnote 4] Of the 518 Recovery Act
proj4Officialsois has started to date, about 96 percent (496) are
located in economically distressed counties. The total estimated cost
for the 496 projects is $724 million, or about 93 percent of total
Illinois funds FHWA has obligated to date.
Illinois to Revise and Recertify Maintenance-of-Effort Estimate:
The state of Illinois is revising its highway infrastructure investment
maintenance-of-effort certification and will submit it to the U.S.
Department of Transportation once the department establishes a
submittal deadline.[Footnote 5] On September 24, 2009, FHWA issued
supplemental guidance on the maintenance-of-effort requirement, which
clarified that states should include in their certified amounts the
funding they provide to local governments for transportation projects.
Based on the supplemental guidance, Illinois recalculated its highway
infrastructure investment maintenance-of-effort amount, which increased
from $814 million to $1.7 billion.
Recovery Act Transit Funds Benefited Metropolitan Chicago:
The Federal Transit Administration apportioned $375.5 million in
Transit Capital Assistance funds and $95.5 million in Fixed Guideway
Infrastructure Investment funds to Illinois and urbanized areas within
the state for transit projects.[Footnote 6] Approximately $414.2
million was allocated to transit agencies under northeastern Illinois's
Regional Transportation Authority, including $318.7 million from the
Transit Capital Assistance program and $95.5 million from the Fixed
Guideway Infrastructure Investment program.[Footnote 7] As of October
1, 2009, the three transit agencies that comprise the Regional
Transportation Authority”the Chicago Transit Authority, Metra (a
regional commuter rail system), and Pace (a suburban bus system)”had
initiated most of the transit projects they planned to fund with
Recovery Act dollars (see figure 1). The Chicago Transit Authority and
Pace used Recovery Act funds to, among other things, purchase buses.
[Footnote 8] Metra used Recovery Act funds to, for example, repair
locomotives and rehabilitate stations.
Figure 1: Status of Transit Projects in the Chicago Metropolitan Area,
as of October 1, 2009:
[Refer to PDF for image: illustrated table]
Transit agency: Chicago Transit Authority;
Program: Transit Capital Assistance;
Number of projects using Recovery Act funds, completed: 1;
Number of projects using Recovery Act funds, started: 5;
Dollars obligated (in millions): $191.3.
Transit agency: Chicago Transit Authority;
Program: Fixed Guideway;
Number of projects using Recovery Act funds, completed: 2;
Number of projects using Recovery Act funds, started: 4;
Dollars obligated (in millions): $48.9.
Transit agency: Metra;
Program: Transit Capital Assistance;
Number of projects using Recovery Act funds, started: 10;
Number of projects using Recovery Act funds: 11;
Dollars obligated (in millions): $94.2.
Transit agency: Metra;
Program: Fixed Guideway;
Number of projects using Recovery Act funds, started: 2;
Number of projects using Recovery Act funds: 5;
Dollars obligated (in millions): $46.6.
Transit agency: Pace
Program: Transit Capital Assistance;
Number of projects using Recovery Act funds, started: 3;
Dollars obligated (in millions): $33.1.
Source: GAO analysis of Chicago Transit Authority, Metra, and Pace
data.
[End of figure]
Chicago Transit Authority and Pace officials said that they did not
experience any major difficulties reporting employment data to
federalreporting.gov during the October 2009 reporting cycle.[Footnote
9] However, both agencies expressed some reservation about the quality
of the employment information they had gathered from bus manufacturers.
Officials from both agencies said that the manufacturers provided them
with data on the hours worked per project, but that they could not
verify the accuracy of those data.
Illinois Public Housing Agencies We Visited Continue to Make Progress
on Recovery Act Projects:
Illinois has 99 public housing agencies that have received Recovery Act
formula grants. In total, these public housing agencies have received
$221.5 million in Public Housing Capital Fund formula grants (see fig.
2). As of November 14, 2009, 89 of these public housing agencies have
obligated $41.8 million and 76 have drawn down $16.4 million. On
average, housing agencies in Illinois are obligating funds slower than
housing agencies nationally. We visited the following two housing
agencies for this report: the Chicago Housing Authority and the Housing
Authority for LaSalle County.
Figure 2: Percent of Public Housing Capital Fund Formula Grants
Allocated by HUD That Have Been Obligated and Drawn Down by Public
Housing Agencies in Illinois, as of November 14, 2009:
Refer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100%; $221,498,521;
Funds obligated by public housing agencies: 18.9%; $41,755,151;
Funds drawn down by public housing agencies: 7.4%; $16,426,807.
Number of public housing agencies:
Entering into agreements for funds: 99;
Obligating funds: 89;
Drawing down funds: 76.
Source: GAO analysis of HUD data.
[End of figure]
Both the Chicago Housing Authority and the Housing Authority for
LaSalle County have made progress on the Recovery Act projects they
identified for our July 2009 report.[Footnote 10] However, Chicago
Housing Authority officials reported that they had to replace 3 of the
12 projects on their original list because they began prior to HUD's
Recovery Act project eligibility date.[Footnote 11] Nevertheless, the
Chicago Housing Authority expects to meet the March 17, 2010, deadline
for obligating all of its allocated funds. The Housing Authority for
LaSalle County did not change its planned Recovery Act projects and,
like the Chicago Housing Authority, expects to meet the March 17, 2010,
deadline. As of June 18, 2009 (120 days after the date Recovery Act
funds were made available to housing agencies), the Chicago Housing
Authority had awarded contracts totaling approximately 13 percent of
its Recovery Act funds.[Footnote 12] The Housing Authority of LaSalle
County had awarded contracts totaling just over 50 percent of its
allocated funds.
Recovery Act Projects Will Result in Rehabilitated Units for Seniors
and Families:
Figure 3 describes some of the projects the Chicago Housing Authority
and the Housing Authority for LaSalle County funded with Recovery Act
monies.
Figure 3: Descriptions of Selected Public Housing Projects Funded with
Recovery Act Monies:
[Refer to PDF for image: 3 photographs and associated information]
Dearborn Homes:
The Chicago Housing Authority estimates that the fourth phase of its
Dearborn Homes rehabilitation project, which will involve the
comprehensive rehabilitation and modernization of 172 public housing
units, will cost $32.3 million. The housing agency has reserved $28.2
million in Recovery Act funds for this project. The approximately $4
million gap in funding will be covered with non-Recovery Act capital
funds.[A] To date, the housing agency has not obligated any money to
the project, which is expected to begin in January 2010 and be
completed in November 2010.
Kenmore Senior Apartments:
At the Kenmore Senior Apartments, the Chicago Housing Authority is
demolishing and rehabilitating the interiors of 132 units. The
completed building will include 100 expanded, renovated units for
seniors. The housing agency has obligated $987,348 to the demolition
project and has expended $717,630. The housing agency has obligated
$16.9 million to the rehabilitation project ($16.4 million in Recovery
Act funds and $419,626 in non-Recovery Act capital funds and Low-Income
Housing Tax Credit equity).[B] Work on the project began in May 2009
and is expected to be completed in January 2011.
Philip J. Mueller House:
At the Philip J. Mueller House, the Housing Authority for LaSalle
County is replacing a retaining wall. To date, the housing agency has
obligated $262,496 to the project and has expended all of those funds.
Work on the project began in June 2009 and is complete.
Source: GAO analysis of Chicago Housing Authority and Housing Authority
for LaSalle County information.
[A] HUD's Capital Fund program provides annual formula grants to
housing agencies for development, financing, modernization, and
management improvements.
[B] The Low-Income Housing Tax Credit program was designed to provide
the private market with an incentive to invest in affordable rental
housing. The tax credits are awarded to developers of qualified
projects. Developers then sell these credits to investors to raise
capital (or equity) for their projects, which reduces the debt that the
developer would otherwise have to borrow. Because the debt is lower, a
tax credit property can in turn offer lower, more affordable rents.
In addition, at the Ravlin Congregate Center, the housing agency is
updating kitchens and bathrooms in 84 senior apartments and updating
common areas. The housing agency has obligated $658,626 to the project
and has expended $570,225. Work began in August 2009 and is expected to
be completed in December 2009.[Footnote 13]
[End of figure]
Illinois Housing Agencies We Spoke to Faced Challenges Associated with
the Buy American Provision:
Both the Chicago Housing Authority and the Housing Authority for
LaSalle County reported challenges in meeting the requirements of, and
monitoring contractors' compliance with, the Buy American provision in
the Recovery Act.[Footnote 14] For example, the Chicago Housing
Authority is using Recovery Act funds to update the security camera
systems throughout its housing portfolio. Housing agency officials said
that the new cameras must be compatible with the agency's own security
monitoring systems, as well as with those of the Chicago Police
Department; however, they also said that the cameras that meet their
specifications are not made in the United States. The housing agency is
working with HUD to resolve the issue. Similarly, officials from the
Housing Authority for LaSalle County said that despite including
requirements to comply with the Buy American provision in its
contracts, they have identified at least one project in which non-
American materials were used. In this case, the housing agency required
the contractor to redo the work with American-made products.
Illinois Housing Agencies We Spoke to Reported Employment Data, but One
Did Not Apply Reporting Guidance:
Chicago Housing Authority officials said that they did not experience
any major difficulties reporting employment data to
federalreporting.gov during the October 2009 reporting cycle. The
housing agency also partnered with the City of Chicago to train
contractors and other vendors on how to collect and report employment
data to the housing agency. Housing Authority for LaSalle County
officials said that they reported the number of people, by trade, who
worked on Recovery Act-related projects, rather than applying the full-
time equivalents calculation outlined by the Office of Management and
Budget (OMB) in its reporting guidance.[Footnote 15] Subsequent to
October 10, 2009, HUD directed the housing authority to revise its
employment data using the OMB calculation.
Chicago Housing Authority Competitive Grants to Begin Soon:
In addition to the Capital Fund formula grants, HUD awarded 32
competitive grants to housing agencies in Illinois, including 27 to the
Chicago Housing Authority. One of these grants is for the redevelopment
of the housing agency's Ogden North project. The $9.9 million grant
will be used in combination with other public and private financing to
develop 60 new replacement public housing units and 77 non-public
housing rental units, 123 for-sale homes, a community space, and a
management and maintenance facility. The project is scheduled to begin
in July 2010 and be completed in January 2012.
Illinois's Quality Review Process Helped Reduce Reporting Errors among
State Agencies, but Some Local Entities Faced Reporting Challenges:
The Illinois Office of the Governor requires state agencies to submit
employment and other data to the Illinois Federal Reporting Test site
for review and verification before they submit their data to
federalreporting.gov.[Footnote 16] The Illinois Office of Internal
Audit is responsible for reviewing and verifying these data submissions
against baseline data the state collected from the agencies in
September 2009.[Footnote 17] Once the Office of Internal Audit has
verified, and the state's Recovery Act Executive Committee has approved
agencies' data submissions, agencies upload their data onto
federalreporting.gov. Local governments, such as the City of Chicago,
and local entities, such as the Chicago Transit Authority and the
Chicago Housing Authority, receive certain Recovery Act funds directly
from the federal agencies. These direct recipients of funds do not
submit their data to the state for review. Instead, these local
governments and entities are responsible for assuring the quality and
timeliness of their reports.
Illinois's Quality Review Process Helped Identify and Reduce Reporting
Errors among State Agencies:
Illinois required state agencies to submit information to the Illinois
Federal Reporting Test Site for review and verification before
submitting their data to federalreporting.gov. Most of the errors the
state identified during its review of agencies' data were relatively
minor. For example, the state found instances in which agencies had
entered incorrect activity codes, ZIP codes, and activity descriptions.
State officials said that after state agencies reported their data to
federalreporting.gov, a few had to address questions from, or make
small changes at the request of, their respective federal agencies, but
for the most part, these questions and corrections were easily
addressed.
Subsequent to the October 10, 2009, reporting date, state officials
told us that the Illinois State Board of Education had received and
reported incorrect employment data from a number of local education
agencies (LEAs)”generally school districts. For example, some LEAs
double-counted the number of positions created and retained with
Recovery Act funds, attributing the positions to both State Fiscal
Stabilization Fund education stabilization funds”which were distributed
and expended in state fiscal year 2009”and State Fiscal Stabilization
Fund government services funds”which were distributed and expended in
state fiscal year 2010.[Footnote 18] Other LEAs reported zero
positions. According to state officials, in these cases, LEAs received
Recovery Act funds before finalizing staff lay offs and were unsure
whether those jobs should count as jobs retained because of Recovery
Act funds. State officials said that they had identified some of these
errors through the review process, but were not aware of the full
extent of the problem until after October 10, 2009. According to state
officials, the Governor's Office and the Illinois State Board of
Education have discussed these reporting issues with the U.S.
Department of Education. They said that the Department of Education
plans to issue additional reporting guidance before the January 2010
reporting cycle.
State officials said that they plan to continue reviewing agencies'
data submissions during future reporting cycles. As it did with state
agencies that reported during the October 2009 reporting cycle, the
state plans to collect baseline data from, and conduct upload tests
with, newly reporting state agencies prior to the January 2010
reporting cycle. In addition, state officials said that they hope to
build automated edit checks into the Illinois Federal Reporting Test
site to speed the state's review of agencies' data and further reduce
reporting errors. Finally, state officials said that the Governor
recently created an independent Office of Accountability to work with
state agencies to ensure the correct reporting of data to
federalreporting.gov.
Some Local Entities We Spoke to Faced Reporting Challenges:
We spoke to several local governments and entities, including three
local governments, two transit agencies, and two public housing
agencies and all told us that they had reported their employment data
to federalreporting.gov by the October 10, 2009, deadline. However, as
discussed in more detail earlier in this report, some faced challenges
in verifying and reporting employment data. For example, the Chicago
Transit Authority and Pace, the two local transit agencies with which
we spoke, said that while the manufacturers that were fulfilling their
bus orders sent them detailed data on the actual hours their employees
worked, they could not verify the accuracy of the data they received.
The Housing Authority of LaSalle County told us that it reported the
number of people, by trade, who worked on Recovery Act-related
projects. The housing agency did not apply the full-time equivalents
calculation outlined by OMB in its reporting guidance.[Footnote 19]
Subsequent to October 10, 2009, HUD directed the housing authority to
revise its employment data using the OMB calculation.
Recovery Act Funds Aid Illinois's State Budget and Help Local
Governments Create and Expand Programs:
The Director of the Illinois OMB said that Recovery Act funds continued
to assist the state in funding its education, infrastructure, and
Medicaid programs. Recovery Act funds”including $1 billion from the
State Fiscal Stabilization Fund and $1.4 billion made available as a
result of increased federal assistance to Medicaid”are expected to
allow the state to provide an additional $2.4 billion in services this
fiscal year. The state plans to reduce spending and seek new revenue
sources”including tax increases and video gaining terminals”in
anticipation of an end to Recovery Act assistance after fiscal year
2010. The Illinois OMB will present a formal strategy for continuing
state operations without Recovery Act funds to the Governor in the
spring of 2010.
Local Governments Create and Expand Programs with Recovery Act Funds:
We visited three cities in Illinois-”the Chicago, Joliet, and
Springfield”-to review their use of Recovery Act funds. Table 2
provides recent demographic information for these cities.
Table 2: Demographic Data for the Cities of Chicago, Joliet, and
Springfield, Illinois:
Local government: City of Chicago;
Population: 2,853,114;
Locality type: City;
Unemployment rate: 11.3%.
Local government: City of Joliet;
Population: 146,125;
Locality type: City;
Unemployment rate: 12.2%.
Local government: City of Springfield;
Population: 117,352;
Locality type: City;
Unemployment rate: 8.2%.
Source: U.S. Census Bureau and U.S. Department of Labor.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
The cities generally used the Recovery Act grants to create or expand a
variety of programs and services that in many cases would otherwise
have remained unfunded. City officials noted that they generally did
not use Recovery Act grants for programs or personnel costs that would
result in additional city funding for long-term obligations.
City of Chicago. City of Chicago officials reported the city received
31 Recovery Act grants as of October 22, 2009, totaling over $1
billion. City officials included funds that were not awarded directly
to the city in this $1 billion total, including $240.2 million in
grants awarded to the Chicago Transit Authority, a $143.9 million grant
awarded to the Chicago Housing Authority, and $293.6 million in State
Fiscal Stabilization Fund monies for Chicago Public Schools. [Footnote
20] Table 3 describes the six largest Recovery Act grants awarded
directly to the City of Chicago. In addition to these grants, city
officials said that they have applied for three additional grants
totaling $107 million.[Footnote 21]
Table 3: Largest Direct Sources of Recovery Act Funding for the City of
Chicago:
Agency: U.S. Department of Housing and Urban Development;
Grant: Homelessness Prevention and Rapid Re-Housing Program;
Examples of uses of funds: Homelessness prevention;
Amount: $34.4 million.
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial Justice Assistance Grant;
Examples of uses of funds: Overtime pay for police officers; new police
cars;
Amount: $28.7 million.
Agency: U.S. Department of Energy;
Grant: Energy Efficiency and Conservation Block Grant;
Examples of uses of funds: Energy efficiency upgrades in city buildings
and facilities, including new boiler units and solar panels;
Amount: $27.6 million.
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant;
Examples of uses of funds: Foreclosure prevention; homebuyer
counseling; housing rehabilitation; job training for formerly
incarcerated individuals;
Amount: $22.5 million.
Agency: U.S. Department of Justice;
Grant: COPS Hiring Recovery Program;
Examples of uses of funds: To hire 50 police officers;
Amount: $13.3 million.
Agency: Federal Aviation Administration;
Grant: Airport Improvement Program;
Examples of uses of funds: Replace airport runway;
Amount: $12.3 million.
Source: City of Chicago.
Note: An agreement between the City of Chicago and Cook County reserved
$7.2 million of the Edward Byrne Memorial Justice Assistance Grant for
Cook County.
[End of table]
City of Joliet. City of Joliet officials said that the city had been
awarded $3.8 million in Recovery Act funds as of October 27, 2009. This
total included a $2.0 million grant for roadway resurfacing through the
Illinois Department of Transportation that was not awarded directly to
the city. In addition to those funds, the Joliet Housing Authority
received $2.5 million from the U.S. Department of Housing and Urban
Development.[Footnote 22] Table 4 lists the $1.9 million in grants
awarded directly to the city. As of November 13, 2009, the city awaited
decisions on its applications for a $55 million Transportation
Investment Generating Economic Recovery (TIGER) grant for a new
transportation center through the U.S. Department of Transportation and
a $1.3 million Energy Efficiency and Conservation Block Grant through
the U.S. Department of Energy.
Table 4: Direct Sources of Recovery Act Funding for the City of Joliet:
Agency: U.S. Department of Homeland Security;
Grant: Assistance to Firefighters Fire Station Construction Grant;
Examples of uses of funds: Construction of a fire station;
Amount: $1.2 million.
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial Justice Assistance Grant;
Examples of uses of funds: To purchase law enforcement equipment,
including cameras;
Amount: $459,820.
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant;
Examples of uses of funds: Road reconstruction; down payment assistance
for home buyers;
Amount: $249,000.
Source: City of Joliet.
Note: An agreement between the City of Joliet and Will County reserved
$229,910 of the Edward Byrne Memorial Justice Assistance Grant for Will
County.
[End of table]
City of Springfield. City of Springfield officials said that the city
had been awarded $5.3 million in Recovery Act funds. This total
included a $2.4 million grant for road work through the Illinois
Department of Transportation that was not awarded directly to the city.
The Springfield Housing Authority received $2.0 million from the U.S.
Department of Housing and Urban Development and $8.6 million in State
Fiscal Stabilization Fund monies went to the Springfield School
District. The $2.9 million awarded directly to Springfield is
summarized in table 5. As of November 12, 2009, the city did not have
any additional direct grants pending.
Table 5: Direct Sources of Recovery Act Funding for the City of
Springfield:
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial Justice Assistance Grant;
Examples of uses of funds: To purchase law enforcement equipment,
including cameras;
Amount: $1.7 million.
Agency: U.S. Department of Energy;
Grant: Energy Efficiency and Conservation Block Grant;
Examples of uses of funds: Rebates for energy efficient appliances;
Amount: $1.2 million.
Agency: U.S. Department of Housing and Urban Development;
Grant: Homelessness Prevention and Rapid Re-Housing Program;
Examples of uses of funds: Homelessness assistance;
Amount: $517,000.
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant;
Examples of uses of funds: Repaving streets and sidewalks;
Amount: $337,000.
Source: City of Springfield.
Note: An agreement between the City of Springfield and Sangamon County
reserved $481,129 of the Edward Byrne Memorial Justice Assistance Grant
for Sangamon County to retain police officers.
[End of table]
State Comments on This Summary:
We provided the Office of the Governor of Illinois with a draft of this
appendix on November 18, 2009. The Deputy Chief of Staff responded for
the Governor on November 19, 2009. In general, the state concurred with
our statements and observations. The official also provided us with
technical comments that we incorporated, as appropriate.
GAO Contacts:
Leslie Aronovitz, (312) 220-7712 or aronovitzl@gao.gov.
Cynthia Bascetta, (202) 512-7114 or bascettac@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Paul Schmidt, Assistant
Director; Dean Campbell; Robert Ciszewski; Gail Marnik; Cory Marzullo;
Roberta Rickey; and Rosemary Torres Lerma made major contributions to
this report.
[End of section]
Footnotes: Appendix VII: Illinois:
[1] See GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed (Appendixes), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: September
2009).
[2] [hyperlink, http://www.gao.gov/products/GA0-09-1017SP].
[3] FHWA Supplemental Guidance on the Determination of Economically
Distressed Areas under the Recovery Act (August 24, 2009). This
guidance included criteria for designating counties as economically
distressed based on special need, which took into consideration factors
such as actual or threatened business closures, business restructuring,
military base closures, and natural disasters or emergencies.
[4] 0fficials from the FHWA Illinois Division Office reviewed the
rationale the Illinois DOT used to identify economically distressed
counties.
[5] The Recovery Act requires that the state certify that it will
maintain the level of spending for the types of transportation projects
funded by the Recovery Act that it had planned to spend the day the
Recovery Act was enacted. Recovery Act, div. A, title XII, § 1201(a).
[6] The Transit Capital Assistance Program provides capital assistance
for transit projects in urban and non-urban areas. The Fixed Guideway
Infrastructure Investment Program provides capital assistance for the
modernization of existing fixed guideway systems, such as heavy rail,
commuter rail, and light rail. The jurisdictions of some urbanized
areas within the state cross into at least one other state. These
urbanized areas are reflected in each of the states in which they are
located. Therefore, some urbanized areas are included in multiple state
totals.
[7] As of November 5, 2009, the Federal Transit Administration had
obligated $362.1 million (96 percent) of the Transit Capital Assistance
funds”including $318.6 million to the transit agencies under the
Regional Transportation Authority”and all of the Fixed Guideway
Infrastructure Investment funds.
[8] We reviewed two contracts the Chicago Transit Authority and Pace
used to procure buses. According to Chicago Transit Authority
officials, the agency used an option on an existing Washington
Metropolitan Area Transit Authority contract to procure 58 60-foot
articulated hybrid buses for $48.9 million. Chicago Transit Authority
officials said that the existing contract was awarded competitively to
the best value bidder, was fixed price, and in accordance with existing
contracting procedures. Officials confirmed that the manufacturer had
delivered all of the buses as of September 11, 2009. According to Pace
officials, they issued a $16.6 million change order to an existing 5-
year contract to purchase an additional 58 30-foot buses. Pace
officials said that the original contract was awarded competitively to
the lowest bidder and in accordance with the existing contracting
procedures. They also stated that the unit price per bus was the same
as the original contract price. Officials said they expect the
manufacturer to begin production in February 2010 for delivery later
that year.
[9] Under § 1512 of the Recovery Act, direct recipients of Recovery Act
funds are expected to report quarterly to federal agencies (through the
federalreporting.gov Web site) on a number of measures, including the
use of funds and the number of jobs created and retained.
[10] See GAO, Recovery Act: States' and Localities' Current and Planned
Uses of Funds While Facing Fiscal Stresses (Appendixes), [hyperlink,
http://www.gao.gov/products/GAO-09-830SP] (Washington, D.C.: July
2009).
[11] See HUD, Information and Procedures for Processing American
Recovery and Reinvestment Act Capital Fund Formula Grants, PIH-2009-12
(HA) (Washington, D.C.: March 18, 2009). The housing agency replaced
two of the ineligible projects with the next two "shovel ready"
projects and with HUD's approval, deferred approximately $28 million in
Recovery Act funds it had allocated to the third phase of the Dearborn
Homes redevelopment to a later phase.
[12] Under the Recovery Act, public housing agencies are to give
priority to projects that can award contracts based on bids within 120
days from the date the funds are made available, as well as projects
that rehabilitate units, or those already underway or included in the
required 5-year capital fund plans.
[13] We reviewed a $651,345 contract for the renovation of the kitchens
and bathrooms the housing agency awarded for this project. Housing
agency officials said that the contract was awarded competitively to
the lowest bidder and was fixed price. They also said that they
followed HUD contracting guidance in awarding the contract, as they do
for all contracts.
[14] Section 1605 of the Recovery Act requires that "none of the funds
appropriated or otherwise made available by [the] Act may be used for a
project for the construction, alteration, maintenance, or repair of a
public building or a public work unless all of the iron, steel, and
manufactured goods used in the project are produced in the United
States." Federal agencies may, under certain circumstances, waive the
Buy American requirement and the requirement is to be applied in a
manner consistent with the United States obligations under
international agreements. For more information, see HUD, PIH
Implementation Guidance for the Buy American Requirement of the
American Recovery and Reinvestment Act of 2009 including Process for
Applying Exceptions, PIH-2009-31 (HA) (Washington, D.C.: August 21,
2009).
[15] See OMB, Implementing Guidance for the Reports on Use of Funds
Pursuant to the American Recovery and Reinvestment Act of 2009, M-09-21
(Washington, D.C.: June 22, 2009).
[16] Illinois is considered a decentralized reporting state because
state agencies, not the state, are responsible for uploading their
employment and other data into federalreporting.gov.
[17] According to state officials, state agencies uploaded baseline
data from their award notices and grant agreements to the Illinois
Federal Reporting Test site in September 2009. The state's review of
agencies' data submissions includes verifying DUNS numbers,
expenditures, and receipts. The state also performs a "reasonableness
check" of agencies' employment data by comparing it to federally
established employment reporting guidelines. When the state identified
errors or discrepancies, it required the agencies to make appropriate
corrections.
[18] The State Fiscal Stabilization Fund is a one-time appropriation
that the U.S. Department of Education awards to governors to, among
other things, help stabilize state and local budgets. States must use
education stabilization funds to restore state support for education
and government services funds for public safety and other government
services, which may include education.
[19] See OMB, Implementing Guidance, M-09-21.
[20] The Recovery Act funds for transportation, housing, and education
programs mentioned in this appendix were awarded directly to the
agencies responsible for administering these programs, not to the city.
[21] Pending grants include $105.9 million from the National
Telecommunications and Information Administration's Broadband
Technologies Opportunity program, $1.1 million from the U.S. Department
of Agriculture Forest Service's Wildland Fire Management program, and
$97,038 from the U.S. Department of Justice's Services, Training,
Officers, Prosecutors (STOP) Violence Against Women Formula Grant
program.
[22] LEAs serving the city also received State Fiscal Stabilization
Fund monies; however, city officials said that the exact amount the
city received was difficult to determine because the LEAs serving
Joliet also serve other cities.
[End of Appendix VII: Illinois:
Appendix VIII: Iowa:
Overview:
The following summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act)[Footnote 1] spending in Iowa. The full report covering all of
GAO's work in 16 states and the District of Columbia is available at
[hyperlink, http://www.gao.gov/recovery].
What We Did:
Our work in Iowa examined specific programs and funds under the
Recovery Act”the Highway Infrastructure Investment Program, Transit
Capital Assistance Program, Weatherization Assistance Program, Public
Housing Capital Fund, and education programs. We selected these
programs because they are among the programs receiving the greatest
amount of Recovery Act funds in Iowa and have recently begun to
obligate or are already using significant amounts of Recovery Act
funds. For descriptions and requirements of the programs we covered,
see appendix XVIII of GAO-10-232SP. To review the transportation
programs, we visited four transit authorities: the Des Moines Area
Regional Transit Authority; the Ames Transit Agency; the Mid-Iowa
Development Association and Dodger Area Transit in Fort Dodge; and the
Southwest Iowa Transit Agency in Atlantic, Iowa. We selected these to
provide a mix of large urban, small urban, and nonurban transit
authorities. To review the weatherization program, we revisited the
Polk County Public Works Department in Des Moines, an urban local
action agency, as well as Mid-Iowa Community Action in Marshalltown, a
rural local action agency. We revisited four public housing agencies
that we reported on in our July 2009 report: the Des Moines Municipal
Housing Agency, the Evansdale Municipal Housing Authority, the North
Iowa Regional Housing Authority and the Ottumwa Housing Authority.
Finally, we surveyed a representative sample of local educational
agencies (LEA) nationally and in Iowa about their planned uses of
Recovery Act funds. We also examined the state's actions to stabilize
its budget, monitor controls over the use of Recovery Act funds, and
report the number of jobs created and retained as a result of these
funds. We analyzed state and local budget information, including state
revenue estimates, and met with state and municipal officials. We
visited three Iowa localities”Cedar Rapids, Des Moines, and Newton”to
determine the amount of Recovery Act funds each is receiving from
federal agencies and how those funds are being used. We selected Cedar
Rapids because it is the second largest city in Iowa and was already
managing federal funds to recover from significant flooding that
occurred in 2008. We selected Des Moines because it is the largest city
in Iowa and has been awarded at least $16.5 million in Recovery Act
funds for various projects. We selected Newton because its unemployment
rate is above the state's average-8.1 versus a state average of 6.3”and
because of the recent loss of a major area employer. As part of our
review of Iowa's reporting on the number of jobs created and retained
under the Recovery Act, we met with highway contractors as well as
county and district engineers in Cass and Polk counties and from the
cities of Atlantic, Jefferson, and Fort Dodge.
What We Found:
* Highway Infrastructure Investment. The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned $358
million in Recovery Act funds to Iowa. As of October 31, 2009, the
federal government had obligated $334 million to Iowa; and $165 million
had been reimbursed by the federal government for work submitted for
payment by highway contractors.[Footnote 2] About 84 percent of
Recovery Act highway obligations for Iowa have been for pavement
improvement projects. Iowa's October 2009 report to
www.federalreporting.gov on the number of jobs created or retained
shows that Recovery Act funds have contributed to the equivalent of
more than 1,200 full-time highway infrastructure jobs in Iowa. In
addition, Iowa transportation officials estimate that the Recovery Act
has helped complete repairs on more than 250 lane-miles of road in the
state.
* Transit Capital Assistance Program. The U.S. Department of
Transportation's Federal Transit Administration (FTA) apportioned $36.5
million in Recovery Act funds to Iowa and urbanized areas located in
the state. As of November 5, 2009, FTA had obligated $35.2 million.
About 90 percent of Iowa's Recovery Act Transit Capital Assistance
Program funds are being used to replace and expand aging bus fleets and
to rehabilitate or improve transit facilities. Transit agencies we
visited”Des Moines Area Regional Transit Authority; Ames Transit
Agency; Mid-Iowa Development Association and Dodger Area Transit in
Fort Dodge; and the Southwest Iowa Transit Agency in Atlantic, Iowa”are
using Transit Capital Assistance Recovery Act funds primarily to
replace buses that have been in their fleets for 10 years or longer. In
total, the state and urbanized areas in Iowa reported 12 jobs created
or retained as a result of Transit Capital Assistance program
expenditures.
* Weatherization Assistance Program. Iowa has obligated most of the
$40.4 million received in Recovery Act funds to the local agencies that
carry out the weatherization work. Seventeen of 18 agencies are using
these funds to complete weatherization work, such as insulating walls
and attics and reducing air infiltration in homes. Actual work on homes
did not, however, start until September 2009; therefore, only 71 homes
had been weatherized, as of October 31, 2009.
* Public Housing Capital Fund formula grants and competitive grants.
Iowa's 48 public housing agencies received approximately $7.6 million
in Public Housing Capital Fund formula grants. As of November 14, 2009,
Iowa's public housing agencies had obligated about $6.1 million and had
drawn down about $3 million in Capital Fund formula grants. On average,
Iowa public housing agencies are obligating funds faster than public
housing agencies nationally. Only one public housing agency in Iowa was
awarded competitive grant funds”the Ottumwa Housing Authority”which was
awarded two competitive grants totaling about $178,000 to improve
energy efficiency at two sites.
* Education. Based on a survey of a representative sample of LEAs in
Iowa about their planned use of Recovery Act funds, we estimated that
about one-third of Iowa LEAs plan to use more than 50 percent of
Individuals with Disabilities Education Act (IDEA) funds to retain
staff and about two-thirds of LEAs plan to use more than 50 percent of
State Fiscal Stabilization Fund (SFSF) funds to retain staff. However,
about one-third of Iowa LEAs anticipate job losses, even with SFSF
funds.
* State and Local Government use of Recovery Act funds. The receipt of
Recovery Act funds enabled Iowa to mitigate the effects of a recent
budget cut to state agencies. Due to projected declines in fiscal year
2010 revenues, Iowa's governor recently implemented a 10 percent across-
the-board budget reduction for the fiscal year, which will result in
government furloughs and layoffs. However, according to state
officials, the receipt of Recovery Act funds has enabled Iowa to
maintain education services, and avoid additional state government
layoffs. The three localities we visited”Cedar Rapids, Des Moines, and
Newton”said that they have benefited from the receipt and use of
Recovery Act funds. However, officials from these three localities also
said that they faced significant challenges in applying for and
implementing Recovery Act programs due to continuing budgetary and
staffing constraints.
* State monitoring and internal controls. Iowa's State Auditor and the
Iowa Accountability and Transparency Board continue to monitor controls
over Recovery Act funds. The Office of the State Auditor's audit plan
includes consideration of the increased risk associated with state
agencies and localities receiving Recovery Act funding. The Iowa
Accountability and Transparency Board (Board) identified six high-
priority programs that it expects will have some difficulty in fully
complying with the accountability and transparency requirements in the
Recovery Act. The Board has required that these high-priority programs
submit a comprehensive accountability plan.
* State Reporting under Section 1512. In accordance with section 1512
of the Recovery Act,[Footnote 3] Iowa submitted a detailed report to
the federal government that included information on the number of jobs
created and retained by the implementation of the Recovery Act. Based
on data provided by state and local agency officials, Iowa created a
centralized database and used it to calculate the number of jobs
created or retained for programs funded through the state. Iowa has
implemented internal controls, such as requiring agency and local
officials to certify their review and approval of information prior to
submission, to help ensure the accuracy of the data reported to the
state. Iowa officials told us that a relatively small amount of data
were improperly submitted based on the number of awards that required
resubmission.
Over 90 Percent of Iowa Recovery Act Highway Infrastructure Funds Have
Been Obligated:
The Iowa Department of Transportation has acted quickly to obligate its
Recovery Act Highway funds for highway infrastructure improvements.
Specifically:
* As we reported in September 2009, $358 million was apportioned to
Iowa in March 2009 for highway infrastructure improvements.[Footnote 4]
As of October 31, 2009, $334 million (93 percent) had been obligated
and $165 million had been reimbursed to Iowa by FHWA for work submitted
for payment by highway contractors.
* Iowa's October 2009 report to the Office of Management and Budget
(OMB) on the number of jobs created or retained shows that Recovery Act
funds have contributed to the equivalent of more than 1,200 full-time
highway infrastructure jobs in Iowa. In addition, transportation
officials estimate that the Recovery Act has helped complete repairs on
more than 250 lane-miles of road in the state.[Footnote 5]
* About 84 percent of Recovery Act highway obligations for Iowa ($282
million of the $334 million obligated) have been for pavement
improvement projects”$197 million for pavement resurfacing and $85
million for pavement reconstruction and rehabilitation. Additionally,
$21 million is being used for bridge replacements. Iowa officials told
us that focusing on pavement projects allowed them to advance a
significant number of needed projects, which will reduce the demand for
these types of projects and free up federal and state funding for
larger, more complex projects in the near future. Figure 1 shows
obligations by the types of road and bridge improvements being made.
Figure 1: Highway Obligations for Iowa by Project Improvement Type as
of October 31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (89 percent, $298.9 million):
Pavement improvement: resurface ($196.5 million): 59%;
Pavement improvement: reconstruction/rehabilitation ($85.3 million):
25%;
New road construction ($14.4 million): 4%;
Pavement widening ($2.8 million): 1%.
Bridge projects total (6 percent, $21.4 million):
Bridge replacement ($20.6 million): 6%;
Bridge improvement ($660,000): Less than 1%;
New bridge construction ($135,000): Less than 1%.
Other (4 percent, $14 million):
Other ($14 million): 4%.
Source: GAO analysis of Federal Highway Administration data.
Note: Totals may not add due to rounding. "Other" includes safety
projects, such as improving safety at railroad grade crossings, and
transportation enhancement projects, such as pedestrian and bicycle
facilities, engineering, and right-of-way purchases.
[End of figure]
* To ensure highway funds are utilized in accordance with the Recovery
Act, the Iowa Department of Transportation has detailed, documented
procedures for the administration and inspection of work performed by
contractors including written contracting procedures, contractor
qualification standards, and material and construction specifications
and guidelines. The state and local governments also employ
construction and material inspectors and technicians, and
construction engineers to review, measure, and accept work performed by
contractors.
* In October, the Iowa Department of Transportation submitted its first
Section 1512 report and the department continues to report project,
financial, and employment information to FHWA. This reporting is
required by the Recovery Act to provide greater accountability and
transparency and includes, among other things, monthly reporting of
contracts awarded, projects in process, employees working, and employee
hours worked. In addition, the department reports this
information to the U.S. House of Representatives Committee on
Transportation and Infrastructure on a monthly basis.
* Iowa has also initiated an $830 million state-funded program”named I-
JOBS”to invest in its infrastructure. A key component of this program
is $115 million for transportation projects across the state, including
$50 million for bridge safety, $45 million for city streets and
secondary roads, and the remainder for enhancing public transit and
recreational trails. As of October 31, 2009, 55 bridge safety projects
had been approved for I-JOBS funding in fiscal years 2010 and 2011, and
$160,000 had been approved for Ames Transit Agency facilities.
Iowa Is Using Recovery Act Transit Capital Assistance Grant Funds
Primarily to Modernize Its Bus Fleet:
Iowa is using Recovery Act transit funds to replace 160 buses and add
20 new buses to its transit fleet. Specifically:
* In March 2009, $36.5 million in Recovery Act Transit Capital
Assistance funds were apportioned to Iowa and urbanized areas located
in the state for transit projects. Of this amount, $15.2 million was
for nonurbanized areas,[Footnote 6] $10.7 million for smaller urbanized
areas, and $10.6 million for urbanized areas with a population of
200,000 or more.[Footnote 7] As of November 5, 2009, FTA had obligated
$35.2 million for Iowa transit capital assistance and reimbursed Iowa
about $4 million for transit expenditures.
* About 90 percent of Iowa's Recovery Act Transit Capital Assistance
Program funds are being used to replace and expand aging bus fleets and
rehabilitate or improve transit facilities. Specifically, $24 million
is being used to replace 160 buses of various sizes, many of which are
10 years old or older. Another $5.6 million is being used to expand bus
fleets in areas of growth around the state. In all cases, these
purchases were included in the region's transportation improvement plan
and could be started quickly. Iowa transportation officials said they
believe that the purchase of new buses will reduce maintenance costs
across the state and, in some cases, could improve fuel efficiency.
* The Recovery Act provides that Transit Capital Assistance Program
funds may be used for activities such as vehicle replacements,
facilities renovation or construction, and preventive maintenance.
Additionally, up to 10 percent of funds apportioned to urbanized or
nonurbanized areas may be used for operating expenses.
* Transit agencies we visited”Des Moines Area Regional Transit
Authority; Ames Transit Agency; Mid-Iowa Development Association and
Dodger Area Transit in Fort Dodge; and the Southwest Iowa Transit
Agency in Atlantic, Iowa”are using Recovery Act Transit Capital
Assistance Program funds primarily to replace high-mileage buses that
have been in their bus fleets for 10 years or longer. Three of the four
agencies were also renovating or expanding facilities. Officials from
all four agencies we met with reported that Recovery Act funds allowed
them to fund projects that would likely not have been funded this
fiscal year because demand exceeded resources.
* The Des Moines Transit Authority plans to use about $3 million to
improve information available to customers by adding new "automated
vehicle location" technology for its bus fleet. This technology will
allow transit riders to use their cell phones and similar technology to
check the status of their bus. It also plans to use 10 percent of its
funds”about $788,800”to fund operations. This proposal, currently
awaiting FTA approval, would provide Recovery Act funds to pay for
staff, facilities, and fuel.
* Officials for the transit agencies we visited said that they are
using existing processes and procedures to monitor Recovery Act funds,
such as a detailed inspection of all new vehicles received before
payment is authorized and an engineering inspection of all completed
facilities work such as building renovations and pavement repair. The
state transit assistant director said that he and his staff have been
regularly monitoring the status of local transit agency procurements to
ensure that all procurement actions are completed in a timely manner.
* Reporting the number of jobs created or retained as required by
section 1512 was calculated and submitted to OMB by the Iowa Department
of Transportation, through the Iowa Department of Management, for
smaller urbanized and nonurban areas. Larger urbanized areas, such as
Des Moines, reported directly to the federal government. The state
provided information on jobs associated with renovated facilities as
well as some new bus purchases. Des Moines' transit authority reported
only on facilities-related work. In total, the state of Iowa and
urbanized areas reported 12 jobs created or retained as a result of
Transit Capital Assistance program expenditures. In calculating the
number of jobs created or retained, Iowa transit officials relied upon
bus manufacturers to provide hours worked associated with basic bus
production. Additional hours identified with local bus customizing were
calculated by the local transit authorities based on input from local
contractors.
Iowa Has Obligated a Majority of Weatherization Funds Received, but
Only a Few Homes Have Been Weatherized:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the U.S. Department of Energy (DOE) is
distributing to each of the states, the District of Columbia, and seven
territories and Indian tribes, to be spent over a 3-year period. This
program enables low-income families to reduce their utility bills by
making longterm energy efficiency improvements to their homes by, for
example, installing insulation or modernizing heating or air
conditioning equipment. On September 22, 2009, DOE allocated all of
these funds to the states, but it has limited the states' access to 50
percent of these funds.[Footnote 8] As of October 31, 2009, DOE had
obligated $80.8 million to Iowa but limited the amount of funds
available to one-half of this amount, or $40.4 million. The Iowa
Division of Community Action Agencies (DCAA) has obligated most of
these funds, or $38.5 million, to 18 local agencies that carry out the
weatherization work. Seventeen of the local agencies are currently
using these funds to weatherize homes; funding to one agency is on hold
until DCAA corrective actions are implemented by the agency.[Footnote
9] Because DCAA decided not to spend Recovery Act funds on
weatherization work until the Department of Labor (Labor) provided the
prevailing wage rates for weatherization workers in Iowa,
weatherization work did not start until September 2009. Therefore, only
71 homes had been weatherized at a total cost of $395,151, as of
October 31, 2009. To date, most of the Recovery Act funds spent in Iowa
were used to provide training and technical assistance, and to purchase
equipment for the local agencies' use in weatherizing homes (see table
1 for more details on funding). Nevertheless, DCAA officials are
confident that Iowa will be able to spend all of the Recovery Act funds
obligated by DOE within the program time frames and will successfully
weatherize the number of homes originally planned.
Table 1: Iowa's Use of Recovery Act Weatherization Assistance Program
Funds, as of October 31, 2009:
Funds obligated by DOE: $80.8 million;
Funds available to Iowa: $40.4 million;
Funds obligated by Iowa: $38.5 million;
Funds spent by Iowa: $3.1 million;
Number of homes Iowa plans to weatherize with Recovery Act funds:
7,200
Source: GAO analysis of Iowa DCAA data.
[End of table]
* DCAA officials said they continue to be concerned about issues
regarding compliance with the Davis-Bacon Act. Their concerns focus
primarily on how to respond in situations where specific work is
completed on a weatherization project, but Labor has not determined a
specific wage rate covering the work. For example, electricians and
plumbers are sometimes needed for the weatherization work, but Labor
has not set wage rates for these workers.
* DCAA's oversight of its weatherization program includes a combination
of desk reviews of detailed reports on program spending and activities,
on-site fiscal and program monitoring at each local agency, and annual
reviews of independent auditors' reports on each local agency. In
addition, DCAA requires local agencies to perform a final inspection of
all homes completed by their contractors to ensure that weatherization
work meets state standards. DOE, in turn, requires DCAA to inspect 5
percent of the homes weatherized by each local agency. Where Recovery
Act funds were used, however, DCAA staff said that they plan to inspect
7 to 9 percent of homes weatherized.
* DCAA officials told us they are using existing program measures to
track weatherization program effectiveness. For example, each year DCAA
engages a private consultant to assess program costs and results and
the assessments are provided to DOE. The most recent assessment,
completed June 1, 2009, found first-year client fuel savings averaged
$388, compared with $394 per dwelling the previous year. DCAA expects
to use this same program measure to help demonstrate energy savings
from Recovery Act Funds.
* DCAA reported the number of hours worked by state and local
weatherization staff and contractor personnel that were directly funded
using Recovery Act funds. These hours, along with other pertinent
information, were reported to the Iowa Department of Management which,
in turn, determined the number of jobs created or retained and reported
this information to OMB.
* We visited two of the local agencies”Polk County Public Works and Mid-
Iowa Community Action, Inc. (MICA)”that are currently using Recovery
Act funding to weatherize homes. Officials at both local agencies told
us that since the establishment of prevailing wages required by the
Davis-Bacon Act, they have begun spending Recovery Act funds to
weatherize homes.
* Polk County officials told us that they rely on private contractors
to complete all weatherization work. As of October 31, 2009, Polk
County had spent $15,750 to weatherize 2 homes. MICA, on the other
hand, uses its own crew-based staff to complete all work. MICA
officials said they are considering using some weatherization
contractors in the future. As of October 31, 2009, MICA had spent
$41,005 to weatherize 9 homes.
Iowa Public Housing Agencies Continue to Make Progress on Recovery Act
Projects, but Reporting on Jobs Was Inconsistent:
Iowa housing agencies are using Recovery Act funds to improve and
modernize public housing. Specifically:
* In Iowa, 48 public housing agencies have received Recovery Act
formula grant funds. In total, these public housing agencies received
approximately $7.6 million in Public Housing Capital Fund formula
grants (see fig. 2). As of November 14, 2009, 44 public housing
agencies had obligated about $6.1 million, and 35 had drawn down about
$3 million. On average, according to Department of Housing and Urban
Development (HUD) data, public housing agencies in Iowa are obligating
funds faster than public housing agencies nationally.
Figure 2: Percentage of Public Housing Capital Funds Allocated by HUD
That Have Been Obligated and Drawn Down in Iowa, as of November 14,
2009:
[Refer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100%; $7,615,337;
Funds obligated by public housing agencies: 80.1%; $6,101,978;
Funds drawn down by public housing agencies: 39.9%; $3,039,955.
Number of public housing agencies:
Entering into agreements for funds: 48;
Obligating funds: 44;
Drawing down funds: 35.
Source: GAO analysis of HUD data.
[End of figure]
* The four public housing agencies that we visited”the Des Moines
Municipal Housing Agency, the Evansdale Municipal Housing Authority,
the North Iowa Regional Housing Authority, and the Ottumwa Housing
Authority”have obligated almost all of their Recovery Act formula grant
funds and have begun or completed most projects (see table 2).
Specifically, as of November 14, 2009, the four housing agencies have
obligated over 99 percent and expended about 25 percent of their
formula grant funds, and agency officials told us that they will meet
the obligation and expenditure deadlines outlined in the Recovery Act.
Officials at these housing agencies identified 19 projects that have
been or will be funded using Recovery Act funds, from relatively simple
tasks, such as repairing concrete walkways, to more comprehensive work,
such as a renovation of a building and its individual units.
Table 2: Use of Recovery Act Formula Grant Funds at Selected Iowa
Public Housing Agencies, as of November 14, 2009:
Public housing agency: Des Moines Municipal Housing Agency;
Funds awarded: $1,455,108;
Funds obligated: $1,455,108;
Funds expended: $323,758;
Project status at time of GAO visit: one project currently underway
Public housing agency: Evansdale Municipal Housing Authority;
Funds awarded: $77,364;
Funds obligated: $77,364;
Funds expended: $50,677;
Project status at time of GAO visit: two projects completed; three
projects yet to begin.
Public housing agency: North Iowa Regional Housing Authority;
Funds awarded: $209,780;
Funds obligated: $209,780;
Funds expended: $209,741;
Project status at time of GAO visit: five projects completed.
Public housing agency: Ottumwa Housing Authority;
Funds awarded: $601,765;
Funds obligated: $596,858;
Funds expended: 0[A];
Project status at time of GAO visit: six projects completed; two
projects currently underway.
Public housing agency: Total;
Funds awarded: $2,344,017;
Funds obligated: $2,339,110;
Funds expended: $584,176.
Source: GAO analysis of HUD and public housing agency data.
[A] According to an Ottumwa Housing Authority official, the agency
experienced technical problems with its Internet service that prevented
it from accurately reporting its Recovery Act formula grant
expenditures to HUD. According to the official, the Ottumwa Housing
Authority had expended about $242,535 as of November 14, 2009.
[End of table]
* In general, housing agencies that we visited have not changed their
plans for using Recovery Act formula grant funds since our July 8, 2009
report. These housing agencies also did not report any significant
concerns about compliance with the Davis-Bacon Act or the Buy American
provision[Footnote 10] of the Recovery Act. More specifically, at the
time of our visit, housing agency officials reported the following:
- Thirteen of 19 projects were complete, 3 were under way, and 3 had
not yet begun.
- All 19 projects were on the public housing agencies' 5-year plans.
- Twenty-four contracts had been awarded, 17 of which were awarded
competitively within 120 days of when the housing agencies received the
funds.
- The Des Moines Municipal Housing Authority was rehabilitating 18
vacant units. No other housing agencies that we visited were
rehabilitating vacant units.
* We visited seven sites with projects funded using Recovery Act
formula grant funds in Iowa. Construction was under way or complete at
all projects that we visited. For example, the Ottumwa Public Housing
Authority is replacing the roof on a high-rise, 97-unit public housing
facility. We observed that work was under way at the time of our visit
in October 2009. As of October 21, 2009, officials at the Ottumwa
Housing Authority told us they had obligated $61,150 for this project,
but had not yet expended any funds (see figure 3).
Figure 3: Roof Repairs to an Iowa Public Housing Facility, before Work
Began and Work in Progress:
[Refer to PDF for image: 2 photographs]
Source: GAO.
[End of figure]
* We selected and discussed with officials one contract for each of the
four housing agencies we visited. Officials told us that all four were
competitively bid. One contract received only one bid, which officials
attributed to the rural location of the housing authority and the
limited number of qualified contractors in the area.
* Officials reported few problems using www.federalreporting.gov or the
Recovery Act Management and Performance System. However, at least one
housing agency official complained that the additional reporting
requirements were burdensome for smaller housing agencies such as his
(he works alone with just one part-time assistant.)
* Reporting on the number of jobs created or retained was inconsistent
across the four housing agencies we visited. Officials at two housing
agencies did not report any jobs created or retained because officials
said that they did not believe they had collected sufficient data to
report results. One official told us that she received HUD's guidance
on counting jobs after Recovery Act contracts were complete, making it
difficult to collect the necessary data, although contractors told her
some jobs were retained or created. Officials at the other two housing
agencies we visited used different methods to estimate the number of
jobs created or retained: one housing agency official said he counted
the number of workers on each project, based on his understanding of
guidance from HUD officials, while an official from a second housing
agency used Davis-Bacon payroll data. As previously discussed, Iowa's
housing agencies do not submit their quarterly reports to the Iowa
Department of Management for review, rather they report directly
through www.federalreporting.gov or, as we found at one housing
authority, officials provided data to the city finance office which, in
turn, reported to the Web site.
Public Housing Projects Funded with Competitive Grants to Begin Soon:
One housing agency in Iowa plans to use Capital Fund Recovery Act
competitive grants to fund energy efficiency improvements at public
housing facilities.
* In addition to Capital Fund formula grants described above, HUD
awarded two competitive grants to public housing agencies in Iowa. Both
grants were awarded to the Ottumwa Housing Authority for creating
energy-efficient communities. On September 23, 2009, HUD notified the
Ottumwa Housing Authority that it was awarded the following competitive
grants:
- $100,000 to install energy-efficient refrigerators and washing
machines in individual units in high-rise public housing facilities, and
- $78,300 to install energy-efficient refrigerators and lighting in
individual units at family facilities.
The Ottumwa Housing Authority plans to solicit bids to award
contracts for both projects in November 2009 and install the new
appliances before the end of the year.
* Two other public housing agencies that we visited applied for
competitive grants: the North Iowa Regional Housing Authority and the
Des Moines Municipal Housing Agency. An official from the North Iowa
Regional Housing Authority said that she was very dissatisfied with the
competitive grant process because, as a small agency that is
responsible for an area exceeding 4,000 square miles, she does not
believe her application received the same level of consideration as
other larger public housing agencies. While Ottumwa Housing
Authority officials were somewhat satisfied with the application
process, they also said the process required a lot of data.
Iowa Is Using Recovery Act Education Funds to Save Jobs:
We surveyed a representative sample of LEAs”generally school districts”
nationally and in Iowa about their planned uses of Recovery Act funds.
Table 3 shows Iowa and national GAO survey results on the estimated
percentages of LEAs that (1) plan to use more than 50 percent of their
Recovery Act funds from three education programs to retain staff, (2)
anticipate job losses even with SFSF monies, and (3) reported a total
funding decrease of 5 percent or more since last school year.
Table 3: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: IDEA funds;
Estimated percentages of LEAs, Iowa: 32%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: Title I funds[A];
Estimated percentages of LEAs, Iowa: 46%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: SFSF funds;
Estimated percentages of LEAs, Iowa: 68%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipate job losses, even with SFSF funds;
Estimated percentages of LEAs, Iowa: 31%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Iowa: 10%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Notes: Percentage estimates for Iowa have margins of error, at the 95
percent confidence level, of plus or minus 13 percentage points or
less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[A] Title I, Part A, of the Elementary and Secondary Education Act of
1965.
[End of table]
Iowa Continues to Use Recovery Act Funds to Mitigate Effects of Budget
Cuts, but Recovery Act Implementation Strained Local Budgets and
Personnel:
Iowa ended fiscal year 2009 with a balanced budget,[Footnote 11] in
part by using $45.3 million from the state's Economic Emergency Fund
which, state officials explained, is allowed under state law. However,
senior officials from the Iowa Department of Management said that on
October 8, 2009, in response to reduced revenue estimates for fiscal
year 2010,[Footnote 12] the Governor issued an executive order
requiring a 10 percent cut to state fiscal year 2010 general fund
expenditures for all departments and entities receiving such funds from
the state.[Footnote 13] This cut is expected to result in the
elimination of positions at state agencies,[Footnote 14] and the
implementation of furloughs for over 3,200 state employees. According
to a senior official from the Iowa Department of Management, the
receipt of Recovery Act funds can continue to enable Iowa to mitigate
the effects of the 10 percent cut by maintaining state and local
education services and reducing the number of layoffs in state agencies
and local school districts. The official stated that without Recovery
Act funds, Iowa would have had to cut additional programs, services,
and staff. This official also said that the across-the-board reduction
should have a minimal, if any, effect on implementation of Recovery Act
programs. However, the Iowa State Auditor said that reductions in staff
can negatively affect the application of internal controls over
Recovery Act expenditures, potentially making Recovery Act-funded
programs more vulnerable to fraud, waste, and abuse.
* We visited three localities in Iowa to determine the extent to which
local governments used Recovery Act funds (see table 4). Similar to
Iowa's state government, local municipal governments have benefited
from the use of Recovery Act funds under various programs, but
implementation has strained municipal operational budgets and personnel
resources.
Table 4: Localities in Iowa Visited to Address Use of Recovery Act
Funds:
Locality: Cedar Rapids;
Population: 128,056;
Locality type: City;
Unemployment rate: 6.6%.
Locality: Des Moines;
Population: 197,052;
Locality type: City;
Unemployment rate: 7.3%.
Locality: Newton;
Population: 15,042;
Locality type: City;
Unemployment rate: 8.1%.
Source: U.S. Census Bureau and U.S. Department of Labor.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
* To administer Recovery Act-funded programs, local governments in Iowa
need to find other financial resources, such as local tax revenue,
according to a senior official from the Iowa Department of Management.
They pointed out that local governments in Iowa are mostly funded by
local sources of revenues,[Footnote 15] and that the state does not
share a significant amount of revenue with local governments, nor does
it provide funding to local governments to address administrative costs
for Recovery Act-funded programs.[Footnote 16]
* These localities have benefited from the receipt and use of Recovery
Act funds, but faced budget and staffing constraints in implementing
Recovery Act-funded programs. For instance, officials from Des Moines
said the city used about $1.2 million to improve neighborhood
infrastructure such as streets and sidewalks, and about $1.8 million to
fund homelessness prevention and rapid rehousing efforts.[Footnote 17]
Des Moines officials noted that the availability of Recovery Act funds
from federal and state sources enabled community development officials
to assist more citizens than in previous years; however, the city has
been affected by reduced revenue collection and higher administrative
costs to implement Recovery Act programs. Due to reduced availability
of staff and financial resources, Des Moines officials said they faced
significant challenges adhering to requirements for Recovery Act-funded
programs. For instance, city officials struggled to finish design
applications needed to apply for funding for a new fire station from
the Recovery Act Assistance to Firefighters Fire Station Construction
Grant program.
* Similarly, officials from Newton said that Recovery Act funds
obtained through state agencies allowed the city to construct capital
projects that would not have otherwise been funded. For example, the
city received about $620,000 in grants through the state's highway
infrastructure program for street overlay projects and $660,000 in
loans and grants for an aeration basin replacement project to improve
Newton's wastewater facilities.[Footnote 18] However, city officials
needed to use funds from their operating budget, as well as from
Recovery Act funds, to complete Recovery Act projects under their
jurisdiction. Cedar Rapids also received Recovery Act funds from
federal and state sources for several programs, including about
$1,487,000 for transit capital assistance and about $537,000 for
homelessness prevention efforts.[Footnote 19] Cedar Rapids has applied
for Recovery Act competitive grants but city officials said that they
have limited staffing available to administer the grants program.
Iowa's State Auditor and Iowa Accountability and Transparency Board
Provide Oversight of Recovery Act Funds:
Iowa's State Auditor and Accountability and Transparency Board continue
to monitor controls over Recovery Act Funds. Specifically:
* The Office of the State Auditor recently completed its 2009 audit
plan. According to state officials, the audit plan reflects the
increased risk associated with the receipt of Recovery Act funds by
agencies and localities, as well as agency risk assessments submitted
by agency auditors. For example, state audit officials told us that
audits are in process at Iowa's Department of Human Services,
Department of Transportation, and the Workforce Development Agency
because these agencies are receiving the bulk of Recovery Act funds.
* Recently, Iowa reduced the State Auditor's appropriation by 10
percent, which followed the 30 percent reduction to the State Auditor's
appropriation implemented at the beginning of fiscal year 2010. These
reductions are not expected to affect the State Auditor's ability to
oversee Recovery Act funds, state audit officials said, because of the
auditor's ability to bill state agencies directly for work associated
with auditing federal funds. However, as a result of these reductions,
the Office of the State Auditor may not be able to perform sufficient
audit work at certain state agencies to issue an unqualified opinion on
the state of Iowa comprehensive annual financial report, according to
officials from the office.
* The Iowa Accountability and Transparency Board's Internal Control
Evaluation Team surveyed 82 programs and identified 6 high-priority
programs”such as the Weatherization Assistance Program and the
education stabilization portion of the SFSF program”that it expects
will have some difficulty in fully complying with the accountability
and transparency requirements in the Recovery Act. The board has
required that these high-priority programs submit comprehensive
accountability plans for the board's review of Recovery Act activities.
These plans are due by November 16, 2009.
* The U.S. Department of Justice and the DOE Office of the Inspector
General provided training on federal procurement guidelines and fraud
prevention on October 27, 2009. This training was mandatory for staff
involved in programs identified as a high-priority by the board.
* Senior officials from the Iowa Department of Management said that
they plan to create a more detailed "dashboard" of Recovery Act data on
Iowa's Economic Recovery Web site. Additionally, senior officials from
the department want to create a Web-based system that allows users to
pull up the number of jobs created or retained, by job classification
code, from the use of Recovery Act funds in Iowa.
Iowa Reported on Jobs Created, Retained, and Other Information:
Iowa's centralized database and validation and certification processes
helped to ensure the accuracy of data, reported jobs, and other
information related to the use of Recovery Act funds to the federal
government, as follows:
* On October 10, 2009 the state of Iowa submitted a detailed report to
the federal government that included Recovery Act expenditures and the
number of jobs created and jobs retained by the act.
* The Iowa Department of Management used a centralized database to
report Iowa's Recovery Act information”funds received and expended, and
performance measures, such as jobs created and retained”to federal
entities. The state's centralized database calculated the number of
jobs created or retained based upon data provided by state agency and
locality officials, such as hours worked. State officials told us that
they used a centralized database to help ensure the accuracy and
consistency of the information reported. However, localities, such as
public housing authorities and urbanized transit agencies”which receive
their funding from federal agencies”report Recovery Act information to
OMB, not through the state's centralized reporting database.
* The centralized database used to report Recovery Act information was
created by the Iowa Recovery Act implementation executive working
group. This executive working group was created in March 2009 to
provide a coordinated process for (1) reporting on Recovery Act funds
available to Iowa through various federal grants and (2) tracking the
federal requirements and deadlines associated with those grants. A
larger implementation working group”made up of representatives from 24
state agencies”is led by the executive working group and assisted by
groups focused on implementation topics such as budget and tracking,
intergovernmental coordination, and communication.
* Iowa officials told us that they developed internal controls to help
ensure that the data submitted to federal entities are accurate.
Specifically, Iowa inserted validation processes in the database to
help identify and correct inaccurate data as it was entered. Officials
told us that these validation processes generally worked and identified
inaccuracies in the data. In addition, state agency and locality
officials were required to certify their review and approval of their
agency's information prior to submission to the state's centralized
database and OMB. These certifications are intended to help ensure
ownership and accuracy of the information.
* According to Iowa officials, the number of errors reported in the
grant awards data was relatively small. Specifically, information on 29
of the 2,137 individual Recovery Act awards reported to OMB had to be
removed from the original submission due to coding errors. In addition,
the state's internal controls helped officials identify and correct
duplicate subrecipient report submissions. To improve the process,
state officials plan to provide additional training to agencies and
localities that had problems with reporting required Recovery Act data.
As a result, Iowa officials said they believe that the majority of
the problems identified in their initial quarterly report to OMB will
be corrected before they are required to report in the next quarter.
State Comments on This Summary:
We provided the Governor of Iowa with a draft of this appendix on
November 17, 2009. The Director, Iowa Office of State-Federal
Relations, and the Director for Performance Results, Department of
Management, responded for the Governor on November 19, 2009. Officials
agreed with our findings. The officials also offered technical
suggestions, which we have incorporated, as appropriate.
GAO Contact:
Lisa Shames, (202) 512-3841 or shamesl@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Thomas Cook, Assistant
Director; Christine Frye, analyst-in-charge; James Cooksey; Daniel
Egan; Ronald Maxon; Marietta Mayfield; Mark Ryan; and Ben Shouse made
key contributions to this report.
[End of section]
Footnotes: Appendix VIII: Iowa:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] States request reimbursement from FHWA as they make payments to
contractors working on approved projects.
[3] Recovery Act, div. A, title XII, § 1512.
[4] This does not include obligations of $539,424 associated with
"Transfers to FTA" of apportioned funds that were transferred from FHWA
to FTA for transit projects. Generally, FHWA has authority pursuant to
23 U.S.C. § 104(k) (1) to transfer funds made available for transit
projects to FTA.
[5] A lane-mile is one lane of road for one mile. Two-hundred fifty
lane-miles equal 62.5 miles of 4-lane highway or 125 miles of 2-lane
highway.
[6] $539,424 was transferred from FHWA to FTA to fund additional
transit projects. Generally, FHWA has authority pursuant to 23 U.S.C. §
104(k) (1) to transfer funds made available for transit projects to
FTA.
[7] 0f the $10.6 million total for the urbanized areas, $7.9 million is
apportioned to Des Moines, $1.5 million to Davenport, and $540,000 to
Bettendorf.
[8] DOE currently plans to make the remaining funds available to the
states once 30 percent of the housing units identified in the state
plans are weatherized.
[9] During routine program monitoring of homes weatherized by the
Southern Iowa Economic Development Agency, DCAA staff said that they
found numerous weaknesses in the agency's oversight of the contractors'
work. As a result, DCAA found that the work completed on numerous homes
did not meet the required state standards and needed to be redone.
While Recovery Act funds were not used on these homes, DCAA believed
that the program weaknesses were serious so that it suspended Recovery
Act funding to the agency on September 24, 2009. Before this funding
can be restored, DCAA is requiring that the local agency implement
specific corrective actions, such as requiring the local agency to
engage an independent audit firm to review all DCAA findings and report
to DCAA. According to DCAA officials, the full extent of the problems
at this agency is not yet known because the local agency is still
inspecting all homes weatherized since April 1, 2009. However, DCAA
officials said that the local agency has implemented some of the
required corrective actions and they expect that the agency can resume
receiving Recovery Act weatherization funding sometime in the future.
[10] The Buy American provision of the Recovery Act prohibits, with
certain exceptions, the use of Recovery Act funds "for the
construction, alteration, maintenance, or repair of a public building
or work unless all of the iron, steel, and manufactured goods used in
the project are produced in the United States." Federal agencies may,
under certain circumstances, waive the Buy American requirement and the
requirement is to be applied in a manner consistent with United States
obligations under internal agreements. Recovery Act, div. A, § 1605.
[11] Iowa's fiscal year begins July 1 and ends June 30.
[12] 0n October 7, 2009, the Iowa Revenue Estimating Conference lowered
the fiscal year 2010 revenue estimate, previously set in March 2009,
from about $5.853 billion to about $5.438 billion, about a $414.9
million reduction.
[13] Executive Order 19, 32 Admin. Bull. 1139. As a result of the
fiscal year 2010 across-the-board cuts, the total reduction in General
Fund expenditures for executive branch departments and entities is
$564.4 million. Additionally, the legislative and judicial branches
announced reductions to their fiscal year 2010 budgets of $3.3 million
and $11.4 million, respectively. The fiscal year 2010 budgets for all
three branches of government in Iowa was reduced by a total of $579.1
million.
[14] State agencies plan to implement reductions-in-force for at least
180 positions, while leaving at least 230 positions vacant.
[15] Local sources of revenue include taxes on residential and
commercial properties, as well as sales taxes levied by localities in
Iowa.
[16] Senior officials from the Iowa Department of Management said that
Iowa did not plan to take advantage of federal allowances to recoup
administrative costs related to Recovery Act activities because the
General Assembly has already appropriated and prescribed the use of
Recovery Act funds for fiscal years 2009 and 2010.
[17] Funding for these initiatives would originate from the Recovery
Act Community Development Block Grant and Homelessness Prevention and
Rapid Re-Housing Program, respectively.
[18] According to a Newton city official, funding for the street
overlay projects originated from the Iowa Department of Transportation
while funding for the aeration basin replacement project originated
from the Iowa Finance Authority's State Revolving Fund. The Iowa
Department of Transportation and the Iowa Finance Authority both
received Recovery Act funds.
[19] The Iowa Department of Transportation and the Homelessness
Prevention and Rapid Re-Housing Program would fund these initiatives.
[End of Appendix VIII: Iowa]
Appendix IX: Massachusetts:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Massachusetts. The full report covering all of GAO's
work in 16 states and the District of Columbia may be found at
[hyperlink, http://www.gao.gov/recovery].
What We Did:
GAO's work in Massachusetts for this reporting period focused on three
specific programs funded under the Recovery Act”Highway Infrastructure
Investment, Public Housing Capital Fund (formula and competitive
grants), and the Weatherization Assistance Program. We selected these
programs because all three have significant funds being obligated at
this point. The highway program in Massachusetts has a major obligation
deadline approaching in March 2010 and was behind other states in
getting these funds obligated and reimbursements for projects
previously obligated. Competitive grants for the housing program were
recently awarded, and the formula grant projects are under way. Lastly,
the Massachusetts weatherization program has begun spending its
Recovery Act funds following a delay while the U.S. Department of Labor
set weatherization wage rates. Our work focused on the status of the
programs' funding, how funds are being used based on issues specific to
each program (including procedures for procurement of goods and
services), and how results were being reported and assessed. As part of
our review of public housing, we revisited two agencies, the Boston and
Revere public housing agencies, that we reported on earlier in 2009. We
also visited two recipients of weatherization funds”community action
agencies in Chelsea and Gloucester. In addition, we are including
updated funding information and results of our national survey on three
Recovery Act education programs with significant funds being disbursed.
For descriptions and requirements of the programs we covered, see
appendix XVIII of GAO-10-232SP.
To gain an understanding of the state's experience in meeting Recovery
Act reporting requirements, we examined documents prepared by, and held
discussions with, the Massachusetts Department of Transportation
(MassDOT) and its predecessor, the Massachusetts Executive Office of
Transportation (EOT) and met with two highway general contractors.
[Footnote 1] In Massachusetts, state agencies that are prime recipients
of Recovery Act funds report through the commonwealth on a number of
measures, including the use of funds and estimates of the number of
jobs created and retained. The first quarterly reports were due in
October 2009. We focused our work on MassDOT's methodology for
collecting data, particularly job creation and sustainment data, and on
MassDOT's experience in preparing the October report.
Finally, we continued to track the use of Recovery Act funds on state
fiscal stabilization, and also visited two Massachusetts cities to
determine the Recovery Act funds each is receiving from federal
agencies and how those funds are being used as they deal with their
difficult fiscal situations. We chose to visit the cities of Boston and
Springfield, the largest and third-largest cities in population in
Massachusetts, respectively. Both are receiving Recovery Act funds
under several programs. They have unemployment rates of 9.2 percent and
12.8 percent, respectively, thus providing an example of cities with
unemployment rates above and below the commonwealth's unemployment rate
of 9.3 percent.
What We Found:
* Highway Infrastructure Investment. As of October 31, 2009, the U.S.
Department of Transportation (DOT) Federal Highway Administration
(FHWA) has obligated $253 million of the $438 million of Recovery Act
funds apportioned to Massachusetts. Although still behind other states,
the commonwealth has made progress in having funds obligated for
highway projects, including those in metropolitan areas. Upcoming
projects for which Massachusetts will seek approval will strike a
balance between projects that can be obligated quickly and projects
that support the state's long-term economic development plans. Bids for
highway projects continue to come in below state cost estimates, as
competition continues among contractors for these projects. According
to FHWA officials, Massachusetts has been meeting its maintenance of
effort spending goals, but the commonwealth will need to recertify to
higher spending levels because of errors in their original calculation
and additional guidance that state highway aid to local governments
must be included.
* Public Housing Capital Fund. Public housing agencies in Massachusetts
were allocated about $82 million in Public Housing Capital Fund formula
grants under the Recovery Act. As of November 14, 2009, they had
obligated about $31 million of these funds and drawn down about $12
million. These funds flow directly to the public housing agencies. The
two public housing agencies we visited”Boston and Revere”both said they
are using their formula funds primarily to accelerate capital
improvement projects that were already on their long-term plans. The
Boston Housing Authority has faced some challenges to awarding
contracts and starting construction work quickly, but has taken steps
to meet the March 2010 deadline for obligating all formula funds. The
Revere Housing Authority expects the construction work on its one
formula project to be completed by the end of December 2009. In
addition, Boston received about $40 million in competitive grant funds
for specific purposes, while Revere did not apply for any competitive
grants.
* Weatherization Assistance Program. Massachusetts was allocated $122.1
million in Recovery Act Weatherization Assistance Program funds in
March 2009 for improving the energy efficiency of low-income families'
homes.[Footnote 2] As of November 17, 2009, the commonwealth reported
overall Recovery Act weatherization expenditures of $16.4 million
primarily for advance payments to subgrantees and estimated the
completion of over 500 units with Recovery Act funding, with an
additional 1,100 units in process. The commonwealth opted to use these
funds once the U.S. Department of Labor set prevailing wage rates for
Massachusetts weatherization workers. To handle the increased funds,
local community action agencies that implement the weatherization
program identified potential new contractors. Those new to
weatherization receive special training and agencies report doing more
oversight and inspections of these contractors' work.
* Updated funding information on education programs. Massachusetts has
been awarded Recovery Act education funds through three major programs.
The commonwealth has been awarded $726 million in State Fiscal
Stabilization Fund money, designed in part to help state and local
governments stabilize their budgets by minimizing budgetary cuts in
education and other essential government services. As of November 6,
2009, the commonwealth has drawn down about $423 million. Actual and
planned recipients include local educational agencies (LEA) (which have
expended $412 million), institutions of higher education (ME), fire
departments, and the state police. Massachusetts was also awarded $164
million in Recovery Act funds through Title I, Part A of the Elementary
and Secondary Education Act of 1965 (ESEA), as amended, which helps
educate disadvantaged youth, and as of November 6, 2009, the
commonwealth had drawn down almost $7 million. In addition, under Part
B of the Individuals with Disabilities Education Act (IDEA), as
amended, which supports special education services, the commonwealth
has been awarded $291 million. As of November 6, 2009, the commonwealth
had drawn down almost $20 million in IDEA, Part B Recovery Act funds
for LEAs In addition, we found that LEAs in Massachusetts are generally
not planning to use more than half of their Recovery Act funds for
staff retention, and that the commonwealth's current plans for
monitoring LEAs' use of State Fiscal Stabilization Fund monies include
an up-front review of LEAs' funding applications and the Single Audit.
* Recipient reporting. Massachusetts developed a centralized system to
collect award-level data from prime recipients that supplements data
from the commonwealth's financial management system with employment
data collected by state agencies from their vendors and subrecipients.
The commonwealth took steps to ensure the quality of recipient reports
that included the centralized calculation of full-time equivalent
positions (FTE) based on hours worked and the requirement that each
prime recipient validate data before submission to [hyperlink,
http://www.federalreporting.gov] (FederalReporting.gov). While some
nonstate entities we visited were largely successful with quarterly
report submission, other entities we visited that did not report
through the commonwealth's centralized data system faced challenges.
* Cities' use of Recovery Act funds. Boston and Springfield have
received Recovery Act funds directly from federal agencies and
indirectly through state government. The cities' plans for the funds
include using education and public safety dollars to help retain jobs
in schools and police departments.
Massachusetts Makes Further Progress in Having Highway Funds Obligated
but May Face Challenges with Additional Maintenance of Effort
Requirements:
Massachusetts has recently made progress in having more funds obligated
for federal aid highway projects, including those in metropolitan areas
(see table 1).[Footnote 3] States are required to suballocate 30
percent of their apportionment to metropolitan and other areas of the
state, and as of October 31, 2009, 46 projects in Massachusetts have
been approved overall, with 14 in suballocated areas. According to the
Economic Stimulus Coordinator at the Massachusetts Executive Office of
Transportation (EOT), the upcoming round of projects for which
Massachusetts will seek approval will strike a balance between projects
that can be obligated quickly to create jobs immediately and more
complex projects that will yield additional jobs over the long-term and
are part of the commonwealth's economic development plans.
Table 1: Massachusetts Recovery Act Federal Aid Highway Amounts as of
October 31, 2009:
Category: Funds suballocated to metropolitan areas (30 percent);
Total: $131 million;
Amount obligated[A]: $41 million;
Amount reimbursed: $0 million;.
Category: Funds for state-wide use (70 percent);
Total: $307 million;
Amount obligated[A]: $211 million;
Amount reimbursed: $20 million.
Category: Total Massachusetts apportionment;
Total: $438 million;
Amount obligated[A]: $253 million;
Amount reimbursed: $20 million.
Source: GAO analysis of FHWA data.
Notes: Amounts may not add up to totals due to rounding.
This does not include obligations associated with $12.8 million of
apportioned funds that were transferred from FHWA to the Federal
Transit Administration (FTA) for transit projects. Generally, FHWA has
authority pursuant to 23 U.S.C. § 104(k)(1) to transfer funds made
available for transit projects to FTA.
[End of table]
Massachusetts has increased its reimbursement rate from 2.4 percent on
September 1, 2009, to 8.1 percent on October 31, 2009, for all Recovery
Act highway projects. However, compared to the national average of 18.4
percent, the commonwealth has a low reimbursement rate for these
projects. The EOT Economic Stimulus Coordinator and the Federal Highway
Administration (FHWA) Region I Director of Project Delivery identified
several reasons for a low reimbursement rate on Recovery Act projects.
These include (1) lag time between when the contractor submits his
certified payroll and other contract expenses and their actual
reimbursement, (2) the time needed for the Massachusetts Highway
Department (MassHighway) to review and approve contractor expenses, and
(3) the longer time required for design and permitting for more
complicated and expensive projects.[Footnote 4] The FHWA Region I
Director of Project Delivery stated that it can take up to 2 months
from when a contractor performs highway work and completes the
appropriate paperwork until it receives payment from the commonwealth
and the commonwealth seeks reimbursement from FHWA. Additionally,
highway contractors said that the frequent rain in May and June
contributed to slower progress on paving projects, which made up a
large portion of Massachusetts's initial round of projects.
Bid Amounts for Advertised Highway Projects Have Been Coming in Below
MassHighway Cost Estimates:
Data obtained from MassHighway on bids received for advertised highway
projects indicate that bids continue to come in under their cost
estimates. In our review of all Recovery Act highway project bid
amounts, 28 out of 35 projects came in below MassHighway cost
estimates, and on average, these projects came in at 13 percent below
the state cost estimates.Footnotes 5, 6] According to the EOT Economic
Stimulus Coordinator, there continues to be significant competition
among contractors for these projects. The FHWA Region I Division
Administrator and highway contractors said that contractors are
reducing their profit margins to keep people working. Massachusetts
will request to have the excess project funds deobligated and to
obligate the savings to other Recovery Act highway projects. According
to the FHWA Region I Financial Manager, by early October, they had
deobligated approximately $10 million in Massachusetts Recovery Act
highway funds. According to the EOT Economic Stimulus Coordinator, the
deobligated funds have already been used to cover contingencies, such
as when bids come in over the state cost estimates, or they may be
obligated to other Recovery Act projects in fiscal year 2010.
Massachusetts Faces Additional Challenges with Maintenance of Effort
Requirements:
Massachusetts will need to recertify to include approximately $150
million more in spending than originally calculated to satisfy its
maintenance of effort (MOE) requirement.[Footnote 7] The FHWA Region I
Financial Manager stated that an FHWA analysis of Massachusetts's
initial MOE calculation and additional guidance requiring states to
include highway aid to localities in their MOE necessitates that the
commonwealth commit to higher spending levels. State officials told us
they plan to meet the MOE requirements. According to the EOT Economic
Stimulus Coordinator and the FHWA Region I Director of Program
Development, on average, Massachusetts has been on track for meeting
its MOE spending goals.
Local Housing Agencies Are Starting to Implement Formula Funded
Projects, and Some Have Been Awarded Competitive Grants:
Sixty-eight of the 253 public housing agencies in Massachusetts have
been allocated Public Housing Capital Fund formula grants, which are
provided directly to housing agencies by the Department of Housing and
Urban Development (HUD) and are intended to improve the physical
condition of and modernize housing units, as well as improve
management. In total, these agencies have been awarded $81,886,976 in
formula grant funds. As of November 14, 2009, 52 of these public
housing agencies have obligated $30,600,977, and 32 have drawn down
$12,231,507 (see figure 1). On average, housing agencies in
Massachusetts are obligating funds slower than housing agencies
nationally.
Figure 1: Percentage of Public Housing Capital Funds Allocated by HUD
That Have Been Obligated and Drawn Down in Massachusetts as of November
14, 2009:
[REfer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100%; $81,886,976;
Funds obligated by public housing agencies: 37.4%; $30,600,977;
Funds drawn down by public housing agencies: 14.9%; $12,231,507.
Number of public housing agencies:
Entering into agreements for funds: 68;
Obligating funds: 52;
Drawing down funds: 32.
Source: GAO analysis of HUD data.
[End of figure]
The Boston and Revere housing agencies we visited are using their
formula funds primarily to speed up the completion of previously
planned capital improvement projects. The Boston Housing Authority
received $33,329,733 in formula funds, and the Revere Housing Authority
received $324,072. Ten of Boston's 14 planned formula-funded projects
and Revere's 1 formula-funded project were already on their 5-year
plans. The Boston Housing Authority originally planned to use its
formula funds for 15 projects; it has dropped one project in part
because the need will be addressed through a Recovery Act competitive
grant. These 14 projects include, for example, bathroom renovations and
wall and foundation repairs. Revere is using its funds for a window
replacement project at one housing development. Both agencies said
their projects most likely will not involve the rehabilitation of
vacant housing units.
Both agencies said they are on track to meet the March 17, 2010,
deadline for obligating 100 percent of their formula funds, but the
Boston Housing Authority has experienced more challenges in awarding
contracts and getting projects started quickly. Boston awarded design
contracts for two of its projects within 120 days of receiving formula
funds. As of October 20, 2009, it had put just over half of its
contracts for formula projects out to solicit bids, and expected to put
the remaining contracts out to solicit bids by December 1, 2009. Boston
officials cited the time required to design improvements in existing
buildings, the requirements of the competitive bidding process, and the
city of Boston permitting process as factors that affect how quickly
contracts can be put in place. But Boston officials said they are
making special efforts to meet the obligation deadline. For example,
the Boston Housing Authority has tried to speed up the contracting
process by no longer allowing successful bidders to negotiate contract
terms after they have been selected to receive the contract; this
procedural change will be continued after all Recovery Act funds have
been exhausted. The Boston Housing Authority also hired additional
staff to manage its formula-funded projects. The Revere Housing
Authority, meanwhile, has made faster progress on its one formula grant
project. It started the actual work on its project in October and
expects the work to be completed by the end of December 2009. Revere
officials said they were able to get work started quickly because
environmental regulations are less extensive in a smaller city and
their window replacement project is relatively straightforward.
Competitive Grants Have Presented New Opportunities for Some Local
Housing Agencies:
In addition to the Capital Fund formula grants, HUD awarded 15
competitive grants to housing agencies in Massachusetts. Housing
agencies across the country could apply for these funds to support
specific priority investments in four categories. The housing agencies
we visited had different experiences with the competitive grant
application process. The Boston Housing Authority applied for seven
competitive grants (worth $60,211,241 total) and was awarded four
grants (worth $40,211,241 total). Boston officials reported that the
availability of competitive grants for specific purposes spurred them
to plan projects they otherwise would not have undertaken. For example,
Boston received $22,196,000 to reconstruct part of an older development
as a model energy-efficient community. It received $4,062,717 to create
a comprehensive services center for frail elderly individuals. Boston
officials found the competitive application process more streamlined
than other HUD funding competitions, because it required less narrative
and allowed applicants to self-certify that they met certain
requirements rather than submit extensive documentation.
The Revere Housing Authority, on the other hand, did not apply for any
competitive grants, although Revere officials considered applying for a
grant. Officials said the application process was cumbersome, and that,
with their limited staff, they could not complete the application by
HUD's deadline. Revere officials said they would still be interested in
seeking any additional competitive grant funds that become available,
in order to take advantage of a Recovery Act provision allowing local
housing agencies to use Recovery Act funds for improvements to state-
funded housing units and then continue to support these units with
regular federal capital and operating funds in the future.
Massachusetts has encouraged local housing agencies to take advantage
of this provision.[Footnote 8]
Recovery Act Has Required Some Changes in Contracting Procedures:
Local housing agencies in Massachusetts typically award Capital Fund
contracts according to state procurement law, but HUD requires them to
follow federal procurement policies when awarding contracts funded
exclusively by the Recovery Act.[Footnote 9] Officials at the Boston
Housing Authority stated they have modified their contracts for
projects funded by the Recovery Act. For these projects, Boston
officials have eliminated an extra step that they say is required by
Massachusetts but not by federal procurement policy”obtaining sub-bids
for specific categories of the project before obtaining bids from the
general contractor that manages the whole project.
For this report we reviewed two specific contracts that were supported
in part by Recovery Act funds. We reviewed a contract awarded by the
Boston Housing Authority for design of bathroom renovations at one
housing development, which was modified to add $328,000 in Recovery Act
funds for the design of renovations to additional units. The contract
was modified on June 23, 2009. According to housing authority
officials, the contract amendment does not specify a deadline for
completion of the Recovery Act-supported work, but requires each
successive phase of the work to be completed within a certain number of
days after the Boston Housing Authority has approved the contractor to
move on to that phase. Housing authority officials also said that
although a deadline is not explicitly included in the contract, the
contract requires the contractor to complete the work within the time
frame specified in the Recovery Act. We also reviewed a contract in the
amount of $421,400 awarded by the Revere Housing Authority for window
replacement work at one housing development. This contract was awarded
on August 20, 2009, and is expected to be completed by December 31,
2009.
Boston and Revere officials largely followed similar procedures in
awarding these contracts. We noted, and Boston officials confirmed,
that the Boston Housing Authority awarded its contract competitively,
used a fixed-price contract, and obtained self-certifications from
bidders that they are not on the state's debarment list. Revere Housing
Authority officials also told us they awarded their contract
competitively, used a fixed-price contract, and checked to make sure
the bidders were not on the state debarment list. Boston and Revere
officials said they have procedures for monitoring their contractors'
work. Boston officials said a project manager reviews the reports and
design submissions provided by the contractor during each phase of the
project, and if necessary, makes comments that the contractor must
address. Revere officials said their contractor is monitored regularly
by an on-site Clerk of the Works and by the architecture firm that
designed the window replacement work.
Massachusetts Accelerates Funding for Weatherization:
In March 2009, the U.S. Department of Energy (DOE) allocated
Massachusetts $122.1 million in Recovery Act funds for its
Weatherization Assistance Program to improve the energy efficiency of
low-income families' homes. However, because the U.S. Department of
Labor had not yet established a Davis-Bacon prevailing wage for
weatherization workers for Massachusetts, the commonwealth opted to use
funding from other sources, including its regular (non-Recovery Act)
funding under the program for weatherization work and for training of
new contractors until the wage rate was set.[Footnote 10] The process
of contracting for the weatherization of individual housing units using
Recovery Act money then began on September 1, 2009. In Massachusetts,
11 community action agencies (CAA) and one nonprofit housing agency
function as subgrantees for DOE weatherization funding; they do not do
weatherization with their own staff but rather utilize private sector
contractors.[Footnote 11] In describing attempts to accelerate
weatherization spending, state officials said they advised Recovery Act
subgrantees to consider using a standard contract developed by CAPLAW,
a Boston-based national organization that provides technical assistance
to CAM. State officials estimated that subgrantees saved a month in
time by using this contract because it simplified the task of contract
development.
Training and Quality Control Practices Focus on Requirements of New
Contractors:
In order to handle a dramatic increase in weatherization funding, the
number of contractors statewide increased from 55 to 77. The two CAM we
visited, Action, Inc. in Gloucester and CAPIC, Inc. in Chelsea, both
described efforts to actively recruit more contractors. They
acknowledged, however, that some new contractors do not have experience
in weatherizing homes, which requires knowledge of various technologies
and materials. To assure accountability for work done by companies new
to weatherization, officials described initiatives to provide
additional training and engage in quality control efforts.
Massachusetts recommends that new contractors attend courses such as a
weatherization "boot camp" funded by gas and electric utility companies
and designed for new weatherization contractors, as well as attend
training on installation of cellulose materials. Massachusetts
officials also described various quality control practices. At least 50
percent of work is inspected while in progress and 100 percent at
completion by energy auditors working for CAM in the weatherization
network.[Footnote 12] We observed energy auditors demonstrating the use
of specialized equipment, an infrared sensor, to ensure that a
contractor was meeting quality standards. Contractors are paid only
when work is completed and judged to have met such standards. CAA
officials told us that they do more oversight and inspections of work
by less experienced contractors. Technical assistance and advice is
also provided by a weatherization consultant, paid for by utility
companies. State energy officials reported their plans to inspect 10-25
percent of all finished work and that they are hiring two new staff to
strengthen program and fiscal monitoring. Several other oversight
entities are also reviewing or plan to review Massachusetts Recovery
Act weatherization spending, including the state Inspector General and
the Office of the State Auditor.
Of the $122.1 million allocated by DOE, Massachusetts has obligated $92
million to be spent over three fiscal years. As of November 17, 2009,
the commonwealth reported overall Recovery Act expenditures of $16.4
million primarily for advance payments to subgrantees and estimated the
completion of over 500 units with Recovery Act funding with an
additional 1,100 units in process.[Footnote 13] Because utility
companies in Massachusetts also support weatherization activities,
officials told us that the Recovery Act funding allowed additional
leveraging of funding. For example, an official at CAPIC, Inc. told us
they could combine support from utilities with Recovery Act funds to
both insulate a home and replace an inefficient furnace. Contractors
also described the benefits of funding in terms of helping them
diversify their business in a difficult economic climate. One
contractor we spoke with had specialized in high-end renovations but
noted that with new Recovery Act funding for weatherization, he has
decided to establish weatherization as an ongoing activity at his
company.
Recovery Act Education Funds Continue to Help Address State Funding
Shortfalls, and Massachusetts Will Use the Single Audit to Monitor SFSF
Spending:
Massachusetts has been awarded Recovery Act education funds through
three major programs:
* State Fiscal Stabilization Fund (SFSF), which is designed in part to
help state and local governments stabilize their budgets by minimizing
budgetary cuts in education and other essential government services;
* Title I, Part A of the Elementary and Secondary Education Act of 1965
(ESEA), as amended, which helps educate disadvantaged youth; and;
* Parts B and C of the Individuals with Disabilities Education Act
(IDEA), as amended, which supports special education and related
services.
SFSF. The commonwealth has been awarded $726 million in SFSF funds, out
of its total allotment of $994 million. This award includes $545
million in education stabilization funds (Phase I of the commonwealth's
education stabilization funds) and $181 million in government services
funds (all of the commonwealth's government services funds). As of
November 6, 2009, the commonwealth has drawn down about $423 million of
its SFSF funds.
Also as of November 6, 2009, LEAs have expended $412 million, including
$322 million in education stabilization funds and $90 million in
government services funds, and IHEs have expended $14 million in
education stabilization funds.[Footnote 14] Of the remaining Phase I
education stabilization funds, the commonwealth plans to distribute
almost all to IHEs. Of the remaining government services funds, the
commonwealth plans to distribute about $20 million to fire departments
and $3 million to the state police to replace staff or maintain
staffing levels. The commonwealth expects to be awarded its remaining
$268 million in Phase II education stabilization funds in 2010. When
Massachusetts is awarded these funds, it plans to distribute more than
half to LEAs through its primary funding formula, primarily to address
a shortfall in local education funding. It also anticipates
distributing a substantial portion to IHEs, to make up for fiscal year
2010 budget cuts and restore the IHEs to their fiscal year 2009 funding
levels.
ESEA, Title I. The commonwealth has been awarded $164 million through
Title I, Part A of ESEA. The commonwealth required LEAs that were
allocated funds through this program to submit applications to and have
them approved by the commonwealth prior to receiving these funds, as it
does with all sub-grants of federal funds. As of November 23, 2009,
about 82 percent of the state's LEAs that were allocated ESEA Title I
Recovery Act funds had submitted and had approved by state officials
their program applications. As of November 6, 2009, the commonwealth
had drawn down almost $7 million in ESEA Title I Recovery Act funds for
these LEAs
IDEA. The commonwealth has been awarded $291 million in IDEA, Part B
funds. The commonwealth also requires LEAs to submit applications
before receiving these funds. As of November 23, 2009, about 88 percent
of the LEAs that were allocated IDEA, Part B funds had submitted and
had approved by state officials their program applications. As of
November 6, 2009, the commonwealth had drawn down almost $20 million in
IDEA, Part B Recovery Act funds for these LEAs.
Massachusetts LEAs Generally Plan to Use Some Recovery Act Funds to
Retain Jobs:
Looking more specifically at how LEAs in Massachusetts are using their
Recovery Act funds, we found that they generally plan to use less than
half of these funds for job retention. From August to October of 2009
we surveyed a representative sample of LEAs nationally and in
Massachusetts about their planned uses of Recovery Act funds. Based on
our survey, for example, we estimate that 37 percent of LEAs in
Massachusetts plan to use more than half of their SFSF funds to retain
staff (see table 2). State officials told us that LEAs in Massachusetts
have historically had a disincentive to use federal grant funds for
payroll costs because of some additional costs associated with using
federal grants”as opposed to LEAs' own funds”for payroll costs.
According to the state educational agency, in June 2009 the
commonwealth enacted legislation exempting SFSF funds”but not Recovery
Act Title I or IDEA funds”from these additional costs. State officials
said this change came too late to affect LEAs' fiscal year 2009 SFSF
spending. They said they are now starting to receive LEAs'
plans for using Phase II SFSF funds, and expect that a higher
proportion of these Phase II SFSF funds will be used for payroll costs.
Based on our survey, we also estimate that a minority of LEAs in the
commonwealth expect job losses or experienced a funding cut of 5
percent or more since the prior school year.
Table 2: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds:
Estimated percentages of LEAs in Massachusetts: 8%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs in Massachusetts: 10%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs in Massachusetts: 37%.
Responses from GAO survey: Anticipate job losses, even with SFSF funds;
Estimated percentages of LEAs in Massachusetts: 28%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs in Massachusetts: 12%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Massachusetts have margins of error, at
the 95 percent confidence level, of plus or minus 16 percentage points
or less.
[End of table]
Massachusetts Plans to Rely Primarily on the Single Audit to Monitor
LEAs' SFSF Spending, and Currently Lacks Plan for Ongoing Monitoring:
The Massachusetts Executive Office of Education (EOE) plans to use the
Single Audit[Footnote 15] to monitor SFSF expenditures, along with some
additional steps, but it currently lacks a plan for ongoing monitoring
of the funds throughout the year. EOE officials told us that given the
wide range of allowable uses of the SFSF funds, the Single Audit
process generally will be sufficient to monitor these funds. They said
they are taking some additional steps to supplement the Single Audit.
The commonwealth reviews LEAs' SFSF applications to determine if they
plan to use the funds for allowable purposes. It has issued guidance to
LEAs that reminds them of uses that are prohibited by the Recovery Act,
and encourages them to be especially cautious in using the funds for
certain purposes”such as construction and repairs”that are associated
with more extensive regulations and therefore more susceptible to
misuse. The commonwealth has also modified the annual financial report
that LEAs must submit to the commonwealth, to request a detailed
breakdown of how LEAs have actually spent their SFSF funds, and will
compare these end-of-year reports to the LEAs' planned uses of the
funds. The U.S. Dept. of Education (Education) has issued guidance
directing states to have a comprehensive plan for monitoring LEAs' use
of SFSF funds, and Education officials said that relying exclusively on
the Single Audit is not sufficient. Massachusetts officials told us
they believe their approach is comprehensive and satisfies the federal
requirement. However, while their approach includes up-front actions to
guide LEAs' use of funds and postexpenditure actions to ensure funds
were used properly, it does not currently include any ongoing
monitoring of LEAs' expenditures during the fiscal year. The
Massachusetts Recovery and Reinvestment Office conducted a training
session for all state agencies in November 2009 on strategies for
monitoring waste, fraud, and abuse in Recovery Act programs; EOE
officials participated in this training but have not yet developed a
plan for using these strategies to monitor SFSF spending.
Without ongoing monitoring, Massachusetts lacks the opportunity to
correct any potential misuses of the funds before the end of the fiscal
year.
Massachusetts Used Centralized Reporting for State Agencies, but Some
Nonstate Entities Faced Challenges Reporting Directly to
FederalReporting. gov:
Massachusetts developed a centralized system to collect award-level
data from prime recipients as required under section 1512 of the
Recovery Act.[Footnote 16] The Massachusetts Recovery and Reinvestment
Office (MRRO) developed the Stimulus Reporting database, which
supplements data from the commonwealth's financial management system”
MMARS”with employment data collected by state agencies from their
vendors and subrecipients. MMARS data include many of the award-level
data elements required, such as award expenditures and vendor
information. However, MRRO requested that state agencies submit data
not included in the MMARS system separately, primarily jobs numbers and
some narrative elements. MRRO was able to generate state employee job
information centrally from the commonwealth's payroll system, but state
agencies had to collect jobs numbers directly from vendors and
subrecipients. Some state agencies were able to provide this
information through their certified payroll systems or other systems
established for Recovery Act reporting, but the majority relied on
reporting templates provided by MRRO. EOT used its civil rights
reporting system to provide employment data for the state Stimulus
Reporting database. EOT officials, as well as contractors working on
Recovery Act funded projects, told us that the ability to use this
system for Recovery Act reporting required little additional effort and
helped ensure the quality of the data submitted because data could be
uploaded directly. Other agencies completed templates provided by MRRO
to submit employment data. For example, Massachusetts's Department of
Housing and Community Development used these templates to collect data
from local community action agencies administering weatherization
grants.
Massachusetts Implemented Steps to Ensure the Quality of Recipient
Reports:
Massachusetts took several steps to ensure the completeness and
accuracy of data submitted by state agencies and other prime
recipients. MRRO issued instructions to all state agencies on the U.S.
Office of Management and Budget's prescribed method for calculating FTE
positions. However, MRRO approved EOE's use of an alternative method
for estimating the jobs retained as a result of SFSF funds distributed
to LEAs at the end of the state fiscal year 2009.[Footnote 17] The
commonwealth also issued detailed guidance that included instructions
for validating data and a checklist for ensuring the quality of data
submitted to FederalReporting.gov. Individual agencies also took steps
to ensure the integrity of data they collected from subrecipients. EOT
compared data that contractors submitted with their certified payroll
records, while the Massachusetts's Department of Housing and Community
Development used a consultant to oversee the data collection process.
State Officials Had Some Concerns about the Reporting Process:
State officials raised concerns that reporting FTEs may understate the
impact of federal stimulus spending on employment. MRRO officials noted
that the way FTEs are calculated does not show the full number of
workers involved with Recovery Act projects. For instance, according to
the EOT Economic Stimulus Coordinator, the commonwealth reported 139
FTEs for transportation projects for the quarter ending September 30,
2009, but this number is made up of 1,362 individuals who worked on
such projects. State officials also noted that some technical features
of FederalReporting.gov made the process cumbersome, particularly data
validation and error processing. MRRO officials told us that they
compiled a list of these technical difficulties that they provided to
the Recovery Accountability and Transparency Board. Despite these
technical challenges, state officials noted that the statewide
reporting process was largely successful. They credited several
features of the federal reporting system, including the batch
processing capability and the technical staffs responsiveness.
Nonstate Entities Successfully Submitted Reports, but Some Faced
Challenges:
Some prime recipients that did not submit reports through the
commonwealth's central reporting platform successfully submitted data
directly to FederalReporting.gov, but other entities that reported
directly to FederalReporting.gov faced challenges. The city of Boston
used its human resource management system to generate data for its
quarterly report. Despite minor difficulties locating federal reporting
numbers, the city was able to compile data and submit its quarterly
report without much difficulty. Similarly, the Boston Housing
Authority, another agency that submitted reports directly to
FederalReporting.gov, reported that they relied on HUD guidance and
reporting templates to compile data from vendors working on 14 Recovery
Act projects. However, other entities had difficulties submitting
reports directly to FederalReporting.gov. Revere Housing Authority
officials told us that they had difficulty locating guidance and thus
did not report jobs created for an architectural firm providing design
services for a Recovery Act window replacement project. In addition,
the Springfield Police Department reported problems obtaining agency
codes and other data required to complete their report, and the
Springfield Office of Housing encountered technical challenges
submitting their report through FederalReporting.gov.
Recovery Act Funds Help Two Selected Localities' Budgets:
We visited the cities of Boston and Springfield (see table 3) to review
their use of Recovery Act funds, as discussed below.[Footnote 18]
Table 3: Characteristics of Selected Local Governments:
Locality name: Boston;
Population: 609,023;
Locality type: City;
Unemployment rate: 9.2%;
Fiscal year 2010 operating budget: $2.39 billion;
FTE employees: 16,500.
Locality name: Springfield;
Population: 150,640;
Locality type: City;
Unemployment rate: 12.8%;
Fiscal year 2010 operating budget: $529 million;
FTE employees: 5,125.
Sources: U.S. Census Bureau, U.S. Department of Labor, and Boston and
Springfield budget documents.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
City of Boston:
Recovery Act funds have saved jobs in education and public safety.
According to Boston city officials, Recovery Act funds for city schools
($23.3 million in SFSF, $20.8 million in ESEA Title I, and $10.3
million in IDEA) will be used to retain 200 FTEs. In public safety, the
competitive COPS Hiring Recovery Program (CHRP) grant ($11.8 million
over 3 years) will fund 50 police officer positions, and the Edward
Byrne Memorial Justice Assistance Grant (JAG) Program ($3.9 million for
1 year) will pay for 50 police officers.
State aid reductions lead revenue losses in Boston. Prior to producing
a balanced budget for fiscal year 2010, city officials noted that
reductions in state aid were responsible for a significant portion
($94.8 million reduction from the previous year's levels) of the city's
$213 million budget gap during fiscal year 2010 budget development.
Other revenue losses contributing to the difficult budget environment
include city licenses and permits, excise taxes, and interest income
($21.8 million reduction). On the other hand, property tax receipts,
the city's largest source of funds, are expected to increase by $60.4
million during fiscal year 2010. According to city finance officials,
in general, property taxes may increase by 2.5 percent per year as long
as total receipts fall under a specified limit.
Preparing for end of Recovery Act funds. City finance officials said
that although Recovery Act funds have been very helpful in closing the
fiscal year 2010 budget gap, these funds comprised only about 1 percent
of city revenues. To prepare for future fiscal years, city officials
said they are containing spending growth through fiscal controls
including layoffs, position elimination, and concessions from unions.
In addition, for fiscal year 2010, the city plans to moderate its
pension fund payment schedule and use reserve funds to supplement
declining revenue. Potential cost pressures include personnel expenses
such as wage increases related to collective bargaining agreements and
rising employee health insurance costs. In addition, payments to
support employee pensions are likely to continue to rise.
City of Springfield:
Recovery Act funds have saved jobs in education and public safety.
According to Springfield officials, Recovery Act funds ($14.9 million
in SFSF, $8.6 million in ESEA Title I, and $4.4 million in IDEA funds)
will be used to help retain 451 FTEs for city schools. In public
safety, city officials reported they did not apply for a CHRP grant,
since it provides funding for 3 years and Recovery Act funding would
end just as new officers became proficient. In addition, CHRP grants
require that recipients retain their funded officer positions for at
least an additional 12 months using state or local funds and sustaining
these jobs was viewed as unaffordable at the time the grant was
offered. The city, however, later applied for an Edward Byrne Memorial
Justice Assistance Grant (competitive) to hire 10 police officers.
These positions were believed to be affordable, since training costs
will be minimal (newly trained officers were available because a nearby
city had paid to train them but could not afford to hire them), and
will eventually replace officers who retire or leave the workforce.
Recovery Act funds cushioned reductions in state aid. State aid to
Springfield (60 percent of the city's revenue base) has been reduced
over fiscal years 2009 and 2010, although officials acknowledged that
reductions likely would have been more severe had the commonwealth not
received Recovery Act funds aimed at state budget stabilization, such
as increased Federal Medical Assistance Percentage funds and SFSF.
Officials noted that Recovery Act funds helped to cushion state aid
reductions but, nevertheless, comprise a small portion of total city
revenues. Property tax collections (31 percent of city revenues) have
not declined due to rate adjustments that offset lower property values
and some growth in the city's tax base.
Preparing for end of Recovery Act funds. Given constraints in obtaining
additional revenue, city officials reported focusing on cost-cutting
strategies to prepare for the absence of Recovery Act funds. Strategies
include examining procurement costs, controlling hiring (e.g.,
carefully reviewing any new hires), and re-examining business practices
(e.g., outsourcing transportation services). Potential spending
pressures include pay increases in new collective bargaining agreements
for teachers, increased funding for the city's large special education
population, and employee pension costs.
State Comments on This Summary:
We provided a draft of this appendix to the Governor of Massachusetts,
the Massachusetts State Auditor's Office, the Massachusetts Office of
the Inspector General, the Chair of the Massachusetts House Committee
on Federal Stimulus Oversight, and the Chair of the Massachusetts
Senate Committee on Post Audit and Oversight, and provided excerpts of
the draft to other entities including cities and housing agencies we
visited. The Governor's Office, in general, agreed with our draft
report. The Governor's Office and other officials provided clarifying
and technical comments, which we incorporated as appropriate.
GAO Contacts:
Stanley J. Czerwinski, (202) 512-6806 or czerwinskis@gao.gov.
Laurie E. Ekstrand, (202) 512-6806 or ekstrandl@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Carol L. Patey, Assistant
Director; Lorin M. Obler, analyst-in-charge; Nancy J. Donovan; Kathleen
M. Drennan; Keith C. O'Brien; Salvatore F. Sorbello Jr.; and Robert D.
Yetvin made major contributions to this report.
[End of section]
Footnotes: Appendix IX: Massachusetts:
[1] As of November 1, 2009, Massachusetts reorganized its
transportation agencies and authorities into a new Massachusetts
Department of Transportation (MassDOT).
[2] 0n September 22, 2009, the U.S. Department of Energy obligated all
the funds allocated to the states, but it has limited the states'
access to 50 percent of these funds.
[3] The U.S. Department of Transportation has interpreted the term
"obligation of funds" to mean the federal government's commitment to
pay for the federal share of the project. This commitment occurs at the
time the federal government approves a project and a project agreement
is executed.
[4] MassHighway, formerly overseen by Massachusetts EOT, is now part of
the Massachusetts Department of Transportation.
[5] MassHighway has advertised 46 projects, but as of October 31, 2009,
only 35 have had bid openings.
[6] The data provided included projects that had been awarded contracts
and projects where contracts had not yet been awarded. Our analysis
included projects that had engineers' estimates and the contract award
amount. Therefore, only projects that had positive values for the
estimate and award amounts were included in our analysis. Although we
examined the data for obvious discrepancies, the data we collected are
self-reported by individual states. Therefore, the data may not be
complete and we consider the reliability of these data undetermined.
Because of this, we are only reporting ranges, percentages, and other
description statistics.
[7] States were required to certify that they will maintain the level
of spending that they had planned on February 17, 2009.
[8] The federal government subsidizes the operating and capital
improvement costs of public housing units throughout the nation.
Massachusetts and some other states also use some state funds to
subsidize public housing units. The majority of the units managed by
the Revere Housing Authority, in fact, are subsidized by state funds.
However, the Massachusetts State Auditor has reported that the
operating subsidies provided by the state have not been sufficient to
maintain in good condition the state-aided units in Massachusetts.
[9] However, according to guidance developed by the Massachusetts
Office of the Inspector General and the Massachusetts Office of the
Attorney General, based on discussions with HUD's Boston Field Office,
public housing agencies may use their own state and local procurement
laws and regulations if their use is not contrary to the purposes of
the Recovery Act, one of which is to expedite or facilitate the use of
Public Housing Capital Funds.
[10] According to state officials, the rates established for
Massachusetts counties, and provided to them in August 2009, are
consistent with what has generally been paid for this work.
[11] Private sector contractors are generally chosen from a
precertified list established every 2 years. CAAs have also recruited
new contractors to handle the increase in weatherization funding due to
the Recovery Act and screen them by criteria such as quality of prior
work. Depending on the needs of each home, the cost of weatherization
varies; a standard price list for materials and weatherization
activities is established statewide and used by each contractor.
[12] State energy officials report having trained and certified 35 new
energy auditors statewide with certification of others expected.
[13] Other activities listed in the state plan include weatherization
of state public housing and establishment of a training institute;
however, these initiatives are planned to begin in 2010.
[14] Actual expenditures by LEAs may be higher than the amount drawn
down by the state. In Massachusetts, according to state officials, the
state draws down funds according to its agreement with the U.S.
Department of the Treasury, and it is not unusual for drawdowns to lag
behind expenditures.
[15] Single Audits are prepared to meet the requirements of the Single
Audit Act, as amended, and provide a source of information on internal
control and compliance findings and the underlying causes and risks.
The Single Audit Act requires states, local governments, and nonprofit
organizations expending $500,000 or more in federal awards in a year to
obtain an audit in accordance with the requirements set forth in the
act. A Single Audit consists of (1) an audit and opinions on the fair
presentation of the financial statements and the Schedule of
Expenditures of Federal Awards; (2) gaining an understanding of and
testing internal control over financial reporting and the entity's
compliance with laws, regulations, and contract or grant provisions
that have a direct and material effect on certain federal programs
(i.e., the program requirements); and (3) an audit and an opinion on
compliance with applicable program requirements for certain federal
programs.
[16] Data required under section 1512 of the Recovery Act include the
total amount of recovery funds received, and expended or obligated, a
detailed list of all projects or activities, an estimate of the number
of jobs created and retained by the projects and activities, and
certain detailed information on any subcontracts or subgrants awarded
by the recipient.
[17] Because the fiscal year 2009 Recovery Act SFSF grants were
primarily recorded as general revenues for each school district, EOE
officials were unable to distinguish funds used to retain specific
employees. Instead, EOE asked school districts to provide a line-byline
accounting of their non-salary expenditures during that time period.
They then divided the remainder by each school district's average
teacher salary to derive an estimated number of jobs retained.
[18] City Recovery Act funds referred to in this section cover funds
which are administered by city government and not the full scope of
Recovery Act funds that benefit city residents such as unemployment
insurance and Medicaid. This section features sources of Recovery Act
funds which substitute for declines in city operating revenues. Other
city-administered Recovery Act funds provide expanded services and
include funds for community development, homelessness, and energy
efficiency.
[End of Appendix IX: Massachusetts]
Appendix X: Michigan:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Michigan. The full report covering all of GAO's work
in 16 states and the District of Columbia may be found at [hyperlink,
http://www.gao.govirecovery].
What We Did:
We reviewed three program areas funded under the Recovery Act: Highway
Infrastructure Investment, the Weatherization Assistance Program, and
Education. We selected these program areas because they had a number of
risk factors, including the receipt of significant amounts of Recovery
Act funds or a substantial increase in funding from previous years'
levels. These programs also provided an opportunity for us to consider
the design of internal controls over program activities. Our work
focused on the status of the program areas' funding, how funds are
being used, safeguards and controls, and issues specific to each
program. Our review of the Highway Infrastructure Investment program
included a site visit to the largest Recovery Act-funded highway
project in the state. As part of our review of the Weatherization
Assistance Program, we visited two local agencies that had begun
weatherization work”one in Jackson and another in Pontiac.
Additionally, for Education, we surveyed a nationally representative
sample of local educational agencies (LEA) to obtain information about
their use of Recovery Act funds for three education programs. For
descriptions and requirements of the programs we covered, see appendix
XVIII of GAO-10-232SP.
To gain an understanding of the state's experience in meeting Recovery
Act reporting requirements, we discussed the reporting process with
officials at Michigan's Economic Recovery Office (ERO), Michigan's
Department of Transportation (MDOT), the state's Department of Human
Services (DHS), two transportation vendors, and two local agencies that
conduct weatherization work.
We also monitored the state's fiscal situation and visited three
Michigan localities to assess the economic challenges they faced and
the Recovery Act's impact on these communities. We met with state
budget officials and visited the cities of Flint and Royal Oak, as well
as Allegan County, where we met with city and county officials. We
selected these communities because they represented rural, urban, and
suburban areas with a variety of unemployment rates and population
sizes.
What We Found:
* Highway Infrastructure Investment Funds. The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned $847
million in Recovery Act funds to Michigan. As of October 31, 2009, the
federal government had obligated $707 million to Michigan”most of which
was for highway pavement improvement projects”and reimbursed $142
million. Michigan has adapted its existing internal controls to oversee
and monitor Recovery Act-funded projects. State officials told us
contracts generally have been awarded for less than the original
official estimates, and that excess funds are being used to fund
additional projects.
* Weatherization Assistance Program. The U.S. Department of Energy
(DOE) obligated $243.4 million to Michigan for weatherization
activities under the Recovery Act but it has limited the state's access
to 50 percent of these funds. As of September 30, 2009, DHS had
obligated $198.7 million to 32 local agencies with the goal of
weatherizing approximately 33,000 units by March 31, 2012. DHS
officials told us program expenditures and reimbursements to local
agencies totaled $5.3 million through September 30, 2009. Michigan
officials told us they use existing internal controls to oversee and
monitor the weatherization program and have increased the number of
monitors and other oversight staff to address the increased volume for
this program. Officials from the two local agencies we visited told us
they are also using existing safeguards and plan to increase the scope
of their oversight activities for weatherization projects. DHS
officials told us Michigan's Recovery Act-funded weatherization work
was delayed until the prevailing wage rates required under the Davis-
Bacon Act[Footnote 1] were established by the U.S. Department of Labor
for weatherization work. According to state officials, as of October
29, 2009, 9 of Michigan's 32 local agencies had begun conducting
weatherization work, and they estimated that 287 units had been
weatherized as of October 31, 2009.
* Education. The U.S. Department of Education (Education) allocated
$1.592 billion in State Fiscal Stabilization Fund (SFSF) monies to
Michigan, of which $1.302 billion are education stabilization funds and
$290 billion are government services funds. In addition, Michigan was
allocated $390 million for Title I, Part A of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended, and $414 million
for Parts B and C of the Individuals with Disabilities Education Act
(IDEA), as amended. An estimated 87 percent of Michigan's 97 LEAs that
responded to the survey reported that they planned to use more than
half of their SFSF allocation to retain staff; however, an estimated 45
percent of Michigan LEAs told us they anticipated job losses even with
the SFSF allocation.
* Recipient reporting. State officials told us that the state met the
October 10, 2009, deadline for reporting information to the federal
government on the use of Recovery Act funds and on jobs created and
retained through September 30, 2009. State officials and vendors said
they experienced some challenges in preparing and submitting Recovery
Act reports but did not identify any significant problems. State
officials told us they used a centralized reporting process wherein
each state agency receiving Recovery Act funds is required to report
quarterly to the ERO on a number of measures”including the use of funds
and estimates of the number of jobs created and retained”and in turn
the ERO submits this information to the federal government.
* State and local government's fiscal condition and use of Recovery Act
funds. Michigan continues to experience rising unemployment and
declining tax revenues, and its fiscal year 2010 budget addresses
projected shortfalls with a mix of spending cuts and Recovery Act
funds. State officials expressed grave concern about the state's long-
term budget outlook, when the shortfalls are expected to continue and
little or no Recovery Act funds will be available. According to local
government officials, Recovery Act funds awarded through the Community
Oriented Policing Services (COPS) Hiring Recovery Program and the
Energy Efficiency Conservation Block Grant (EECBG) will be used to
restore police officer positions and to increase the efficiency of city
buildings. Local officials told us Recovery Act-funded programs are
having minimal or no effect on local budgets. Local officials also told
us they have experienced some challenges, such as identifying federal
grant programs appropriate for their localities.
Michigan Is Using Recovery Act Funds for Many Highway Projects:
As we reported in September 2009, FHWA apportioned $847 million to
Michigan in March 2009 for highway infrastructure and other eligible
projects. As of October 31, 2009, Michigan had obligated $707 million--
83 percent of the funds[Footnote 2]-”and $142 million had been
reimbursed by the federal government.[Footnote 3]
The Majority of Funds Obligated in Michigan Are for Highway Pavement
Projects:
As of October 31, 2009, about $430 million of the $707 million of
Recovery Act highway funds obligated-61 percent”were used for pavement
improvement projects such as resurfacing and rehabilitating roads. As
we reported in September 2009, MDOT selected mostly pavement projects
because the primary focus of Michigan's capital improvement plan for
highways has been maintaining existing roads and bridges, and improving
pavement conditions. An additional 19 percent of Michigan's obligated
Recovery Act highway funds were for pavement widening, including the
largest Recovery Act-funded project in the state.
As of October 31, 2009, Michigan had awarded 222 contracts for highway
projects, work had begun on 172 contracts, and 15 contracts had been
completed. MDOT officials told us contracts for Recovery Act projects
have been awarded for less than the amounts officially estimated when
the funds were obligated, due in part to increased competition among
contractors. The officials said that they qualified about 130 new
contractors for MDOT work from January to October 2009”and attributed
this increased interest to decreased work in the private sector. MDOT
officials also told us that as of October 19, 2009, they had identified
an estimated $106 million of excess funds from the lower bids. They
said they requested that FHWA deobligate these funds in order to fund
additional projects and, as of October 19, 2009, FHWA had obligated
funds for 19 additional highway projects totaling $33 million.
Michigan Uses Its Existing Contracting Procedures and Internal Controls
to Award and Oversee Recovery Act Contracts:
MDOT is using its existing procedures and internal controls to award
and oversee highway contracts using Recovery Act funds. We reviewed two
contracts for locally administered pavement improvement projects.
According to MDOT officials, these two contracts were awarded
competitively to prequalified contractors using its existing
contracting procedures that, among other things, require contractors to
be prequalified by MDOT before bidding on any contracts. MDOT also
checks to determine that the contractors have not been suspended or
debarred.[Footnote 4] Consistent with internal controls in place prior
to receiving Recovery Act funds, MDOT assigned contract oversight
personnel to these projects. In addition, MDOT officials told us they
adapted their existing procedures to monitor these contracts once the
projects had begun.
The first contract we reviewed”a fixed-price $55.7 million pavement-
widening project on M-59 in an economically distressed area near
Detroit”is the largest Recovery Act-funded highway project in Michigan.
MDOT awarded this contract in July 2009 and officials told us the work
began in August 2009 and is scheduled to be completed by September
2012. An MDOT official told us that, as of November 3, 2009, this
project was about 20 percent complete and most of the work will be
completed by December 2010. Figure 1 shows the work that was underway
on M-59 at the time of our visit. The second contract we reviewed was a
fixed-price $621,392 pavement improvement project on 1-94 in an
economically distressed area outside Ann Arbor. MDOT awarded this
contract in August 2009 and, according to the officials, it was
completed November 2, 2009.
Figure 1: Recovery Act-Funded Pavement-Widening Project on M-59 near
Detroit:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
MDOT officials told us their oversight procedures for monitoring these
projects include steps for monitoring contractor performance, safety,
and quality. Further, MDOT monitors the projects over time for
adherence to the contract schedule and the original contract budget.
Additionally, officials told us they hold biweekly meetings with
contractors to discuss construction progress and all issues involving
quality.
Weatherization Work Has Begun, but Few Projects Have Been Completed:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which DOE is distributing to each of the states,
the District of Columbia, and seven territories and Indian tribes, to
be spent over a 3-year period. This program enables low income families
to reduce their utility bills by making long-term energy efficiency
improvements to their homes by, for example, installing insulation or
modernizing heating or air conditioning equipment.
DOE obligated $243.4 million in Recovery Act funds to Michigan for its
Weatherization Assistance Program, but it has limited the state's
access to 50 percent of these funds until 30 percent of the housing
units in the state's plan have been weatherized, at which time it plans
to make the remaining funds available. As of September 30, 2009, DHS,
the state agency responsible for administering the state's
Weatherization Assistance Program, had obligated $198.7 million to its
network of 32 local agencies. The majority of agencies (27) use
contractors to perform the work, while a handful use their own staff or
a combination of their staff and contractor personnel. DHS officials
told us that, as of October 29, 2009, 9 of its 32 agencies had begun
conducting weatherization work. DHS officials told us program
expenditures and reimbursements to local agencies totaled $5.3 million
through September 30, 2009. DHS estimated that its local agencies had
weatherized 287 units as of October 31, 2009.
Michigan's Weatherization Work Was Delayed Until Prevailing Wage Rates
Were Established Under the Davis-Bacon Act:
DHS officials told us Michigan's Recovery Act-funded weatherization
work was delayed due to a requirement to establish prevailing wage
rates for this work under the Davis-Bacon Act. In prior years, the
Weatherization Assistance Program funded through annual appropriations
was not subject to the requirements of the Davis-Bacon Act, but the
Recovery Act required it to be applied to all programs. State and local
officials stated that local agencies did not solicit contractors for
weatherization work under the Recovery Act until they received these
wage rates, which were established by the U.S. Department of Labor on
August 14, 2009.
Officials at DHS and the two local agencies we visited told us
preparatory actions taken by Michigan's agencies positioned them to
quickly begin weatherization work once the wage rates were established.
These actions included determining the eligibility of applicants,
conducting pre-inspections of homes, and hiring new staff.[Footnote 5]
DHS officials also told us that, despite the delayed start of the
weatherization work, they expect to meet their statewide goal of
weatherizing 33,410 units by March 31, 2012.
Concerns about Compliance with the National Historic Preservation Act
Have Been Resolved:
In August 2009, DOE notified DHS officials that a review under the
National Historic Preservation Act[Footnote 6] was required of
properties that would be weatherized under the Recovery Act-funded
Weatherization Assistance Program. DHS officials initially told us that
an estimated 90 percent of the homes to be weatherized would need such
a review, which could cause a significant delay in the state's
weatherization work.
DHS and the State Historic Preservation Office executed an interagency
agreement on November 18, 2009, that details the process for conducting
these reviews, including the conditions under which such reviews are
required and, to the extent permissible under applicable laws and
regulations, allowing the process to be expedited. With this agreement
in place, state officials said they are confident that the historic
preservation requirements can be met without causing further delays.
Some Weatherization Work Has Been Completed:
We visited two agencies and four homes where weatherization work was
either in progress or had been completed. At one agency, 17 units had
been weatherized and work at 67 units was in progress. At the other
agency, work was in progress on 35 units, and no units had been
completed. Table 1 summarizes the weatherization work at the two
agencies we visited.
Table 1: Weatherization Activities at Two Michigan Agencies:
Recovery Act allocation:
Agency: Community Action Agency of Jackson, Lenawee, Hillsdale;
$5,767,356;
Agency: Oakland Livingston Human Services Agency: $11,688,604.
Amount received:
Agency: Community Action Agency of Jackson, Lenawee, Hillsdale;
$1,041,318[A];
Agency: Oakland Livingston Human Services Agency: $1,267,813[B].
Units to be weatherized:
Agency: Community Action Agency of Jackson, Lenawee, Hillsdale: 824;
Agency: Oakland Livingston Human Services Agency: 1,681.
Approved applications:
Agency: Community Action Agency of Jackson, Lenawee, Hillsdale: 472[A];
Agency: Oakland Livingston Human Services Agency: 632[C].
Units completed:
Agency: Community Action Agency of Jackson, Lenawee, Hillsdale: 17[A];
Agency: Oakland Livingston Human Services Agency: 0[C].
Source: DHS; Community Action Agency of Jackson, Lenawee, Hillsdale;
and Oaldand Livingston Human Services Agency.
[A] As of October 15, 2009.
[B] As of September 30, 2009.
[C] As of October 21, 2009.
[End of table]
Figures 2 and 3 show weatherization work in progress at the Community
Action Agency of Jackson, Lenawee, and Hillsdale and at the Oakland
Livingston Human Services Agency, respectively.
Figure 2: Contractors Installing Side Wall Insulation in Jackson,
Michigan Under the Recovery Act-Funded Weatherization Assistance
Program:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
Figure 3: Contractor Installing Foundation Insulation in Hazel Park,
Michigan Under the Recovery Act-Funded Weatherization Assistance
Program:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
DHS and Local Agencies Are Implementing Monitoring Procedures for
Oversight of Recovery Act Funds:
DHS officials told us they have monitored local weatherization
agencies' use of Weatherization Assistance Program funds since 2005,
including reviewing their fiscal procedures and internal controls. In
addition, an independent public accountant conducts an annual financial
audit of each agency.
To assist in monitoring the use of Recovery Act funds, DHS officials
told us they planned to add 22 additional staff. In October 2009, they
said they had hired 15 staff, including 11 weatherization technical
monitors, 2 fiscal monitors, and 2 weatherization technical
supervisors. They also said they planned to hire a reports analyst, a
contract administrator, a program monitor, an additional fiscal
monitor, a Davis-Bacon Act analyst, and two historical preservation
review analysts. The technical staff will monitor 5 to 10 percent of
all weatherization projects. In addition, the DHS Office of Inspector
General hired two staff to conduct weatherization audits.
DHS officials told us they had developed a monitoring plan for the 32
local agencies, which includes desk reviews by state agency staff to
cover such things as the contractor selection process, compliance with
Davis-Bacon Act requirements, and Recovery Act reporting. The plan also
includes visits to work sites by DHS weatherization technical monitors.
Agency officials at the two locations we visited told us their internal
controls include using separate accounting codes to track Recovery Act
funds and contracting for annual independent external audits. In
addition, officials at one agency told us that they recently hired a
business operations coordinator and contracted with a Davis-Bacon Act
compliance specialist. Officials from both agencies described measures
they plan to use to ensure that quality goods and services are provided
with Recovery Act funds, including conducting pre- and post-inspections
of projects, customer surveys, contractor evaluations, and requiring
satisfactory post-inspections to be completed prior to paying
contractor invoices.
Local Agencies Are Using Existing Procedures to Select and Monitor
Recovery Act Contractors:
Officials at the two agencies we visited told us they had pre-
established procedures for selecting and monitoring contractors.
According to these officials, the criteria used to select contractors
included consideration of prior weatherization experience. We reviewed
two weatherization contracts at each of the two agencies. In each case,
agency officials told us they used their existing contracting
procedures but added specific language to the contracts related to
Recovery Act and Davis-Bacon Act requirements. Officials also told us
that the contracts were awarded competitively and included detailed
price schedules covering labor and material for each weatherization
task, such as installing insulation and weather-stripping.
Most LEAs Plan to Use Recovery Act Funds to Retain Jobs:
Education allocated $1.592 billion in SFSF funds to Michigan”of which
$1.302 billion was education stabilization funds and $290 million was
government services funds. In addition, Education allocated $390
million for ESEA Title I, as amended; and $414 million for IDEA, as
amended. As previously reported, Michigan Department of Education
officials told us that:
* LEAs plan to use most of the SFSF funds allocated thus far for
teacher salaries;
* State officials have encouraged LEAs to use their ESEA Title I
Recovery Act funds for programs such as professional development for
teachers and professional staff and for supplemental reading programs;
* LEAs intend to use the IDEA Part B grants to, among other things,
retain special education teachers, acquire new technologies, enhance
professional development for teachers, and provide additional bus
transportation services to students with disabilities; and;
* LEAs intend to use the IDEA Part C grants for early intervention
services.
Table 2 shows the amounts of Recovery Act funding for these three
education programs available to Michigan as of November 6, 2009.
Table 2: Education-Related Recovery Act Funds Awarded to Michigan as of
November 6, 2009:
SFSF:
Total grants awarded: $872.6 million;
Grants drawn down: $615.8 million;
Percentage of grant funds drawn down: 71.
ESEA Title I:
Total grants awarded: $389.9 million;
Grants drawn down: $4.7 million;
Percentage of grant funds drawn down: 1.
IDEA[A]:
Total grants awarded: $414.0 million;
Grants drawn down: $9.6 million;
Percentage of grant funds drawn down: 2.
Source: Education.
[A] Includes both Part B and Part C funds.
[End of table]
We surveyed a representative sample of LEAs”generally school districts”
nationally and in Michigan about their planned uses of Recovery Act
funds.[Footnote 7] Table 3 shows Michigan and national GAO survey
results on the estimated percentages of LEAs that (1) plan to use more
than 50 percent of their Recovery Act funds from the three Education
programs to retain staff, (2) anticipate job losses even with SFSF
funds, and (3) reported a total funding decrease of 5 percent or more
since last school year.
Table 3: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: IDEA funds;
Estimated percentages of LEAs, Michigan: 37%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: ESEA Title I funds;
Estimated percentages of LEAs, Michigan: 23%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff: SFSF funds;
Estimated percentages of LEAs, Michigan: 87%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipate job losses in school year 2009-
2010, even with SFSF funds;
Estimated percentages of LEAs, Michigan: 45%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Michigan: 13%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Michigan have margins of error, at the
95 percent confidence level, of plus or minus 11 percentage points or
less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
State and Local Governments Experienced Some Challenges, but Were Able
to Meet the Recovery Act Reporting Requirements:
The Recovery Act requires each recipient of Recovery Act funds to
report information quarterly to the federal government on each award,
including: (1) the total amount of Recovery Act funds received, (2) the
amount of funds expended or obligated, and (3) the estimated number of
jobs created and retained.[Footnote 8] The first reporting deadline was
October 10, 2009 for all activity through September 30, 2009, with
quarterly reports due 10 days after the end of each subsequent quarter.
According to state officials, all state agencies that are required to
report on Recovery Act funds used a centralized reporting process to
submit reports to the ERO, which then submitted this information to the
federal government. ERO officials told us a key internal control
procedure was the requirement that state agency officials review the
information in agency reports and attest to its accuracy and
completeness. In addition, the ERO reviewed the reported information
for reasonableness and, as necessary, coordinated with state agency
officials on any issues identified during these reviews, such as
incomplete data. ERO officials said Michigan met the October 10, 2009,
deadline, and that they plan to use the same centralized reporting
process for the reports due in January 2010.
We discussed the reporting process with officials at two state agencies-
MDOT and DHS”as well as staff at two MDOT vendors and officials at two
local agencies that conduct weatherization work. They described some
challenges in obtaining the necessary information and in preparing and
submitting Recovery Act information to the state, but they did not
identify significant problems. For example, one vendor told us that
because the end of September fell in the middle of a pay period,
complete payroll information through September 30, 2009, was not
provided to the state agency by the deadline on October 2, 2009. We
discussed this issue with an MDOT official who told us they instructed
vendors whose last pay period extended into October to submit the last
pay period information in their next report.[Footnote 9] Therefore, the
full information for the split pay period would be included in the
January 2010 report covering payrolls for the period from October 1,
2009, to December 31, 2009.
Non-state entities such as local governments, universities, and
community colleges that received Recovery Act funds directly from
federal agencies submitted their reports to the federal government
rather than through the state's centralized system. Non-state entities
that received Recovery Act funds through a state agency submitted their
reports to the cognizant state agency. For example, localities
receiving transportation funds submitted reports to MDOT, and
localities receiving Recovery Act funds directly from federal agencies
reported to FederalReporting.gov. Officials at local governments we
visited told us they did not encounter any significant problems in
meeting the reporting deadline of October 10, 2009.
ERO officials told us between 1,000 and 1,100 non-state entities in
Michigan received Recovery Act funds directly from the federal
government. They said the state does not have responsibility for
oversight of these Recovery Act funds, and is not notified when these
entities submit reports. The ERO officials also said that, although
there is a public perception that the state is ultimately responsible
for tracking all Recovery Act funds provided to Michigan, the state
does not have access to the reports that non-state entities submit
prior to their release to the general public. Therefore, although
Michigan accesses available information and monitors this funding, they
cannot track the funds in the same way they can track federal funds
provided directly to the state.
Recovery Act Funds Provide Assistance to the State and Localities, but
Governments Continue to Face Significant Economic Challenges:
The state enacted its fiscal year 2010 budget on October 30, 2009, and
addressed its projected $2.7 billion deficit through both spending cuts
and the use of Recovery Act funds to free up other state revenues.
[Footnote 10] Since our July report, Michigan has continued to
experience rising unemployment and declining tax revenues. In September
2009, Michigan's unemployment rate was 15.3 percent, compared to 8.9
percent a year ago. State officials reported that, in recent months,
the state's tax revenues have continued to fall short of previously
reduced projections.
According to state officials, in comparison to the fiscal year 2009
budget, the state's spending cuts for fiscal year 2010 include an 8
percent cut in provider reimbursement rates for Medicaid services, 10
percent cuts to state agencies' budgets, an 11 percent cut in state
revenue sharing funds provided to local governments, and an estimated
$292-per-pupil funding cut from the State School Aid Fund.[Footnote 11]
State officials projected that these cuts, as well as the $1.423
billion in Recovery Act funding, should allow the state to complete
fiscal year 2010 with a balanced budget. However, they expressed
serious concerns about the state's long term budget outlook, when
little or no Recovery Act funds will be available. Michigan is
projecting a $1.1 billion shortfall in fiscal year 2011”even after
including over $200 million in Recovery Act funds”and a projected
shortfall of over $1.5 billion in fiscal year 2012.
Michigan's local governments are also facing the pressure of balancing
budgets with declining revenues, and have voiced concerns to the
federal government that the Recovery Act does not directly alleviate
local fiscal pressures. We visited three localities to better
understand these pressures and the Recovery Act's impact in these
communities. Table 4 provides recent population and unemployment data
for these localities.
Table 4: Population and Unemployment Data for Local Governments
Visited:
Locality: Flint;
Population: 112,900;
Type: City;
Unemployment rate: 26.3%.
Locality: Royal Oak;
Population: 57,110;
Type: City;
Unemployment rate: 9.9%.
Locality: Allegan County;
Population: 112,975;
Type: County;
Unemployment rate: 13.2%.
Source: U.S. Census Bureau and U.S. Department of Labor.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
City of Flint:
City officials told us Flint was awarded $4.5 million in Recovery Act-
funded grants; however, as of October 15, 2009, none of these funds had
been received. For example, Flint applied for funds through the COPS
Hiring Recovery Program to restore 40 of the 100 police officers it had
laid off, and was awarded funding to restore 8 positions. While these
additional officers may help increase Flint's public safety, officials
told us the city will incur additional costs because the grant requires
the city to retain the positions for at least 12 months beyond the
grant-funded period using state and/or local funds. Also, because the
grant provides salaries at the entry level, the city must make up the
difference between the amount of the grant and the amount the city pays
rehired officers. City officials told us the Recovery Act has not
significantly impacted Flint's budget. They said they are experiencing
continuing declines in collected tax revenues, and estimated that state
revenue sharing funds”the city's largest single source of revenue”will
decrease by $2.7 million in fiscal year 2010.[Footnote 12]
City of Royal Oak:
City officials told us Royal Oak was awarded over $1.4 million in
Recovery Act funds and, although none of these Recovery Act grants will
provide direct assistance in stabilizing the city's budget, they plan
to use some of these funds on projects that will achieve long-term cost
savings. For example, funds from EECBG will be used to improve the
efficiency of city buildings and reduce the city's energy expenses.
City officials also said they had some difficulty obtaining information
about competitive grants and determining whether grants were
appropriate for the needs of the city due to the length and complexity
of the grant applications. However, they said administering and
reporting on Recovery Act grants did not present significant challenges
for Royal Oak. City officials told us that, overall, the Recovery Act
is not expected to have a significant impact on Royal Oak's budget. The
officials expressed concerns about declining property tax revenues and
cuts to state revenue sharing but said they believed the city is
fiscally well-positioned due, in part, to its elimination of about 25
percent of city employees over the last 5 years through attrition and
retirement.
Allegan County:
Although county officials stated that the county has not directly
received any Recovery Act funds, its Transportation Department was
allocated a $1.6 million Recovery Act grant through MDOT to construct a
new facility and the County Road Commission was allocated over $1.4
million of Recovery Act funds through MDOT to resurface county roads.
The officials also told us the requirements and goals of many Recovery
Act programs do not fit the needs of a rural county such as Allegan.
For example, applicants for a grant from the U.S. Department of
Transportation's Transit Investments for Greenhouse Gas and Energy
Reduction program must apply for at least $2 million, an amount that
will make it difficult for Allegan County to put together a competitive
application. In addition, they told us they were disappointed they have
not received Recovery Act assistance to meet what they have identified
as the county's most critical needs, including law enforcement and
improved court facilities. The officials also told us they expect the
Recovery Act to improve some county facilities and roads but not to
significantly affect the county's budget in the long term. They said
that, due to zero growth in property tax revenues and a decrease in
revenues from sources such as court fees, property transaction fees,
and state revenue sharing funds, the county is projecting a $2 million
budget shortfall for fiscal year 2010.
State Comments on This Summary:
We provided the Governor of Michigan with a draft of this appendix on
November 18, 2009, and staff in the Governor's office and the ERO
reviewed the draft and responded on November 19, 2009. We also provided
relevant excerpts to officials from the localities we visited.
Officials agreed with our draft and provided clarifying or technical
suggestions that were incorporated, as appropriate.
GAO Contacts:
Susan Ragland, (202) 512-8486 or raglands@gao.gov.
Revae Moran, (202) 512-3863 or moranr@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Robert Owens, Assistant
Director; Ranya Elias, analyst-in-charge; Manuel Buentello; Kevin
Finnerty; Patrick Frey; Henry Malone; Giao N. Nguyen; and Amy Sweet
made major contributions to this report.
[End of section]
Footnotes: Appendix X: Michigan:
[1] 40 U.S.C. §§ 3141-3148.
[2] For the Highway Infrastructure Investment Program, the U.S.
Department of Transportation has interpreted the term obligation of
funds to mean the federal government's commitment to pay for the
federal share of the project. This commitment occurs at the time the
federal government signs a project agreement.
[3] States request reimbursement from FHWA on an ongoing basis as the
state makes payments to contractors working on approved projects.
[4] According to state officials, MDOT can debar a contractor if (1)
the contractor has been debarred by the federal government and is on
the debarment list posted on a federal Web site maintained by the
General Services Administration [hyperlink, https://www.epls.gov] that
lists contractors excluded from receiving federal contracts and certain
subcontracts, or (2) the contractor has serious performance issues,
such as felony convictions, work performance and safety issues, or
contract violations.
[5] Other actions included conducting energy audits, purchasing
materials and equipment, establishing new accounts for Recovery Act
funds, and providing training to inspectors and other staff.
[6] Pub. L. No. 89-665, 80 Stat. 915 (Jan. 10, 1966) (codified as
amended at 16 U.S.C. §§ 470 et seq.).
[7] 0f the 134 LEAs surveyed in Michigan, 97 responded.
[8] Recovery Act, div. A, title XV, § 1512(c).
[9] MDOT officials also told us vendors could choose to split the
information for the last pay period of the year ended September 30,
2009, and report payroll information for September 2009 in their
reports for that year and include payroll information for October 2009
in the report for the next quarter.
[10] The projected shortfall, per the state's May 2009 Consensus
Revenue Estimate, is for both the state's General Fund and School Aid
Fund.
[11] State officials explained that, of the $292 per-pupil budget cut,
$165 is a result of the state's approved fiscal year 2010 budget. After
the budget was approved, Michigan's Treasurer estimated additional
shortfalls in school aid tax revenue of $212 million, or $127 per
pupil. On November 19, 2009, officials told us that, under state law,
this shortfall required an additional reduction in state aid payments
of $127 per pupil.
[12] Additionally, Flint is in the first year of a state-approved plan
to eliminate a $10 million deficit. Under this plan, the city must
adopt budgets that provide sufficient revenue to eliminate this deficit
within 5 years.
[End of Appendix X: Michigan]
Appendix XI: Mississippi:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Mississippi.[Footnote 1] The full report covering all
of GAO's work in 16 states and the District of Columbia may be found at
[hyperlink, http://www.gao.gov/recovery].
What We Did:
We reviewed two programs funded under the Recovery Act”the Highway
Infrastructure Investment Program and Public Housing. We selected these
programs to follow up on projects we reported on in our earlier
reports. Our work focused on the status of program funding, the
programs' use of funds, and other issues. As part of our review of
public housing, we revisited two housing agencies, one in Picayune and
another in Gulfport. For descriptions and requirements of the programs
covered in our review, see appendix XVIII of GAO-10-232SP.
To gain an understanding of the state's experience in meeting Recovery
Act reporting requirements, we examined documents prepared by, and held
discussions with, the Mississippi Department of Transportation (MDOT).
As a prime recipient[Footnote 2] of Recovery Act funds, MDOT is
required to report quarterly on a number of measures, including the use
of funds and estimates of the number of jobs created and retained. The
first quarterly reports were due in October 2009. We focused our work
on MDOT's methodology for collecting data, particularly job creation
and retention data, and on MDOT's experience in preparing the October
report.
Our work in Mississippi also included meeting with officials of three
Mississippi cities to determine the amount of Recovery Act funds each
has received, or will receive, directly from federal agencies and to
learn how those funds are being used. We chose to visit the cities of
Jackson, Meridian, and Vicksburg. We selected Jackson because its
unemployment rate was below the state's average, and it is one of the
larger cities in Mississippi. We selected Meridian and Vicksburg
because both are smaller cities with unemployment rates higher than the
state's average.
What We Found:
* Highway Infrastructure Investment. As of October 31, 2009, the U.S.
Department of Transportation's (DOT) Federal Highway Administration
(FHWA) has obligated $301 million and reimbursed to Mississippi $69
million of the $355 million of Recovery Act funds apportioned to the
state. The state is using most of the obligated funds for interstate
and state road projects that MDOT plans and administers and secondary
road and bridge projects that the Mississippi Office of State-Aid Road
Construction oversees. In commenting on MDOT's selection of state-wide
Recovery Act projects, MDOT's Executive Director said that the Recovery
Act's requirement that priority be given to projects projected for
completion within 3 years limited Mississippi's ability to fund
projects that would have produced lasting economic impacts. Finally, we
found that FHWA has obligated little of the estimated $45 million that
MDOT has set aside for projects planned by local public agencies
(counties and cities), largely because these entities have been slow to
plan Recovery Act projects. However, the State Local Public Agency
(LPA) Engineer believes that the counties and cities will have these
projects ready for obligation before March 2, 2010, the date on which
unobligated program funds are subject to withdrawal and redistribution
in accordance with the Recovery Act.
* Public Housing Capital Fund. Mississippi has 52 public housing
agencies that have received about $32.4 million from the Public Housing
Capital fund. The Picayune Housing Authority used Recovery Act funding
for two projects, one completed in August 2009 that renovated 22 units
and another that began September 24, 2009, which will renovate 92
units. The Mississippi Regional Housing Authority-VIII (MRHA-8) in
Gulfport planned to use funds for 5 projects. MRHA-8 has one project
under way, has awarded contracts for two others, and expects to award a
contract for a fourth project in December. The housing agency dropped
one of its five planned projects when it found that a lengthy
environmental assessment was required before the project could move
forward. In addition, bids for other projects are coming in at less
cost than estimated. MRHA-8 is planning to undertake additional
projects with remaining Recovery Act funds.
* Recipient reporting. MDOT uses FHWA's Recovery Act Data System (RADS)
to collect data required for its quarterly report. This includes
information such as project descriptions, project completion status,
and project cost. MDOT also requires suballocants, subrecipients, and
vendors to submit monthly payroll reports, which RADS uses to compute
the number of jobs created and retained. However, we found that some
work carried out in support of Recovery Act projects is not reported.
Additionally, MDOT, its suballocants, and its vendors are not
taking steps to verify the accuracy of payroll reports that are the
basis for RADS' computation of jobs created and retained.
* Cities' use of Recovery Act funds. Jackson, Meridian, and Vicksburg
have all received or will be receiving Recovery Act funds directly from
one or more federal agencies. Jackson has received or will be receiving
a total of $6.83 million; Meridian, $1.02 million; and Vicksburg,
$773,000. The cities' plans for the funds include constructing and
repairing facilities, purchasing police vehicles, acquiring other
public safety equipment, and providing training that will enable low-
income, older individuals to re-enter the workforce.
Mississippi Focuses on the Obligation of Local Recovery Act Highway
Projects:
Two Mississippi agencies”MDOT and the Office of State Aid Road
Construction (OSARC)”administer Recovery Act funding for transportation
projects. MDOT is responsible for operating and maintaining
Mississippi's interstate and state road projects, as well as overseeing
all road construction projects that fall under the jurisdiction of any
of the state's local public agencies (LPA).[Footnote 3] OSARC assists
Mississippi's 82 counties in the construction and maintenance of
bridges and secondary, nonstate roads. As explained by state officials,
these agencies differ in that the Governor appoints the State Aid
Engineer, while an elected commission, independent of the Governor,
controls MDOT. In addition, because the U.S. Department of
Transportation recognizes only one state agency, all federal funds flow
through MDOT.
MDOT and OSARC Continue to Award Contracts for Less Than Estimated:
FHWA apportioned $355 million in Recovery Act funds to Mississippi in
March 2009 for highway infrastructure and other eligible projects.
Table 1 shows the dollar amounts both MDOT and OSARC are responsible
for administering, as well as the amount FHWA had obligated as of
October 31, 2009, for projects for which each agency is responsible.
The total number of MDOT and OSARC projects with contracts awarded,
completed, or underway is also included.
Table 1: Status of MDOT and OSARC Recovery Act Projects as of October
31:
Status of Recovery Act projects: Apportioned;
MDOT: $342.1 million;
OSARC: $12.5 million;
Total: $354.6 million.
Status of Recovery Act projects: Obligated;
MDOT: $289.6 million;
OSARC: $11.4 million;
Total: $301.0 million (85%).
Status of Recovery Act projects: Reimbursed;
MDOT: [Empty];
OSARC: [Empty];
Total: $69.0 million (23%).
Total projects: Contracts awarded;
MDOT: 57;
OSARC: 13;
Total: 70.
Total projects: Construction started;
MDOT: 45;
OSARC: 11;
Total: 56 (80%).
Total projects: Completed;
MDOT: 10;
OSARC: 2;
Total: 12 (17%).
Source: FHWA.
[End of table]
Both MDOT and OSARC continue to award Recovery Act contracts for less
than the state cost estimates. Through October 31, FHWA informed us
that MDOT and OSARC have awarded contracts for a total average of 11.4
percent and 10.9 percent less than estimated, respectively.
Additionally, OSARC has been able to fund three extra projects using
$1.6 million in excess funding.
According to MDOT's Budget Director, MDOT and OSARC committed to expend
a combined total of $331.1 million in state funding for the period
February 17, 2009, through September 30, 2010. As of October 31, FHWA-
Mississippi Division officials stated that the two agencies have
together expended $264.2 million, which is nearly 80 percent of their
total commitment.
Local Public Agencies Are Slow in Planning Recovery Act Projects:
About $45 million of the $342.1 million in Recovery Act funds that MDOT
administers is set aside for approximately 85 LPA city projects.
Although the Recovery Act requires that these funds be obligated within
1 year of apportionment or be subject to withdrawal and redistribution,
MDOT originally chose to implement an internal deadline of September 3,
2009. MDOT established this deadline to encourage the LPAs to take
action in advance of the final March 2, 2010, deadline, thereby
reducing the risk that the state will lose Recovery Act funding.
However, on September 9, only one LPA city project for $2.7 million had
been obligated. As a result, the LPA engineer informed us that MDOT
extended its deadline to November 2, 2009; at which time, each LPA must
submit its Recovery Act projects' Plans, Specifications, and Estimate
Assembly (PS&E).[Footnote 4] If each LPA meets this deadline, MDOT will
be able to send the paperwork to FHWA for approval no later than
November 16, 2009.
On November 2, the six district offices had received PS&E assemblies
for approximately 74 percent of the LPA city Recovery Act projects. The
LPA engineer reiterated that all of the funding for the state's LPA
projects will be obligated by March 1, 2010. He explained that if an
LPA has not forwarded its PS&E documentation by December 16, MDOT
officials will proactively assist as needed to correct errors and
prepare plans so that the documentation can be approved, the funds
obligated, and the projects advertised.
Requirements May Have Limited Opportunities for Long-Term
Infrastructure Improvements and Economic Development:
The Recovery Act placed funding priority on transportation projects
that states could begin quickly and complete within 3 years of the
act's enactment. When MDOT and OSARC chose projects to fund using
Recovery Act dollars, both emphasized projects that were "ready-to-go,
[Footnote 5] which ensured an expedited obligation process and the
likelihood that each project would be completed within 3 years. While
the Executive Director of MDOT and the State Aid Engineer stated that
they are seeing immediate positive impacts from Recovery Act-funded
projects, both officials believe that placing priority on "ready-to-go"
projects may have limited opportunities for long-term infrastructure
improvements and economic development.
The MDOT Executive Director explained that the majority of MDOT's
Recovery Act projects were pavement improvements, including resurfacing
and rehabilitation. Although he acknowledged that such projects improve
infrastructure and increase safety, the Executive Director identified a
few projects that he felt would have likely had a more lasting impact
on Mississippi's infrastructure and economic development. For example,
the Executive Director would have finished upgrading the remaining
portions of U.S. 78 to interstate standards. While this project was not
"ready-to-go" and required an additional $80 million in funding, the
upgrades would have enabled U.S. 78, which connects Memphis to
Birmingham through northern Mississippi, to become Interstate 22. An
interstate road, according to the Executive Director, would not only
have better serviced a new Toyota plant being built in Tupelo, but it
also may have attracted new business to the state.
The State Aid Engineer reiterated what we were told by MDOT's Executive
Director. Although he also recognized the need for each Recovery Act
project and gave examples of those having an impact on the state, such
as an industrial park access road, the State Aid Engineer named
additional projects that he believed may have had a greater impact on
the state's infrastructure. For instance, the State Aid Engineer
mentioned a $10 million bridge reconstruction project connecting the
cities of Gulfport and Biloxi. If this project had received Recovery
Act dollars, the bridge would have served as a major hurricane
evacuation route.
Public Housing Improvements Are Under Way:
HUD has provided Mississippi's 52 public housing agencies with about
$32.4 million in Recovery Act funds distributed as Public Housing
Capital Grant awards. As of October 24, 2009, these 52 public housing
agencies had awarded contracts for about $12.9 million and expended
approximately $3.3 million.
Visited Housing Authorities Have Awarded Contracts for Most
Projects:
We revisited two of Mississippi's public housing authorities that we
reported on in July 2009”the Housing Authority of Picayune,
Mississippi, and Mississippi Regional Housing Authority No. VIII (MRHA-
8), located in Gulfport, Mississippi. The Recovery Act projects
initiated by each of these housing authorities and the status of the
projects are shown in tables 2 and 3.
Table 2: Picayune Housing Authority's Recovery Act Projects:
Location of units to be renovated: George Weems and Yes Mae L. Williams
Developments;
Was the project part of the authority's 5-year plan? Yes;
Contract award date: March 10, 2009 (change order to ongoing contract);
Estimated contract completion date: August 18, 2009 (actual
completion date of project);
Estimated cost of renovations: $433,763 (actual cost for completed
project);
Number of housing units to be renovated: 22;
Renovations: Kitchens, bathrooms, plumbing, entrance doors, flooring,
painting, and water heaters.
Location of units to be renovated: Pines Public Housing Development;
Was the project part of the authority's 5-year plan? Yes;
Contract award date: September 24, 2009;
Estimated contract completion date: March 23, 2010;
Estimated cost of renovations: $280,000 ($263,867 funded by Recovery
Act funds);
Number of housing units to be renovated: 92
Renovations: Heating, ventilation, air conditioning.
Source: GAO analysis of Picayune Housing Authority data.
[End of table]
Table 3: MRHA-8 Implemented and Planned Recovery Act Projects:
Development to be Renovated: H.C. Patterson;
In 5-year plan? No;
Contract award date: June 16, 2009;
Estimated contract completion date: February 22, 2009;
Estimated cost of renovations: $228,600;
Number of housing units or buildings to be renovated: 1 building;
Renovations: Renovations.
Development to be Renovated: Dan Stepney[A];
In 5-year plan? Yes;
Contract award date: October 26, 2009;
Estimated contract completion date: February 23, 2010;
Estimated cost of renovations: $287,785;
Number of housing units or buildings to be renovated: 35 buildings;
Renovations: Reroof.
Development to be Renovated: Pecan Circle[A];
In 5-year plan? Yes;
Contract award date: October, 2009;
Estimated contract completion date: April 2010;
Estimated cost of renovations: $305,000;
Number of housing units or buildings to be renovated: 38 buildings;
Renovations: Reroof and upgrade siding.
Development to be Renovated: Dan Stepney;
In 5-year plan? Yes;
Contract award date: Expected in December 2009;
Estimated contract completion date: Expected December 2010;
Estimated cost of renovations: Estimated to be $1.2 to $1.5 million;
Number of housing units or buildings to be renovated: 35 buildings;
Renovations: Interior.
Source: GAO analysis of MRHA-8 data.
[A] The contracts for exterior renovations at the Dan Stepney and Pecan
Circle developments were scheduled to begin in August, but were delayed
due to a required environmental review.
[End of table]
As of October 24, 2009, MRHA-8 had awarded contracts for $1,048,737 of
the $3,783,351 received from HUD under the Recovery Act. This housing
authority has not awarded contracts for as much of its funding as
originally planned because contract bids received have been
substantially less than the estimated project costs. In addition, MRHA-
8 was unable to initiate a fifth project because the project was in a
flood plain and would have required a lengthy 8-step environmental
assessment. However, MRHA-8 officials indicated that more of the funds
will be used when contracts are awarded for interior renovation of
units at the Dan Stepney and Pecan Circle complexes, which are expected
to cost about $1.2 million each. Officials also said the roofing
projects may experience cost growth because there is uncertainty about
the condition of the roofs that are to be repaired. Finally, officials
told us that they may reconstruct MRHA-8 office space at the Pecan
Circle complex to fully use all of the grant funds.
Picayune and MRHA-8 Will Not Receive Competitive Grants:
HUD awarded $8.5 million in competitive grants to housing agencies in
Mississippi.[Footnote 6] However, neither the Picayune Housing Agency
nor MRHA-8 will receive any of these funds. Picayune officials did not
apply for these grants because they did not believe they had sufficient
time to get the professional help needed to complete the application.
MRHA-8 officials told us that they applied for a competitive grant but
were not successful.
Housing Agencies Provide Information on Job Counts:
Officials for both housing agencies told us that they were unsure how
to calculate the number of new and retained employees that resulted
from Recovery Act projects. Instead, the officials said that they
relied on contractors to provide the numbers that their staff entered
into the Recovery Act reporting system, FederalReporting.gov. The
housing authorities did not provide any guidance to contractors as to
how jobs created and retained should be reported. In addition, both
housing agencies found the reporting system difficult to understand.
Picayune officials did not seek any assistance from HUD or the Office
of Management and Budget (OMB). MRHA-8 officials sought assistance by
phone from OMB, but had difficulty getting through. In addition, MRHA-8
officials told us that FederalReporting.gov logged them off while they
were inputting data, causing them to lose all data added to that point.
To avoid this happening again, an MRHA-8 official saved information as
a draft, but was unable to locate the draft in the reporting system
after saving it.
MDOT Experiences Minor Challenges As State Implements Decentralized
Recovery Act Reporting:
Each prime recipient of Recovery Act funds is responsible for
collecting project-level data to address section 1512 Recovery Act
reporting requirements and for entering this data into
FederalReporting.gov. The Recovery Act requires prime recipients of
Recovery Act funds to report quarterly on these projects, and the first
of these recipient reports was due in October 2009. Among other
information, the reports are to describe the project, including its
cost and completion status, as well as the number of jobs that the
project created and retained. To learn more about a prime recipient's
methodology for collecting these data and its experience with
submitting its first quarterly report, we reviewed one Mississippi
agency--MDOT.
FHWA-Mississippi Division officials told us that on October 10, 2009,
MDOT submitted its first quarterly report, which included the agency's
own project data and data collected from another state agency”the
Office of State Aid Road Construction, to which MDOT suballocates
Recovery Act funds. In this first quarterly report, MDOT also included
information on 5 of the approximately 85 projects being planned by
local public agencies (LPA), which are subrecipients of MDOT Recovery
Act funds.
MDOT Uses FHWA Database to Develop Quarterly Reports:
The U.S. Department of Transportation's FHWA uses a two-part system to
collect and analyze data required to be submitted under the Recovery
Act. This two-part system is made up of FHWA's computerized database,
known as the Recovery Act Data System (RADS), and hard copy reporting
forms. RADS compiles a range of Recovery Act project information,
including each project's name, description, purpose, and rationale, as
well as the project's estimated cost and ultimate contract award
amount. Additionally, RADS provides the dates of major project
milestones, such as contract advertisement, award, and completion.
According to MDOT officials, the department also requires suballocants,
subrecipients, and vendors to submit completed hard copies of FHWA Form
1589 every month. This form documents the total number of employees,
hours worked, and payroll dollars for the month being reported. MDOT
then enters this data into RADS, which produces an electronic file that
contains all required reporting elements for every obligated Recovery
Act project. Once each electronic file is complete, MDOT uploads all
files directly into FederalReporting.gov.
Officials Experience Only Minor Reporting Problems:
MDOT experienced some minor challenges in submitting its first
quarterly report. For example, officials mentioned that RADS requires
the entry of multiple elements, all of which are not used for section
1512 reporting. This presented an additional challenge for the MDOT
official responsible for entering project data into RADS because it
increased the volume of entries during an already time-constrained
reporting process. Additionally, this same official told us he had
difficulty obtaining the DUNS numbers for some of the subrecipients and
vendors and chose to work with the Mississippi Division of the FHWA to
locate these numbers.
Job Count Numbers Were not Verified:
Under section 1512 of the Recovery Act, all prime recipients are
required to report and estimate the number of jobs created and retained
by activities and projects. However, we determined that MDOT officials
responsible for section 1512 reporting did not verify or obtain
supporting documentation to validate the form 1589 reports that contain
jobs data for each Recovery Act Project. Instead, MDOT officials
explained to us that they conducted "spot checks" of the forms to
identify material omissions and significant reporting errors. For
example, officials completed simple calculations to verify that the
reported pay was above minimum wage. Additionally, even though MDOT's
deputy executive director and chief engineer, as well as one district
engineer, told us that project engineers are expected to use their
expertise and day-to-day project site observations to review each form
1589, three project engineers informed us that this expectation was not
adequately communicated. As a result, one engineer told us that he only
ensured that there were no unfilled blanks on the form, and another
explained to us that he had been informed that MDOT Contract
Administration would ultimately be responsible for reviewing the forms.
Finally, two of the three engineers said that they were never verbally
instructed as to how they should validate the forms, and they did not
receive any written guidance on this subject.
We also found that although RADS guidance stipulates that monthly
reports by subrecipients and vendors should include all employees that
devote time to a particular Recovery Act contract, one vendor was not
doing so because certain administrative and corporate positions are not
included in the certified payroll. However, another vendor was
including employees in these types of positions even though there was
no documentation to validate that the employees had devoted a specific
amount of time to that particular project.
Visited Local Governments Explain Their Use of Recovery Act Funds:
To learn more about the impact of Recovery Act funds on local
governments, GAO visited three localities in Mississippi: the cities of
Jackson, Meridian, and Vicksburg.[Footnote 7]
Jackson, Mississippi:
Population: 173,861:
Unemployment rate: 8.6 percent (state rate: 8.8 percent):
Table 4: Selected Sources of Recovery Act Funds as Reported by Jackson
City Officials:
Program: Transit;
Purpose: Transit Capital Assistance Program;
Amount: $3.4 million.
Program: Public safety;
Purpose: Edward Byrne Memorial Justice Assistance Grant (JAG);
Amount: $1.6 million.
Program: Community Development;
Purpose: Homelessness Prevention and Rapid Re-housing;
Amount: $1.0 million.
Program: Community Development;
Purpose: Community Development Block Grant Program;
Amount: $674,000.
Program: Community Development;
Purpose: Senior Community Service Employment Program;
Amount: $157,000.
Source: Jackson city officials.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
In Jackson, we found the following:
Construction of local transit hub. Jackson will use Recovery Act funds
to construct an administrative and maintenance facility for the city's
local transit system. The facility will provide maintenance space for
the city's buses.
Training for senior citizens. The city expects to provide training for
low-income older individuals that will enable these individuals to re-
enter the workforce.
Maintenance and equipment upgrades. City officials noted that they plan
to use JAG funds to repair the roofs of both the local crime lab and
the training academy. The city will also use the funds to purchase new
equipment such as police cruisers, crime lab devices, speech
translators, speed-detection lasers, and new computers, as well as
equipment for the city's Mobile Crime Scene Unit, Bomb Squad, and
Narcotics Division.
Preparing for end of Recovery Act funds. City officials noted that they
have not used Recovery Act funds in ways that would create long-term
fiscal responsibilities for the city. Recovery Act funds are being used
for construction and infrastructure rather than on programs that will
cost the city money to maintain in coming years. An official also noted
that the process of applying for Recovery Act grants and fulfilling the
requirements of those grants has brought together various local, state,
and federal government entities and that Jackson city officials will
use those connections in the future to help them obtain more external
funding.
Meridian, Mississippi:
Population: 38,232:
Unemployment rate: 12.2 percent (state rate: 8.8 percent):
Table 5: Selected Sources of Recovery Act Funds as Reported by Meridian
City Officials:
Program: Public safety;
Purpose: COPS Hiring Recovery Program;
Amount: $582,000.
Program: Public safety;
Purpose: Edward Byrne Memorial Justice Assistance Grant (JAG) Program;
Amount: $257,000.
Program: Energy;
Purpose: Energy Efficiency and Conservation Block Grant Program;
Amount: $182,000.
Source: Meridian city officials.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
In Meridian, we found the following:
Public safety. City officials stated that Meridian has used or will use
Recovery Act funds to purchase police vehicles, upgrade the
department's security camera system, and provide funding for a Direct
Action Response Team. The city has also been granted funds to hire as
many as five police officers for 3 years.
Energy efficiency. City officials noted that Recovery Act funding is
being used to purchase more energy-efficient materials to be used in
the restoration of Meridian's City Hall.
Preparing for end of Recovery Act funds. A city official stated that
most of the city's projected Recovery Act funds are for equipment,
infrastructure repair, or improvements, which will only require the
expenditure of maintenance funds in the future. The same official
stated that, as required, the city will use local government funding to
continue the employment of the police officers hired with Recovery Act
funds.
Vicksburg, Mississippi:
Population: 24,974:
Unemployment rate: 14.5 percent (state rate: 8.8 percent):
Table 6: Selected Sources of Recovery Act Funds as Reported by
Vicksburg City Officials:
Program: Public safety;
Purpose: COPS Hiring Recovery Program;
Amount: $508,000.
Program: Public safety;
Purpose: Edward Byrne Memorial Justice Assistance Grant Program;
Amount: $266,000.
Source: Vicksburg city officials.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
In Vicksburg, we found the following:
Public safety. Vicksburg city officials stated that the city is
planning to use Recovery Act funds to purchase crowd-control barricades
to be used for city events. The city is also planning to purchase
communications equipment and generators for a mobile precinct that will
be used for local events and during emergency situations. The city has
also been granted Recovery Act funds that would allow the city to hire
as many as four police officers for 3 years.
Preparing for end of Recovery Act funds. City officials stated that the
city will use local government funding, as required, to continue the
employment of the police officers hired with Recovery Act funds. They
also noted the city will continue to seek other sources of funding from
both federal and state agencies.
State Comments on This Summary:
We provided the Governor of Mississippi with a statement of facts on
thrabkinn@gao.gov on November 2, 2009. The General Counsel to the
Governor, who serves as the stimulus coordinator, responded for the
Governor on November 19, 2009. The official provided technical
suggestions that were incorporated, as appropriate.
GAO Contacts:
John K Needham, (202) 512-5274 or needhamjkl@gao.gov.
Norman J. Rabkin, (202) 512-9723 or rabldnn@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Barbara Haynes, Assistant
Director, James Elgas, analyst-in-charge; Anna Russell; Gary Shepard;
Erin Stockdale; and Ryan Stott made major contributions to this report.
[End of section]
Footnotes: Appendix XI: Mississippi:
[1] Pub. L. No. 111-5, 123 Stat.115. (Feb. 17, 2009).
[2] M defined by OMB, prime recipients are non-Federal entities that
receive Recovery Act funding as Federal awards in the form of grants,
loans, or cooperative agreements directly from the Federal Government.
[3] LPAs are local government entities, usually a city or county
government, eligible to participate in the federal transportation
program.
[4] Submittal and authorization of the PS&E Assembly is the final stage
of project development. The PS&E Assembly included the plans,
proposals, bid sheets, specifications, and the LPA's professional
construction estimate.
[5] MDOT officials describe projects as "ready-to-go" if the department
has acquired right-of-way, received all environmental clearances, and
developed the project plan.
[6] HUD was required to award nearly $1 billion to public housing
agencies based on competition for priority investments, including
investments that leverage private sector funding or financing for
renovations and energy conservation retrofitting. In September 2009,
HUD awarded competitive grants for the creation of energy-efficient
communities, gap financing for projects stalled due to financing
issues, public housing transformation, and improvements addressing the
needs of elderly or persons with disabilities.
[7] Our examination of Recovery Act funds includes those which have
been or will be received directly from federal agencies by the local
jurisdictions.
[End of Appendix XI: Mississippi]
Appendix XII: New Jersey:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in New Jersey. The full report covering all of GAO's work
in 16 states and the District of Columbia may be found at [hyperlink,
http://www.gao.gov/recovery].
What We Did:
We reviewed three specific programs funded under the Recovery Act:
State Fiscal Stabilization Fund (SFSF), Highway Infrastructure
Investment program, and Public Housing. We selected these programs for
different reasons. New Jersey began disbursing its allocation of SFSF
funds in September 2009. The highway program in New Jersey has an
obligation deadline approaching in March 2010 and is behind other
states in its obligation of funds suballocated for regional,
metropolitan, and local use. The housing program recently awarded
competitive grants and projects using the Recovery Act formula grant
funds are under way. Our work focused on the status of each program's
funding, how funds are being used, and issues that are specific to each
program. For descriptions and requirements of the programs we covered,
see appendix XVIII of GAO-10-232SP. As part of our review of public
housing, we also revisited four housing agencies”Newark, Plainfield,
Rahway, and Trenton”that we reported on earlier in 2009.[Footnote 1] We
also reported on selected survey results for Title I, Part A of the
Elementary and Secondary Education Act (ESEA), as amended and Part B of
the Individuals with Disabilities Education Act (IDEA).
To gain an understanding of the state's experience in meeting Recovery
Act reporting requirements, we met with state officials with each of
the programs we reviewed. Because New Jersey is a decentralized
reporting state, each agency serves as the prime recipient.[Footnote 2]
Prime recipients of Recovery Act funds are required to report quarterly
on a number of measures, including estimates of the number of jobs
created and retained. The first quarterly reports were due in October
2009.
Finally, our work in New Jersey included visiting two localities to
determine the amount of Recovery Act funds each has or will be
receiving from the state or directly from federal agencies and to learn
how those funds are being used. We chose to visit the city of Newark
and Cumberland County. Both localities have unemployment rates that are
higher than the state average of 9.6 percent as of September 2009. We
selected Newark because it is New Jersey's largest city, urban, and
located in the northern part of the state. We selected Cumberland
County because it is sparsely populated, a mix of urban and rural
areas, and located in the southern part of the state.
* State Fiscal Stabilization Fund (SFSF). As of November 13, 2009, New
Jersey had drawn down 45 percent of its total allocation of SFSF monies
(education stabilization funds). Most of New Jersey's local educational
agencies (LEAs) will spend over half of their SFSF funds on staff
retention.
* Highway Infrastructure Investment. The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned $652
million in Recovery Acts funds to New Jersey. As of October 31, 2009,
about $492 million had been obligated and $71 million had been
reimbursed by FHWA. The overall obligation rate for New Jersey
continues to be high, but the state has been slow to request that FHWA
obligate about $196 million of suballocated funds to New Jersey for
projects planned by local agencies.
* Public Housing Capital Fund. New Jersey's 80 public housing agencies
are spending about the same as the national average. Under the act,
public housing authorities are to prioritize projects for which the
authority can award contracts within 120 days from when funds were made
available, however, officials in all four agencies we visited said that
they were unable to award contracts within this timeframe. Officials
cited such reasons as delays in obtaining work permits and meeting
requirements for HUD's approval of all obligations and expenditures.
* Localities use of Recovery Act funds. As of October 2009, the city of
Newark, reported receiving, will be receiving, or being allocated,
approximately $120 million, which it plans to use for numerous onetime
projects, such as road repaving. Cumberland County reported receiving
about $4.8 million that it is using to support nonrecurring projects
and existing programs, such as road repaving and employment programs
for adults and youth, respectively.
New Jersey Continues to Plan For and Spend Recovery Act Education
Funds:
As of November 13, 2009, New Jersey had drawn down $325 million in SFSF
funds (45 percent of its total allocation of education stabilization
funds) and had drawn down about $1.6 million of IDEA, Part B and
$207,850 ESEA Title I, Part A funds.[Footnote 3] For this report, we
reviewed New Jersey's LEAs' use of Recovery Act education funds and the
New Jersey Department of Education's (NJED) plan for management of SFSF
funds and experience with recipient reporting.
Most of New Jersey's LEAs will use SFSF funds to retain staff. We
surveyed a representative sample of LEAs”generally school districts”
nationally and in New Jersey about their planned uses of Recovery Act
funds. Table 1 shows New Jersey and national GAO survey results on the
estimated percentages of LEAs that (1) plan to use more than 50 percent
of their Recovery Act funds from three education programs to retain
staff, (2) anticipate job losses even with State Fiscal Stabilization
Fund monies, and (3) reported a total funding decrease of 5 percent or
more since last school year. The GAO survey indicated that an estimated
79 percent of New Jersey LEAs plan to use over half of their SFSF funds
to retain staff, compared to the national estimate of 63 percent, but a
smaller percentage of New Jersey LEAs plans to use over half of their
ESEA Title I or IDEA funds to retain staff when compared to national
estimates. Our survey also indicated that compared to national
estimates, fewer of New Jersey's LEAs anticipated job losses and
decreases in funding of 5 percent or more.
Table 1: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs, New Jersey: 3%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs, New Jersey: 10%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs, New Jersey: 79%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipate job losses, even with SFSF funds;
Estimated percentages of LEAs, New Jersey: 12%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, New Jersey: 2%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO.
Note: Percentage estimates for New Jersey have margins of error, at the
95 percent confidence level, of plus or minus 16 percentage points or
less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
NJED has process for monitoring management of SFSF funds. As we
reported in our September 2009 report,[Footnote 4] NJED allocated $1
billion of SFSF education stabilization funds and $39 million of SFSF
government services funds to help cover and increase the state's
portion of education funding for the 2009-2010 school year. NJED
disburses SFSF payments semimonthly, on the 15th and 30th of each
month. The department issued the first payments to LEAs on September 15
and 30, 2009. SFSF funds are federal funds governed by applicable
federal cash management rules.[Footnote 5] Additionally, Education
directs states to monitor LEAs' management of SFSF funds.
According to state officials, NJED's cash management process requires
LEAs to issue quarterly reports on actual expenditures of the SFSF
funds to determine cash needs for the next quarter. If NJED determines
through its review of quarterly reports that an LEA spent at least 90
percent of SFSF payments, NJED will continue to send scheduled
payments. If an LEA spends more than the total of the payments issued
in a quarter, NJED increases the amount of the semimonthly payments.
[Footnote 6] On the other hand, if an LEA spends less than 90 percent
of the payments issued in a quarter, NJED withholds semimonthly
payments until the LEA's expenditures exceed 90 percent. NJED officials
told us that they reviewed the first quarterly reports in October 2009
for the 390 LEAs receiving SFSF funds.[Footnote 7] As a result, 145
LEAs received larger semimonthly payments, and payments for 21 LEAs
were withheld.[Footnote 8] According to guidance issued by NJED to
LEAs, LEAs are directed to remit any interest accrued, of more than
$100, on unspent SFSF funds to Education at least quarterly. However,
NJED officials reported that they do not anticipate that LEAs will earn
interest on SFSF funds because most LEAs will use the funds to pay
salaries each month. One NJED official reported that, as of November
2009, no interest had been remitted to the federal government because
the 21 LEAs had not earned interest on the funds because either the
funds were in a non-interest bearing account or the LEAs had not
accrued more than $100 in interest.
In addition to reviewing quarterly reports, NJED officials said that
they will review LEAs' SFSF expenditures, including matching payments
to expenditures and checking for any earned interest, as part of the
department's on-site monitoring of how LEAs use Recovery Act funds,
which began in October 2009.[Footnote 9] We expect to examine NJED and
LEA cash management in future reports.
State officials reported few problems with recipient reporting for
education funds. New Jersey officials reported few problems in
complying with Recovery Act recipient reporting requirements. However,
according to NJED officials, some LEAs had difficulty counting the
number of jobs created and estimating those retained. NJED followed-up
with LEAs that, based on its internal checks, reported what seemed to
be an unreasonable number of jobs given the funding allocation and
found that some LEAs reported hours instead of the number of full-time
equivalent jobs. Of the 616 school LEAs in the state, NJED officials
said that about 20 LEAs had problems with providing an accurate count
of jobs created. NJED officials told us that they corrected the problem
for many of these LEAs prior to submitting a report to OMB.
New Jersey Department of Transportation's Local Project Obligation Rate
is Low, but its Overall Obligation Rate is High:
As we reported in September 2009, $652 million was apportioned to New
Jersey in March 2009 for highway infrastructure and other eligible
projects. As of October 31, 2009, about $492 million had been obligated
and $71 million had been reimbursed by FHWA. Almost 59 percent of
Recovery Act highway funds obligated for New Jersey projects are being
used for pavement improvements. Specifically, $288.5 million of the
approximately $492 million obligated in New Jersey as of October 31,
2009, is being used for projects such as pavement improvements,
including $52 million for pavement resurfacing and $237 million for
pavement reconstruction and rehabilitation. Many state officials told
us they selected pavement improvement projects because these projects
were already in their pipeline, were identified infrastructure needs,
could advance sooner than planned because funding was available, and
had met federal planning requirements. In addition to these pavement
improving projects, the New Jersey Department of Transportation (NJDOT)
plans to apply Recovery Act funds to other critical infrastructure
needs on the state highways system including 23 structurally deficient
bridges, 40 bridge decks needing rehabilitation, and 5 priority
drainage projects. Figure 1 shows obligations by the types of road and
bridge improvements being made.
Figure 1: Highway Obligations for New Jersey by Project Improvement
Type as of October 31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (59 percent, $288.5 million):
Pavement improvement: reconstruction/rehabilitation ($236.9 million):
48%;
Pavement improvement: resurface ($51.6 million): 10%;
Bridge projects total (19 percent, $93.5 million):
Bridge replacement ($70.8 million): 14%;
Bridge improvement ($22.7 million): 5%;
Other (22 percent, $110.5 million):
Other ($110.5 million): 22%.
Source: GAO analysis of Federal Highway Administration data.
Note: Totals may not add due to rounding. "Other" includes safety
projects, such as improving safety at railroad grade crossings, and
transportation enhancement projects, such as pedestrian and bicycle
facilities, engineering, and right-of-way purchases.
[End of figure]
Since bids for contracts are coming in lower than the estimated costs,
state plans to use excess funds for additional highway projects. NJDOT
officials noted that bids for contracts are coming in on average 15
percent lower than the state's estimated costs, primarily due to the
competitive environment amongst bidders. In turn, NJDOT expects to have
FHWA deobligate excess funds from FHWA approved projects where a
contract has been awarded for an amount lower than the FHWA obligated
amount. NJDOT expects about $30 million in funds associated with
savings from these bids. This has allowed NJDOT to submit four new
projects for approval that were not in their original project
submission. According to NJDOT officials, the four projects are pending
final approval.
Local areas continue to identify projects and state seeks federal
obligation for these projects at a slow rate. As required under the
Recovery Act, about $196 million was suballocated in New Jersey,
primarily based on population, for metropolitan, regional, and local
use. NJDOT provided most of the suballocated funding to the three
Metropolitan Planning Organizations (MPO) covering the state so that
eligible county and local projects could receive Recovery Act funds.
According to NJDOT, it was important to provide the opportunity for
Recovery Act funds to have the greatest impact on transportation
projects across the state and not just projects in the state highway
system. As of October 30, 2009, the MPOs in New Jersey had identified
about 90 highway infrastructure projects estimated to cost
approximately $164 million.[Footnote 10] NJDOT officials anticipate
that FHWA has obligated funding for 32 of these projects costing
approximately $63.6 million. Many of the projects consist of road
resurfacing and adding guard rails Compared to New Jersey's overall
obligation rate, the state has been slow in having FHWA obligate its
suballocation for projects planned by local agencies. Our analysis of
FHWA data as of October 31, 2009 showed that the local obligation rate
is about 34 percent compared to the state's overall rate of about 93
percent.
For the remaining 58 projects, NJDOT continues to work closely with
MPOs and local government representatives, holding biweekly meetings to
resolve outstanding issues such as planning and environmental
clearances. The state has established an internal November 30, 2009,
deadline to complete final submission plans. NJDOT officials are hoping
that all their projects are able to meet this deadline; however, if
this does not happen, the MPOs may reallocate funds to other local or
NJDOT projects that will enable New Jersey to reach 100 percent
obligation by March 1, 2010. However, even if their internal deadline
is met, officials stated that it will be spring before the bulk of the
work begins on the local projects. Additionally, state officials
concede that project spending and related reimbursements will be slow
over the winter season due to the seasonal nature of some of the work.
Reimbursements remain low but NJDOT expects the pace to increase.
According to NJDOT officials, the reimbursements for its projects had
increased from $4 million dollars as of September 1, 2009, to
approximately $10 million on September 23, 2009. As of October 31,
2009, it was $71 million. Officials told us they expect to see state
highway reimbursements increase significantly in the near future, as
all the original projects involving Recovery Act funding have received
the notice to proceed and contractors can begin project work. Officials
also told us that while they anticipate work beginning on these
projects, progress is contingent on having good weather this winter.
NJDOT officials stated that the recipient reporting process is
generally working well, but some reporting concerns remain. NJDOT
officials told us the only problem they had with their initial
submission into the www.federalreporting.gov (FederalReporting.gov) Web
site was that it did not allow for batch uploading, resulting in a long
and cumbersome data entry process for the state. Additionally, NJDOT
officials stated that they reviewed the data submitted by vendors and
requested clarification as needed, but do not have the staff to conduct
a full audit of every vendor's job count. As part of its data quality
assurance effort, NJDOT reviewed a project on October 8, 2009 where
work had begun, to determine compliance with Recovery Act jobs
reporting requirements. They basically found consistency and agreement
between invoices and payments, as well as between certified payrolls
and the contractor's monthly workforce report. However, the review
found that five of the seven subcontractors for this project who had
begun work had not submitted monthly vendor workforce reports to the
prime contractor. NJDOT recommended that the prime contractor on the
project work with all subcontractors to ensure that they submit all
delinquent monthly manpower reports to the state as required within 10
business days of receiving the results of the review.
Housing Agencies Continue to Make Progress on Recovery Act Projects:
New Jersey has 80 public housing agencies that have received Recovery
Act formula grant awards. In total, these public housing agencies have
received $104 million in Public Housing Capital Fund formula grants
(see fig. 2 for obligations and draw downs). On average, housing
agencies in New Jersey are obligating funds at about the same rate as
other housing agencies in other states. As of November 14, 2009, the
four housing agencies we visited had obligated $17 million and had
drawn down $3 million.
Figure 2: Percentage of Public Housing Capital Funds Allocated by HUD
that Have Been Obligated and Drawn Down in New Jersey, as of November
14, 2009:
[Refer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100%; $104,165,767;
Funds obligated by public housing agencies: 49.0%; $51,028,253;
Funds drawn down by public housing agencies: 12.0%; $12,473,768.
Number of public housing agencies:
Entering into agreements for funds: 80;
Obligating funds: 75;
Drawing down funds: 59.
Source: GAO analysis of HUD data.
[End of figure]
Changes made to projects using Recovery Act funds. Since our report in
July 2009, officials at the Newark Housing Authority and Plainfield
Housing Authority told us they made changes to projects included in
their annual statements.[Footnote 11] The Newark Housing Authority
initially proposed a project to demolish five buildings.[Footnote 12]
However, officials decided instead to repair the roofs, siding,
heating, and air conditioning in other buildings for less cost and use
the remaining funds on projects such as installing security systems and
cameras in other buildings. Plainfield Housing Authority officials said
they will add a project in response to a violation notice issued by
local fire authorities requiring the Plainfield Housing Authority to
install smoke barriers on 11 floors in one of its buildings. Plainfield
Housing Authority officials told us that to offset the cost of this new
project, it will reduce funding to other projects.
Public housing authorities are using Recovery Act funds to rehabilitate
vacant units. In total, the four public housing agencies will use
Recovery Act funds to rehabilitate 568 vacant units, of which 338 had
been completed as of November 17, 2009 (see table 2). For example, the
Newark Housing Authority has completed rehabilitations for 313 vacant
units. Figure 3 shows one unit the Newark Housing Authority
rehabilitated with Recovery Act funds.
Table 2: Number of Vacant Units Available for Rehabilitation and
Completed Rehabilitations as of November 17, 2009, by Housing
Authority:
Housing authority: Newark;
Number of vacant units available for rehabilitation: 422;
Number of these vacant units completed as of November 17, 2009: 313.
Housing authority: Rahway;
Number of vacant units available for rehabilitation: 9;
Number of these vacant units completed as of November 17, 2009: 9.
Housing authority: Plainfield;
Number of vacant units available for rehabilitation: 22;
Number of these vacant units completed as of November 17, 2009: 16.
Housing authority: Trenton;
Number of vacant units available for rehabilitation: 115;
Number of these vacant units completed as of November 17, 2009: 0.
Source: Newark Housing Authority, Rahway Housing Authority, Plainfield
Housing Authority, and Trenton Housing Authority.
[End of table]
Figure 3: Newark Housing Authority Rehabilitations with Recovery Act
Funds, Before and After:
[Refer to PDF for image: before and after photographs]
Source: GAO.
Note: The Newark Housing Authority does not install appliances until
tenants move in.
[End of figure]
Public housing authorities faced challenges in awarding contracts
within 120 days. Under the act, public housing authorities are to
prioritize projects for which the authority can award contracts within
120 days from when funds were made available. Officials in all four
public housing authorities we visited said that they were unable to
award Recovery Act projects within this time frame. A Rahway Housing
Authority official reported that in some cases, the architect and
engineering plans were not ready and, in other cases, more time was
needed to obtain work permits. An official with the Trenton Housing
Authority reported that lower than expected bids on its projects
allowed the agency to obligate funds for rehabilitating more units,
which required additional time. Also, according to this official,
aspects of the Trenton Housing Authority's process for awarding
contracts and obtaining board approval, for example, were lengthy.
Newark Housing Authority officials told us that they could not award
all of their contracts within the 120 days because their status as a
HUD designated "troubled" agency prevented them from obligating the
funds.Footnote 13, 14] Plainfield Housing Authority officials told us
that they could not award all Recovery Act contracts within this time
frame because HUD requires the agency to receive approval for all
obligations and expenditures of Recovery Act funds.
While some of the agencies have had challenges obligating funds, the
four public housing agencies we visited in New Jersey did not report
challenges or barriers in undertaking Recovery Act projects due to
Recovery Act requirements such as the "Buy American" provision or Davis-
Bacon requirements.
Few challenges cited in reporting project data to federal agencies. All
four public housing officials told us that they generally did not face
challenges in reporting jobs created and retained, although there were
some technical difficulties entering the information on the federal
FederalReporting.gov Web site.
Mixed views on HUD's competitive grant process. HUD awarded 11 Capital
Fund competitive grants to housing agencies in New Jersey. Newark
Housing Authority officials said that the application process was fair
because HUD made awards using clear criteria and scoring. HUD awarded
the Newark Housing Authority $11 million to develop multiuse housing.
Trenton Housing Authority and Plainfield Housing Authority officials
also noted that the competitive grant process was fair. However, Rahway
Housing Authority officials told us that they believe the competitive
grant process was unfair because as a small agency, it lacks the in-
house professional staff, such as architects and engineers, to complete
a more competitive grant application. As a result, these officials
thought that large housing authorities have advantage over the small
ones in preparing grant applications.
Selected Localities Using Recovery Act Funds to Support Projects and
Programs:
GAO visited two localities in New Jersey”the city of Newark and
Cumberland County”to review their use of Recovery Act funds.
Newark, New Jersey:
Population: 278,980:
Locality Type: City:
Unemployment Rate: 15.0 percent (state average-9.6 percent).[Footnote
15]
Table 3: Selected Sources of Recovery Act Funding to Newark Government:
Public Works:
Public Works: Public Works & Road Improvements--$4.9 million;
Employment and Training: Employment and Workforce Investment Act”$5.2
million.
Source: City of Newark.
[End of table]
Newark will use Recovery Act funds for numerous nonrecurring projects.
According to city officials, as of October 2009, Newark and its
community partners[Footnote 16] have reported receiving, will be
receiving, or have reported being allocated approximately $120 million
in Recovery Act funds. Of these funds, approximately $9.3 million were
apportioned to the city, while the remaining funds were awarded to
community partners. City officials in the Office of the Business
Administrator stated that they will not rely on Recovery Act funds to
stabilize the calendar year 2009 or upcoming years' budgets because the
city does not want to use Recovery Act funds to replace normal
operating expenses or create new expenses. In April 2009, the city
identified 43 nonrecurring projects in a range of categories such as
employment, housing, transportation, energy, and education that could
be funded with Recovery Act monies.[Footnote 17] For example, one of
the city's projects will use $4.9 million of NJDOT Recovery Act funds
received from the state for road resurfacing.
Newark wants to be model for leveraging Recovery Act funds. Officials
told us that they are being very aggressive about pursuing Recovery Act
competitive grants and hope to be an example of how to take advantage
of Recovery Act competitive funds to meet local goals.[Footnote 18] As
of October 2009, the city had submitted 17 competitive grant
applications for approximately $163 million in potential funding.
Examples of competitive grants for which Newark applied are the
Neighborhood Stabilization Program 2 grant from HUD and an Edward Byrne
Memorial competitive grant from the U.S. Department of Justice.
Cumberland County, New Jersey:
Population: 156,830:
Locality Type: County:
Unemployment Rate: 12.6 percent[Footnote 19] (state average--9.6
percent):
Table 4: Selected Sources of Recovery Act Funding to Cumberland County
Government:
Employment and Training:
Employment and Workforce Investment Act-”$2.2 million;
Public Works:
Public Works: Public Works & Road Improvements--$2.4 million.
Source: Cumberland County Government.
[End of table]
Cumberland County is using Recovery Act funds to support nonrecurring
and existing programs. According to a senior-level budget official, as
of October 2009, the County had received about $ 4.8 million in
Recovery Act funds, which it has used (or plans to use) primarily for
employment, training, and public works.[Footnote 20] For example, the
U.S. Department of Labor provided $2.2 million through the state for
employment and training activities, including workforce investment. A
senior level official in the County's Office of Workforce Development
said that some of the Recovery Act funds were used to provide a career
camp summer program for older youth that trained participants in what
was described as "high growth industry areas" for Cumberland County,
which includes information technology and landscaping/horticulture.
This official also stated that at the end of September 2009, the office
had expended 78 to 80 percent of its Recovery Act youth funds, and
would use the balance of the remaining funds primarily to supplement
community college or vocational school tuition for continuing education
of youth who participated in the career camps. Although the county
would like to take advantage of other Recovery Act monies, the budget
official commented that, unlike Newark or other bigger localities, the
county does not have the resources or staff to dedicate to applying for
numerous competitive grants.
As of October 2009, the county had applied to the state for one
competitive grant under HUD's Community Development Block Grant program
(CDBG) with the help of a contractor the county hired.
Cumberland County facing fiscal challenges for 2009 and projects the
same for 2010. A budget document we reviewed and the senior-level
budget official we spoke to indicated that Cumberland County's fiscal
year 2009 budget is approximately $137 million, with more than half
funded through property taxes. This official commented that the
county's housing market did not suffer massive foreclosures to the
extent that some larger localities experienced. The official stated
that the county projects a budget gap of at least $1.2 million for its
current 2009 fiscal year, and attributed the gap primarily to taking in
less revenue than projected in some of its budget areas and increasing
pension costs and insurance premiums for the county employees' health
care plan. However, this official said that Cumberland County will not
rely on Recovery Act funds to balance its budget; instead, the county
will use the funds to support nonrecurring projects, such as road
improvements, or existing programs, such as workforce investment, as
mentioned above. The official further commented that their exit
strategy is that once Recovery Act funding ends, their programs will
revert back to the level of service allowed under regular
appropriations. The official stated that although the county has not
cut or reduced any program services for fiscal year 2009, it might be a
different scenario for FY 2010 based on the current economy and
increasing expenses. The official added that the county did not
increase its general tax rate in 2009 and does not plan to do so for
2010. Therefore, if necessary, the county will take actions, such as
reducing and cutting services, to help in balancing its budget for the
upcoming fiscal year. The official also referred to the county's
"surplus" or reserve funds for offsetting its budget shortfalls for the
current fiscal year and 2010. The official said this reserve fund,
generated through excess budget appropriations from previous years,
[Footnote 21] contained $14 million as of fiscal year 2009 and
comprises about 10 percent of the county's 2009 budget. According to
the official, the money can only be used for the purpose of helping to
close budget gaps.
Tracking Recovery Act funds can pose challenges. The county's senior-
level budget official stated that the county maintains Recovery Act
funds separately from regular appropriations in its accounting systems.
However, the official was concerned that some of the grant award
letters the county receives from the state do not always clearly
distinguish between appropriations from Recovery Act funds and regular
appropriations. She stated that this heightens the potential for errors
in tracking Recovery Act funds.
State Comments on This Summary:
We provided the Governor of New Jersey with a draft of this appendix on
November 17, 2009. The Governor's Chief of Staff, who serves as the co-
chair for the Governor's Recovery Accountability Task Force, responded
for the Governor on November 19, 2009. The official provided technical
suggestions that were incorporated, as appropriate.
GAO Contacts:
David Wise, (202) 512-2834 or wised@gao.gov.
Gene Aloise, (202) 512-6870 or aloisee@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Diana Glod, Assistant Director,
Tahra Nichols, analyst-in-charge; Kisha Clark, Alexander Lawrence Jr.;
Tarunkant Mithani; Vincent Morello; Nitin Rao; and Cheri Truett made
major contributions to this report.
[End of section]
Footnotes: Appendix XII: New Jersey:
[1] GAO, Recovery Act: States' and Localities' Current and Planned Uses
of Funds, While Facing Fiscal Stresses, [hyperlink,
http://www.gao.gov/products/GAO-09-830SP] (Washington, DC: July 8,
2009).
[2] As defined by OMB, prime recipients are non-Federal entities that
receive Recovery Act funding as Federal awards in the form of grants,
loans, or cooperative agreements directly from the Federal Government.
[3] As of November 6, 2009, New Jersey had drawn down $325 million in
SFSF funds (education stabilization funds), $1,444 of IDEA, Part B
funds, and no ESEA Title I, Part A funds.
[4] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to be Fully Addressed (New Jersey), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: Sept. 23,
2009).
[5] According to the U.S. Department of Education's guidance on SFSF,
states must have an effective system to ensure that entities are able
to draw down funds as needed to pay program costs but that also
minimizes the time that elapses between the transfer of the funds and
their disbursement by the grantee or subgrantee, in accordance with
U.S. Department of the Treasury regulations at 31 C.F.R. Part 205.
Education requires grantees and subgrantees to remit interest earned on
advances to the department at least quarterly. 34 C.F.R. §80.21(i).
[6] Districts that spend more than their quarterly payments by an
amount greater than their next scheduled payment receive the
corresponding additional amount (not to exceed the district's total
allocation) equaling the difference between actual expenditures and
their quarterly payments in the first payment of the next quarter.
[7] According to a NJED official, New Jersey provides aid through its
funding formula (equalization aid) to 390 of the 616 school districts;
the remaining districts fund education using local funds, other state
funds, and federal funds.
[8] As of November 10, 2009, a NJED official said that 14 of the 21
LEAs provided support for their expenditures of SFSF funds and had
begun to receive their scheduled SFSF payments. This official said that
the department was working with the remaining 7 LEAs regarding the
expenditure of the funds.
[9] One NJED official noted that NJED also sends guidance directly to
LEAs for which the department withholds payment and works through the
department's local offices to resolve the reasons why the LEAs are not
spending their SFSF funds.
[10] According to a state official, of the $196 million suballocation,
NJDOT will use $32 million for state highway projects.
[11] The annual statement lists the public housing authority's planned
activities with the current year's Capital Fund Program Grants and
Capital Fund Financing Program.
[12] A Newark Housing Authority official said that the agency has
removed this project from its annual statement for Recovery Act funds
because, at the time, HUD had not approved the demolition of the five
buildings and the agency was concerned that it would not be able to
meet Recovery Act deadlines for the obligation of funds. This official
also said that the agency would not use Recovery Act funds for the
demolition.
[13] HUD developed the Public Housing Assessment System to evaluate the
overall condition of housing agencies and to measure performance in
major operational areas of the public housing program. These include
financial condition, management operations, and physical condition of
the housing agencies' public housing programs. Housing agencies that
are deficient in one or more of these areas are designated as troubled
performers by HUD and are statutorily subject to increased monitoring.
[14] A Newark Housing Authority official also noted the additional time
spent in working with HUD to create a new process for HUD's approval of
obligations within the Recovery Act timeframes, given its "troubled"
status.
[15] U.S. Census Bureau and U.S. Department of Labor. Population data
are from July 1, 2008. Unemployment rates are preliminary estimates for
September 2009 and have not been seasonally adjusted. Rates shown are a
percentage of the labor force. Estimates are subject to subsequent
revision.
[16] Community partners are nonprofits, educational institutions, faith-
based, and other community organizations, as well as other government
and quasi-government organizations.
[17] These projects will use three different types of Recovery Act
funds: those Newark has or will receive through formula grants directly
from Federal agencies, those from the state of New Jersey, and
competitive grant funds that Newark will receive from Federal agencies.
[18] As we reported in April, Recovery Act funds are being distributed
to states, localities, other entities and individuals through a
combination of formula and competitive grants and direct assistance.
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.:
April 2009).
[19] U.S. Census Bureau and U.S. Department of Labor. Population data
are from July 1, 2008. Unemployment rates are preliminary estimates for
September 2009 and have not been seasonally adjusted. Rates shown are a
percentage of the labor force. Estimates are subject to subsequent
revision.
[20] Cumberland County also received $4.4 million in education funds,
but this money went directly to the local education districts and did
not pass through the county accounting system.
[21] For example, if a local agency did not disburse the funds
appropriated for a program year, those funds went into the reserve
funds.
[End of Appendix XII: New Jersey]
Appendix XIII: New York:
Overview:
This appendix summarizes GAO's work on the fourth bimonthly review of
American Recovery and Reinvestment Act of 2009 (Recovery Act) spending
in New York. The full report on all of GAO's work in 16 states and the
District of Columbia may be found at [hyperlink,
http://www.gao.gov/recovery.
What We Did:
We reviewed four specific programs funded by the Recovery Act”the
Highway Infrastructure Investment Program, the Transit Capital
Assistance and Fixed Guideway Infrastructure Investment programs, and
the Weatherization Assistance Program.[Footnote 1] These programs were
selected primarily because they are receiving or expect to receive
significant amounts of Recovery Act funds, recently began disbursing
funds to states, or both. We also updated information on three Recovery
Act education programs that will receive significant Recovery Act
funds: (1) the U.S. Department of Education (Education) State Fiscal
Stabilization Fund (SFSF); (2) Title I, Part A of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended; and (3) the
Individuals with Disabilities Education Act (IDEA), as amended, Part B.
We focused on how funds were being used, how safeguards were being
implemented, and how results were being assessed.
Our work in New York also included understanding the state's fiscal
condition and visiting four localities to gain insight into their use
of Recovery Act funds. We visited Buffalo and New York City because
they are the two largest cities in the state and their unemployment
rates are above the state's rate.[Footnote 2] We also selected Steuben
County because it is a rural county with an unemployment rate above the
state's rate, and Westchester County because it is a suburban county
with an unemployment rate below the state's rate.
What We Found:
Funds from the programs we reviewed are helping New York State and
local governments stabilize their budgets, while also stimulating
infrastructure development and expanding existing programs”thereby
providing needed services and potential jobs. The following summarizes
specific findings for the areas we examined.
* Highway Infrastructure Investment Program: The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned
$1.12 billion in Recovery Act funds to the New York State Department of
Transportation (NYSDOT) in March 2009. As of October 31, 2009, about
$833 million had been obligated and about $94 million had been
reimbursed by FHWA. NYSDOT officials report that state Recovery Act
contracts are receiving bids that average 15 percent lower than
estimated costs. As a result, New York's Governor recently announced
that 34 new projects expected to cost about $70 million will be funded
with these savings. The federal www.recovery.gov Web site reports the
number of jobs created by project for the recipients we reviewed. The
Recovery Act contractor representatives we spoke with emphasized that
they reported hours paid for by Recovery Act dollars, which they
explained, is required by their contracts. Consistent with Office of
Management and Budget (OMB) guidance, they did not identify or
distinguish between the number of new jobs created or retained by their
Recovery Act projects.
* Transit Capital Assistance and Fixed Guideway Infrastructure
Investment programs: The U.S. Department of Transportation's Federal
Transit Administration (FTA) apportioned over $1.3 billion of Recovery
Act funds to the state of New York and urbanized areas located in the
state.[Footnote 3] As of November 5, 2009, FTA has obligated over $1.1
billion. For example, FTA awarded a $24.4 million Transit Capital
Assistance grant to the Niagara Frontier Transportation Authority
(NFTA) to replace 56 buses. FTA also apportioned over $254.8 million in
Fixed Guideway Infrastructure Investment program funds under the
Recovery Act to two cities in New York”New York and Buffalo. As of
November 1, 2009, FTA has obligated 100 percent of these funds. The
Metropolitan Transportation Authority (MTA) is using its
$254.4 million grant for a variety of maintenance and safety
improvement projects, while NFTA is using its $409,946 grant to
purchase batteries, including backup batteries for its Metro Rail
stations. In October, MTA and Greater Glens Falls Transit (GGFT)
submitted their first Recovery Act quarterly reports to OMB, which
included jobs data. Both agencies, consistent with OMB guidance,
reported the total number of full-time equivalents (FTE) paid for with
Recovery Act funds; ultimately, the information for these two agencies
was reported on www.recovery.gov as "jobs created."[Footnote 4]
* Weatherization: Many of the subgrantees implementing the
Weatherization Assistance Program in New York delayed submitting their
applications for Recovery Act funding to the New York State Division of
Housing and Community Renewal (DHCR) until after the U.S. Department of
Labor (Labor) established Davis-Bacon Act prevailing wage rates for
weatherization workers on September 3, 2009. Because Recovery Act
weatherization money has just begun to reach the subgrantees, DHCR has
had little to report regarding the impact of the Recovery Act on its
program.
* Education: Education awarded New York about $4.98 billion in SFSF;
ESEA Title I, Part A; and IDEA, Part B Recovery Act funds. However,
only about 3 percent of these funds had been disbursed, as of November
16, 2009. According to New York State Education Department (NYSED)
officials, the time it takes the agency to develop and process the
applications necessary to distribute funds to local education agencies
(LEAs) contributed to the slow disbursement. The NYSED estimates that
these funds, or the anticipated receipt of these funds, saved or
created 28,000 education jobs. The localities we visited noted that a
share of those jobs would be at risk once these funds are phased out.
* New York's use of Recovery Act funds: Because of continuing fiscal
challenges, in October 2009, the Governor of New York proposed a
Deficit Reduction Plan (DRP) to eliminate the state's estimated $3.2
billion current-year budget gap. The DRP, which is being considered by
the state legislature, would result in about $1.3 billion in across-the-
board reductions in state aid to localities. The localities we visited
plan to or are using Recovery Act funds for financing Medicaid,
retaining teachers, upgrading infrastructure, and increasing housing
services, among other things.
NYSDOT Funded Additional Highway Projects with Savings and Experienced
Technical Difficulties with Its First Recovery Act Quarterly Report to
OMB:
FHWA apportioned $1.12 billion in Recovery Act funds to New York in
March 2009 for highway infrastructure and other eligible projects. As
of October 31, 2009, about $833 million had been obligated and about
$94 million had been reimbursed by FHWA.[Footnote 5,6,7] NYSDOT
officials told us that they expect to have the state's entire
apportionment obligated by the end of the calendar year. According to
NYSDOT, as of October 31, 2009, FHWA had obligated funding for a total
of about 368 projects. According to officials, $642 million in
contracts had been awarded for 279 authorized projects.
NYSDOT officials told us that as of October 2009, bids for state
Recovery Act contracts have on average been 15 percent lower than the
state's original estimated costs of the projects. In September,
Governor Paterson announced that 34 new projects valued at about $70
million were being funded with the savings. Officials told us that the
savings result from a very competitive construction market and lower
materials prices.
New York Highway Contract Reviews Generally Have Been Favorable:
In previous reports, we commented on NYSDOT's internal controls and
oversight of Recovery Act projects. For this report, we examined the
contracts for the two state-awarded projects we visited and discussed
them with state officials who confirmed that they followed recommended
practices of competitive bidding and awarding fixed-price contracts.
[Footnote 8] We also note that in October 2009, the Office of the State
Comptroller (OSC), which reviews and approves NYSDOT highway contract
awards, published an audit of local highway Recovery Act projects that
found local governments are following sound procurement procedures,
including competitive bidding, and generally have made reasonable
efforts to ensure that selected contractors are responsible. Also, in
October FHWA officials said that they have not seen NYSDOT's
contracting oversight suffer as a result of the high workload resulting
from the Recovery Act contracts and current hiring freeze. However, in
August, OSC announced that it rejected a Recovery Act highway contract,
citing possible connections between the contractor and a debarred
vendor. NYSDOT officials said this was the first time OSC rejected a
Recovery Act contract, maintained that their review was thorough, and
noted that the contractor in question currently has two state highway
contracts and was not on the debarred list. NYSDOT officials said they
have monitored one of these projects closely and have not found any
issues. In response to the rejected contract, NYSDOT canceled all bids
and postponed the project until the state Department of Labor rules on
the case.
NYSDOT Experienced Technical Challenges with Its First Recovery Act
Quarterly Report to OMB:
In October, NYSDOT submitted its first Recovery Act quarterly report to
OMB's Web site [hyperlink, http://www.federalreporting.gov]. To develop
this report, NYSDOT collected data, including total work hours, from
all contractors for Recovery Act projects and NYSDOT checked the data
using certified payrolls from the contractors. The work hours were then
converted to FTEs using FHWA guidelines. The federal Web site
[hyperlink, http://www.recovery.gov] reports the number of jobs created
by project for the recipients we reviewed. The two contractors whose
representatives we spoke with emphasized that they report work hours
paid for by the Recovery Act, which they explained, is required by
their contracts. They noted they would have a very difficult time
determining if these hours are associated with new or retained jobs.
When it came time to submit the report, NYSDOT had planned to use batch
processing that was being developed between FHWA and OMB to upload data
on its almost 400 projects; however, the batch loading feature was not
made available by OMB for this reporting round, requiring NYSDOT to
upload data for each project individually. NYSDOT officials reported
spending a considerable amount of time on this process.[Footnote 9]
Highway Infrastructure Funds Were Transferred from FHWA to FTA for the
St. George Ferry Terminal Project:
We visited the St. George Ferry Terminal on Staten Island, which in
July 2009 was awarded $175 million in Recovery Act highway funds, more
than any other project in the state. Highway infrastructure investment
funds were transferred from FHWA to FTA at the request of Governor
Paterson. The project will rehabilitate eight vehicular ramps, one
pedestrian bridge, and one parking lot that provide access to the ferry
terminal. (See figure 1 for a photo of one of the ramps.) The project
is currently in the design phase and is administered by the New York
City Department FTA Transportation and overseen by FTA. Construction is
scheduled to begin in April 2010 and completed in June 2014.
Table 4: Selected Sources of Recovery Act Funding to Cumberland County
Government:
Employment and Training:
Employment and Workforce Investment Act-”$2.2 million;
Public Works:
Public Works: Public Works & Road Improvements--$2.4 million.
Source: Cumberland County Government.
[End of table]
New York Transit Agencies Are Using Recovery Act Funds for Fleet and
Rail Improvements and Some Reported the Impact of These Funds in the
First Recovery Act Quarterly Report to OMB:
In March 2009, FTA apportioned over $1.3 billion in Recovery Act
Transit Capital Assistance funds to the state of New York and urbanized
areas located in the state for transit projects.[Footnote 10] As of
November 5, 2009, FTA obligated over $1.1 billion (85.3 percent) of
these funds. NFTA was awarded a $24.4 million grant from Recovery Act
Transit Capital Assistance funds to replace 56 life-expired 40-foot
diesel buses.[Footnote 11] According to officials, the buses are being
procured through an existing contract, which was competitively awarded
in April 2005, and NFTA expects to take delivery of all buses by
November 30, 2010. According to officials, NFTA is unable to address
its bus replacement needs through the existing Transit Capital
Assistance program alone. NFTA would like to maintain an average fleet
age of 6 years, consistent with FTA guidelines, but its current average
fleet age is 10.4 years. NFTA reported that the buses purchased with
Recovery Act funds will bring its average fleet age down to 7.8 years.
In March 2009, FTA apportioned about $254.8 million in Recovery Act
Fixed Guideway Infrastructure Investment funds to two cities in New
York”Buffalo and New York City”for transit projects. As of November 1,
2009, FTA obligated 100 percent of these funds. NFTA was awarded a
$409,946 grant from Recovery Act Fixed Guideway Infrastructure
Investment funds to buy batteries, including backup batteries for NFTA
Metro Rail that power tunnel lighting, emergency station lighting,
elevators, and the communication system. According to officials, these
items will improve passenger safety because existing batteries are at
the end of their useful life and starting to fail The officials said
that Recovery Act funding was needed to allow NFTA to address this
issue in addition to the Metro Rail System's other pressing capital
needs. MTA was awarded a $254.4 million grant from Recovery Act Fixed
Guideway Infrastructure Investment funds for a variety of maintenance
and safety improvement projects, including the Jackson Avenue Vent
Plant Rehabilitation project in Long Island City. (See figure 2.) The
contractor's bid for this project came in $12.05 million (17.5 percent)
less than the engineer's estimate. MTA officials indicated that
receiving lower-than-expected bids may enable it to fund additional
projects at a later date.
Figure 2: MTA Jackson Avenue Vent Plant Rehabilitation Project:
[Refer to PDF for image: illustrations and associated data]
Project:
Jackson Avenue Vent Plant Rehabilitation.
Lead agency:
MTA New York City Transit.
Description:
This project includes the replacement of three vent plants with one
larger plant. According to officials, this project will improve safety
by modernizing the fan system that helps to direct smoke away from
emergency exits in the event of a smoke condition in a subway tunnel.
Location:
Long Island City (Queens), NY.
Recovery Act Funds:
This project was awarded $89.45 million of the $254.4 million in
Recovery Act Fixed Guideway Infrastructure Investment funds awarded to
MTA. However, due primarily to savings resulting from bids on contracts
being received that are less than the original estimated cost, the
budget for this project is actually approximately $76.02 million.
Status:
Construction has begun and the project is expected to be completed in
September 2012.
Illustration 1 depicts a map of Queens indicating the location of the
Fan Plant under Jackson Avenue, and the Plenium under 43rd Avenue.
Illustration 2 depicts the Fan plant and Plenium, as well as
ventilation supply and exhaust.
Sources: MTA and GAO.
[End of figure]
In October, MTA and GGFT submitted their first Recovery Act quarterly
reports to OMB, which included jobs data expressed as FTEs. Consistent
with OMB guidance, MTA and GGFT reported the total number of FTEs paid
for with Recovery Act funds. Ultimately, the information for these two
agencies was reported on www.recovery.gov as "jobs created." NFTA did
not have any jobs data to report at that time because its Recovery Act-
funded work had not begun.
With the Establishment of Davis-Bacon Act Wage Rates, Weatherization
Assistance Program Recovery Act Funds Have Started to Flow to
Subgrantees:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the U.S. Department of Energy (DOE) is
distributing to each of the states, the District of Columbia, seven
territories and Indian tribes, to be spent over a 3-year period. This
program enables low-income families to reduce their utility bills by
making longterm energy efficiency improvements to their homes by, for
example, installing insulation or modernizing heating or air
conditioning equipment. On September 22, 2009, DOE obligated all the
funds allocated to the states, but it has limited the states' access to
50 percent of these funds.[ Footnote 12]
With the approval of the New York State weatherization assistance plan
by DOE on June 26, 2009, DHCR began accepting contract applications for
Recovery Act funding from its 65 subgrantees, the local agencies that
operate the program. However, many subgrantees delayed submitting their
applications until after Labor established Davis-Bacon Act prevailing
wage rates for weatherization workers on September 3, 2009.[Footnote
13] As of November 15, 2009, DHCR had approved 60 contracts with
subgrantees, the state had obligated $194.3 million in Recovery Act
weatherization funds, and about $49 million had been disbursed by DHCR
to fund weatherization activities under the Recovery Act.
Davis-Bacon Act Rates Could Increase Weatherization Administration
Costs and Affect Work on High-rise Housing Units:
Generally, with some exceptions, the new Davis-Bacon Act rates were in
line with what the subgrantees had been paying their workers; however,
some subgrantees will incur increased administrative costs because of
Davis-Bacon requirements, such as on-site verification of payrolls that
ensure workers are paid the proper wage rates for their labor. However,
in New York, these new rates only apply to buildings fewer than five
stories. Specific weatherization rates were not established for
buildings with more than four stories, so state officials stated that
workers must be paid at the Davis-Bacon rates established for
commercial construction. These rates are significantly higher than what
local agencies paid previously.[Footnote 14] This issue primarily
affects the state's urban areas, according to state officials,
especially New York City where high-rise buildings are a prevalent form
of residential housing. Two subgrantees we visited told us that they
intend to subcontract out all weatherization work done on buildings
with more than four stories funded by the Recovery Act. They could not
pay their own workers vastly different wages depending on which
building they were working on.
According to these officials and DHCR agency representatives, the
higher wage rates for buildings with more than four stories mean that
the cost of weatherizing these buildings will increase. One subgrantee
estimated this increase to be from 20 to 30 percent. Also, according to
DHCR officials, the higher commercial rates might reduce the
weatherization activities eligible for funding.[Footnote 15] Because of
higher wage rates, officials are concerned that some activities, such
as window replacement, may no longer be eligible for weatherization
funding. However, on November 10, 2009, DOE announced that the saving
to investment ratio for buildings with more than four stories could be
calculated using the Davis-Bacon residential wage rate established for
buildings with fewer than five stories in lieu of the higher commercial
rates.
State Officials Plan to Use a Variety of Accountability Approaches to
Monitor the Use of Recovery Act Weatherization Funds:
DHCR officials stressed that an extensive fiscal and program monitoring
system was in place for the weatherization program before the passage
of the Recovery Act. They indicated that DHCR intends to use some of
the Recovery Act funds earmarked for administration to increase the
resources available for on-site technical assistance provided to
subgrantees as well as to add 13 additional staff members to the number
of staff already monitoring the program.
DHCR's normal monitoring processes of its subgrantees include 9 to 12
site visits per year conducted by DHCR staff and an inspection of at
least 10 percent of the units weatherized. Further, DHCR has
established a weatherization database that allows it to monitor monthly
production goals against actual work completed.
State Officials Are Preparing to Measure the Impact of Recovery Act
Weatherization Funds and to Meet DOE's Reporting Requirements:
DHCR intends to collect and report all data required by DOE for
reporting purposes from the 65 subgrantees. DHCR officials said that
they had already collected all of the information DOE requires except
job creation and retention numbers. DHCR has issued guidance on
reporting job creation figures to its subgrantees. In addition, DHCR
officials intend to perform quality reviews of the data submitted by
the subgrantees to ensure accuracy.
Because Recovery Act weatherization money has just begun to reach the
subgrantees, DHCR has had little to report regarding the impact of the
Recovery Act on its program. However, some agencies have begun
weatherizing homes using Recovery Act funds, as illustrated in figure
3. In the future, in addition to the number of jobs created or
retained, DHCR intends to report the number of units weatherized as
well as the projected energy saving.
Figure 3: Community Environmental Center Workers Insulate a Home Being
Weatherized in Queens, New York:
[Refer to PDF for image: photograph]
Source: Community Environmental Center of Long Island City, New York.
[End of figure]
New York State Received Recovery Act Funds from Education but Has
Disbursed Little to LEAs:
As of November 16, 2009, New York had disbursed 3 percent of its $4.98
billion education allocation for SFSF, ESEA Title I, and IDEA
Recovery Act funds (see figure 4)[Footnote 16] NYSED has approved 75
percent of LEAs' Recovery Act education applications[Footnote 17]
necessary for disbursement, and officials said that the time they have
taken to process and approve LEAs' applications for these three
programs contributed to the slow disbursement of funds.[Footnote 18] We
reviewed the rate of drawdowns of 16 states plus the District of
Columbia and, as a result, found that New York is one of the states
with the smallest share of Recovery Act education funds drawn down as
of November 6, 2009. State education officials expect the flow of
education funds to increase beginning in January 2010. Because the
lengthy application approval process left them with little Recovery Act
funding to draw down, LEAs have paid for Recovery Act education program
expenses up front and expect to be reimbursed for allowable
expenditures as they submit claims.
Figure 4: Amount of Education Funds Disbursed by New York, as of
November 16, 2009:
[Refer to PDF for image: pie-chart and subchart]
Amount disbursed as a percentage of total allocated:
Disbursed: $136,268,422; 3%;
Undisbursed: $4,843,731,578; 97%;
Total allocated: $4,980,000,000.
Amount disbursed by program:
Title I: $287,375; 0.2%;
IDEA: $31,798,471; 23%;
SFSF: $104,182,576; 76%;
Total disbursed: $136,268,422.
Source: GAO analysis of New York State Recovery and Reinvestment
Cabinet and New York Office of the State Comptroller data.
[End of figure]
In addition to meeting with NYSED officials to assess how LEAs plan to
use Recovery Act funds, we revisited one LEA that we reported on in
July 2009”the New York City School District”and, for contrast, visited
a rural, high-poverty LEA, the Jasper-Troupsburg Central School
District located south of Rochester.
The "funding cliff," a reference to the temporary nature of Recovery
Act education funds and anticipated fiscal challenges when New York
runs out of these funds, is of paramount concern to state and local
education officials. Local officials told us that Governor Patterson's
DRP, which includes a $686 million cut in education aid, could lead to
teacher layoffs and increased taxes. For example, according to LEA
officials, the combined impact of the end of Recovery Act funding and
the DRP could place teachers' jobs in the New York City School District
at risk and could result in a 15 percent increase in the school tax
levy by the end of fiscal year 2011 at the Jasper-Troupsburg Central
School District.[Footnote 19]
NYSED Develops New Monitoring Plan and Enhances Existing Controls over
Recovery Act Funds:
In our September 2009 Recovery Act report, we addressed the need for
states to monitor Recovery Act funds; and, at the time, NYSED lacked a
monitoring plan for SFSF funds. However, since that report and a
November 2009 audit by Education's Office of Inspector General (OIG)
that addressed similar concerns, NYSED developed a monitoring plan for
SFSF Recovery Act funds and enhanced existing monitoring of ESEA Title
I and IDEA Recovery Act funds.[Footnote 20] In addition, the OIG report
found deficiencies in NYSED's current monitoring protocols. In
particular, the OIG found that NYSED does not collect enough detail
from LEAs on ESEA Title I and IDEA expenditure reimbursement forms,
such as check amounts and payees, to sufficiently monitor use of funds.
NYSED officials said that despite resource constraints that limit their
ability to review additional documentation for non-Recovery Act ESEA
Title I and IDEA reimbursements, they plan to request additional
information before paying the full amounts of Recovery Act expenditure
reimbursements. Also, NYSED officials said that they will select
approximately 30 of the 68 LEAs they identified as high risk and
conduct on-site reviews to assess the accuracy and allowability of
pending and paid claims.
With an Estimated 28,000 Education Jobs Saved or Created in New York,
State and Local Officials Are Focused on Job Retention:
Many LEAs in New York are planning to use more than half of their
education funds to retain jobs. In particular, NYSED officials said
that 28,000 education jobs were retained or created with Recovery Act
funds, of which an estimated 14,728 jobs were retained and 93 FTEs were
created in the New York City School District.[Footnote 21] Some LEAs
noted that the positive impacts of the Recovery Act funds include
maintaining smaller class sizes and after-school programs. For example,
Jasper-Troupsburg Central School District officials mentioned that
without Recovery Act funding, the average seventh grade class size
would have increased from about 15 to 27 students per class. In
addition to having the goals of saving and creating jobs, the Recovery
Act also supports education reform. However, one LEA also suggested
that when Recovery Act funding ceases, some gains made in education
reform would be diluted. New York City School District officials told
us how recently recruited math and science teachers, part of a reform
initiative to support new schools that replaced low-performing schools,
could be laid off.
One New York LEA Continues to Face Uncertainties about How to Use
Recovery Act Funds:
Jasper-Troupsburg Central School District officials said that they are
unsure of how to spend the Recovery Act ESEA Title I funds on onetime
expenses, rather than spending them on recurring services that would
create unsustainable commitments after Recovery Act funding expires.
The Jasper-Troupsburg Central School District typically spends ESEA
Title I funds on teachers who instruct Title I-eligible students;
however, adding more teachers would create a recurring cost that
officials say they cannot afford once Recovery Act funding ceases. As a
result, Jasper-Troupsburg officials said that they will probably not
use most of their $274,000 ESEA Title I Recovery Act allocation if they
do not receive clarity from state or Education officials on allowable
onetime uses of the funds.[Footnote 22]
Recovery Act Funds Providing Temporary Relief to the Budgets of New
York and Some Localities:
As noted in our September report, New York State received about $6
billion in Recovery Act funds that it used to help close its budget
gaps for last fiscal year and the current fiscal year, 2009-2010. Based
on the state's Mid-Year Financial Plan Update, New York's government is
now facing a $3.2 billion gap in its current-year $54.6 billion General
Fund budget. As identified in the Mid-Year Update, the gap is a result
of continued declining state revenues, primarily from personal income
tax. In October 2009, the Governor proposed a DRP that would eliminate
the state's current-year budget gap. The DRP, which is being considered
by the state legislature, would result in about $1.3 billion in across-
the-board reductions in state aid to localities. We visited the City of
Buffalo, New York City, Steuben County, and Westchester County to gain
a better understanding of New York State's localities' fiscal
conditions and to determine how these local governments are using
Recovery Act funds.[Footnote 23]
In December 2008, the Governor had proposed aid reductions to
localities to balance its current-year budget. Based on the state's
executive and enacted budgets for fiscal year 2009-2010, these cuts
would have adversely affected programs, such as education. The Governor
and the state legislature were able to avoid most of the reductions by
balancing the state budget with higher taxes and Recovery Act funds.
Recovery Act funds are providing short-term budget relief to three out
of the four localities visited, allowing them to avoid taking further
actions, such as layoffs, furloughs, and eliminating or reducing
services. (See table 1 for background information on these localities.)
Table 1: Background on Selected Local Governments:
Locality: City of Buffalo;
Population: 270,919;
Locality type: City;
Unemployment rate: 10.8%.
Locality: New York City;
Population: 8,363,710;
Locality type: City;
Unemployment rate: 10.2%.
Locality: Steuben;
Population: 96,573;
Locality type: County;
Unemployment rate: 9.5%.
Locality: Westchester;
Population: 953,943;
Locality type: County;
Unemployment rate: 7.4%.
Sources: U.S. Census Bureau and U.S. Department of Labor.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
City of Buffalo:
Officials from the City of Buffalo reported that they have received or
will be receiving about $29 million in Recovery Act funds for housing
services, clean water, and street upgrades, among other things. These
funds will have no direct impact on the city's operating budget since
they will flow directly from the state agencies to local agencies, such
as those for transportation and housing. In addition, while the City of
Buffalo plans to balance its current- and out-year budgets using some
of its reserves,[Footnote 24] city officials are concerned about
impending state aid cuts, since this aid makes up about 43 percent of
its revenue base. According to the officials, the local agencies that
are receiving Recovery Act funds have been hiring temporary workers to
avoid recurring costs when Recovery Act funding ends.
New York City:
New York City officials reported that the city will primarily use its
$4.9 billion in Recovery Act funds to avoid major teacher layoffs ($2.1
billion) and for Medicaid ($1.6 billion). In addition, New York City
used funds from a $5.5 billion surplus that it accumulated in better
economic times to help close its current-year budget gap. New York City
officials are developing a strategy to address the phaseout of Recovery
Act funds, including any potential layoffs in education and social
services that this funding had prevented.
Steuben County:
Steuben County officials reported that the county will use the majority
of its $9.0 million in Recovery Act funds for Medicaid ($6.7 million)
and for highway infrastructure investment ($845,000). Steuben County
officials are concerned that future tax increases will be needed to
address anticipated gaps after Recovery Act funds are spent and that
they will need to tap into their reserve. County officials stated that
they will need to reduce expenditures as well.
Westchester County:
Westchester County officials reported that the county will use its $97
million of Recovery Act funds primarily for financing Medicaid ($30.2
million), upgrading its wastewater treatment plant ($27.5 million), and
purchasing buses ($13.3 million). Westchester County officials are
concerned that future tax increases may be needed to address
anticipated gaps and that they may have to tap into their reserves
after Recovery Act funds are spent.
State Comments on This Summary:
We provided the Governor of New York with a draft of this appendix on
November 18, 2009. A representative from the Governor's Office
responded on November 19, 2009. We also provided various state agencies
and local officials with the opportunity to comment. In general, they
agreed with our draft and provided some clarifying and technical
suggestions that were incorporated as appropriate.
GAO Contacts:
Susan Fleming, (202) 512-4431 or flemings@gao.gov.
Dave Maurer, (202) 512-9627 or maurerd@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Ronald Stouffer, Assistant
Director; Barbara Shields, analyst-in-charge; Colin Fallon; Christopher
Farrell; Emily Larson; Sarah McGrath; Tiffany Mostert; Joshua Ormond;
Summer Pachman; Frank Putallaz; Glenn Slocum; Yee Wong; and Kimberly
Young made major contributions to this report.
[End of section]
Footnotes: Appendix XIII: New York:
[1] For descriptions and requirements of the programs we covered, see
app. XVIII of [hyperlink, http://www.gao.gov/products/GAO-10-232SP].
[2] The New York State September 2009 unemployment rate was 8.8
percent, as provided by the U.S. Department of Labor.
[3] We followed up at the two New York transit agencies we reported on
in September 2009”the Metropolitan Transportation Authority in New York
City and Greater Glens Falls Transit in Glens Falls”and visited the
Niagara Frontier Transportation Authority in Buffalo.
[4] In our November 2009 report, Recovery Act: Recipient Reported Jobs
Data Provide Some Insight into Use of Recovery Act Funding, but Data
Quality and Reporting Issues Need Attention (GAO-10-223), we made 2
recommendations to the Director of OMB. One of these recommendations
was as follows: to improve the consistency of FTE data collected and
reported, OMB should continue to work with federal agencies to increase
recipient understanding of the reporting requirements and application
of the guidance. As part of this recommendation, we recommended that
OMB consider being more explicit that "jobs created or retained" are to
be reported as hours worked and paid for with Recovery Act funds.
[5] For the Highway Infrastructure Investment Program, the U.S.
Department of Transportation has interpreted the term obligation of
funds to mean the federal government's commitment to pay for the
federal share of the project. This commitment occurs at the time the
federal government signs a project agreement.
[6] States request reimbursement from FHWA as the states make payments
to contractors working on approved projects.
[7] This does not include obligations associated with $175.5 million of
apportioned funds that were transferred from FHWA to FTA for transit
projects. Generally, FHWA has authority pursuant to 23 U.S.C. §
104(k)(1) to transfer funds made available for transit projects to
FTA.
[8] The projects visited were the bridge replacement project on Bartell
Road over Interstate 81 in Cicero, New York, and the resurfacing of
Route 77 project in Corfu, New York.
[9] In our November 2009 report, Recovery Act: Recipient Reported Jobs
Data Provide Some Insight into Use of Recovery Act Funding, but Data
Quality and Reporting Issues Need Attention (GAO-10-223), we made 2
recommendations to the Director of OMB. One of these recommendations
was that OMB should work with the Recovery Board and federal agencies
to reexamine review and quality assurance processes, procedures, and
requirements in light of experiences and identified issues with this
round of recipient reporting and consider whether modifications need to
be made and if additional guidance is warranted.
[10] As we reported in September 2009, MTA sought Recovery Act Transit
Capital Assistance funding in two grants worth over $660.2 million and
plans to use these funds to pay for a series of maintenance and capital
projects. GGFT received a $1.2 million grant to purchase a hybrid
expansion vehicle and for various capital projects. According to
officials, as of November 15, 2009, MTA had awarded contracts valued at
$437.2 million for projects funded with its Recovery Act Transit
Capital Assistance grants, and GGFT had awarded contracts valued at
$582,718.
[11] Sound internal controls are important for managing Recovery Act
funds. We reported on MTA's and GGFTs internal controls in September
2009. NFTA will use existing systems that have been reviewed by
independent auditors and FTA to oversee Recovery Act grants. The 2008
and 2009 Single Audit reports for NFTA provided unqualified opinions on
its financial statements and did not find any material weaknesses or
significant deficiencies in internal controls over financial reporting
or major programs. FTA's fiscal year 2009 Triennial Review of NFTA,
however, found deficiencies in 3 of the 23 areas examined. NFTA
submitted corrective action plans to FTA, which is reviewing them.
[12] DOE currently plans to make the remaining funds available to the
states once 30 percent of the housing units identified in the state
plans are weatherized. New York State's total allocation is $394.7
million.
[13] Only weatherization activities funded by the Recovery Act are
subject to Davis-Bacon wage rates.
[14] The newly established Davis-Bacon residential wage rate for a
weatherization worker in New York County (Manhattan), including
benefits, is $30.61. For buildings with more than four stories, a
weatherization worker is paid based on what he or she does. If the
weatherization worker's activities fell under the classification of a
carpenter, he or she would be paid that Davis-Bacon wage rate, which is
$92.69, including benefits.
[15] To be eligible for funding under the Weatherization Assistance
Program, an activity must generally achieve a savings to investment
ratio of at least one. That is, for each dollar invested, 1 dollar must
be saved over the expected life of the activity performed.
[16] As of November 16, 2009, $2.2 billion of the $4.98 billion
allocated has been approved by the state for disbursement to LEAs.
[17] As of November 16, 2009, NYSED had approved 134 of 612
applications received for ESEA Title I; approved 595 of 673
applications received for IDEA, Part B; and approved 907 of 909
applications received for SFSF.
[18] In this section, unless otherwise specified, Recovery Act SFSF
funding includes education stabilization funds and government services
funds; IDEA refers to IDEA, Part B; and ESEA Title I refers to ESEA
Title I, Part A.
[19] Recovery Act funding comprised about 8 percent of the New York
City School District's operating budget of $18 billion in fiscal year
2010, and 7 percent of the Jasper-Troupsburg School District's
operating budget of about $10 million in fiscal year 2010.
[20] Department of Education, Office of Inspector General, New York
State System of Internal Control over American Recovery and
Reinvestment Act Funds, Ed-OIG/A02J0006 (Washington, D.C., Nov. 10,
2009). We did not perform independent audit work to test and validate
whether the control weaknesses reported by the OIG were appropriate and
comprehensive.
[21] NYSED directed LEAs to Education's September 2009 guidance on
calculating jobs retained or created. According to NYSED's Web site, a
job retained or created is one that would not have been filled without
Recovery Act funds, regardless of whether the employee filling that job
is paid with Recovery Act funds.
[22] LEAs must obligate 85 percent of ESEA Title I, Part A Recovery Act
funds by September 30, 2010, unless granted a waiver to carry over
additional funds. LEAs must obligate all ESEA Title I, Part A funds by
September 30, 2011.
[23] The City of Buffalo, Steuben County, and Westchester County are
not responsible for the operations of their local school districts. The
City of Buffalo is also not responsible for administering its Medicaid
program, which is managed by Erie County.
[24] As explained by officials, the Buffalo Fiscal Stability Authority
Act requires the City of Buffalo to develop multiyear budgets that are
balanced. The City of Buffalo plans to use restricted state aid and
incentives to municipalities and unreserved fund balance to balance its
budgets.
[End of Appendix XIII: New York]
Appendix XIV: North Carolina:
Overview:
The following summarizes GAO's work for the fourth of its bimonthly
reviews of the American Recovery and Reinvestment Act of 2009 (Recovery
Act)[Footnote 1] spending in North Carolina. The full report covering
all of our work in 16 states and the District of Columbia is available
at [hyperlink, http://www.gao.gov/recovery].
What We Did:
Our work in North Carolina included gathering information about five
programs funded under the Recovery Act”Highway Infrastructure
Investment administered by the U.S. Department of Transportation's
Federal Highway Administration (FHWA), Transit Capital Assistance funds
administered by the U.S. Department of Transportation's Federal Transit
Administration (FTA), and three education programs administered by the
U.S. Department of Education”Title I, Part A of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended; Part B of the
Individuals with Disabilities Education Act (IDEA), as amended; and the
State Fiscal Stabilization Fund (SFSF). For descriptions and
requirements of the programs we covered, see appendix XVIII of GAO-10-
232SP. We reviewed FHWA obligations of funds for highway infrastructure
investment projects and gathered information about the level of state
effort for the types of transportation projects funded by the Recovery
Act and state oversight of Transit Capital Assistance activities. We
also reviewed the largest transit project in an urbanized area-”the
Charlotte Area Transit System in the City of Charlotte-”and in a
nonurbanized area”-AppalCART in the town of Boone.
We surveyed a representative sample of local education agencies (LEA)
nationally and in North Carolina about their planned uses of Recovery
Act funds. To obtain more specific information on local uses of
Recovery Act funds in North Carolina, we also visited two LEAs”
Charlotte-Mecklenburg Schools and Weldon City Schools”that participated
in GAO's national survey of LEAs We gathered information from state
educational agency officials about their plans for monitoring local
SFSF implementation activities. We also reviewed the state's
implementation of recipient reporting requirements under the Recovery
Act by interviewing state and local officials about their experiences
at FederalReporting.gov and by gathering information about how the
state and local entities estimated jobs created and retained with
Recovery Act funds. We also gathered information about the state's
economic condition and visited two local entities”the City of Durham
and Halifax County”to learn about the use and impact of Recovery Act
funds in urban and rural areas.
* Highway Infrastructure Investment. As of October 31, 2009, the FHWA
had obligated $600 million of the $736 million apportioned to North
Carolina for highway infrastructure and other eligible projects, and
$110 million had been reimbursed by FHWA to the North Carolina
Department of Transportation (NCDOT). Most of these funds have been
used to fund pavement projects. NCDOT officials told us that the
contract bids, on average, have been approximately 20 percent under
NCDOT's cost estimates. NCDOT officials cited challenges in expending
approximately $1.2 billion of state funds required to meet the level of
effort the state certified it would expend to meet its Maintenance of
Effort (MOE) requirement.
* Transit Capital Assistance funds. FA apportioned $103.6 million in
Recovery Act Transit Capital Assistance funds to the state and
urbanized areas located in the state, of which $70.5 million was
apportioned to urbanized areas and $33.1 million to the state for
projects in nonurbanized areas. FTA has obligated $67.1 million of the
amount for urbanized areas in North Carolina. Of the $33.1 million
apportioned to the state for nonurbanized areas, FTA signed a single
grant agreement for $25 million to the state for projects in
nonurbanized areas. However, as of November 13, 2009, NCDOT had not
allocated any of the $25 million to individual transit agencies in
nonurbanized areas.
* Local uses of Recovery Act education funds. We estimate that 37
percent of North Carolina LEAs experienced a total funding decrease of
5 percent or more”more than double the estimate for LEAs nationwide.
Also, many North Carolina LEAs reported they plan to use over half of
their SFSF, ESEA Title I, or IDEA Recovery Act funds for retaining
staff, but an estimated 54 percent of LEAs reported that, even with
SFSF funds, they will lose jobs, compared to 32 percent of LEAs
nationally. Charlotte-Mecklenburg and Weldon City school officials
report using portions of their SFSF, ESEA Title I, and IDEA funding to
retain jobs. North Carolina amended its application for SFSF funds to
conform to the state's legislatively enacted primary funding formulae,
which resulted in a reduction of the required education support level
in state funds from nearly $7 billion to $5.3 billion. The U.S.
Department of Education approved North Carolina's amended SFSF
application.
* Recipient reporting. North Carolina's prime recipients met the
federal deadline for recipient reports and reported few known errors.
The state's Office of Economic Recovery and Investment (OERI) reviewed
every report submitted by state agencies for errors and omissions and
reconciled the data with its weekly funding and disbursement report.
OERI facilitated information sharing among the state's prime recipients
to ensure recipient reports were complete, accurate, and submitted on
time. According to OERI, most reporting problems were administrative in
nature.
* North Carolina's fiscal condition. North Carolina's revenues have not
met official state forecasts, and the state has initiated actions to
control spending. The state's first quarter revenues were 1 percent, or
$45 million, below the $4.2 billion estimated for the first quarter of
this fiscal year. North Carolina implemented an approximate 5 percent
set-aside of state agencies' budgets. The City of Durham and Halifax
County have both received Recovery Act funding. Durham received a total
of approximately $11 million, most of which was used for
transportation, energy efficiency, and workforce development
initiatives, among others. Halifax County officials report that the
county has received $517,271 that it has used to reduce the effect of
budget cuts in child day care and nutrition programs, nutritional
assistance to senior citizens, and public safety.
Transportation: Highway Infrastructure Investment:
NCDOT is the primary recipient of all Highway Infrastructure Investment
funds in North Carolina. It is responsible for building, repairing, and
operating highways, bridges, and other modes of transportation,
including ferries, in North Carolina.
Recovery Act Fund Obligations Increase and Additional Projects Are
Planned:
As of October 31, 2009, $600 million[Footnote 2] of the $736 million
that was apportioned to North Carolina in March 2009 for highway
infrastructure and other eligible projects had been obligated”an
increase of $147 million, or 32 percent, from what we reported in
September 2009.[Footnote 3] The $600 million includes obligations of
suballocated funds,[Footnote 4] which have increased by almost 60
percent since our September report, to $184 million. This is in part
because NCDOT set a September 1, 2009, deadline for local highway
agencies to submit projects to NCDOT for approval. As of October 31,
2009, $110 million had been reimbursed by FHWA to NCDOT”an increase of
$72 million since September 1, 2009.[Footnote 5]
About 76 percent of Recovery Act highway obligations”including
obligations of suballocated funds”for North Carolina have been for
pavement projects. Specifically, $456 million of the $600 million
obligated as of October 31, 2009, is being used for pavement projects
including approximately $214 million to reconstruct or rehabilitate
roads, $185 million to widen roads, and $57 million for new roads. As
reported in our April 2009 report, NCDOT officials told us they
identified these projects based on Recovery Act direction that priority
is to be given to projects anticipated to be completed within a 3-year
time frame, and are located in economically distressed areas. Figure 1
shows obligations by the types of road and bridge improvements being
made.
Figure 1: Highway Obligations for North Carolina by Project Improvement
Type as of October 31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (76 percent, $456 million):
Pavement improvement: reconstruction/rehabilitation ($214.1 million):
46%;
Pavement widening ($184.7 million): 31%;
New road construction ($57.2 million): 10%;
Bridge projects total (9 percent, $51.8 million):
New bridge construction ($25.9 million): 4%;
Bridge replacement ($15.9 million): 3%;
Bridge improvement ($10 million): 2%;
Other (15 percent, $91.8 million):
Other ($91.8 million): 15%.
Source: GAO analysis of Federal Highway Administration data.
Note: Totals may not add due to rounding. "Other" includes safety
projects, such as improving safety at railroad grade crossings, and
transportation enhancement projects, such as pedestrian and bicycle
facilities, engineering, and right-of-way purchases.
[End of figure]
According to NCDOT, as of October 31, 2009, the department had
advertised for bids on 228 contracts, representing a total estimated
value of $493 million in Recovery Act funding. NCDOT data shows that
145 of those contracts have been awarded, for approximately $435
million; work has begun on 122 of the awarded contracts, representing
$375 million; and 3 of those contracts, representing $5.7 million, have
been completed.
Based on documents provided by NCDOT, contract bids NCDOT received
through October 2009 for Recovery Act projects have been, on average,
approximately 20 percent under NCDOT's cost estimates”about $107
million in Recovery Act funds below the original state engineer's cost
estimates.[Footnote 6] NCDOT officials reported they have, on a monthly
basis, requested that FHWA deobligate Recovery Act funds and requested
that FHWA obligate approximately $100 million for additional projects
as a result of these below-estimate bids. Because bids continue to be
below NCDOT cost estimates and the Recovery Act requires the state to
obligate all of its Recovery Act Highway Infrastructure Investment
funds within 1 year, NCDOT has identified and submitted to FHWA a list
of planned projects exceeding its apportionment by about $92 million.
NCDOT officials told us they do not foresee bid prices increasing
anytime soon. Based on their discussions with industry officials, NCDOT
officials believe there are many contractors still seeking work, but
very little private work is available. NCDOT officials stated they are
confident that the North Carolina apportionment can all be obligated in
a timely manner, even with the increase in the number of contracts
needed because of below-estimate bids.
NCDOT Officials Concerned about Maintenance of Effort Requirements:
The Recovery Act requires states to certify that they will maintain the
level of state effort (spending level) for the types of transportation
projects funded by the Recovery Act that it had planned the day the
Recovery Act was enacted. As part of this certification, the governor
of each state is required to identify the amount of funds the state
planned to expend from state sources from February 17, 2009, through
September 30, 2010.[Footnote 7] Federal Highway Administration”North
Carolina Division officials told us NCDOT is struggling to expend $1.2
billion of state funds quickly enough to meet the level of effort it
certified that it would meet. Documentation provided by NCDOT shows the
state is not meeting its expenditure targets to keep it on track to
meet its year-end required expenditures. Specifically, it has spent
$321 million of the $499 million of the state funds it targeted for
expenditure by September 2009. NCDOT officials identified below-
estimate bids for projects with state funding as a primary reason the
state is having difficulty meeting its required level of effort. NCDOT
officials told us they meet every 2 weeks to assess the state's level
of highway spending and develop additional projects they plan to get
underway in time to spend state funds during the period covered by the
maintenance of effort certification. However, awarding contracts,
starting construction in the winter, and completing a significant
amount of work so funds are expended by the end of the maintenance of
effort period on September 30, 2010, may be difficult. NCDOT officials
told us they have a projected $38 million shortfall in meeting their
certification and are working to eliminate the shortfall, but want to
make sure they select projects that meet NCDOT's performance goals and
that there are sufficient state revenues to support the expenditures.
Transit Authorities Using Existing Oversight Processes for Recovery Act
Capital Assistance--Funded Projects Covering Wide Range of Uses:
In March 2009, the U.S. Department of Transportation's Federal Transit
Administration (PTA) apportioned $103.6 million in Recovery Act Transit
Capital Assistance funds to North Carolina and urbanized areas in the
state. Of that total, $70.5 million was apportioned to urbanized areas
and $33.1 million to the state for spending in nonurbanized areas.
[Footnote 8] As of November 5, 2009, FTA had obligated $92 million. Of
the $70.5 million apportioned to urbanized areas, FTA had obligated
$67.1 million, or 95 percent, in Recovery Act funds to transit agencies
in urbanized areas as of November 5, 2009.[Footnote 9] Of the $33.1
million apportioned for nonurbanized areas, FTA signed a single grant
agreement for $25 million on August 26, 2009, which will be
subsequently allocated for projects in nonurbanized areas. However, as
of November 13, 2009, NCDOT had not yet distributed any of these funds
to individual transit agencies in nonurbanized areas because it had not
finalized its grant agreements with the transit agencies in the
nonurbanized areas. According to an NCDOT official, the $8.1 million
apportioned but not awarded for nonurbanized areas was for transit
construction projects that were not approved by FTA because they did
not have required environmental documents finalized. However, NCDOT
officials responsible for the North Carolina transit program commented
that they plan to resubmit these projects with the required
environmental documentation on December 30, 2009, for FTA approval.
NCDOT officials reached out to urban, rural, and regional public
transportation systems to identify eligible projects for the Transit
Capital Assistance funds under the Recovery Act. According to NCDOT
officials, most of the urbanized area projects selected were unfunded,
high-priority projects already on the Statewide Transportation
Improvement Plan (STIP). NCDOT worked with the nonurbanized transit
agencies to help them prepare their grant applications. According to an
NCDOT official, NCDOT required the nonurbanized transit agencies to
select projects that were ready-to-go and could be completed in about 3
years. The STIP was amended to include these nonurbanized area
projects.
North Carolina transit agencies in urbanized areas are using Transit
Capital Assistance funds under the Recovery Act in a variety of ways,
including replacement and expansion of transit vehicle fleets,
preventive maintenance on existing vehicles, advanced technology and
security systems, renovation of transit facilities including bus stops,
and new construction for operational space. Based on our review of
approved projects in nonurbanized areas, about 75 percent of the
nonurbanized transit agencies are using Transit Capital Assistance
funds to purchase additional transit vehicles. Other uses included
vehicle maintenance, purchase of communications equipment, renovation
of existing facilities, and building new transit facilities.
NCDOT officials commented that they provide more assistance to
nonurbanized transit agencies than transit agencies in urbanized areas,
which have more technical expertise and available resources to meet
federally-funded project requirements. For Recovery Act transit
projects in urbanized areas, NCDOT is using the same oversight
procedures that it would normally use for its other federally-funded
transit projects. These oversight procedures generally include periodic
site visits, review of project documentation, progress reviews, and
providing assistance on project management, contracting, and Recovery
Act reporting requirements, if needed. For Recovery Act projects in
nonurbanized areas, NCDOT officials commented that they are extensively
involved in reviewing and approving project documentation and providing
technical assistance. Specifically, NCDOT's oversight procedures in
nonurbanized areas include periodic on-site visits, reviewing and
approving key steps in the contracting process, reviewing contract
documentation and providing assistance on project management and in
meeting Recovery Act reporting requirements.
We selected the largest project in an urbanized area and the largest
project in a nonurbanized area using Transit Capital Assistance funds
under the Recovery Act in North Carolina for review. The Charlotte Area
Transit System (CATS) in Charlotte, North Carolina, had the largest
project in an urbanized area, and AppalCART in Boone, North Carolina,
had the largest project in a nonurbanized area. According to CATS
officials, FTA obligated $20.8 million for the three-phased renovation
project we selected for review. CATS awarded a contract for Phase 1 of
the renovation and expansion of the existing North Davidson Bus
Operating facility in order to provide an upgraded facility with
improved maintenance and operations space. The contract for Phase 1 of
the project was awarded on September 14, 2009, for a total estimated
value of $8.7 million with a project start date of November 25, 2009
and a projected completion date of December 16, 2010. According to CATS
officials, the fixed-price contract was awarded competitively to the
lowest bidder, with nine contractors submitting bids. These officials
also indicated that the contract required the prime contractor to
provide CATS the recipient reporting information required by the
Recovery Act for both the prime contractor's Recovery Act work and for
its subcontractors. CATS' officials commented that they used the same
contract award and oversight process for this project that they
normally use for federally funded projects. Oversight of this project
includes a full-time project manager and part-time assistants, contract
administrator services involving two staff, and consultant provided
inspection services.
The AppalCART project we reviewed provides for a new transit facility
for bus maintenance and transit operations and the purchase and
installation of a transfer station and several passenger shelters.
According to AppalCART officials, the contract for the new transit
facility was awarded on May 29, 2009, for a total estimated value of
$4.1 million with a project start date of June 15, 2009 and a projected
completion date of June 18, 2010. According to AppalCART officials, the
fixed-price contract was awarded competitively to the lowest bidder,
with 10 contractors submitting bids. Much of the contract award process
for this project occurred in the fall of 2008 and early 2009 before
enactment of the Recovery Act and prior to the project's selection as a
Recovery Act-funded Transit Capital Assistance project. Before the
Recovery Act, AppalCART officials had not identified all funding
sources for the project. According to AppalCART officials, the contract
was awarded prior to funding being available under the Recovery Act
based on verbal assurances from NCDOT that funding was approved for the
project. As of November 13, 2009, NCDOT had not yet allocated any of
the $6 million in Recovery Act funds AppalCART expects to receive for
this project because NCDOT had not finalized its grant agreements for
transit agencies in nonurbanized areas. According to AppalCART
officials, in the absence of Recovery Act funding, AppalCART has paid
all contract costs to date from its own funds and has secured a
$1,000,000 line of credit as a contingency to avoid work stoppages on
the project before the onset of winter. These officials also indicated
that the contract required the prime contractor to provide AppalCART
the information required for recipient reporting under the Recovery Act
for both the prime contractor's Recovery Act work and for its
subcontractors. AppalCART project oversight includes a full-time
project manager who is on-site multiple times a week, and a contract
administrator who is on-site weekly. Both individuals oversee work
quality and progress, as well as review the appropriateness of
contractor expenditures. The AppalCART director is also on-site
frequently and provides overall agency oversight of the project and
approves AppalCART periodic payments to the contractor.
Recovery Act Funds for Education Address Staffing, Program Needs:
We surveyed a representative sample of LEAs”generally school districts–
nationally and in North Carolina about their planned uses of Recovery
Act funds. To obtain more specific information on local uses of
Recovery Act funds in North Carolina, we also visited two LEAs that
completed the survey, Weldon City Schools, a non-urban LEA, and
Charlotte-Mecklenburg Schools, an urban LEA. In addition, we met with
state officials at the Department of Public Instruction (DPI) to
discuss state plans and efforts related to three Recovery Act education
programs: SFSF; Title I, Part A of ESEA; and Part B of IDEA.
Many North Carolina LEAs Reported Total Funding Reductions and Plans to
Use Recovery Act Funds to Retain Staff:
We estimate that 37 percent of North Carolina LEAs experienced a total
funding decrease of 5 percent or more”more than double the national
estimate. Also, many North Carolina LEAs reported they plan to use over
half of their SFSF, ESEA Title I, or IDEA Recovery Act funds for
retaining staff. However, an estimated 54 percent of North Carolina
LEAs reported that, even with SFSF funds, they will lose jobs, compared
to 32 percent of LEAs nationally. Table 1 shows North Carolina and
national GAO survey results on the estimated percentages of LEAs that
(1) plan to use more than 50 percent of their Recovery Act funds from
three education programs to retain staff, (2) anticipate job losses
even with State Fiscal Stabilization Fund monies, and (3) reported a
total funding decrease of 5 percent or more since the last school year.
Table 1: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs, North Carolina: 52%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs, North Carolina: 49%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs, North Carolina: 73%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipated job losses, even with SFSF
funds;
Estimated percentages of LEAs, North Carolina: 54%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, North Carolina: 37%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for North Carolina have margins of error, at
the 95 percent confidence level, of plus or minus 11 percentage points
or less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
LEAs We Visited Reported Using Recovery Act Funds to Offset State
Budget Cuts and to Meet Staffing and Programmatic Needs:
Due to significant reductions in state aid for noninstructional support
staff”clerical and custodial staff”LEA officials with whom we spoke
reported using significant portions of their SFSF allocations to retain
these positions. North Carolina reduced the public schools' fiscal year
2009-2010 budget by 9.5 percent, which was partially offset by SFSF
funds for a net reduction of 4.9 percent. The largest reduction in
state funding was for noninstructional support, according to a state
official, which decreased from $405 million in fiscal year 2008-2009 to
$13.5 million in fiscal year 2009-2010. As a result, officials from
Charlotte-Mecklenburg Schools told us they used all of their SFSF
allocation to retain noninstructional staff because state support for
these positions in their LEA was reduced from about $37 million in
fiscal year 2008-2009 to about $1 million in fiscal year 2009-2010.
Additionally, LEA officials we spoke to reported they will use ESEA
Title I and IDEA funds for job retention, as well as to address other
programmatic needs. For example, in Charlotte-Mecklenburg, LEA
officials told us the additional ESEA Title I funds helped fund teacher
and teacher assistant positions as well as preserve its model pre-K
program and 9th grade program. Their ability to maintain these programs
will have a positive effect on increasing student achievement and
decreasing the dropout rate, according to LEA officials. Charlotte-
Mecklenburg officials also told us they used the majority of the
additional fiscal year 2009-2010 IDEA allocation to retain and hire new
teachers and teaching assistants. According to Weldon City Schools
officials, ESEA Title I funds have enabled the LEA to maintain
essential teaching positions. In the absence of these funds, Weldon
officials said teachers would have been laid off and classroom sizes
would have increased. Weldon officials also told us the additional IDEA
funds will help maintain the stability of support staff and service
levels. For example, IDEA Recovery Act funds will help cover travel
expenses for occupational, speech, and physical therapists.
North Carolina Amended Its SFSF Application to Reflect Changes in the
State's Primary Budget Formulae:
According to state officials, North Carolina amended its SFSF
application to reflect enacted changes to its elementary and secondary
education primary budget formulae for distributing education
stabilization funds. To receive SFSF funds, the state was required to
make certain assurances, including that it would meet MOE requirements
by maintaining state support for education at no less than the fiscal
year 2006 funding level. Also, states must use their primary education
funding formula to distribute SFSF education stabilization funds. In
its initial application, North Carolina used all of the state public
school funding formulae, which included all categories of public school
funding, as the primary formulae. Subsequently, according to state
officials, the state legislature enacted primary formulae that included
fewer funding categories than the formulae used in the initial
application. According to state officials, the U.S. Department of
Education advised the state to use the enacted primary formulae in its
amended application, and state officials changed the fiscal year 2006
funding level included in the state's amended SFSF application to
conform to the legislatively enacted primary funding formulae so the
state has comparable measures of support in all fiscal years. In the
amended application, the state's fiscal year 2006 support level is
reduced to $5.3 billion for elementary and secondary education from
nearly $7 billion in the initial approved application. According to
state officials, North Carolina would meet MOE requirements under the
initial and enacted primary formulae. The Department of Education
approved the amended application on November 16, 2009.
North Carolina Has Developed a Plan for Monitoring Recipient Use of
SFSF Funds:
We reported in our September report that North Carolina had yet to
develop its SFSF monitoring plan required by the U.S. Department of
Education.[Footnote 10] North Carolina's Office of State Budget and
Management (OSBM) completed its SFSF monitoring plan in September 2009.
For SFSF funds for LEAs and charter schools, OSBM delegated monitoring
responsibilities to the state agency responsible for education, the
North Carolina DPI. According to DPI officials, DPI developed a plan to
monitor LEAs' use of SFSF funds, which incorporates its existing
reporting and monitoring procedures. DPI officials indicated they are
likely to focus their local monitoring efforts on compliance with
contracting and equipment requirements, and documentation requirements
for all employees who are paid from federal funds or whose salaries are
used to match federal funds. DPI officials reported they continue to
modify the state's data collection system to capture information on
jobs created and retained and will monitor data quality in local
reports. Under OSBM's plan, responsibility for monitoring the use of
funds by public institutions of higher education has been assigned to
the North Carolina Community College System Office and the University
of North Carolina General Administration Office. Responsibility for
monitoring the use of the remaining SFSF funds by other state agencies
has been assigned to OSBM's Internal Audit section and budget analysts.
North Carolina Used a Decentralized Approach for Federal Reporting;
State Agencies Reported on Time with Few Errors:
North Carolina used a decentralized approach to reporting on its
Recovery Act activities. Under this approach, each prime recipient of
Recovery Act funds reports directly to FederalReporting.gov rather than
submit its recipient reports through a central state contact. The
quarterly reports”required by the Recovery Act in Section 1512”provide
information on the use of funds, estimates of the number of jobs
created and retained, as well as other information. North Carolina
established its own Office of Economic Recovery and Investment (OERI)”
known informally as the office of the Recovery Czar”to coordinate and
track North Carolina's handling of federal Recovery Act funds and
ensure transparency. OERI also has responsibility for helping state
agencies that are prime recipients coordinate their recipient reporting
efforts. Specifically, OERI has held two roundtable discussions for the
state's prime recipients to facilitate information sharing among agency
officials and develop quality assurance measures to ensure the
recipient reports were complete, accurate, and submitted on time. In
addition, to further ensure the transparent use of Recovery Act funds,
OERI contacted local police and sheriffs' offices that were prime
recipients of a U.S. Department of Justice Local Law Enforcement
Assistance Grant to remind them to report to FederalReporting.gov by
the October 10, 2009 deadline. An OERI official reported to us that all
state agencies successfully submitted their reports by the October 2009
deadline. OERI staff reviewed every report submitted by a state agency
for errors or omissions and reconciled the data with OERI's Weekly
Funding and Disbursement Report.[Footnote 11]
According to an OERI official, the federal reporting process had
features that helped avoid serious and widespread reporting problems.
In particular, FederalReporting.gov featured an online validation tool
that helped recipients identify and correct problems in advance of the
October reporting deadline. In addition, he told us that federal
funding agency personnel were quick to respond to requests for
assistance and maintained good communication with recipients, typically
resolving issues in less than 12 hours. However, this official also
reported that the FederalReporting.gov helpdesk and online live chat
assistance were overwhelmed with the volume of inquiries as the
deadline approached and some recipients could not access either
service.
According to an OERI official, as of October 28, 2009, most recipient
reporting areas of concern were administrative in nature, such as an
incorrect Data Universal Numbering System (DUNS)[Footnote 12] or award
number. However, OERI reported that the job count, a substantive
reporting element, proved troublesome for 9 of its 17 state agencies,
and the count submitted was sometimes questioned by the cognizant
federal agency. Most of the agency officials said the questions were in
reference to awards received too close to the end of the quarterly
reporting cycle to result in any jobs created or saved. OERI also said
it is problematic that it did not have immediate access to recipient
reports in FederalReporting.gov and said state coordinating offices
need such access to recipient reports if the monitoring efforts are to
be effective.
After the October 2009 reporting deadline, we interviewed officials
from two state agencies, DPI and the NCDOT to assess their experiences
reporting at FederalReporting.gov. DPI officials told us they used both
certified and noncertified payroll files, depending on availability, to
report jobs data for the first quarterly report.[Footnote 13] DPI
officials told us they experienced few problems reporting jobs data,
but that they plan to use a different approach beginning with the next
quarterly report by collecting jobs information from school districts
after DPI makes modifications to its computer system. An NCDOT official
told us NCDOT began collecting monthly jobs data from vendors
(contractors) when their employees or their subcontractors began work
on the Recovery Act projects. Although NCDOT was unable to report jobs
data for all vendors by the October 10 reporting deadline, an NCDOT
official told us NCDOT successfully reported jobs data for all vendors
and subrecipients by the October 21, 2009 federal Office of Management
and Budget (OMB) cutoff date for report revisions. According to this
NCDOT official, a technical problem with the FHWA system used for
collecting the jobs data initially prevented some of NCDOT's data files
from being validated by FederalReporting.gov; however, the problem was
resolved and NCDOT data files were validated. Officials at the two
NCDOT divisions that we visited reported no significant problems or
issues in collecting and reporting the jobs data for the selected
Recovery Act projects. However, NCDOT did experience challenges with
other data elements, including capturing expenditure data for projects
that were not available until about 2 weeks after the reporting period.
In preparation for the next round of quarterly recipient reporting in
January 2010, OERI held another roundtable to discuss (1) what happened
during the first recipient reporting process and (2) any issues that
need to be resolved before the next quarterly report.
State Budget Officials Report Slight Decline in 1st Quarter Revenue
Collections:
The state's fiscal year 2009-2011 budget was signed into law in August
2009 for the fiscal year which began on July 1, 2009. State budget
officials told us revenues for this fiscal year's 1st quarter ending on
September 30, 2009, were 1 percent, or $45 million, below the $4.2
billion estimated projection for the quarter. According to the
officials, this is not a significant concern because they anticipated
the 1st quarter would be the year's worst quarter. The budget officials
said that since they were unsure whether the state's revenues would
meet the projections for the fiscal year, they decided to initiate an
approximate 5 percent set-aside of state agencies' budgets. According
to state officials, this set-aside will continue at least through the
2nd quarter. State budget officials told us Recovery Act funds are
helping in the areas of education and health and human services, and
the state intends to use more of its SFSF monies in the second quarter
of the current fiscal year.
We visited two localities in North Carolina, the City of Durham and
Halifax County, to collect information on their use of Recovery Act
funds. The City of Durham has received approximately $11 million and
Halifax County has received $517,271 million in Recovery Act funds.
Durham:
Population: 223,284:
Form of government: Municipality with Mayor and City Council:
September 2009 unemployment rate: 7.3 percent:
Table 2: Sources of Recovery Act Formula and Competitive Grant Funding
to Durham City Government:
Transportation:
Surface Transportation Program Direct Allocation: $4,698,060;
Energy Efficiency:
Energy Efficiency and Conservation Block Grant: $2,173,600;
Workforce Development:
Workforce Investment Act (WIA): $1,317,711;
Community Development:
Community Development Block Grant: $516,025;
Homelessness Prevention and Rapid Re-Housing Program: $789,101;
Public Safety:
Edward Byrne Memorial Justice Assistance Grant (JAG): $794,143;
State and Local Law Enforcement Assistance Program: $724,497.
Source: City of Durham.
[End of table]
City officials told us they used Recovery Act funds to support their
transit, capital projects, and workforce development priorities.
Capital Projects:
Recovery Act funds have enabled the City of Durham to stay on schedule
with many of its capital projects and, as a result, take advantage of
now-favorable construction costs, according to city officials. Durham
officials also told us that Recovery Act transportation funding helped
the city accelerate payments for some of its street and sidewalk
infrastructure programs by at least 1 year or budget cycle, thereby
reducing the total costs of these projects. Specifically, the officials
told us that Recovery Act funds' greatest impact was savings on the
cost of current and future debt service. Durham officials said that
without Recovery Act funds, the city would have had to pay for some of
its capital projects through the issuance of debt. Recovery Act funds
helped the city stabilize its debt service level and continue progress
on needed capital projects, according to city officials.
Transit:
Durham officials said the city used Recovery Act transit funding for
preventive maintenance costs and purchased 22 new vans; upgraded bus
stop shelters; and purchased other transit-related items. Durham's
Transit Operations Fund will break even due to receipt of $1 million in
federal Recovery Act funding for fiscal year 2009-2010. Durham
officials anticipate that the use of Recovery Act funds in fiscal year
2010-2011 will have a similar effect.
Workforce Development:
The city reported receiving over $1.3 million in Recovery Act funds
through the Workforce Investment Act (WIA). According to city
officials, the infusion of these funds allowed them to serve more
individuals by providing additional workforce development training and
employment opportunities. Durham officials also told us these funds
were especially useful because Durham's unemployment rate has nearly
doubled since the economic downturn began in fiscal year 2007-2008.
Weathering the Economic Downturn and Preparing for the End of Recovery
Act Funds:
The City responded to the economic downturn and revenue reduction with
planned budget reductions to most operating departments, according to
Durham officials. They report holding vacancies open, reducing travel
and training, and delaying nonessential capital purchases. The city's
Audit Services Department plans to engage relevant staff in designing
and implementing an evaluation of how Recovery Act funds have helped
the city and in developing an exit strategy for when the funds are no
longer available.
Halifax County:
Population: 54,983
Form of Government: Council-Manager;
September 2009 Unemployment rate: 13.1%.
Table 3: Selected Sources of Recovery Act Formula Funding to Halifax
County Government:
Social Services:
Food and Nutrition Services: $90,361;
Child Daycare Funding: $338,679;
Public Safety:
Edward Byrne Memorial Justice Assistance Grant (JAG): $58,925;
Aging:
Elderly Nutrition Funds: $29,306.
Source: Halifax County.
[End of table]
State Takeover of Medicaid Functions Affected Budget Stability:
Halifax County officials told us that over the last several years, the
state has reduced sales tax revenues to all counties in exchange for
taking over Medicaid payments. According to Halifax County officials,
the state's takeover of Medicaid had a significant effect on the
county's budget because, in exchange, the state reduced a significant
portion of the county's sales tax revenues, which are approximately 20
percent of its annual budget. For example, the state reduced Halifax's
Medicaid payments by 25 percent in fiscal year 2007-2008, and in this
fiscal year, 2009-2010, the state is assuming all Medicaid payments in
the county. As a result of the state's takeover of Medicaid payments,
the revenue reductions are more than what Halifax had spent on
Medicaid. According to Halifax County officials, the state gave
counties the option of implementing an additional sales tax or land
transfer tax to offset the lost revenue. Halifax County officials said
they elected not to pursue either strategy because the county's
residents cannot afford to pay more taxes. The county has instead
reduced its budget.
Recovery Act Funds Help, but Administrative Challenges Increase:
Halifax is the second-most economically distressed county in the state
with 24 percent of its residents living below the poverty level.
According to Halifax officials, Recovery Act funds lessened the effect
of budget cuts in its child day-care and nutrition programs. The county
reported receiving a total of $429,040 in Recovery Act funds from the
two programs and hired three staff members to help support what
officials told us are unprecedented needs for assistance. The officials
also told us they used $29,306 of Recovery Act funds to help provide
nutritional assistance to senior citizens who make up one-third of the
county's population, and its sheriff's department received $58,925 from
the Recovery Act's JAG funding.
The officials told us Halifax County is in serious need of additional
revenues, but its Board of Commissioners could decide not to pursue
certain funds due to the Recovery Act's reporting requirements and the
large amount of administrative time involved with oversight and
monitoring of funds. Halifax County officials told us that they do not
have a formal exit strategy once Recovery Act funds are no longer
available.
State Comments on This Summary:
We provided a draft of this appendix to the Governor of North Carolina,
the North Carolina State Auditor's Office, and the North Carolina
Office of Economic Recovery and Investment, and provided excerpts of
the draft to other entities including the state educational agency,
local educational agencies, cities and towns we visited. The Office of
Economic Recovery and Investment, the NCDOT, and other officials
provided clarifying and technical comments, which we incorporated as
appropriate.
GAO Contacts:
Cornelia M. Ashby, (202) 512-8403 or Ashbyc@gao.gov.
Paula M. Rascona, (202) 512-9816 or RasconaP@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Terrell Dorn, Director; Bryon
Gordon, Assistant Director; Sandra Baxter; Bonnie Derby; Steve Fox;
Fred Harrison; Charlene Johnson; Leslie Locke; and Anthony Patterson
made major contributions to this report.
[End of section]
Footnotes: Appendix XIV: North Carolina:
[1] Pub. L. No. 111-5, 123 Stat 115 (Feb. 17, 2009).
[2] This does not include obligations associated with $4.9 million of
apportioned funds that were transferred from FHWA to the Federal
Transit Administration (FTA) for transit projects. Generally, FHWA has
authority pursuant to 23 U.S.C. § 104(k)(1) to transfer funds made
available for transit projects to FTA.
[3] For the Highway Infrastructure Investment Program, the U.S.
Department of Transportation has interpreted the term obligation of
funds to mean the federal government's commitment to pay for the
federal share of the project. This commitment occurs at the time the
federal government signs a project agreement.
[4] The Recovery Act apportions funding to the states for restoration,
repair, and construction of highways and other activities allowed under
the Federal-Aid Highway Surface Transportation Program and for other
eligible surface transportation projects. The Recovery Act requires
that 30 percent of these funds be suballocated, primarily based on
population, for metropolitan, regional, and local use.
[5] States request reimbursement from FHWA as the state makes payments
to contractors working on approved projects.
[6] Does not include nine contracts for which NCDOT indicated complete
engineering estimate data were not available.
[7] Recovery Act, div. A, title XII, § 1201(a).
[8] Urbanized areas are areas encompassing a population of not less
than 50,000 people that have been defined and designated in the most
recent decennial census as an "urbanized area" by the Secretary of
Commerce. Nonurbanized areas are areas encompassing a population of
fewer than 50,000 people.
[9] For the Transit Capital Assistance Program, the U.S. Department of
Transportation has interpreted the term obligation of funds to mean the
federal government's commitment to pay for the federal share of the
project. This commitment occurs at the time the federal government
signs a grant agreement.
[10] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed (North Carolina), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: Sept. 23,
2009).
[11] The Weekly Funding and Disbursement Report is compiled from
Recovery Act obligation, disbursement, and drawdown data provided to
OERI by each state agency on a weekly basis.
[12] A DUNS number is a nine-digit identification number that is
assigned to an entity and identifies specific information about the
entity such as the entity's business name and address.
[13] For noncertified payroll, DPI calculated FTEs based on average
salaries and expenditures.
[End of Appendix XIV: North Carolina]
Appendix XV: Ohio:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Ohio. The full report on all of our work, which covers
16 states and the District of Columbia, is available at [hyperlink,
http://www.gao.gov/recovery].
What We Did:
GAO's work in Ohio focused on specific programs funded under the
Recovery Act, as well as general issues involving the effect of
Recovery Act funds. We selected the Weatherization Assistance Program
for detailed review primarily because it was in full operation across
the state. To continue our ongoing longitudinal analysis of the use of
the Recovery Act funds, we also updated funding information on the U.S.
Department of Transportation's (DOT) Highway Infrastructure Investment
Program; the Department of Housing and Urban Development's (HUD) Public
Housing Capital Fund; and three U.S. Department of Education
(Education) Recovery Act education programs”the State Fiscal
Stabilization Fund (SFSF); Title I, Part A, of the Elementary and
Secondary Education Act of 1965 (ESEA), as amended; and Part B of the
Individuals with Disabilities Education Act (IDEA), as amended. For
descriptions and requirements of the programs we covered, see appendix
XVIII of GAO-10-232SP. In addition to specific Recovery Act programs,
we also reviewed general issues involving state and local budget
stabilization and the state's efforts to report on the use and effect
of the Recovery Act funds by program.
Recovery Act Funds Provide Some Needed Support to Local Governments in
Ohio:
The state and some local governments in Ohio continue to face budgetary
challenges. As we reported, the state's biennial budget for fiscal
years 2010-2011 relies on about $851 million in proceeds from the video
lottery terminals to balance its biennial budget. According to a senior
official with the state budget office, the Ohio Supreme Court recently
ruled that a statewide referendum was needed before these terminals
could go into operation. The earliest such a referendum could be held,
this official said, was November 2010. The state had planned to have
the terminals in operation a year earlier in order to begin collecting
revenues. This delay will force the state to take other actions to keep
its budget balanced.
GAO visited four localities in Ohio”the City of Athens, the City of
Cincinnati, the City of Toledo, and Putnam County”to review their use
of Recovery Act funds.
Athens, Ohio:
See tables 1 and 2 for demographic information on and sources of
Recovery Act funding for the City of Athens.
Table 1: Demographics for Athens, Ohio:
Population: 22,088;
Locality type: City;
Unemployment rate: 8.6%.
Sources: U.S. Census Bureau and U.S. Department of Labor.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
Table 2: Sources of Recovery Act Funding to Athens City Government:
Area for funding: Public safety;
Source of funding: Edward Byrne Memorial Justice Assistance Grant
(JAG): $104,531;
Area for funding: Infrastructure;
Source of funding: Federal Transit Administration Transit Capital
Assistance Non-Urbanized Area Formula (Section 5311) Grant: $179,216.
Area for funding: Infrastructure
Source of funding: Drinking Water State Revolving Fund : $320,000.
Sources: Ohio Department of Public Safety, U.S. Department of Justice,
Ohio Department of Transportation, and Ohio Environmental Protection
Agency.
[End of table]
Recovery Act funds helpful, but not integral to current budget.
According to city officials, a 1.5 percent reduction was made in
February 2009 to the city's budget. As a result of this reduction,
raises for nonunion employees were delayed, and nine reserve and part-
time police officers were temporarily laid off. The city also
consolidated some positions, and canceled some unfilled positions,
including a police officer position. However, city officials said that
their fiscal year 2009 finances are better than those of many other
cities in the state. In fiscal year 2009, city revenues increased and
surpassed expectations. City officials said that Athens' largest
employer, Ohio University, has been offering early retirement packages,
which have increased income tax revenues due to augmented taxpayer
incomes.[Footnote 1] City officials are guarded about future revenue
growth as these one-time revenues and incomes could go down as payrolls
shrink.
Recovery Act funds have been provided additional public safety and
infrastructure.
* Public safety: The JAG funds will go toward, among other things,
mobile computer data terminals for nine police vehicles that will
provide additional capabilities to officers in the field.
* Infrastructure: Recovery Act funds have allowed Athens' transit
system to fund upgrades and to purchase a new bus. The upgrades also
made it possible for a contractor to retain a bus maintenance mechanic
position. The city's Department of Engineering and Public Works applied
for 12 Recovery Act grants but received only one. City officials said
that the drinking water funds will help Athens save operating costs and
avoid additional debt. According to officials, the water project was
needed but it would not have been done immediately otherwise; without
Recovery Act funds, repairs could have sustained the facility for a
while.
Cincinnati, Ohio:
See tables 3 and 4 for demographic information on and sources of
Recovery Act funding for the City of Cincinnati.
Table 3: Demographics for Cincinnati, Ohio:
Population: 333,336l
Locality type: City;
Unemployment rate: 9.3%.
Sources: U.S. Census Bureau and U.S. Department of Labor.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
Table 4: Sources of Recovery Act Funding to Cincinnati City Government:
Area for funding: Community development and social services:
Source of funding: Community Development Block Grant ” Recovery Act
Funds (CDBG-R): $3,490,694;
Source of funding: Homelessness Prevention and Rapid Re-Housing Program
(HPRP) Grant: $5,339,182;
Area for funding: Public safety:
Source of funding: Edward Byrne Memorial Justice Assistance Grant
(JAG): $3,419,570;
Source of funding: COPS Hiring Recovery Program (CHRP) Grant:
$13,570,400;
Area for funding: Infrastructure:
Source of funding: Federal Highway Administration (FHWA) ” Highway
Infrastructure Investment Program: $4,500,000;
Source of funding: Energy Efficiency & Conservation Block Grant
(EECBG): $3,520,600.
Sources: U.S. Department of Housing and Urban Development, Ohio
Department of Public Safety, U.S. Department of Justice, Ohio
Department of Development, and Cincinnati, Ohio, government officials.
[End of table]
Future budget problems are not resolved. According to city officials,
fiscal year 2009 general fund tax revenues will be down $28 million
from original estimates and are expected to continue falling in fiscal
year 2010. To keep the fiscal year 2009 budget in balance, city
officials pursued several actions that included employee layoffs,
furloughs, wage concessions, city service cutbacks and drawing down
funds held in reserve. In addition, city officials stated that even
with all the staffing and service cuts made during the current year, a
$51 million dollar structural deficit will have to be resolved next
year.
Recovery Act funds have provided additional services and saved jobs in
community development and social services, public safety, and
infrastructure.
* Community development and social services: A city official said
Recovery Act funding received under the CDBG-R program prevented the
elimination of a private lot abatement initiative and nine other human
service initiatives totaling more than $700,000. The remaining $8.1
million will be used to start eight new initiatives and pay
administrative expenses.
* Public safety: City officials said that Recovery Act funding will
save approximately 79 city police officer positions and create three
new staff positions. Approximately $1.4 million in Byrne JAG funds will
finance 27 officer positions through the end of fiscal year 2009.
Officials with the city budget office and the police department said
that they will have to make choices about whether they can continue to
fund those positions with city revenues during next year's budget
deliberations. Another $1.6 million in Byrne JAG funds is being
subgranted by Cincinnati to 14 different local governments for law
enforcement activities to support several other officer positions and
pay for new equipment. The remaining Byrne JAG funds are slated to
retain 2 officers in the city's Sex Offenders Unit, create 2 new crime
analyst positions, and allow the city law department to hire 1
additional prosecutor. The CHRP grant will also fund personnel-related
costs by supporting 50 officer positions from fiscal years 2009 through
2012.
* Infrastructure: Cincinnati will administer two projects totaling $4.5
million that were approved through the local area metropolitan planning
organization (MPO). The city will also receive a $3.5 million formula
grant allocation under the EECBG program that will fund eight different
projects.
Toledo, Ohio:
See tables 5 and 6 for demographic information on and sources of
Recovery Act funding for the City of Toledo.
Table 5: Demographics for Toledo, Ohio:
Population: 316,851;
Locality type: City;
Unemployment rate: 12.1%.
Sources: U.S. Census Bureau and U.S. Department of Labor.
Notes: Population data are a revised estimate from July 1, 2007.
Unemployment rates are preliminary estimates for September 2009 and
have not been seasonally adjusted. Rate is a percentage of the labor
force. Estimates are subject to revision.
[End of table]
Table 6: Sources of Recovery Act Funding to Toledo City Government:
Area for funding: Social services:
Source of funding: Community Development Block Grant ” Recovery Act
Funds (CDBG-R): $2,141,045;
Source of funding: Homelessness Prevention and Rapid Re-Housing Program
(HPRP) Grant: $3,275,494;
Area for funding: Public safety:
Source of funding: Edward Byrne Memorial Justice Assistance Grant
(JAG): $2,504,046;
Source of funding: STOP Violence Against Women Act Formula Grant:
$40,193;
Source of funding: COPS Hiring Recovery Program (CHRP) Grant:
$7,149,437.
Area for funding: Infrastructure:
Source of funding: Federal Highway Administration (FHWA) ” Highway
Infrastructure Investment Program: $13,357,522.
Source of funding: Energy Efficiency & Conservation Block Grant
(EECBG): $3,083,600;
Source of funding: Assistance to Firefighters Fire Station Construction
Grant: $2,995,602;
Source of funding: U.S. Environmental Protection Agency Brownfields
Program: $940,000;
Source of funding: Clean Water State Revolving Fund: $805,200.
Sources: U.S. Department of Housing and Urban Development, Ohio
Department of Public Safety, U.S. Department of Justice, Ohio
Department of Transportation, Ohio Department of Development, U.S.
Department of Homeland Security's Federal Emergency Management Agency,
U.S. Environmental Protection Agency, Ohio Environmental Protection
Agency, and Toledo, Ohio, government officials.
[End of table]
Recovery Act funds provide some relief to budget crisis but fund mostly
project-based activities. According to a city official, Toledo revised
its fiscal year 2009 budget to recognize a revenue shortfall of
$24 million. City officials said that they renegotiated several city
employee union contracts that included several concessions and 2-year
wage freezes, placed some city employees on a 32-hour work week, and
laid off others, including 75 police officers in May 2009. Toledo
officials do not anticipate revenues returning to pre-2009 levels for
several years, making for tough budget decisions in the future.
Additionally, city officials that we spoke to expressed concerns that
much of the Recovery Act funding is restricted to specific project-
based activities, leaving Toledo little discretion to apply such
funding to other priorities that are facing cutbacks as a result of the
city's current budget crisis.
Recovery Act funds have provided additional services and saved jobs in
social services, public safety and infrastructure.
* Social services: Toledo plans to initiate nine different community
projects to improve local neighborhoods and alleviate homelessness. For
example, $500,000 in Recovery Act funding received under the CDBG-R
program will be used to complete necessary home repairs for persons who
would not otherwise qualify to receive home weatherization services
that are also available under the Recovery Act. In addition, the
Recovery Act funding for HPRP will be allocated to several subgrantees
to provide housing relocation, case management, legal services, and
rental payments to eligible persons.
* Public safety: A city official described how the $9.7 million in
Recovery Act funding for the public safety programs listed in table 6
will allow the city to rehire laid off staff and avoid other planned
layoffs. For example, the $7.1 million in funding for the CHRP grant
permitted Toledo to recall 31 officers who were laid off in May 2009.
These officers' salaries and benefits will be funded through 2012.
Other police department layoffs were avoided and city assistant
prosecutor positions were added with the approximately $1.4 million in
Byrne JAG and Violence Against Women program funds Toledo is receiving
as a subgrantee of Lucas County. In addition, Toledo will use
approximately $698,000 in Byrne JAG funds to recall 6 civilian 911
emergency call center staff previously laid off in 2009.
* Infrastructure: Under the Highway Infrastructure Investment program,
the city will administer six road projects totaling $6.9 million that
were approved by the local area MPO. Additionally, $6.5 million will be
obligated for projects under the same FHWA program to double the
capacity of an existing rail yard and create future economic
development opportunities.
Putnam County, Ohio:
See tables 7 and 8 for demographic information on and sources of
Recovery Act funding for Putnam County.
Table 7: Demographics for Putnam County, Ohio:
Population: 34,543;
Locality type: County;
Unemployment rate: 9.0%.
Sources: U.S. Census Bureau and U.S. Department of Labor.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
Table 8: Sources of Recovery Act Funding to Putnam County Government:
Area for funding: Public safety:
Source of funding: Edward Byrne Memorial Justice Assistance Grant
(JAG): $351,497;
Source of funding: Assistance to Rural Law Enforcement to Combat Crime
and Drugs Grant: $703,200;
Area for funding: Social services:
Source of funding: Workforce Investment Act: $178,000;
Source of funding: Child Care and Development Block Grant: $38,000;
Source of funding: Supplemental Nutrition Assistance Program: $12,000;
Source of funding: Title IV-E Adoption Assistance and Foster Care
Programs: $12,000;
Source of funding: Impact on Child Support Incentives Program: $8,000.
Sources: Ohio Department of Public Safety, U.S. Department of Justice,
and Putnam County, Ohio, government officials.
[End of table]
Recovery Act funds to address some reductions made to the county's
budget. County officials approved a revised budget in May 2009 that
included $1 million decreases to both revenues and expenditures for the
current fiscal year. According to a county official, expenditure cuts
were made across the board except for mandated services and
nonnegotiable items such as debt repayments to maintain a balanced
budget. These cuts included reducing administrative expenses, wage
freezes, and not replacing retiring staff. In addition, the Sheriffs
Office laid off 6 full-time staff and 10 part-time staff and reduced
the work week for all full-time hourly employees from 40 to 32 hours.
Recovery Act funds have provided additional services and saved jobs in
public safety and social services.
* Public safety: County officials applied for both a Byrne JAG grant
through the state and a federal Bureau of Justice Assistance Rural Law
Enforcement grant. Both grant applications, totaling $1.1 million, were
successful, but the Sheriffs Office applied to bring back the same full-
time road patrol deputies with each of these two grants. Now that both
grants have been awarded, the Sheriffs Office asked for approval to use
the Byrne JAG funding award for a different purpose”to bring back an
additional 2 full-time and 10 part-time staff members and return all
full-time hourly staff to a 40-hour work week. By October 16, 2009, the
Sheriff's Office request had been approved.
* Social services: A Putnam County official said that the county used
Recovery Act funding to provide additional services and support to
eligible individuals. The county did not use these funds to hire or
retain additional staff or to pay for contractor support.
Recovery Act Funds Are Being Used to Weatherize Homes:
The State of Ohio has been allocated $266.8 million[Footnote 2] in
Recovery Act funds for its Home Weatherization Assistance Program
(HWAP). Of this amount, the Ohio Department of Development (ODOD) has
obligated all of the $133.4 million that the U.S. Department of Energy
(DOE) has so far provided. States were authorized to start using
Recovery Act funds to weatherize homes on July 1, 2009. As of November
5, 2009, ODOD reported that it had drawn down $37.5 million to
weatherize 4,708 homes.
Davis-Bacon Act Provisions Are Established; Ohio Is Making Adjustments:
The wage rates set for weatherization work on residential homes under
the Recovery Act were subject to provisions of the Davis-Bacon Act. On
September 3, 2009, the U.S. Department of Labor (Labor) published
county-by-county residential wage rates. These rates represented the
minimum rate that weatherization workers could be paid when Recovery
Act funds were used. To aid in monitoring these provisions, all
grantees and contractors working on the Recovery Act projects were
required by ODOD to maintain accurate records and complete weekly
certified payrolls on Recovery Act-funded projects. As the prime
recipient of the state's weatherization Recovery Act funds, ODOD is
responsible for obtaining, maintaining, reviewing, and monitoring all
Davis-Bacon Act certified payroll records.
Ohio began weatherizing residential homes before Labor issued its
guidance on Davis-Bacon wage rates. Ohio officials told us that the
state wanted to ensure that it met production targets and, therefore,
decided to proceed quickly. Effective July 1, 2009, ODOD directed its
34 grantees[Footnote 3] that perform the weatherization work to set
their own wage rates based on similar positions within their counties
and be prepared to make adjustments once the Davis-Bacon rates were
finalized. It turned out that some of the Davis-Bacon rates were higher
than expected, but grantees are making adjustments. Of the three
grantees we visited, one grantee will be making additional payments
(back pay) of at least $85,817 to 31 weatherization employees. The
second grantee will pay $1,225 to two contractor employees. The third
grantee will not have to make adjustments because it already paid a
wage equal to, or higher than, the Davis-Bacon wage rates.
While uncertainty over Davis-Bacon wage rates did not slow residential
projects in Ohio, it has caused difficulties for buildings considered
commercial. ODOD officials said that the state considers all
multifamily buildings with four stories or more to be commercial
structures; however, Labor has not provided wage rates for commercial
projects. According to ODOD officials, the absence of a commercial wage
rate for weatherization projects caused some grantees to delay projects
in larger, multifamily buildings until they could better estimate the
costs of those projects. ODOD officials stated that new guidance issued
by DOE on November 10, 2009, has addressed their concerns and they
would now be able to move forward on commercial projects. DOE's
November guidance states that grantees may use Labor's residential
weatherization wage rates in lieu of commercial rates in estimating the
cost-effectiveness of weatherization measures in high-rise buildings.
As Initial Program Implementation Unfolds, Additional Monitoring
Efforts, Early in the Process, Are Essential for Program Effectiveness:
To understand how the program was being implemented, we met with state
officials and visited grantees that perform the weatherization work. We
met with ODOD officials responsible for managing HWAP to gain an
understanding of how the state plans to monitor the program. ODOD plans
to enhance its existing monitoring approach by conducting both
administrative and technical monitoring on an annual basis and
assessing grantee performance on a quarterly basis. As of October 31,
2009, ODOD officials told us that it had conducted site visits to 8 of
its provider network of 34 grantees and reviewed 3 percent of
production. ODOD had not yet reviewed the administrative functions of
any of its grantees. However, state officials said ODOD is revising its
monitoring program to better align it to Recovery Act guidance.
We conducted site visits to three grantees selected to provide a mix of
(1) crew-based and contractor-based service providers, (2) rural and
urban service providers, and (3) direct grantee or delegate service
providers. During our site visits, we reviewed files of about 10
percent of homes weatherized using Recovery Act funds from July 1,
2009, through September 30, 2009.[Footnote 4] We reviewed file
documentation to determine whether the grantee had (1) assessed
applicant eligibility, (2) conducted an initial inspection to determine
where and how much energy is being lost, and (3) conducted a final
quality assurance inspection to ensure that the project was completed
according to Weatherization Assistance Program standards. We also
conducted site visits of an ongoing project and a project scheduled for
final inspection at all three grantees. In addition, we reviewed the
most recent Single Audit reports for these grantees.
Our file reviews of the three grantees we visited identified the
following concerns:
* Inconsistent grantee practices for monthly reporting of the number of
homes completed. We identified a number of inconsistencies in how
grantees defined completed homes, resulting in varying practices for
counting and reporting monthly unit production to ODOD. Our file review
showed that only 34 percent of the homes were reported as completed in
the correct month. According to Ohio's state plan, no home will be
reported as completed until the grantee has performed a final
inspection and certified that all planned work was done. We found that
none of the three grantees consistently followed ODOD's state plan.
* Recovery Act funds were used to weatherize homes before July 1, 2009.
In our file review at one grantee, we found homes that were weatherized
in April and June 2009 and were paid for with Recovery Act funds. These
homes were weatherized before Ohio's July 1, 2009, target date for
Recovery Act production. This is not permitted under Ohio's Recovery
Act State Plan.[Footnote 5]
* Recovery Act funds used to weatherize home of an ineligible
applicant. In our file review at one grantee, we found that an
ineligible applicant had received over $2,300 of weatherization
services, yet the applicant had an income that was above the income
eligibility limit.[Footnote 6] Although failure to verify eligibility
was identified as a significant deficiency in the grantee's fiscal year
2008 Single Audit report and the grantee agreed to implement a
corrective action plan, our review found that existing controls are
still weak, leading to Recovery Act funds being spent on an ineligible
applicant.
* Varying practices for documenting callbacks. We identified
inconsistent practices for documenting callbacks”a process where the
weatherization workers are called back to complete additional work
identified during the final inspection. Two grantees told us that they
documented all callbacks and their resolution, while one grantee had a
more informal process for tracking callbacks. Without an effective
tracking process, it would be difficult for grantees to keep track of
whether a callback issue has been sufficiently addressed and whether
work was completed in accordance with program and safety requirements.
We provided the Governor of Ohio with a draft of this appendix Ohio
officials said they would take a number of actions to address the
findings we reported above. First, to ensure that grantees prepare
their monthly production reports more consistently and in accordance
with program requirements, ODOD officials said they will review the
inconsistencies found with all grantees and provide additional
technical assistance to those grantees who need it. Second, to correct
the use of Recovery funds before July 1, 2009, ODOD officials told us
the provider will cancel the expenses charged to Recovery Act funds and
cover the expenses with non-Recovery Act HWAP funds. Third, to address
using Recovery Act funds to weatherize the home of an ineligible
applicant, ODOD officials told us they will seek reimbursement from the
grantee and will communicate to the grantee the need to verify
eligibility, provide technical assistance on how to strengthen internal
controls, and how to monitor the implementation of these controls.
Finally, to provide a more consistent practice for documenting
callbacks, ODOD officials acknowledge that an effective callback
tracking process is needed and will design a process for grantees to
use.
Ohio's Reported Expenditures May Not Reflect Funds Spent Weatherizing
Homes:
In June 2009, in accordance with DOE's guidance on the use of Recovery
Act funds, ODOD provided grantees with 10 percent of their allocated
funds in order to start up their programs through activities such as
training staff and purchasing equipment. ODOD officials said that these
funds may not be spent, in large part, because of the burden of getting
approvals from DOE for new equipment purchases. ODOD officials said
that it reimburses grantees monthly for production and expects the
grantees to use the 10 percent allocation over the life of the grant;
grantees will have to submit claims against it before the end of the 3-
year grant cycle. As a result, some of the initial allocation passed to
grantees may not have been spent even though it was reported spent
under the first Recovery Act recipient report. For example, as of
November 5, 2009, ODOD said it had drawn down $37.5 million in Recovery
Act funds from the U.S. Treasury; however, this includes the 10 percent
for start up activities allocated in June 2009. ODOD officials said
that as of November 5, 2009, grantees have spent $25.7 million. State
officials said that Ohio followed the Office of Management and Budget's
(OMB) guidance on reporting expenditures under section 1512 of the
Recovery Act and accurately reported the state's disbursement of
Recovery Act funds to ODOD; however, they said they did not report the
expenditure of those funds by HWAP grantees.
Recipient Reporting on Weatherization Assistance Program Is
Inconsistent with Federal Guidance:
Ohio's recipient reports on HWAP underreported actual program progress
because data are only provided through August 2009. ODOD issued
guidance on September 14, 2009, directing its grantees to provide data
only through August 31, 2009. As a result, Ohio's weatherization data
for the first Section 1512 report omit data from September 2009. An
ODOD official explained that because grantees submit data 10 days
following the end of the month, ODOD could not provide data through
September 30, 2009, the required reporting date. ODOD plans to report
data from September through November in the next quarterly report, in
January 2010. A senior ODOD official acknowledged that ODOD's practices
are not consistent with the guidance issued by the OMB that requires
prime recipients to report on a quarterly basis, with the first quarter
ending on September 30, 2009. This may result in reports that do not
accurately reflect the number of jobs created or retained and funds
expended in Ohio's weatherization program in the reported time period.
Furthermore, data reported on jobs do not appear to have been reported
consistent with OMB guidance. OMB guidance requires that total hours
worked be converted to full-time equivalents to calculate the number of
jobs created by the Recovery Act. However, for the first recipient
report ODOD used the results of a labor survey completed in July 2009
that required grantees to estimate the number of jobs that could
potentially be created with Recovery Act funds. This inconsistency
between reporting potential positions and actual hours worked could
result in an inaccurate reporting of jobs created. For example, one of
the grantees we visited reported 36 jobs created, but officials told us
that they had filled only 20 positions at the time of our visit.
Another grantee used contractors to provide weatherization services.
While this grantee reported 14 agency and 8 contractor jobs created, an
official with this grantee confirmed that only 6 agency and 7
contractor positions had been filled.
Conclusion:
Ohio's HWAP will grow significantly under the Recovery Act. In
addition, there is an expectation that services be delivered fast to
inject funds into the economy quickly. As a result, the program is at
heightened risk for waste, fraud, and abuse. Real-time monitoring and
early assessments of grantees activities could help avoid waste, fraud,
and abuse and help ensure program success. Although ODOD has a
monitoring plan in place that meets DOE requirements, given the
discrepancies we found during our site visits, HWAP may benefit from
earlier and more frequent monitoring to ensure that grantees are in
compliance with program and Recovery Act requirements. In addition,
ODOD should clarify its guidance to grantees on subrecipient reporting
for Recovery Act programs to better align it to the state and OMB
requirements and time frames.
In response to our findings, the Ohio Office of Budget and Management
(OBM) issued general guidance to all state agencies on November 20,
2009, to create more uniform state-issued guidance regarding Recovery
Act reporting requirements and to reinforce the importance of early
monitoring and data assurance review of all Recovery Act-funded
programs. Specifically, to ensure consistency OBM will review all
updated or new state agency guidance and post all federal guidance on
one web site. The state says that this centralized approach could help
state agencies take advantage of best practices for reporting
requirements and for developing guidance. In order to provide
consistency in reporting the number of jobs created, the state will
develop a jobs calculator, which will be based on OMB's jobs
calculation guidance. This new guidance also asks state agencies to
evaluate their monitoring plans to anticipate additional
needs or changes in order to ensure full compliance with Recovery Act
requirements.
With regard to our findings on Ohio's Home Weatherization Assistance
Program, state officials recognized that providing data through August
31, 2009, is less than ideal, but that reporting accurate and complete
grantee data within 10 days of the end of the quarter is not possible
using the current HWAP reporting processes. According to state
officials, OBM and ODOD will review the current process and consult
with OMB on how to proceed. Similarly, OBM will provide ODOD with its
jobs calculator to calculate jobs based on the number of actual hours
worked during a quarter. Finally, ODOD said it planned to add staff to
begin administrative monitoring in December 2009 and will begin fiscal
monitoring in January 2010.
Ohio Continues to Use Recovery Act Funds and Award Highway Contracts
Below the State's Estimated Cost:
The U.S. Department of Transportation's FHWA apportioned about $936
million in Recovery Act funds to Ohio. Of this apportionment, about
$655 million was allocated to the Ohio Department of Transportation
(ODOT) and the remaining funds, about $281 million, were directly
suballocated to Ohio's metropolitan, regional, and local areas. As of
October 31, 2009, FHWA had obligated about $475 million of the $936
million in funds apportioned to Ohio and had reimbursed the state $62
million. This is about 51 percent of the total funding apportioned to
Ohio in March 2009 compared to 41 percent as of June 25, 2009.
According to ODOT, the main reason for this slow increase in obligating
funds was that FHWA deobligated funds totaling over $40 million because
contract awards came in below the state's estimated cost. While lower-
than-estimated project costs reduced the obligation rate, they also
allowed ODOT to fund more projects than originally planned. We reported
in our July 2009 report that ODOT had identified 210 transportation
projects; as of November 23, 2009, the number of projects increased to
244. ODOT officials told us that the increase in the number of funded
transportation projects was directly related to contracts being awarded
below the state's estimated project cost. Table 9 compares total
highway program obligations as of June 25, 2009, and October 31, 2009.
Table 9: Comparison of Highway Obligations for Ohio as of June 25,
2009, and October 31, 2009:
Obligations:
Total obligations, Amount: $936 million;
Total obligations, Percentage: 100%;
Statewide (70 percent of funds), Amount: $655 million;
Statewide (70 percent of funds), Percentage: 100%;
Suballocated (30 percent of funds), Amount: $281 million;
Suballocated (30 percent of funds), Percentage: 100%.
Obligations as of June 25, 2009:
Total obligations, Amount: $384 million;
Total obligations, Percentage: 41%;
Statewide (70 percent of funds), Amount: $339 million;
Statewide (70 percent of funds), Percentage: 52%;
Suballocated (30 percent of funds), Amount: $46 million;
Suballocated (30 percent of funds), Percentage: 16%.
Obligations as of October 31, 2009:
Total obligations, Amount: $475 million;
Total obligations, Percentage: 51%;
Statewide (70 percent of funds), Amount: $315 million;
Statewide (70 percent of funds), Percentage: 48%;
Suballocated (30 percent of funds), Amount: $160 million;
Suballocated (30 percent of funds), Percentage: 57%.
Difference:
Total obligations, Amount: $91 million;
Statewide (70 percent of funds), Amount: 24 million;
Suballocated (30 percent of funds), Amount: $114 million.
Source: GAO analysis of Federal Highways Administration data.
[End of table]
As of November 20, 2009, ODOT had awarded 175 contracts valued at $467
million. Generally, contract bids are coming in under the state's
estimated cost; however, several contract bids have exceeded the
state's estimated cost. For example, on one project, the winning
contract bid was 41.9 percent, or $64,000 below the state's estimated
cost and on another project, the winning contract bid was 10.4 percent,
or $151,383, above the state's estimated cost. Overall, the ratio of
bids under the estimated cost versus those bids that exceed the state's
estimated cost is about five to one. In those cases where the contract
is awarded at a cost below the state's cost estimate, ODOT submits a
modification request to FHWA to deobligate the funds from one project
and obligate the funds to another project.
Ohio's Use of Public Housing Capital Fund Grants Is Increasing:
Ohio has 52 public housing agencies that have received Recovery Act
formula grants. In total, these public housing agencies received about
$128.3 million in Public Housing Capital Fund formula grants. Figure 1
shows the funds allocated by HUD that have been obligated and drawn
down by Ohio public housing agencies as of November 14, 2009.
Figure 1: Percentage of Public Housing Capital Funds Allocated by HUD
That Have Been Obligated and Drawn Down in Ohio, as of November 14,
2009:
[Refer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100%; $128,325,949;
Funds obligated by public housing agencies: 42.5%; $54,487,378;
Funds drawn down by public housing agencies: 9.4%; $12,035,927.
Number of public housing agencies:
Entering into agreements for funds: 52;
Obligating funds: 40;
Drawing down funds: 36.
Source: GAO analysis of HUD data.
[End of figure]
As of November 14, 2009, 40 of Ohio's 52 public housing agencies have
obligated about $54.5 million. Of the 40 public housing agencies that
have obligated funds, 36 agencies have drawn down more than $12.0
million. On average, housing agencies in Ohio are obligating funds
somewhat slower than housing agencies nationally. We previously visited
the following three housing agencies: the Columbus Metropolitan Housing
Authority, Cuyahoga Metropolitan Housing Authority, and London
Metropolitan Housing Authority. We will provide updated information on
these housing agencies in a future report.
Ohio's Disbursement of Recovery Act Funds for Education Programs Is
Increasing:
Ohio's disbursement of the ESEA Title I, IDEA Part B, and SFSF funds
allocated under the Recovery Act has increased in the last several
months. In September 2009, we reported that Ohio had allocated almost
all Recovery Act funds made available for ESEA Title I, IDEA Part B,
and SFSF but that limited funds had been disbursed. As of November 6,
2009, Ohio has increased its disbursements of Recovery Act funding for
these programs. Table 10 compares the level of subrecipient drawdown of
available funding for each of the education programs as of September
15, 2009, and November 6, 2009.
Table 10: Comparison of Funds Drawn Down for ESEA Title I, IDEA, and
SFSF Programs as of September 15, 2009, and November 6, 2009:
Education program: ESEA Title I, Part A;
Recovery Act funds allocated to Ohio: $372,673,474;
Funds drawn down by subrecipients (September 15, 2009): $2,751,435;
Percentage of funds drawn down (September 15, 2009): 0.78%;
Funds drawn down by subrecipients (November 6, 2009): $24,437,748;
Percentage of funds drawn down (November 6, 2009): 7.00%.
Education program: IDEA, Part B;
Recovery Act funds allocated to Ohio: $451,095,410;
Funds drawn down by subrecipients (September 15, 2009): $4,049,994;
Percentage of funds drawn down (September 15, 2009): 0.90%;
Funds drawn down by subrecipients (November 6, 2009): $35,140,981;
Percentage of funds drawn down (November 6, 2009): 8.00%.
Education program: SFSF;
Recovery Act funds allocated to Ohio: $980,685,675;
Funds drawn down by subrecipients (September 15, 2009): $110,900,000;
Percentage of funds drawn down (September 15, 2009): 11.31%;
Funds drawn down by subrecipients (November 6, 2009): $246,874,558;
Percentage of funds drawn down (November 6, 2009): 25.00%.
Source: GAO analysis of data from the U.S. Department of Education.
[End of table]
As of November 6, 2009, subrecipients had drawn down $24,437,748 in
ESEA Title I funds”an increase of more than $21.7 million over the
amount drawn down as of September 15, 2009. Ohio subrecipients had
drawn down $35,140,981 in IDEA Part B funds”an increase of nearly $31.1
million since September 15, 2009”and $246,874,558 in SFSF funds”an
increase of nearly $136.0 million.
We surveyed a representative sample of local educational agencies (LEA)”
generally school districts”nationally and in Ohio about their use of
Recovery Act funds made available for three education programs: (1)
Title I, Part A of ESEA, as amended; (2) Part B of IDEA, as amended;
and (3) SFSF. Table 11 shows Ohio and national GAO survey results on
the estimated percentages of LEAS that (1) plan to use more than 50
percent of their Recovery Act funds from three education programs to
retain staff, (2) anticipate job losses even with SFSF moneys, and (3)
reported a total funding decrease of 5 percent or more since last
school year.
Table 11: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs, Ohio: 15%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs, Ohio: 11%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs, Ohio: 46%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipate job losses, even with SFSF funds;
Estimated percentages of LEAs, Ohio: 13%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since last year;
Estimated percentages of LEAs, Ohio: 4%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO survey of LEAs.
Note: Percentage estimates for Ohio have margins of error, at the 95
percent confidence level, of plus or minus 11 percentage points or
less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
Ohio's Initial Recipient Reporting Was Successful, but Improvements Are
Planned:
Under Section 1512(c) of the Recovery Act, direct recipients of
Recovery Act funds, including state and local entities, are required to
report quarterly the detailed information on the projects and
activities funded by the act. As we discussed in our September report
[Footnote 7] OBM developed a new information system called the Ohio
American Recovery and Reinvestment Act Hub to centrally collect and
report this information from state agencies to OMB's
FederalReporting.gov Web site. OBM serves as a conduit for information
from state agencies; it relies on those agencies to validate the
accuracy of the data they submit to OBM.
According to OBM officials, the overall recipient reporting for state
agencies was successful. They stated that no material omissions or
significant reporting errors were found. However, changing guidance
from federal agencies caused some confusion about the proper recipient
reporting method to be used”whether to report by award or by specific
project. This confusion resulted in improper data submissions that
required correction. Other minor issues arose during the reporting
process, but all were resolved during the 10-day period for submitting
revisions. For example, for some highway projects, ODOT reported two or
more North American Industry Classification System codes when the
FederalReporting.gov software would only accept one code. As we noted
earlier, we identified a number of inconsistencies in the way one state
agency, ODOD, reported data on expenditures and employment information
during the September 2009 reporting cycle. OBM officials said that to
their knowledge, ODOD was the only state agency that did not provide
information as of September 30, 2009. Other state agencies also
provided inaccurate information to OBM that was submitted prior to
October 10, 2009, to FederalReporting.gov, in error, before being
corrected. For example, some agencies reported (1) the wrong project
description data, (2) projects that were less than 50 percent complete
as "not started," and (3) invalid or improperly registered Data
Universal Numbering System numbers.
OBM officials told us that they plan to make number of changes to the
processes they use to collect data from state agencies before the next
reporting cycle, including:
* increasing training and communication on reporting requirements with
state agencies sooner in the reporting cycle, especially those agencies
that did not have to report in the initial cycle;
* establishing an advisory group with representatives from state
agencies to discuss future recipient reporting changes; and;
* supporting recipients with a centralized guidance repository,
reviewing state agency-issued guidance, and interpreting federal
guidance.
On November 20, 2009, OBM issued new guidance to subrecipients
implementing changes to the current reporting process.
Local governments that are direct recipients of Recovery Act funds must
report on those funds directly to the federal government. Officials in
the localities we visited told us that for the most part, they were
able to report in accordance with federal requirements. Officials in
two of the localities we visited said they took advantage of training
opportunities that enabled them to report on time and correctly. For
example, a Putnam County official who attended training on Recovery Act
reporting for Department of Justice grants said that county officials
would not have been able to comply with the reporting requirements if
they had not attended the training. Cincinnati developed a Web-based
Recovery Act reporting application to collect the required recipient
reporting information from subgrantees and contractors. Cincinnati's
system was designed to interface with the FederalReporting.gov Web
site, and city officials said that they were able to upload all the
required data easily into the federal reporting system on time.
However, several of the local government officials we spoke with said
there was confusion about reporting because of the overlapping
requirements. This occurred because many of the programs themselves had
separate reporting requirements and systems in addition to the
FederalReporting.gov system. For example, Athens officials told us that
the federal JAG reporting requirements were much more complicated than
requirements of the Ohio Criminal Justice Services. Toledo officials
said they experienced a troublesome reporting burden under multiple
state and federal reporting systems associated with HUD funding. Also,
while Cincinnati requires all subgrantees and contractors to maintain
records to support the information they submit, the city does not have
a process to verify that the submissions are accurate.
State Comment on This Summary:
We provided the Office of the Governor of Ohio with a draft of this
appendix on November 19, 2009, and representatives of the Governor's
office responded on November 23, 2009.
In general, they agreed with our findings and provided technical
suggestions that were incorporated, as appropriate. They also provided
specific comments on our analysis of the state's weatherization
program. We incorporated those comments in that section of the
appendix, as appropriate.
GAO Contacts:
Cynthia M. Fagnoni, (202) 512-7202 or fagnonic@gao.gov.
David C. Trimble, (202) 512-9338 or trimbled@gao.gov.
Staff Acknowledgements:
In addition to the contacts named above, Bill J. Keller, Assistant
Director; Sanford Reigle, analyst-in-charge; William Bricking; Matthew
Drerup; Laura Jezewski; Myra Watts-Butler; Lindsay Welter, and Doris
Yanger made major contributions to this report.
[End of section]
Footnotes: Appendix XV: Ohio:
[1] According to city officials, the Athens income tax is paid by
individuals who either live or work in the city.
[2] U.S. Department of Energy (DOE) officials told us that on September
22, 2009, they obligated all the funds allocated to the states but had
limited the states' access to 50 percent of these funds. DOE currently
plans to make the remaining funds available to the states once 30
percent of the housing units identified in the state plans are
weatherized.
[3] Three of these grantees use 24 local agencies”called delegates”to
provide weatherization services.
[4] At the time of our review in early October 2009, one of the
grantees we visited had not finalized its September 2009 monthly
production report; therefore, we were unable to test homes completed
for that month. For the other two, we reviewed production for all three
months.
[5] In order to promote separate accountability of Recovery Act funds
from the DOE Base Allocation funds, and to comply with the DOE
directive that Recovery Act production cannot commence without an
approved comprehensive state plan, Ohio will implement the two sources
of funding in sequence. HWAP production before July 1, 2009, will be
funded with base allocation dollars, and HWAP production from July 1,
2009, forward will be funded with Recovery Act fund.
[6] Eligibility for the Recovery Act Weatherization Assistance Program
is generally limited to households with income levels at or below 200
percent of the federal poverty level or households whose income levels
are the basis for receiving cash assistance payments under Titles IV
and XVI of the Social Security Act or local law during the 12-month
period preceding the determination of eligibility for weatherization
assistance. 42 U.S.C. § 6862(7).
[7] GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed (Appendixes), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: Sept. 23,
2009).
[End of Appendix XV: Ohio]
Appendix XVI: Pennsylvania:
Overview:
This appendix summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act) spending in Pennsylvania. The full report covering all of GAO's
work in 16 states and the District of Columbia may be found at
[hyperlink, http://www.gao.govirecovery].
What We Did:
For GAO's work in Pennsylvania, we reviewed four specific programs
funded under the Recovery Act: Highway Infrastructure Investment,
Transit Capital Assistance, Fixed Guideway Infrastructure Investment,
and the Weatherization Assistance Programs. Our work focused on the
status of the program's funding, how funds are being used, and issues
specific to each program. The highway and transit programs have
approaching deadlines in March 2010 for obligating the Recovery Act
funds before these funds are subject to withdrawal and redistribution.
Pennsylvania's weatherization program was starting to spend funds at
the time of our work. We also include updated information and
Pennsylvania survey data for three Recovery Act education programs”the
U.S. Department of Education (Education) State Fiscal Stabilization
Fund (SFSF); Title I, Part A of the Elementary and Secondary Education
Act of 1965 (ESEA), as amended; and Part B of the Individuals with
Disabilities Education Act (IDEA), as amended. For descriptions and
requirements of the programs we covered, see appendix XVIII of GAO-10-
232SP.
We met with the Pennsylvania Accountability Office to gain an
understanding of the state's experience in meeting Recovery Act
reporting requirements for the first quarterly reports that were due in
October 2009. Pennsylvania is a centralized reporting state, and the
Pennsylvania Accountability Office submits the quarterly recipient
reports for Recovery Act funds received by state agencies. Each state
agency receiving Recovery Act funds”the direct recipient”is responsible
for collecting and entering data for its subrecipients and vendors into
a centralized Recovery Act data warehouse.
Finally, we continued to track the state's fiscal condition and also
visited four local governments to discuss the amount of Recovery Act
funds each expects to receive and to learn how those funds will be
used. We selected Harrisburg and Dauphin County, which are located in a
medium-sized urban area encompassing the state capitol, with a county
unemployment rate below the state's average of 8.3 percent. We also
selected Allentown and Lehigh County, which are located in the third
largest urban area in Pennsylvania, with unemployment rates higher than
the state's average.
What We Found:
* Highway Infrastructure Investment. As of October 31, 2009, the U.S.
Department of Transportation (DOT) Federal Highway Administration
(FHWA) had obligated $885 million of the $1.026 billion of Recovery Act
funds apportioned to Pennsylvania and $150 million had been reimbursed.
As of November 20, 2009, Pennsylvania had received bids for 275 of its
293 projects and had 270 projects under way, mainly for pavement
improvements and bridge improvements or replacements.
* Transit programs. For its Transit Capital Assistance Program, DOT's
Federal Transit Administration (FTA) apportioned $327.5 million in
Recovery Act funds to Pennsylvania and urbanized and nonurbanized areas
located in the state. As of November 5, 2009, FTA had obligated $290.0
million. For its Fixed Guideway Infrastructure Investment Program, FTA
apportioned $91.9 million in Recovery Act funds to the Philadelphia and
Pittsburgh urbanized areas, all of which had been obligated by FTA as
of November 5, 2009.
* Weatherization Assistance Program. As of November 19, 2009, the
Pennsylvania Department of Community and Economic Development (DCED)
had released $10 million to the Department of Labor and Industry (L&I)
to provide weatherization training and certification, awarded contracts
for 41 of the 43 weatherization agencies, and released $41.5 million to
41 agencies to begin weatherizing homes. While DCED has focused its
efforts on releasing funds to the agencies, it faces several challenges
to meeting its spending and production targets. These include expanding
its oversight capacity, certifying and training weatherization workers,
and implementing a statewide procurement system for weatherization
materials purchased with Recovery Act funds.
* Education programs. For SFSF, on November 2, 2009, Education approved
Pennsylvania's application for its initial allocation of $1.4 billion.
In fiscal year 2009-10, Pennsylvania will use $655 million to restore
and increase state funding for local educational agencies (LEAs) and
$93.2 million to restore state funding for public institutions of
higher education (IHEs). For ESEA Title I, Part A, Education has
awarded Pennsylvania about $400.6 million in Recovery Act funds. For
IDEA, Part B, Education has awarded Pennsylvania about $441.7 million
in Recovery Act funds. According to data from Education as of November
6, 2009, Pennsylvania had drawn down $70.4 million in Recovery Act ESEA
Title I, Part A funds and $74.7 million in IDEA, Part B funds.
* Recipient reporting. Pennsylvania's Accountability Office reported
that it successfully submitted 276 recipient reports before October 10,
2009, on behalf of 13 state agencies using its centralized Recovery Act
data warehouse. All of these reports were posted immediately on the
state's Web site [hyperlink, http://www.recovery.pa.gov]. By October
30, 2009, Pennsylvania had revised 246 of its preliminary reports
largely because of updated federal agency guidance and federal requests
to standardize award dates and project descriptions. Three transit
agencies in Pennsylvania, that were to file directly with the federal
government, did not successfully submit their recipient reports in
October 2009.
* Pennsylvania's fiscal condition. On October 9, 2009, Pennsylvania
enacted its 2009-10 budget for the fiscal year that began July 1, 2009.
Pennsylvania now has budget authority to spend Recovery Act funds,
according to the state budget office. Even with Recovery Act funds to
help with budget stabilization, the $27.8 billion general fund budget
is $524 million less than last year, and state agencies are preparing
for layoffs. The budget assumed no growth in general fund revenues over
2008-09 revenues and included $3.3 billion in new recurring revenues as
well as onetime revenues. However, the state's general fund revenues
reported as of October 2009 were 1.8 percent below estimates for fiscal
year 2009-10”a revenue shortfall of $160 million.
* Localities' use of Recovery Act funds. The cities of Harrisburg and
Allentown as well as Dauphin and Lehigh counties report that they have
or will receive Recovery Act funds. These four localities plan to use
Recovery Act funds to prevent homelessness and for onetime uses, such
as improving energy efficiency in government buildings and purchasing
law enforcement equipment.
Pennsylvania Continues to Use Recovery Act Funds for Bridges and Roadway
Improvements, and Contracts Continue to Be Awarded for Less Than State
Cost Estimates:
As we previously reported, $1.026 billion was apportioned by FHWA to
Pennsylvania for highway infrastructure and other eligible projects. As
of October 31, 2009, $885 million (86 percent) had been obligated and
$150 million had been reimbursed by FHWA. According to Pennsylvania
data, highway and bridge contracts have been awarded and work has
started. For its 293 projects, as of November 20, 2009, Pennsylvania
had received bids for 275 projects representing about $776.5 million.
Of these, 270 projects representing $762 million were authorized to
begin”that is, a Notice to Proceed, which authorizes a contractor to
begin work, had been issued.
Pennsylvania selected highway and bridge projects that could be started
quickly and focused on roadway improvements and bridge deficiencies.
FHWA data as of October 31, 2009, show that most Recovery Act funds for
Pennsylvania have been obligated to help meet these needs.
Specifically, $366.7 million (41.4 percent) of the $885 million
obligated was for pavement improvement and $273.5 million (30.9
percent) was for bridge improvements or replacements. Lesser amounts
were obligated for other types of projects, such as transportation
enhancements (e.g., curb ramps for people with disabilities).
We reported in September 2009 that bids for Recovery Act highway and
bridge projects were about 12 percent less than original project cost
estimates. Data provided by the Pennsylvania Department of
Transportation (PennDOT) shows that as of November 20, 2009, the total
amount across all bids received was 14.4 percent (or about $130
million) less than original state estimates of total project costs.
According to PennDOT, savings from bids on contracts being less than
the estimated costs have been applied to additional Recovery Act
projects. In July 2009, Pennsylvania added 52 Recovery Act projects and
modified 4 existing projects, and, in November 2009, Pennsylvania added
33 Recovery Act projects and modified 5 existing projects. PennDOT
officials said they may solicit bids for the latter projects in early
2010.[Footnote 1]
Overall, PennDOT officials believe that the Recovery Act is making a
positive impact on their ability to meet state transportation needs.
For example, they said Recovery Act funds have allowed the state to
undertake more projects than it typically could, including addressing
100 additional structurally deficient bridges under the state's
Accelerated Bridge Program.
Pennsylvania's Transportation Revenues Have Been Less Than Expected,
and the State May Need to Amend Its Maintenance of Effort Estimate:
The Recovery Act required the Governor of each state to certify that
the state will maintain the level of spending for the types of
transportation projects funded by the Recovery Act that it planned to
spend the day the Recovery Act was enacted through September 30, 2010
(about $2.2 billion for Pennsylvania). On March 17, 2009, the Governor
of Pennsylvania made this certification. However, Pennsylvania
submitted an amended certification letter on May 20, 2009, after it was
informed by the U.S. Secretary of Transportation that the original
certification did not comply with section 1201 of the Recovery Act or
implementing guidelines because it included certain explanations about
its estimates.
PennDOT has been tracking compliance with Recovery Act maintenance of
effort (MOE) requirements. According to PennDOT officials, one of the
challenges in meeting the MOE requirements is generating the tax
revenue to pay for transportation projects. PennDOT officials said that
to date these revenues, which come from liquid fuels and other taxes,
have been less than expected, and the state is starting to consider
options should MOE requirements not be met. In addition, Pennsylvania
may again need to amend its MOE estimates. In September 2009, FHWA
issued supplemental guidance advising states that their MOE certified
amounts should include funding they provide to local governments or
other entities for transportation projects. PennDOT officials said
their MOE certifications did not include all these amounts, which can
range up to $400 million per year. PennDOT is discussing with FHWA
whether another MOE certification letter will be required.
Transit Agencies in Pennsylvania Continue to Implement Rail and Fleet
Improvement Recovery Act Projects:
We spoke with officials from PennDOT and three transit agencies in
Pennsylvania about their Transit Capital Assistance and Fixed Guideway
Infrastructure Investment Recovery Act funding and projects. In total,
Southeastern Pennsylvania Transportation Authority (SEPTA) in
Philadelphia was allocated $190.9 million; Port Authority of Allegheny
County (Port Authority), $62.5 million; and the Lehigh and Northampton
Transportation Authority (LANTA), $9.4 million in Recovery Act funds
(see table 1). PennDOT's Bureau of Public Transportation also was
apportioned $39.6 million for 15 nonurban transit agencies' projects,
intercity bus, and intercity rail projects.
Table 1: Transit Capital Assistance and Fixed Guideway Infrastructure
Investment Recovery Act Funding for PennDOT and Three Pennsylvania
Transit Agencies:
SEPTA:
Transit Capital Assistance: Approved by FTA: $112.8 million;
Transit Capital Assistance: Remaining allocation: $12.5 million;
Fixed Guideway Infrastructure Investment[A]: $65.7 million;
Total allocation[B]: $190.9 million.
Port Authority:
Transit Capital Assistance: Approved by FTA: $44.0 million;
Transit Capital Assistance: Remaining allocation: $0;
Fixed Guideway Infrastructure Investment[A]: $18.5 million;
Total allocation[B]: $62.5 million.
LANTA:
Transit Capital Assistance: Approved by FTA: $7.7 million;
Transit Capital Assistance: Remaining allocation: $1.7 million;
Fixed Guideway Infrastructure Investment[A]: 0;
Total allocation[B]: $9.4 million.
PennDOT:
Transit Capital Assistance: Approved by FTA: $38.2 million;
Transit Capital Assistance: Remaining allocation: 0;
Fixed Guideway Infrastructure Investment[A]: $1.4 million;
Total allocation[B]: $39.6 million.
Source: GAO analysis of data from FTA, PennDOT, and transit agencies.
[A] The Fixed Guideway Infrastructure Investment Recovery Act total
allocations for SEPTA, Port Authority, and PennDOT have been approved
by FTA.
[B] Numbers may not add to totals due to rounding.
[End of table]
SEPTA and Port Authority continue to use their Recovery Act allocations
for rail construction and improvements, "state of good repair"
projects, and vehicle procurement (including bus purchases).[Footnote
2] As of November 2009, SEPTA had 31 projects with approved Recovery
Act grant funding of which 27 projects had received a Notice to Proceed
with construction. SEPTA planned to add an additional project to its
Recovery Act Transit Capital Assistance grant when its environmental
assessment was completed. Port Authority officials told us that they
continue to use their Recovery Act funding for the North Shore
Connector project and as of November 2009 had spent $3.0 million mostly
on the rail systems portion of the project. Port Authority officials
stated that they planned to begin construction on other Recovery Act
components of the project in the near future.
LANTA plans to use its Transit Capital Assistance Recovery Act grant to
purchase 5 buses and 20 vans, implement a new passenger information
system, install bus shelters and signage, and fund design work and
purchase property for a new maintenance facility. LANTA completed the
van purchase in September 2009 and expected to receive the 5 buses in
2010. The passenger information system project began in September 2009.
At the time of our visit LANTA had not finalized its plans for the new
maintenance facility. If this project does not go forward, LANTA
officials said the Recovery Act funds will be reprogrammed by December
2009 for preventive maintenance or further vehicle purchases.
PennDOT told us that 16 projects under its Recovery Act transit funding
had started work as of October 31, 2009. One nonurban transit agency we
visited, Butler Transit Authority, awarded four contracts for its
intermodal transit center in October 2009 and notice to proceed with
construction was expected in November 2009. PennDOT's intercity rail
Recovery Act project”Elizabethtown Station”began construction in
September 2009.
PennDOT and Transit Agencies in Pennsylvania Continue to Use Existing
Controls to Monitor and Track Transit Recovery Act Funds and Projects:
PennDOT, SEPTA, Port Authority, and LANTA officials told us they plan
to apply existing controls to Recovery Act work. In addition, LANTA
plans to hire a construction management consultant to oversee its
Recovery Act maintenance facility project, and LANTA officials told us
they hold weekly project status meetings with the contractor installing
their passenger information system. PennDOT continues to use its
contract engineering consultant for Recovery Act transit project
management, but PennDOT officials said that reporting duties were being
transferred to in-house staff to free up the consultant to focus on
onsite project management as well as technical assistance. According to
PennDOT officials, the Recovery Act has supported the ongoing
initiative to increase oversight of transit grantees, particularly
those with small and medium-sized capital projects. PennDOT transit
officials said they do not plan to reduce oversight efforts after
Recovery Act funds have been expended.
Pennsylvania Has Begun Certifying and Training Weatherization Workers
and Releasing Funds to Local Agencies, but Faces Challenges Meeting
Spending and Production Targets:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the U.S. Department of Energy (DOE) is
distributing to each of the states, the District of Columbia, and seven
territories and Indian tribes, to be spent over a 3-year period. This
program enables low-income families to reduce their utility bills by
making longterm energy efficiency improvements to their homes by, for
example, installing insulation or modernizing heating or air
conditioning equipment. On September 22, 2009, DOE obligated all the
funds allocated to the states, but it has limited the states' access to
50 percent of these funds.[Footnote 3] Pennsylvania will receive a
total of $252.8 million in Recovery Act funds for its Weatherization
Assistance Program. Of this amount, the Pennsylvania DCED will retain
up to $8.3 million for program management and oversight and will
provide up to $20 million to L&I for training and technical assistance.
The balance of the funds (about $224.5 million) will be provided to 43
weatherization agencies in Pennsylvania. DCED plans to spend at least
50 percent of these funds by September 30, 2010, and plans to evaluate
weatherization agency performance through measures such as jobs
created, homes weatherized, and energy savings. As of November 19,
2009, DCED reports that it has 552 homes in progress for weatherization
and has completed weatherization on 34 homes.
Since our September 2009 report, DCED has reviewed weatherization
agency management plans, awarded contracts, and released funds to some
agencies. As of November 19, 2009, DCED had awarded 41 of the 43
contracts to the weatherization agencies and had released $41.5 million
to 41 of those agencies. DCED expects to complete releasing the first
round of payments to all 43 weatherization agencies and L&I by late-
November 2009”equal to about half of the agencies' first-year total
Recovery Act funding. While DCED has focused its efforts on releasing
funds to the weatherization agencies, it faces several challenges to
meeting its spending and production targets. These include expanding
its oversight capacity, training and certifying weatherization workers,
and implementing a statewide procurement system for weatherization
materials purchased with Recovery Act funds.
Expanding state oversight capacity. Currently, three DCED staff monitor
weatherization agencies to determine if quality weatherization work is
being performed and if program costs are appropriate. Using DCED-
developed monitoring guidelines and procedures, DCED monitors are
expected to visit weatherization agencies at least twice each year and
to inspect 10 percent of the homes each agency has weatherized.
Previously, DCED monitors focused on supporting the weatherization
agencies; however, in the future, monitors will spend more time
assessing agency performance. To increase its oversight capability,
DCED is hiring eight additional monitors. While the new monitors are
expected to have backgrounds in the building trades or inspection
fields, they will be expected to obtain training and meet the
certification standards that the weatherization workers must meet. DCED
is creating a training plan and plans to hire a contractor to revise
its monitoring guidelines and procedures to ensure that monitoring is
done consistently.
Certifying and training weatherization workers. Pennsylvania is
requiring that all weatherization installers, crew chiefs, and auditors
be certified to perform weatherization work under the Recovery Act. To
meet the state requirement, L&I has created an accelerated
certification process that requires each existing worker to submit an
application to a special review committee. L&I officials have estimated
that the state may need as many as 1,500 new certified weatherization
workers. As of November 19, 2009, 574 existing workers have requested
to be certified based on their training and/or experience. As of
November 19, 2009, the committee had reviewed 450 of the 574
applications. Of the 574 applications, 202 applicants have been
certified; 248 applicants will be required to pass a proficiency test
or complete an accelerated training program; and 124 applicants are
awaiting committee review. To provide training and certification for
additional weatherization workers, L&I is establishing six new training
centers, in addition to the Weatherization Training Center at the
Pennsylvania College of Technology. DCED will provide L&I up to
$20 million to conduct the training, and in November 2009, DCED
released $10 million to L&I. Officials hope to have these centers
operational by the end of 2009. Finally, state officials have amended
the certification requirement to allow workers to weatherize homes if
they are certified”or are on a path to certification”within 90 days
from the start of a weatherization contract. L&I officials plan to hire
three additional staff to help ensure the quality and oversight of the
weatherization curriculum and certification of weatherization workers
statewide.
Implementing a statewide procurement system. DCED requires all agencies
to purchase weatherization materials or vehicles through Pennsylvania's
Department of General Services' central procurement system”COSTARS.
Under COSTARS, the Department of General Services awards multiple
contracts through a bidding process that requires suppliers to supply
weatherization materials at discount prices. Suppliers must pay an
annual fee of $500 and must meet terms and conditions specified in the
contract. While there is no COSTARS membership fee, weatherization
agencies must enroll in the COSTARS program prior to purchasing
weatherization materials. As of November 19, 2009, six weatherization
materials suppliers had joined the COSTARS weatherization program. The
Department of General Services would like to increase the number of
suppliers and will accept new bid proposals. The department also
encourages suppliers to offer quantity discounts and encourages COSTARS
members to comparison shop and negotiate lower prices. DCED is
developing a directive for weatherization agencies on the use of
COSTARS for purchasing weatherization materials.
Pennsylvania's SFSF Application Was Approved and the State's Enacted
Budget Provided Funds for School Districts:
Pennsylvania resubmitted its SFSF application to Education on
October 20, 2009,[Footnote 4] and on November 2, 2009, was approved to
receive the initial $1.4 billion of its total $1.9 billion SFSF
allocation.[Footnote 5] For fiscal year 2009-10, the state's
legislature appropriated $5.5 billion for basic education funding”
approximately $4.9 billion in state basic education funding and $655
million in SFSF funds, according to the Pennsylvania Office of the
Budget. (See fig. 1.) Approximately $355 million of the SFSF funds are
to restore state basic education funding to the fiscal year 2008-09
level of $5.2 billion with an additional $300 million (5.7 percent)
increase over the 2008-09 level. For SFSF, Pennsylvania is required to
meet the MOE requirement to ensure that it will maintain state basic
education support at least at the state's fiscal year 2006 level, which
was $4.5 billion, or apply for a waiver. Pennsylvania Department of
Education (PDE) officials stated that they will use their existing Web-
based grant application system for LEAs to apply for basic education
and SFSF funds and to monitor the use of SFSF money.
Figure 1: Pennsylvania's Use of Recovery Act Education Stabilization
Funds for Fiscal Year 2009-10 Basic Education (Dollars in millions):
[Refer to PDF for image: vertical bar graph]
Year: 2005-06;
State basic education funding enacted: $4,492 (Maintenance of effort
requirement at the 2006 level.
Year: 2006-07;
State basic education funding enacted: $4,784.
Year: 2007-08;
State basic education funding enacted: $4,951.
Year: 2008-09;
State basic education funding enacted: $5,226.
Year: 2009-10;
State basic education funding enacted: $4,851;
SFSF enacted:
State basic education funding at 2008-09 level: $355;
Increase over the 2008-09 level: $300;
Total: $5,526.
Source: GAO analysis of Pennsylvania budget documents.
[End of figure]
Pennsylvania will also use SFSF funds to restore funding for public
IHEs. Fourteen colleges in the Pennsylvania State System of Higher
Education, community colleges, a technology college, and four state-
related IHEs[Footnote 6] will receive a total of about $63 million in
SFSF funds to restore state funding cuts in fiscal year 2008-09 and
about $93 million in SFSF funds for fiscal year 2009-10. As shown in
table 2, these funds will be used to restore ME funding to the fiscal
year 2007-08 level of $1.4 billion. PDE officials said that the state
needs to develop a process for collecting and reporting information
about SFSF use for higher education.
Table 2: Pennsylvania's Use of Recovery Act Education Stabilization
Funds for Higher Education (Dollars in millions):
Fiscal year: 2007-08;
State funding: $1,407;
SFSF: $0;
Total: $1,407.
Fiscal year: 2008-09;
State funding: $1,375;
SFSF: $63;
Total: $1,438.
Fiscal year: 2009-10;
State funding: $1,3458;
SFSF: $93;
Total: $1,438.
Sources: Pennsylvania state budget documents and the approved
Pennsylvania SFSF application.
[A] As of November 20, 2009, Pennsylvania had not enacted the state
appropriations for the four state-related IHEs.
[End of table]
Education has awarded Pennsylvania about $400.6 million in Recovery Act
funds for ESEA Title I, Part A and about $441.7 million in Recovery Act
funds for IDEA, Part B. Since our September 2009 report, Pennsylvania
enacted its budget providing state appropriation authority for these
Recovery Act education funds. According to Education data as of
November 6, 2009, Pennsylvania had drawn down $70.4 million in Recovery
Act ESEA Title I, Part A funds. For IDEA, Part B, Pennsylvania had
drawn down $74.7 million.
We surveyed a representative sample of LEAs nationally and in
Pennsylvania about their planned uses of Recovery Act funds. Table 3
shows Pennsylvania's GAO survey results on the estimated percentages of
LEAS that (1) plan to use more than 50 percent of their Recovery Act
funds from three education programs to retain staff, (2) anticipate job
losses even with SFSF funds, and (3) reported a total funding decrease
of 5 percent or more since last school year.
Table 3: Selected Results from GAO Survey of Pennsylvania LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs: 6%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs: 19%.
Responses from GAO survey: Anticipated job losses, even with SFSF
funds;
Estimated percentages of LEAs: 6%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-09;
Estimated percentages of LEAs: 4%.
Source: GAO survey of LEAs.
Notes: Percentage estimates for Pennsylvania have margins of error, at
the 95 percent confidence level, of plus or minus 16 percentage points
or less. At the time our survey was conducted, from August 21 through
October 4, 2009, Pennsylvania did not have an approved application for
SFSF funds or an enacted state budget. An estimated 28 percent of LEAs
reported on the survey that they did not know if they would receive
SFSF funds, and responses from these LEAs regarding SFSF funds are not
included. In its guidance to LEAs, PDE recommended that, because of the
temporary nature of the Recovery Act funds, LEAs use the funds for
onetime expenditures, such as textbook purchases or facility upgrades,
which do not need to be sustained in the future.
[End of table]
Pennsylvania Filed Recipient Reports Using Its Centralized Reporting
Platform, but Localities Face Challenges with Recovery Act Reporting
As we reported in September 2009, Pennsylvania developed a centralized
data warehouse”Central Access to Recovery Data System (CARDS)”to
collect data from state program agencies directly receiving Recovery
Act funding for section 1512 quarterly reporting. By October 9, 2009,
Pennsylvania's Accountability Office used its centralized system to
successfully submit 276 reports on behalf of 13 state agencies with
information on 955 subrecipients and over 1,000 vendors and subvendors.
To help ensure the accuracy and completeness of data submitted, state
program agency officials were to review their report information, and
Pennsylvania's Accountability Office also reviewed the reports for
completeness, accuracy of financial data, and reasonableness of job
data prior to submission to [hyperlink,
http://www.federalreporting.gov]. To promote transparency, Pennsylvania
posted all submitted reports and published summary data on its
[hyperlink, http://www.recovery.pa.gov Web site on October 10, 2009.
According to analysis by Pennsylvania's Senior Advisor for Recovery
Implementation, by October 30, 2009, 246 of the preliminary recipient
reports were revised largely due to updated federal agency guidance and
federal requests to standardize award dates and project descriptions.
Also, some reports were revised to convert job head counts to direct
full-time equivalent measures. PennDOT updated 225 recipient reports in
response to FHWA guidance received on October 28, 2009, just 1 day
before the deadline for recipients to respond to all federal agency
comments. State officials said that navigating the federal agency
review process was challenging, in part because they sometimes did not
know how to contact federal officials about comments received.
Nonstate entities, such as cities, counties, and urban transit
agencies, that received Recovery Act funding directly from the federal
government submitted their reports directly to [hyperlink,
http://www.federalreporting.gov. Local entities, such as nonurban
transit agencies and school districts that received funds through a
state agency were included as subrecipients in the reports submitted
centrally by Pennsylvania.
Transit Agencies Used Various Job Calculation Methodologies, and Some
Did Not Successfully Submit Recipient Reports:
As we reported in November 2009, each of four transit entities we
reviewed used a different denominator to calculate the number of full-
time equivalent jobs it reported on its recipient reports for the
period ending September 30, 2009.[Footnote 7] SEPTA used 1,040 hours as
its denominator since it had projects under way in two previous
quarters. Port Authority in Pittsburgh prorated the hours based on
contractors' start dates as well as to reflect that hours worked from
September 2009 were not included due to lag time in invoice processing.
Port Authority used 1,127 hours for contractors starting before April
2009, 867 hours for contractors starting in the second quarter of 2009,
and 347 hours for contractors starting in the third quarter of 2009.
PennDOT in the report for nonurbanized transit agencies reported using
1,248 hours, which was calculated by multiplying 8 hours per workday
times the 156 workdays from February 17 through September 30, 2009.
Finally, LANTA used 40 hours in the recipient report it tried to
submit, but due to confusion about the need for corrective action, the
report was not filed.
According to FTA, three transit agencies in Pennsylvania did not
successfully submit their recipient reports in October 2009. In
addition to LANTA, Hazleton Public Transit tried to submit but was not
successful in reporting. According to a Hazelton transit official, the
agency received a federalreporting.gov email acknowledging its
submission, but the final report was not posted on recovery.gov.
According to a transit agency official in the City of Washington,
Pennsylvania, the transit agency tried to register with Central
Contractor Registration (CCR) ahead of the October 10 reporting
deadline but did not receive its CCR registration until October 15. The
transit agency official said that, despite repeated attempts before
October 20 to submit their report, the recipient report was not
successfully filed because federalreporting.gov could not match the
agency's identification information.
Recipient Reporting Challenges for Schools:
For the October 2009 recipient reports for ESEA Title I, Part A and
IDEA, Part B funds, PDE used its e-grants system to collect data from
school districts. For its first recipient report for SFSF, PDE
officials anticipated difficulty in distinguishing job measures for the
SFSF, particularly the portion that restores state basic education
funding to the previous year's level. In June 2009, PDE issued a
request for proposals for contractor services to help with its
recipient reporting for Recovery Act education funds. PDE has selected
a vendor to assist with the collection, review, and analysis of fiscal
and programmatic data required for Recovery Act recipient reporting. As
of November 20, 2009, the contract is currently in the review and
approval process. However, PDE officials expressed concern that smaller
LEAs may not have adequate administrative staff to help with their
reporting requirements. For any recipient reporting guidance received
after December 15, 2009, PDE officials anticipate difficulty in
communicating guidance, updating their information systems, and
retraining school staff over the winter holiday season when schools are
closed.
Pennsylvania Enacted Its Budget and Localities Are Receiving Recovery
Act Funds, but Fiscal Challenges Continue:
As we reported in September 2009, the Governor signed a stopgap budget
measure in August 2009 to pay state employees and fund health and
public safety programs. On October 9, 2009, 100 days after the fiscal
year began on July 1, Pennsylvania enacted its 2009-10 budget.[Footnote
8] Under Pennsylvania law, federal funds generally are appropriated by
the General Assembly.[Footnote 9] The Pennsylvania General Assembly
appropriated $6.4 billion in Recovery Act funds in the General Fund
budget, including approximately $1.6 billion for possible competitive
grants. Pennsylvania plans to use $921 million in SFSF funds in fiscal
year 2009-10. Pennsylvania plans to use state funds that were freed up
as a result of the $1.7 billion in increased Federal Medical Assistance
Percentage (FMAP) fund awards to also help with budget stabilization.
[Footnote 10] Even with the Recovery Act funds helping to stabilize the
state budget, the $27.8 billion budget is $524 million less than last
year's budget. Pennsylvania laid off 450 state employees earlier in
fiscal year 2009-10 and announced 319 additional layoffs in November
2009. Pennsylvania estimated no growth in existing general fund
revenues over the 2008-09 level of $25.5 billion and included $934
million in new recurring revenues, including $286 million from changes
in tobacco taxes, $374 million from postponing a scheduled business tax
phaseout, $200 million in new table games revenue, and other targeted
tax increases. Pennsylvania will also draw $755 million from, and
exhaust, its Rainy Day Fund this fiscal year. In addition, the budget
taps $1.6 billion in other onetime revenue, largely from transferring
balances from special funds to the general fund. Although Pennsylvania
projected a 2009-10 year-end balance of $350 million, general fund
revenues reported year-to-date as of October 2009 were $160 million, or
1.8 percent, below estimates. Also, the new gaming revenue legislation
has not been enacted, and Pennsylvania's Secretary of the Budget said
that Pennsylvania's budget will not be completed until the General
Assembly reconvenes in December 2009. As we previously reported, budget
officials are looking ahead for ways to balance future budgets when the
temporary Recovery Act funding ends.
To learn more about the impact of Recovery Act funds on local
governments, we visited the city of Harrisburg and Dauphin County, as
well as the city of Allentown and Lehigh County.[Footnote 11] Table 4
provides recent demographic information for these localities.
Table 4: Demographics for Harrisburg, Dauphin County, Allentown, and
Lehigh County, Pennsylvania:
Local government: Harrisburg;
Population: 47,148;
Locality type: City;
Unemployment rate: 11.5%;
2009 Budget: $118.2 million.
Local government: Dauphin County;
Population: 256,562;
Locality type: County;
Unemployment rate: 8.1%;
2009 Budget: $327.0 million.
Local government: Allentown;
Population: 107,250;
Locality type: City;
Unemployment rate: 12.4%;
2009 Budget: $80.5 million.
Local government: Lehigh County;
Population: 339,989;
Locality type: County;
Unemployment rate: 9.3%;
2009 Budget: $404.9 million.
Sources: U.S. Census Bureau; U.S. Department of Labor; and the budgets
of the City of Harrisburg, Dauphin County, the City of Allentown, and
Lehigh County.
Notes: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision. The unemployment rate for the state of
Pennsylvania in September 2009 was 8.3 percent.
[End of table]
The four local governments we visited generally plan to use the
Recovery Act grants for a variety of projects and service expansions
that would otherwise have remained unfunded. They will also use
Recovery Act funds to provide assistance for families that might
otherwise end up homeless.
City of Harrisburg. City of Harrisburg officials said that the city
will receive or has received Recovery Act funds totaling about $3.9
million, as shown in table 5. Harrisburg officials said that the city
plans to use $25,000 of its Energy Efficiency and Conservation Block
Grant allocation to hire a consultant to develop a strategic plan to
improve the energy efficiency for the city. Harrisburg plans to use its
Edward Byrne Memorial Justice Assistance Grant (JAG) funds to purchase
computers, scanners, and electronic evidence storage to replace costly
paper storage. Harrisburg also plans to use the COPS Hiring Recovery
Program (CHRP) grant to hire eight police officers. Harrisburg
officials said Recovery Act funding is minimal and generally will not
require identification of an exit strategy. However, Harrisburg
officials said that the city may need to increase taxes or user fee
revenues to maintain the eight police officers when the CHRP grant
ends.
Table 5: Select Sources of Recovery Act Funding to the City of
Harrisburg:
Agency: U.S. Department of Housing and Urban Development;
Grant: Homelessness Prevention and Rapid Rehousing;
Description: Assistance to prevent homelessness;
Amount: $855,478.
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant - Recovery;
Description: Acquisition and rehabilitation of four blighted properties
for sale to low- or moderate-income families;
Amount: $599,343.
Agency: U.S. Department of Energy;
Grant: Energy Efficiency and Conservation Block Grant;
Description: Improved energy efficiency of city buildings;
Amount: $256,200.
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial Justice Assistance Grant (JAG);
Description: Law enforcement equipment, such as electronic evidence
storage, computers, and scanners;
Amount: $483,441[A].
Grant: COPS Hiring Recovery Program (CHRP);
Description: Hiring eight police officers;
Amount: $1,689,552.
Source: City of Harrisburg, Pennsylvania.
[A] The City of Harrisburg received its JAG allocation as a
subrecipient through Dauphin County.
[End of table]
Dauphin County. Dauphin County officials said that the county has
received or will receive Recovery Act funds totaling over $6.5 million,
as shown in table 6. For example, Dauphin County plans to use its
Edward Bryne Memorial JAG award from the state to hire a new district
attorney and a public defender. Dauphin County officials state that
Recovery Act funding has been nominal to date and, for the most part,
would have minimal impact on future budgets. Dauphin County officials
said that they expect to be able to fund the new attorney positions
when the JAG funding ends.
Table 6: Select Sources of Recovery Act Funding to Dauphin County:
Agency: U.S. Department of Housing and Urban Development;
Grant: Homelessness Prevention and Rapid Rehousing;
Description: Assistance to prevent homelessness and rapidly re-house
homeless individuals;
Amount: $942,636[A].
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant - Recovery;
Description: Replacement of water lines in two boroughs, and street
rehabilitation in one borough, and construction of a 15-unit apartment
building to provide affordable rental housing for persons with chronic
mental illness;
Amount: $406,027.
Agency: Pennsylvania Department of Community and Economic Development;
Grant: Weatherization Assistance Program;
Description: Weatherization of 583 low-income housing units;
Amount: $4,107,456[B].
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial Justice Assistance Grant (JAG);
Description: Subgrants to nine local police departments in Dauphin
County;
Amount: $745,169[C].
Agency: Pennsylvania Commission on Crime & Delinquency;
Grant: Edward Byrne Memorial JAG;
Description: Hiring one district attorney and one public defender;
Amount: $255,200.
Agency: Pennsylvania Department of Public Welfare;
Grant: Title IV-E Foster Care;
Description: Payments for room and board costs for youth and children
to out-of-home placement providers;
Amount: $73,909.
Source: Dauphin County, Pennsylvania.
[A] Dauphin County expects to receive $621,187 as a direct recipient
and $321,449 as a subrecipient of the state.
[B] As of November 19, 2009, Dauphin County had received $250,000 of
its weatherization assistance funds.
[C] Dauphin County's allocation includes $483,441 for Harrisburg and
$261,728 for eight other municipal police departments.
[End of table]
City of Allentown. City of Allentown officials said that the city has
received or will receive Recovery Act funds totaling about $3.7
million, as shown in table 7. To prevent homelessness within the Lehigh
Valley region, Allentown is working with the surrounding counties of
Lehigh and Northampton and the city of Bethlehem to coordinate
applications to provide rent and utility assistance to low-income
families. Allentown plans to use its Energy Efficiency and Conservation
Block Grant allocation to, among other things, install fuel catalysts
in city fleet vehicles, install solar lighting in city parks, and
purchase solar trash compactors. The City of Allentown will use its
Edward Bryne Memorial JAG awards to install surveillance cameras and
increase patrols in high-crime areas. In preparing for the end of
Recovery Act funding, Allentown city officials stated that they will
use Recovery Act funds for onetime projects and police service
expansions that could be scaled back when the temporary funds end.
Table 7: Select Sources of Recovery Act Funding to the City of
Allentown:
Agency: U.S. Department of Housing and Urban Development;
Grant: Homelessness Prevention and Rapid Rehousing;
Description: Assistance to prevent homelessness;
Amount: $1,129,049.
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant - Recovery;
Description: Facade improvements to the city's business district,
public improvements in the Sacred Heart Hospital neighborhood, and curb
ramps for people with disabilities;
Amount: $737,917.
Agency: U.S. Department of Energy;
Grant: Energy Efficiency and Conservation Block Grant;
Description: Improvement in energy efficiency of city equipment and
infrastructure;
Amount: $1,038,800.
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial Justice Assistance Grant (JAG);
Description: Create new substation and purchase marked cars and police
equipment;
Amount: $672,157[A].
Agency: U.S. Department of Justice;
Grant: Edward Byrne Memorial JAG;
Description: Increase patrols in high-crime neighborhoods;
Amount: $140,561.
Source: City of Allentown, Pennsylvania.
[A] The City of Allentown received the joint allocation totaling
$672,157 for Lehigh County, with $580,171 for Allentown and $91,986 for
four other local police departments.
[End of table]
Lehigh County. Lehigh County officials said the county has received or
will receive Recovery Act funds totaling about $3.2 million, as shown
in table 8. Lehigh County plans to use its Energy Efficiency and
Conservation Block Grant allocation to reduce the county's future
energy costs by installing energy-efficient lightings systems in seven
county buildings, converting the county prison electric boiler system
to gas, and adding solar panels and a geothermal energy system to a new
county building. In preparing for the end of Recovery Act funding,
Lehigh County officials said that they plan to use Recovery Act funds
for onetime projects that they could not provide otherwise.
Table 8: Select Sources of Recovery Act Funding to Lehigh County:
Agency: U.S. Department of Housing and Urban Development;
Grant: Homelessness Prevention and Rapid Rehousing;
Description: Assistance to prevent homelessness;
Amount: $824,412[A].
Agency: U.S. Department of Housing and Urban Development;
Grant: Community Development Block Grant - Recovery;
Description: Sewer line replacement and road repaving;
Amount: $375,581.
Agency: U.S. Department of Energy;
Grant: Energy Efficiency and Conservation Block Grant;
Description: Improved energy efficiency of county buildings;
Amount: $2,032,100.
Source: Lehigh County, Pennsylvania.
[A] Lehigh County received $574,614 as a direct recipient and $249,798
as a subrecipient of the state.
[End of table]
State Comments on This Summary:
We provided the Governor of Pennsylvania with a draft of this appendix
on November 20, 2009. The Chief Implementation Officer responded for
the Governor on November 23, 2009, and agreed with our draft.
GAO Contacts:
Phillip Herr, (202) 512-2834 or herrp@gao.gov.
Mark Gaffigan, (202) 512-3168 or gaffiganm@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, MaryLynn Sergent, Assistant
Director; Richard Jorgenson, analyst-in-charge; Brian Hartman; John
Healey; Shirin Hormozi; Richard Mayfield; James Noel; Jodi M. Prosser;
and Andrea E. Richardson made major contributions to this report.
[End of section]
Footnotes: Appendix XV: Pennsylvania:
[1]Federal regulations require states to maintain a process for
adjusting project cost estimates. In addition, the state shall seek to
revise the federal funds obligated for a project within 90 days after
it has determined that the estimated federal share of project costs has
decreased by $250,000 or more. (23 C.F.R. § 630.106.) The funds
deobligated from this process may be used for other FHWA-approved
projects once the funds have been obligated by FHWA.
[2] See GAO, Recovery Act: Funds Continue to Provide Fiscal Relief to
States and Localities, While Accountability and Reporting Challenges
Need to Be Fully Addressed (Appendixes), [hyperlink,
http://www.gao.gov/products/GAO-09-1017SP] (Washington, D.C.: September
2009), for a more detailed discussion of SEPTA's and Port Authority's
Recovery Act projects.
[3] DOE currently plans to make the remaining funds available to the
states once 30 percent of the housing units identified in the state
plans are weatherized.
[4] As we previously reported, Pennsylvania submitted its first SFSF
application in April 2009 and resubmitted its application on June 26,
2009, to remove four IHEs from receiving SFSF money. Education directed
the state to resubmit its application again to include these IHEs as
recipients of SFSF money. The final application included these four
IHEs.
[5] 0f the $1.9 billion, approximately $1.6 billion (81.8 percent) are
education stabilization funds, and approximately $347 million (18.2
percent) are government services funds. The latter will be used mostly
to fund the Department of Corrections with $500,000 going to help cover
Pennsylvania Department of Education administrative costs associated
with Recovery Act reporting requirements.
[6] The state-related IHEs are Pennsylvania State University,
University of Pittsburgh, Temple University, and Lincoln University.
According to an official in the Office of the Budget, as of November
20, 2009, Pennsylvania had not enacted the state appropriations for the
four state-related IHEs.
[7] GAO, Recovery Act: Recipient Reported Jobs Data Provide Insights
into Use of Recovery Act Funding, but Data Quality and Reporting Issues
Need Attention, [hyperlink, http://www.gao.gov/products/GA0-10-223]
(Washington, D.C.: Nov. 19, 2009).
[8] By October 19, 2009, Pennsylvania had made more than 8,000 payments
totaling more than $3 billion that were delayed during the impasse to
schools, counties, and social service agencies.
[9] 72 Pa. Cons. Stat. § 4615.
[10] The use of Recovery Act funds must comply with specific program
requirements but also, in some cases, enables states to free up state
funds to address their projected budget shortfalls. The increased FMAP
available under the Recovery Act is for state expenditures for Medicaid
services. However, the receipt of this increased FMAP may reduce the
funds that a state would otherwise have to use for its Medicaid
programs. As we previously reported, Pennsylvania plans to use the
funds made available as a result of the increased FMAP to cover the
state's increased Medicaid caseload, ensure that prompt payment
requirements are met, maintain current populations and benefits, and
help stabilize the state budget.
[11] Our examination of Recovery Act funds included only funds that
have or will be received by the specific entities we visited. In
Dauphin and Lehigh counties, local school districts, transit agencies,
and public housing authorities also have or will be receiving Recovery
Act funds.
[End of Appendix XV: Pennsylvania]
Appendix XVII: Texas:
Overview:
The following summarizes GAO's work on the fourth of its bimonthly
reviews of American Recovery and Reinvestment Act of 2009 (Recovery
Act)[Footnote 1] spending in Texas. The full report covering all of our
work at 16 states and the District of Columbia is available at
[hyperlink, http://www.gao.gov/recovery].
What We Did:
We reviewed the use of Recovery Act funds in Texas for highway and
public housing projects. For descriptions and requirements of the
programs we covered, see appendix XVIII of GAO-10-232SP. For these
programs we focused on how funds were being used; how safeguards were
implemented, including those related to procurement of goods and
services; and how results were assessed. State highway projects were
selected because they had been underway for several months. The San
Antonio Housing Authority was selected because it represents one of the
largest public housing authorities in Texas, and received the largest
Public Housing Capital Fund grant in the state. In addition, Texas
highway and San Antonio Housing Authority projects provided us with an
opportunity to review contracts. Contracting procedures were reviewed
for three highway projects and one public housing project awarded with
Recovery Act funds.
Further, we examined Texas's recipient reporting, which identifies the
estimated number of jobs created and retained by Recovery Act funding.
Finally, we surveyed local educational agencies to identify their plans
for using Recovery Act funds.
Our work in Texas also included assessing two localities in Texas to
review the overall effect of Recovery Act funding on local governments'
budgets, and to describe local Recovery Act programs and projects. We
selected the city of Dallas and Denton County because they provide a
contrasting perspective concerning the uses of Recovery Act funding by
Texas localities. The city of Dallas is the eighth-most populous city
in the United States, anticipates receiving significant amounts of
Recovery Act funding, and recently reported an unemployment rate higher
than the state average. Denton County is one of the fastest growing
counties in the United States, recently reported an unemployment rate
lower than the state average, and is likely to receive limited amounts
of Recovery Act funding.
What We Found:
* Highway Infrastructure Investment projects. The U.S. Department of
Transportation's Federal Highway Administration (FHWA) apportioned
$2.25 billion in Recovery Act funds to Texas. As of October 31, 2009,
FHWA had obligated $1.4 billion and reimbursed $162 million for 181
projects. According to officials, the three highway construction
contracts reviewed were competitively awarded at fixed-unit-prices and
the contract awards were for less than the state's estimated contract
costs.
* San Antonio Housing Authority. Texas has 351 public housing agencies
that collectively received $119.8 million in capital fund grants and
$21.5 million in competitively awarded grants under the Recovery Act.
[Footnote 2] The San Antonio Housing Authority received about $14.6
million in capital fund grants that it plans to use to make capital
improvements to its housing developments. The most expensive project,
with an estimated cost of $6.6 million, will completely rehabilitate a
development that houses the elderly. Additionally, the San Antonio
Housing Authority applied for and was awarded an additional $5.4
million to be used for capital improvements to 13 developments that
house the elderly and persons with disabilities.
* Education. We surveyed a representative sample of local educational
agencies (LEAs) nationally and in Texas about their planned uses of
Recovery Act funds. The survey estimates that 20 percent of the Texas
LEAs anticipate job losses even with State Fiscal Stabilization Fund
funds. The national estimate was 32 percent.
* Recipient Reporting. The State Comptroller's Office took steps to
ensure that Texas agencies and institutions reported information
accurately and completely for all Recovery Act awards they received.
According to officials in the Comptroller's Office, any errors found
were communicated to the state entity for disposition, and the
Comptroller's Office staff monitored the correction or update. In
total, 60 agencies and institutions of higher learning submitted 1,131
recipient reports reflecting almost $8.9 billion in Recovery Act awards
and over $232 million in expenditures to FederalReporting.gov through
October 29, 2009.
* Effect of Recovery Act Funds on Local Governments. The city of Dallas
anticipates using Recovery Act funding for programs such as public
safety and transportation, and is taking steps to ensure Recovery Act
funding is spent in compliance with provisions of the Act. Denton
County applied for Recovery Act law enforcement grants; however, Denton
County decided not to apply for other Recovery Act funding.
Texas Continues to Make Progress on Recovery Act Highway Projects
As we reported in September 2009, $2.25 billion in Recovery Act funding
was apportioned to Texas in March 2009 for highway infrastructure and
other eligible projects. According to FHWA data, as shown in Figure 1
as of October 31, 2009, about $1.4 billion was obligated.
Figure 1: Highway Obligations for Texas by Project Type as of October
31, 2009:
[Refer to PDF for image: pie-chart]
Pavement projects total (80 percent, $1,150.9 million):
Pavement widening ($417.9 million): 29%;
Pavement improvement: reconstruction/rehabilitation ($368.3 million):
26%;
New road construction ($195.6 million): 14%;
Pavement improvement: resurface ($169.1 million): 12%;
Bridge projects total (14 percent, $199.8 million):
New bridge construction ($174.1 million): 12%;
Bridge improvement ($13.6 million): 1%;
Bridge replacement ($12.2 million): 1%;
Other (6 percent, $81.6 million):
Other ($81.6 million): 6%.
Source: GAO analysis of Federal Highway Administration data.
Note: Totals may not add to 100 percent due to rounding. "Other"
includes safety projects, such as improving safety at railroad grade
crossings, and transportation enhancement projects, such as pedestrian
and bicycle facilities, engineering, and right-of-way purchases.
[End of figure]
Of the $1.4 billion obligated, $162 million had been reimbursed for 181
Texas projects. According to a Texas official, the types of projects
described above are to relieve congestion, preserve the current system,
and provide transportation enhancements. In addition to state projects,
the Recovery Act requires that states suballocate 30 percent of
Recovery Act highway funds for metropolitan, regional, and local use.
Recovery Act-Funded State and Local Highway Construction Projects Are
Being Completed:
In October 2009, we visited two Recovery Act-funded highway projects
administered by the state of Texas and one administered by the city of
Plano, Texas from funds suballocated for local use. Both state-run
projects involved roadway resurfacing. The Texas Department of
Transportation (TxDOT) Austin district office provided oversight for an
ongoing project we visited and its Tyler district office provided
oversight for a completed project we visited. Figure 2 shows work in
progress and, according to department officials, was more than 50
percent complete on the Austin district office's project near Lago
Vista, Texas. Figure 3 shows the Tyler district office's completed
project in Mineola, Texas.
Figure 2: Resurfacing Work in Progress near Lago Vista, Texas:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
Figure 3: Completed Resurfacing Work in Mineola, Texas:
[Refer to PDF for image: photograph]
Source: GAO.
[End of figure]
We also visited a project using Recovery Act funds to make improvements
at the intersection of Preston Road (State Highway 289) and Legacy
Drive in Plano, Texas. According to Plano officials, the city of Plano
is administering the intersection improvement project in accordance
with TxDOT and city contracting procedures. As shown in Figure 4, work
is underway on the project to construct right and left turn lanes and
install traffic signals.
Figure 4: Improvements in Progress at Intersection of Preston Road and
Legacy Drive in Plano, Texas:
[Refer to PDF for image: photograph]
Source: Texas Department of Transportation.
[End of figure]
State and Local Governments Using Existing Practices to Award Highway
Contracts:
According to TxDOT and city of Plano officials, the three projects were
initiated through competitively awarded fixed-unit-price contracts.
[Footnote 3] According to state officials, after soliciting proposals
for the projects, TxDOT received and evaluated four proposals for the
Austin district project and three proposals for the Tyler district
project. Similarly, Plano officials stated they received and evaluated
six proposals for their intersection-improvement project. Both TxDOT
and Plano officials stated that fixed-unit-price contracts were awarded
for their respective projects.
According to TxDOT officials, the state-run Austin and Tyler district
contracts were awarded to the lowest bidder for approximately $3.3
million and $1.8 million, respectively. Plano officials stated they
awarded their contract to the lowest bidder for about $1.3 million.
According to officials, each contract was awarded for a price that was
lower than the original state and local estimated cost of the project.
TxDOT officials attributed the lower award amounts to reduced material
and product prices brought about by low demand and oil prices and
possibly contractors eliminating their equipment replacement cost and
reducing their profit margins in order to get the contract.
Housing Agencies Continue to Make Progress on Public Housing Capital
Fund Recovery Act Projects:
Of the 415 public housing agencies in Texas, 351 collectively received
$119.8 million in Public Housing Capital Fund formula grants (See
Figure 5). These grants are provided to public housing agencies to
improve the physical condition of their properties. As of November 14,
2009, 262 of these public housing agencies had obligated $44.6 million
and 201 agencies had drawn down $16.9 million. On average, housing
agencies in Texas are obligating funds slower than housing agencies
nationally. For this report, we visited the San Antonio Housing
Authority (SAHA), a large housing authority with 61 property
developments.
Figure 5: Percent of Texas Public Housing Capital Fund Formula Grant
funds Obligated and Drawn Down as of November 14, 2009:
[Refer to PDF for image: 3 pie-charts; 1 horizontal bar graph]
Funds obligated by HUD: 100$; $119,789,530;
Funds obligated by public housing agencies: 37.2%; $44,581,679;
Funds drawn down by public housing agencies: 14.1%; $16,946,584.
Number of public housing agencies:
Entering into agreements for funds: 351;
Obligating funds: 262;
Drawing down funds: 201.
Source: GAO analysis of HUD data.
[End of figure]
SAHA has received $14.6 million in Capital Fund formula grants. As we
outlined in our July 2009 bimonthly report, SAHA officials told us they
planned to use the majority of these Recovery Act grants for
developments previously identified in the agency's 5-year plan.
[Footnote 4] SAHA officials informed us in October 2009 that the
projects we previously reported on were proceeding as planned with no
significant changes. As of November 14, 2009, SAHA had obligated over
$1 million and expended over $119,000 and officials expect to obligate
at least 71 percent, or $10.3 million, of their capital fund grant by
December 31, 2009. SAHA officials did not foresee any difficulties
meeting the Recovery Act's March 17, 2010, deadline for obligating 100
percent of funds.
In May 2009, we visited a SAHA development built in the early 1970s to
house the elderly that will be completely rehabilitated. Specifically,
this development's cabinets, flooring, and air-conditioning system will
be completely replaced, as well as making infrastructure repairs. With
an estimated cost of $6.6 million, this is SAHA's most expensive
Recovery Act project. In October 2009 we revisited this development to
follow up on the progress made since our previous visit. We found that
officials had begun environmental and architectural design work. The
environmental work involves asbestos abatement for two units to
determine the work required for the remaining 117 units. As shown in
Figure 6, this involved removing the walls and ceiling of a unit to
reveal the condition of the structure. The architectural work involves
creating updated designs and floor plans for the development's units.
According to SAHA officials, the architectural design work was
initiated through a competitively awarded contract. SAHA officials told
us that they solicited and evaluated 17 bids from qualified firms, and
in June 2009 awarded a fixed-price contract to an architectural firm
with a total value of $340,000. Officials explained that an amendment
to this contract was completed in September 2009 to award an additional
$10,000 for services that include a site topography survey. As of
October 2009, the firm had completed the new floor plans for the
updated units.
Figure 6: SAHA Unit Undergoing Asbestos Abatement:
[Refer to PDF for image: 2 photographs]
Source: GAO.
Note: The cabinets, walls, and ceiling have been removed since our
previous visit in order to identify the environmental work required.
[End of figure]
SAHA officials issued a Request for Proposal from qualified contractors
on November 4, 2009, for the renovation of the development.
With respect to overall management of capital fund procurement
activities, SAHA officials told us they have recently taken steps to
reduce the potential for fraud. As reported previously, five SAHA
employees were charged with federal bribery-related offenses in the
summer of 2009. These employees were subsequently terminated. Officials
informed us that SAHA's procurement policies and procedures were
revised in August 2009 to include an ethics policy and create stronger
internal controls. According to SAHA officials, audit managers are now
required to check a minimum number of purchases by randomly selecting
purchase orders and comparing them to the requirements delineated in
the contract. The agency's fraud prevention policy was also revised in
September 2009 and states what would be considered improper and
fraudulent conduct. Additionally, SAHA has established a Fraud Hotline
and its Web site now includes information for reporting fraud, waste,
and abuse.
Projects Funded with Competitive Grants to Begin Soon:
In addition to the Capital Fund formula grants, HUD awarded 22
competitive grants with a collective total of $21.5 million to public
housing agencies in Texas. SAHA was awarded nine of these grants, with
a total amount of approximately $5.4 million. According to SAHA
officials, these funds will be used for capital improvements to 13 SAHA
developments that house the elderly and persons with disabilities.
Specifically, SAHA plans to use these funds to modify developments so
they are fully accessible and remodel recreational areas for the
purpose of maintaining an environment that encourages socialization
among residents. As of November 5, 2009, SAHA had not awarded contracts
for this work. Officials informed us that they expected to begin
awarding contracts by January 2010.
Included in SAHA's list of developments that will receive competitive
grants is a housing facility built in the early 1970s with 66 units
that, according to SAHA officials, had previously been a detention
center. SAHA officials plan to allocate about $266,000 to this
development for capital improvements, including a redesigned layout for
recreational areas, new floors, and brighter lighting. Officials stated
that they expect work to begin on this project by July 2010 and
renovations to be completed by December 2010.
Texas Use of Recovery Act Education Funds:
We surveyed a representative sample of local educational agencies (LEA)”
generally school districts”nationally and in Texas about their planned
uses of Recovery Act funds. Table 1 shows Texas and national GAO survey
results on the estimated percentages of LEAs that (1) plan to use more
than 50 percent of their Recovery Act funds from three education
programs to retain staff, (2) anticipate job losses even with State
Fiscal Stabilization Fund (SFSF) monies, and (3) reported a total
funding decrease of 5 percent or more since last school year.
Table 1: Selected Results from GAO Survey of LEAs:
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, IDEA funds;
Estimated percentages of LEAs, Texas: 7%;
Estimated percentages of LEAs, Nation: 19%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, Title I funds;
Estimated percentages of LEAs, Texas: 12%;
Estimated percentages of LEAs, Nation: 25%.
Responses from GAO survey: Plan to use more than 50 percent of Recovery
Act funds to retain staff, SFSF funds;
Estimated percentages of LEAs, Texas: 32%;
Estimated percentages of LEAs, Nation: 63%.
Responses from GAO survey: Anticipated job losses, even with SFSF
funds;
Estimated percentages of LEAs, Texas: 20%;
Estimated percentages of LEAs, Nation: 32%.
Responses from GAO survey: Reported total funding decrease of 5 percent
or more since school year 2008-2009;
Estimated percentages of LEAs, Texas: 9%;
Estimated percentages of LEAs, Nation: 17%.
Source: GAO.
Note: Percentage estimates for Texas have margins of error, at the 95
percent confidence level, of plus or minus 10 percentage points or
less. The nationwide percentage estimates have a margin of error of
plus or minus 5 percentage points.
[End of table]
The estimates presented above are the results of a national survey of
how Recovery Act funds made available by the U.S. Department of
Education under SFSF, ESEA Title I, and IDEA were used by LEAs In
designing the survey, we took steps to minimize nonsampling errors by
pretesting the survey instrument with officials in five LEAs in July
and August 2009. For our survey, we selected a stratified random sample
of Texas LEAs and had a response rate of 74 percent. We also
interviewed officials at the U.S. Department of Education and reviewed
relevant federal laws and guidance.
Recipient Reporting for Texas State Agencies and Institutions:
Under the Recovery Act and related Office of Management and Budget
(OMB) guidance, each recipient of Recovery Act funds is required to
periodically report on several items for each award. Items to be
reported include: (1) the total amount of Recovery Act funds received,
(2) the amount of Recovery Act funds that were expended or obligated to
projects or activities, and (3) an estimated number of jobs created and
retained by projects or activities.[Footnote 5] The first reporting
deadline was October 10, 2009, with quarterly reports due 10 days after
the end of each calendar quarter thereafter.
According to state officials, Texas historically operates in a
decentralized manner with regard to interactions with the federal
government, and each state agency and institution typically establishes
separate relationships with their cognizant federal agency. The October
2009 recipient reporting process was conducted by Texas consistent with
this structure. Specifically, state agencies and institutions reported
directly to the designated federal Web site[Footnote 6] on their
Recovery Act awards. In total, 60 agencies and institutions of higher
learning submitted 1,131 recipient reports reflecting almost $8.9
billion in Recovery Act awards and over $232 million in expenditures to
FederalReporting.gov through October 29, 2009.[Footnote 7]
Issues Encountered by Texas during the October 2009 Reporting Process:
When submitting the first quarterly recipient reports in October 2009,
Texas officials said they experienced several technical problems.
First, the guidance that OMB issued identified a specific format for
the Award Number field in each Section 1512 report. However, the
National Institutes of Health (N111), National Science Foundation
(NSF), and U.S. Department of Education's Office of Federal Student Aid
provided differing guidance on the formatting of the award number,
which led to numerous instances of Texas agencies and institutions
needing to resubmit their recipient reports. According to Texas
officials, these reports were inaccurately flagged as late submissions
because the correction could only be made by deleting the original
report and resubmitting a new report with the corrected award number.
Second, the TxDOT said it encountered issues when reporting on its
Highway Planning and Construction program. TxDOT was unable to use a
batch report-submission process designed for centralized state
reporting, and submitted its 377 reports individually. Third, TxDOT
officials explained that the agency intended to use information
provided by the Federal Highway Administration to complete its
recipient reporting but, due to data-formatting issues, TxDOT
submitted reports based on its internal records. These issues resulted
in an increased workload for state officials. According to state
officials, none of these technical issues have been resolved to date.
Texas Used Its Comptroller's Office for Data Quality in Recipient
Reporting:
The State Comptroller's Office took steps to help ensure that Texas
agencies and institutions reported information accurately and
completely for all Recovery Act awards they received. Officials
explained that an inventory of Recovery Act awards subject to recipient
reporting was developed for use by the Comptroller's Office to verify
that all awards were accounted for. Sources for the inventory included
the statewide accounting system, a weekly reporting database created by
the State Comptroller's Office, USASpending.gov, Recovery Act award
databases at NIH and NSF, Federal Student Aid notification of awards,
and state notifications received from federal agencies starting August
30, 2009. The inventory was compared against an extract provided by the
designated federal Web site indicating successful submissions of Texas
recipient reports. The data elements checked included Dun and
Bradstreet Universal Numbering System number, Catalog of Federal
Domestic Assistance (CFDA) number, award number, award date, and award
amount. Awards that were not reflected on the extract were documented,
researched, and appropriate action taken to ensure all reportable items
had a submission to the designated federal Web site. Based on a
FederalReporting.gov extract received on October 22, Texas officials
found two institutions of higher education that were not included:
Texas State Technical College ($53,536) and Tarleton State University
($47,584). According to state officials, Federal Student Aid notified
institutions on September 24, 2009, of the requirements that their
awards were subject to recipient reporting, and did not provide full
detail on the reporting requirements until October 9, 2009. State
officials said, due to their late start in the reporting process
resulting from this delayed notification, these institutions were
unable to get registered on time for the October report submission.
The State Comptroller's Office said it also reviewed specific agency-
entered fields to help prevent reporting errors. As recipient reports
were submitted to the designated federal Web site, it: (1) compared the
CFDA, award number, award date, and award amount in the Texas report to
state or federal data sources to ensure consistency; (2) verified that
total expenditures in the state report were not greater than the award
amount; (3) confirmed that state reporting of an award number was not
duplicated at the prime-recipient level; (4) performed a review
focusing on the avoidance of other reporting errors to the extent
downloadable data were available from federal agency award information
and specific field-level guidance was provided; and (5) reviewed NIH
and NSF reports for the correct funding-agency code and awarding-agency
code per guidance by the respective federal agency. As part of this
review, the Comptroller's Office said it identified errors with CFDA
numbers, award numbers, and award amounts. According to officials in
the Comptroller's Office, these errors were communicated to the state
entity for disposition, and Comptroller's Office staff monitored the
correction or update.
The State Comptroller's Office is still evaluating the results of the
current process and looking into revised plans for the next quarterly
report due in January 2010. According to Texas officials, the
Comptroller's Office anticipates revising state reporting procedures by
mid-December to address lessons learned and best practices. State
officials also said that the State Agency Internal Audit Forum has
recently developed an audit program related to 1512 recipient reporting
for use by Texas internal audit entities that will be monitoring
Recovery Act awards. Officials stated they anticipate this program will
be completed in December 2009.
Use of Recovery Act Funds by the City of Dallas and Denton County:
To a varying degree, Recovery Act funding, once awarded, would help
support activities in the two Texas local governments we reviewed. The
State Comptroller reports local governments in Texas fund their
operations from property and sales tax; franchise and user fees; and
court costs and fines, with property tax generating the largest amount
of revenue. A report by the National League of Cities and our
discussions with local officials suggest that, relative to many other
states, municipalities in Texas receive very limited revenue from the
state. Overall, this report says state aid to municipalities in Texas
comprises 4 percent of total municipal general revenue.[Footnote 8]
Instead, information from the State Comptroller indicates Texas cities
and counties have the option of imposing an additional local sales tax
beyond the state sales tax that, in combination with other revenue
sources such as property tax, enables these governments to fund their
operations.[Footnote 9]
We assessed the use of Recovery Act funds for two localities in Texas,
the city of Dallas and Denton County. Table 2 provides information
about these two localities.
Table 2: Population and Unemployment Rate in Dallas and Denton County:
Name of locality: Dallas;
Population: 1,279,910;
Locality type: City;
Unemployment rate: 8.7%.
Name of locality: Denton County;
Population: 636,557;
Locality type: County;
Unemployment rate: 7.7%.
Source: U.S. Census Bureau and U.S. Department of Labor.
Note: Population data are from July 1, 2008. Unemployment rates are
preliminary estimates for September 2009 and have not been seasonally
adjusted. Rates are a percentage of the labor force. Estimates are
subject to revision.
[End of table]
City of Dallas:
Recovery Act Funding Affects Select Programs in Dallas Budget.
Officials noted that because Recovery Act funding is targeted to
specific programs, such as public safety and transportation, it only
helped offset the effect of revenue declines, and service and staff
reductions in those select areas. Dallas experienced declines in
property and sales tax revenue for the previous 12 months, and
anticipates a decline in property tax revenue for fiscal year 2010.
[Footnote 10] Local officials stated that property and sales tax
revenue represent approximately two-thirds of the city's $1.3 billion
general revenue fund. Further, city officials reported that the decline
in tax revenue coupled with a Texas state law requiring local
governments to maintain a balanced budget compelled Dallas to close the
gap between revenue and expenditures. City officials said the city made
service and staff cost reductions to offset the decline in tax revenue.
For example, Dallas reduced hours for libraries and recreation centers,
privatized the Dallas City Zoo, reduced staff levels by 398
people,[Footnote 11] eliminated civilian pay-for-performance increases,
and instituted a 2-percent pay reduction through five scheduled
furlough days in fiscal year 2010. In addition, the city used $21.7
million from its reserve fund, which is intended to provide additional
revenue for the city during periods of revenue decline.
Recovery Act Funds Have Helped Address Top Priority: Public Safety. In
accordance with the Dallas City Council's long range strategic plan, a
top priority of the city of Dallas is public safety. In the budget for
fiscal year 2010, public safety accounts for 33 percent of the city of
Dallas's total operating budget. Dallas received both competitive and
formula grants from the Recovery Act to hire additional police
officers. Dallas plans to hire 50 officers through the $8.9 million
Community Oriented Policing Services Hiring Recovery Program (CHRP)
competitive grant, and 41 officers through the $7.1 million Edward
Byrne Memorial Justice Assistance Grant (JAG) formula allocation. The
CHRP grant funds police officer positions for 3 years and requires the
grant recipient to retain the police officers at the grant recipient's
expense for at least 12 additional months after the third year. City
officials acknowledged that sustaining the 50 police officers beyond
the 3-year period would be challenging, but because public safety is a
top priority and because it would be politically difficult to eliminate
police officer positions, the city is committed to taking any necessary
steps to ensure it can retain the additional officers.
Steps Being Taken to Enhance Oversight and Management of Recovery Act
Funds. Dallas officials say they have taken several steps to implement
oversight and management of Recovery Act funding. The Dallas City
Auditor conducted a preliminary risk assessment of the city's internal
control systems. According to the Dallas City auditor, the city faces
increased risk because ARRA funds must be quickly expended, mandatory
reports must be completed within short time frames, some city
departments have not previously administered grants, and employees in
newly funded Recovery Act positions may not be familiar with grant
administration requirements. Internal control weaknesses have been
cited in multiple reports published by the Dallas City Auditor.
[Footnote 12] Furthermore, the Dallas City Auditor acknowledged that
noncompliance with provisions of the Recovery Act, such as misspent
funds, could pose a significant risk to the city government, with
repercussions such as repayment of accepted funds to the federal
government. City officials say they are implementing recommendations
outlined in the Auditor's risk assessment and as a result believe
Dallas has now installed adequate controls for spending Recovery Act
funds. For example, Dallas formed an interdepartmental task force to
track awarded Recovery Act grants and pending grant applications and to
consolidate all recipient reporting to ensure compliance and
consistency. The City Auditor's Office plans to visit selected Recovery
Act fund recipients to discuss internal controls and offer fraud
deterrence presentations to mitigate fraud, waste, and abuse.
Denton County:
Denton County Applied for Recovery Act Funds for Law Enforcement.
Denton County officials reported the county applied for a JAG grant
funded by the Recovery Act. The Denton County Sheriff's Office expects
to receive $34,530 in funding that will be used to purchase a new
patrol boat to patrol lakes in the county. The Denton County Sheriff's
Office also reported seeking two additional Recovery Act grants: CHRP
funding to fund two patrol deputies as well as another Recovery Act
grant to fund forensic and court security equipment.
Denton County Decided Not to Seek Other Recovery Act Funding. A senior
county official indicated Denton County does not plan to apply for
other Recovery Act competitive grants, based on the following concerns:
* Challenges in Planning for Recovery Act Funding: County departments
and officials had to plan the budget for the current fiscal year
2010[Footnote 13] before receiving federal guidance concerning Recovery
Act funds. Specifically, county departments and officials began
planning the budget for fiscal year 2010 in March 2009, shortly after
the Recovery Act was enacted. A senior official reported not receiving
guidance from federal agencies concerning Recovery Act programs until
the summer months of 2009, making it difficult to incorporate Recovery
Act information into the county's budget plans. The county's Sheriff
Office applied for Recovery Act law enforcement grants, but officials
indicated they were more familiar with this program, having previously
received JAG grants before the Recovery Act.
* Financing Federal Matching Requirements: Another key concern raised
by the senior county official is finding the county funding necessary
to pay for the matching requirements of some Recovery Act programs. The
official reported the county budget does not set aside extra money to
pay for matching requirements.
Denton County Is Reducing Its Operating Budget. The Recovery Act
funding Denton County may receive has not averted the need for the
county to reduce its budget for maintenance and operations. A senior
Denton County official reported the county's governing body decided to
reduce the 2010 budget of every county department by 8 to 10 percent.
According to the official, the county is facing higher borrowing costs
to finance a capital improvement program. These higher borrowing costs
have increased one portion of the county's property tax rate, which
pays debt costs. However, the county's 2010 budget identifies
maintaining a low overall tax rate as one of the county's goals. To
offset the effect of the borrowing costs on property taxes, the
official explained it was decided to reduce the other portion of the
property tax rate, which pays for maintenance and operations. Taken
together, the official reported the total county property tax rate
increased slightly from the previous year, but still remains lower than
it was 5 years ago. The county official believed the Recovery Act would
not have averted the county's need to borrow funds for its capital
improvement program, because in her view, the program would not have
qualified for Recovery Act funding.
Texas's Comments on This Summary:
We provided the Governor of Texas with a draft of the appendix on
November 17, 2009. A senior advisor, designated as the state's point of
contact for the Recovery Act, provided comments on this report. In
general, the senior advisor agreed with information contained in the
appendix However, the senior advisor was concerned that the education
survey results may be misleading. Specifically, the senior advisor
stated that the survey results may overstate anticipated job losses in
Texas. In response to his concerns, we included language in the body of
the appendix explaining the steps taken to help ensure that our sample
was representative of Texas's LEAs We also provided a copy of this
summary to the city of Dallas and Denton County. Officials from the
state, city of Dallas, and Denton County provided technical suggestions
that we incorporated, where appropriate.
GAO Contacts:
Carol Anderson-Guthrie, (214) 777-5700 or anderdsonguthriec@gao.gov.
Bob Robinson, (202) 512-5728 or robinsonra@gao.gov.
Lorelei St. James, (214) 777-5719 or stjamesl@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Ron Berteotti, K Eric Essig,
Fred Berry, Steve Boyles, Erinn Flanagan, Ken Howard, Michael O'Neill,
and Daniel Silva made major contributions to this report.
[End of section]
Footnotes: Appendix XVII: Texas:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] Public housing agencies receive money directly from the federal
Department of Housing and Urban Development. Therefore, funds awarded
to the public housing agencies do not pass through the Texas state
budget.
[3] Fixed-unit-price contracts, according to TxDOT and city of Plano
officials, include an itemized listing of the contract items, each at a
particular unit price. The actual quantities of the items used may
vary, but the price per unit will not.
[4] Projects receiving Recovery Act formula grants include
elevator/fire/security upgrades of developments for housing the
elderly; playground upgrades of multifamily developments; repair and
replacement of ventilation systems, doors, fences, roofs, cabinets at
various developments; and a comprehensive modernization of one
development that houses the elderly.
[5] Pub. L. No. 111-5, § 1512(c), 123 Stat. 115, 287 (Feb. 17, 2009).
[6] The Web site is [hyperlink, http://www.FederalReporting.gov].
[7] Amounts do not reflect stimulus activity for local Texas
governments and other nonstate entities.
[8] National League of Cities, Cities & State Fiscal Structure
(Washington, D.C.: 2008), p. 28.
[9] In the case of counties, the State Comptroller reports
approximately half of the state's counties impose a sales and use tax.
[10] The fiscal year for the city of Dallas begins on October 1.
[11] According to Dallas city officials, overall Dallas reduced total
full-time equivalents by 1,325. This number includes the elimination of
vacant positions, as well as positions that were transferred to
entities outside of Dallas city government, such as the Dallas City
Zoo.
[12] For example, "Risk Assessment of City of Dallas Implementation of
the American Recovery and Reinvestment Act, [hyperlink,
http.//www.daIlascityhall.com/pdf/Auditor/A-
10004RiskAssessmentARRAct100909.pdf].
[13] Denton County began its 2009-2010 fiscal year on October 1, 2009.
[End of Appendix XVII: Texas]
Appendix XVIII: Program Descriptions:
Following are descriptions of selected grant programs discussed in this
report.
Figure 1: Selected Grant Programs and Their Administering Federal
Agency or Office:
[Refer to PDF for image: table]
Federal agency: Department of Agriculture;
Agency office: Food and Nutrition Service;
Grant program or programs administered:
* Supplemental Nutrition Assistance Program.
Federal agency: Department of Agriculture;
Agency office: Forest Service;
Grant program or programs administered:
* Wildland Fire Management Program.
Federal agency: Department of Commerce;
Agency office: National Telecommunications and Information
Administration;
Grant program or programs administered:
* Broadband Technology Opportunities Program/State Broadband Data and
Development Program.
Federal agency: Department of Education;
Agency office: Office of Elementary and Secondary Education;
Grant program or programs administered:
* Elementary and Secondary Education Act Title I-A grants;
* State Fiscal Stabilization Fund.
Federal agency: Department of Education;
Agency office: Office of Special Education and Rehabilitative Services;
Grant program or programs administered:
* Individuals with Disabilities Education Act Part B and C grants.
Federal agency: Department of Energy;
Agency office: Office of Energy Efficiency and Renewable Energy;
Grant program or programs administered:
* Clean Cities program;
* Energy Efficiency and Conservation Block Grants;
* Weatherization Assistance Program.
Federal agency: Department of Health and Human Services;
Agency office: Administration for Children and Families;
Grant program or programs administered:
* Child Care and Development Block Grants;
* Community Services Block Grants;
* Head Start/Early Start;
* Recovery Act Impact on Child Support Incentives;
* Title IV-E Adoption Assistance and Foster Care Programs.
Federal agency: Department of Health and Human Services;
Agency office: The Centers for Medicare & Medicaid Services;
Grant program or programs administered:
* Medicaid Federal Medical Assistance Percentage.
Federal agency: Department of Health and Human Services;
Agency office: Health Resources and Services Administration;
Grant program or programs administered:
* Capital Improvement Program;
* Increased Demand for Services.
Federal agency: Department of Homeland Security;
Agency office: Federal Emergency Management Agency;
Grant program or programs administered:
* Emergency Food and Shelter Program;
* Recovery Act Assistance to Firefighters Fire Station Construction
Grants.
Federal agency: Department of Housing and Urban Development;
Agency office: Office of Community Planning and Development;
Grant program or programs administered:
* Community Development Block Grants;
* Homelessness Prevention and Rapid Re-Housing Program;
* Neighborhood Stabilization Program 2.
Federal agency: Department of Housing and Urban Development;
Agency office: Office of Public and Indian Housing;
Grant program or programs administered:
* Public Housing Capital Fund.
Federal agency: Department of Justice;
Agency office: Office of Community Oriented Policing Services;
Grant program or programs administered:
* Community Oriented Policing Services Hiring Recovery Program.
Federal agency: Department of Justice;
Agency office: Office of Justice Programs;
Grant program or programs administered:
* Assistance to Rural Law Enforcement to Combat Crime and Drugs
Program;
* Edward Byrne Memorial Justice Assistance Grant Program;
* Internet Crimes Against Children Initiatives.
Federal agency: Department of Justice;
Agency office: Office on Violence Against Women;
Grant program or programs administered:
* Services*Training*Officers*Prosecutors Violence Against Women Formula
Grants.
Federal agency: Department of Labor;
Agency office: Employment and Training Administration;
Grant program or programs administered:
* Senior Community Service Employment Program;
* Workforce Investment Act Title I-B Grants.
Federal agency: Department of Transportation;
Agency office: Federal Aviation Administration;
Grant program or programs administered:
* Airport Improvement Program.
Federal agency: Department of Transportation;
Agency office: Federal Highway Administration;
Grant program or programs administered:
* Federal-Aid Highway Surface Transportation Program.
Federal agency: Department of Transportation;
Agency office: Federal Transit Administration;
Grant program or programs administered:
* Fixed Guideway Infrastructure Investment Program;
* Transit Capital Assistance Program;
* Transit Investments for Greenhouse Gas and Energy Reduction Grant
Program.
Federal agency: Department of Transportation;
Agency office: Office of the Secretary;
Grant program or programs administered:
* Transportation Investment Generating Economic Recovery Discretionary
Grants.
Federal agency: Environmental Protection Agency;
Agency office: Office of Air and Radiation;
Grant program or programs administered:
* Diesel Emission Reduction Act Grants.
Federal agency: Environmental Protection Agency;
Agency office: Office of Solid Waste and Emergency Response;
Grant program or programs administered:
* Brownfields Program.
Federal agency: Environmental Protection Agency;
Agency office: Office of Water;
Grant program or programs administered:
* Clean Water State Revolving Fund;
* Drinking Water State Revolving Fund.
Federal agency: National Endowment for the Arts;
Grant program or programs administered:
* National Endowment for the Arts Recovery Act grants.
Source: GAO analysis.
[End of figure]
Medicaid Federal Medical Assistance Percentage:
Medicaid is a joint federal-state program that finances health care for
certain categories of low-income individuals, including children,
families, persons with disabilities, and persons who are elderly. The
federal government matches state spending for Medicaid services
according to a formula based on each state's per capita income in
relation to the national average per capita income. The Centers for
Medicare & Medicaid Services, within the Department of Health and Human
Services, approves state Medicaid plans, and the amount of federal
assistance states receive for Medicaid service expenditures is known as
the Federal Medical Assistance Percentage (FMAP). The Recovery Act's
temporary increase in FMAP funding will provide the states with
approximately $87 billion in assistance.
Highway Infrastructure Investment Program:
The Recovery Act provides funding to states for restoration, repair,
and construction of highways and other activities allowed under the
Federal Highway Administration's Federal-Aid Highway Surface
Transportation Program and for other eligible surface transportation
projects. The Recovery Act requires that 30 percent of these funds be
suballocated, primarily based on population, for metropolitan,
regional, and local use. Highway funds are apportioned to states
through federal-aid highway program mechanisms, and states must follow
existing program requirements. While the maximum federal fund share of
highway infrastructure investment projects under the existing federal-
aid highway program is generally 80 percent, under the Recovery Act, it
is 100 percent.
Funds appropriated for highway infrastructure spending must be used in
accordance with Recovery Act requirements. States are required to
ensure that all apportioned Recovery Act funds--including suballocated
funds--are obligated[Footnote 1] within 1 year. The Secretary of
Transportation is to withdraw and redistribute to eligible states any
amount that is not obligated within these time frames.[Footnote 2]
Additionally, the governor of each state must certify that the state
will maintain its level of spending for the types of transportation
projects funded by the Recovery Act it planned to spend the day the
Recovery Act was enacted. As part of this certification, the governor
of each state is required to identify the amount of funds the state
plans to expend from state sources from February 17, 2009, through
September 30, 2010.[Footnote 3]
Public Transit Program:
The Recovery Act appropriated $8.4 billion to fund public transit
throughout the country through existing Federal Transit Administration
(FTA) grant programs, including the Transit Capital Assistance Program,
and the Fixed Guideway Infrastructure Investment program. Under the
Transit Capital Assistance Program's formula grant program, Recovery
Act funds were apportioned to large and medium urbanized areas--which
in some cases include a metropolitan area that spans multiple states--
throughout the country according to existing program formulas. Recovery
Act funds were also apportioned to states for small urbanized areas and
nonurbanized areas under the Transit Capital Assistance Program's
formula grant programs using the program's existing formula. Transit
Capital Assistance Program funds may be used for such activities as
vehicle replacements, facilities renovation or construction, preventive
maintenance, and paratransit services. Recovery Act funds from the
Fixed Guideway Infrastructure Investment program[Footnote 4] were
apportioned by formula directly to qualifying urbanized areas, and
funds may be used for any capital projects to maintain, modernize, or
improve fixed guideway systems.[Footnote 5] As they work through the
state and regional transportation planning process, designated
recipients of the apportioned funds--typically public transit agencies
and metropolitan planning organizations (MPO)--develop a list of
transit projects that project sponsors (typically transit agencies)
submit to FTA for approval.[Footnote 6]
Funds appropriated for the Transit Capital Assistance Program and the
Fixed Guideway Infrastructure Investment Program must be used in
accordance with Recovery Act requirements. States are required to
ensure that all apportioned Recovery Act funds are obligated[Footnote
7] within 1 year. The Secretary of Transportation is to withdraw and
redistribute to each state or urbanized area any amount that is not
obligated within these time frames.[Footnote 8] Additionally, governors
must certify that the state will maintain the level of state spending
for the types of transportation projects funded by the Recovery Act it
planned to spend the day the Recovery Act was enacted. As part of this
certification, the governor of each state is required to identify the
amount of funds the state plans to expend from state sources from
February 17, 2009, through September 30, 2010.[Footnote 9]
Education:
State Fiscal Stabilization Fund:
The State Fiscal Stabilization Fund (SFSF), administered by the Office
of Elementary and Secondary Education of the Department of Education,
included approximately $48.6 billion to award to states by formula and
up to $5 billion to award to states as competitive grants. The Recovery
Act created the SFSF in part to help state and local governments
stabilize their budgets by minimizing budgetary cuts in education and
other essential government services, such as public safety.
Stabilization funds for education distributed under the Recovery Act
must first be used to alleviate shortfalls in state support for
education to Local Education Agencies (LEA) and public institutions of
higher education (IHE). States must use 81.8 percent of their SFSF
formula grant funds to support education (these funds are referred to
as education stabilization funds) and must use the remaining 18.2
percent for public safety and other government services, which may
include education (these funds are referred to as government services
funds). For the initial award of SFSF formula grant funds, Education
made available at least 67 percent of the total amount allocated to
each state,[Footnote 10] but states had to submit an application to
Education to receive the funds. The application required each state to
provide several assurances, including that the state will meet
maintenance-of-effort requirements (or will be able to comply with the
relevant waiver provisions) and that it will implement strategies to
advance four core areas of education reform: (1) increase teacher
effectiveness and address inequities in the distribution of highly
qualified teachers; (2) establish a pre-K-through-college data system
to track student progress and foster improvement, (3) make progress
toward rigorous college-and career-ready standards and high-quality
assessments that are valid and reliable for all students, including
students with limited English proficiency and students with
disabilities; and (4) provide targeted, intensive support and effective
interventions to turn around schools identified for corrective action
or restructuring.[Footnote 11] In addition, states were required to
make assurances concerning accountability, transparency, reporting, and
compliance with certain federal laws and regulations. After maintaining
state support for education at fiscal year 2006 levels, states must use
education stabilization funds to restore state funding to the greater
of fiscal year 2008 or 2009 levels for state support to LEAs and public
IHEs. When distributing these funds to LEAs, states must use their
primary education funding formula, but they can determine how to
allocate funds to public IHEs. In general, LEAs have broad discretion
in how they can use education stabilization funds, but states have some
ability to direct IHEs in how to use these funds.
ESEA Title I, Part A:
The Recovery Act provides $10 billion to help LEAs educate
disadvantaged youth by making additional funds available beyond those
regularly allocated through Title I, Part A of the Elementary and
Secondary Education Act of 1965,[Footnote 12] as amended. Title I
funding is administered by the Office of Elementary and Secondary
Education within the Department of Education. The Recovery Act requires
these additional funds to be distributed through states to LEAs using
existing federal funding formulas, which target funds based on such
factors as high concentrations of students from families living in
poverty. In using the funds, LEAs are required to comply with
applicable statutory and regulatory requirements and must obligate 85
percent of the funds by September 30, 2010.[Footnote 13] Education is
advising LEAs to use the funds in ways that will build the agencies'
long-term capacity to serve disadvantaged youth, such as through
providing professional development to teachers.
IDEA, Parts B and C:
The Recovery Act provided supplemental funding for Parts B and C of the
Individuals with Disabilities Education Act (IDEA), as amended, the
major federal statute that supports early intervention and special
education and related services for children, and youth with
disabilities. Part B provides funds to ensure that preschool and school-
aged children with disabilities have access to a free and appropriate
public education and is divided into two separate grant programs--Part
B grants to states (for school-age children) and Part B preschool
grants. The IDEA Part B grants are administered by the Office of
Special Education and Rehabilitative Services. Part C funds programs
that provide early intervention and related services for infants and
toddlers with disabilities--or at risk of developing a disability--and
their families.
Public Housing Capital Fund:
The Public Housing Capital Fund provides formula-based grant funds
directly to public housing agencies to improve the physical condition
of their properties; to develop, finance, and modernize public housing
developments; and to improve management. Under the Recovery Act, the
Office of Public and Indian Housing within the U.S. Department of
Housing and Urban Development (HUD) allocated nearly $3 billion through
the Public Housing Capital Fund to public housing agencies using the
same formula for amounts made available in fiscal year 2008 and
obligated these funds to housing agencies in March 2009.
HUD was also required to award nearly $1 billion to public housing
agencies based on competition for priority investments, including
investments that leverage private sector funding or financing for
renovations and energy conservation retrofitting. In September 2009,
HUD awarded competitive grants for the creation of energy-efficient
communities, gap financing for projects stalled due to financing
issues, public housing transformation, and improvements addressing the
needs of the elderly or persons with disabilities.
Weatherization Assistance Program:
The Recovery Act appropriated $5 billion for the Weatherization
Assistance Program, which the Department of Energy (DOE) is
distributing to each of the states, the District, and seven territories
and Indian tribes, to be spent over a 3-year period. The program,
administered by the Office of Energy Efficiency and Renewable Energy
within DOE, enables low-income families to reduce their utility bills
by making long-term energy-efficiency improvements to their homes by,
for example, installing insulation, sealing leaks, and modernizing
heating equipment, air circulation fans, and air conditioning
equipment. Over the past 32 years, the Weatherization Assistance
Program has assisted more than 6.2 million low-income families. By
reducing the energy bills of low-income families, the program allows
these households to spend their money on other needs, according to DOE.
The Recovery Act appropriation represents a significant increase for a
program that has received about $225 million per year in recent years.
DOE has approved the weatherization plans of the 16 states and the
District that are in our review and has provided at least half of the
funds to those areas.
Emergency Food and Shelter Program:
The Emergency Food and Shelter Program (EFSP), which is administered by
the Federal Emergency Management Agency (FEMA) within the Department of
Homeland Security (DHS), was authorized in July 1987 by the Stewart B.
McKinney Homeless Assistance Act to provide food, shelter and
supportive services to the homeless.[Footnote 14] The program is
governed by a National Board composed of a representative from FEMA and
six statutorily-designated national nonprofit organizations.[Footnote
15] Since its first appropriation in fiscal year 1983, EFSP has awarded
over $3.4 billion in federal aid to more than 12,000 local private, non-
profit, and government human service entities in more than 2,500
communities nationwide.
State and Local Budget:
The following grant programs were mentioned in the state and local
budget section of this report.
Airport Improvement Program:
Within the Department of Transportation, the Federal Aviation
Administration's Airport Improvement Program provides formula and
discretionary grants for the planning and development of public-use
airports. The Recovery Act provides $1.1 billion for discretionary
Grant-in-Aid for Airports under this program with priority given to
projects that can be completed within 2 years. The Recovery Act
requires that the funds must supplement, not supplant, planned
expenditures from airport-generated revenues or from other state and
local sources for airport development activities. The Recovery Act
provides $1.1 billion for this program.
Assistance to Rural Law Enforcement to Combat Crime and Drugs Program:
The Recovery Act Assistance to Rural Law Enforcement to Combat Crime
and Drugs Program is administered by the Bureau of Justice Assistance
(BJA), a component of the Office of Justice Programs, U.S. Department
of Justice. The purpose of this program is to help rural states and
rural areas prevent and combat crime, especially drug-related crime,
and provides for national support efforts, including training and
technical assistance programs strategically targeted to address rural
needs. The Recovery Act provides $125 million for this program, and BJA
has made 212 awards.
Broadband Technology Opportunities Program/State Broadband Data and
Development Program:
The Department of Commerce's National Telecommunications and
Information Administration (NTIA) administers the Recovery Act's
Broadband Technology Opportunities Program. This program was
appropriated $4.7 billion, including $350 million for the purposes of
developing and maintaining a broadband inventory map. To accomplish
this, NTIA has developed the State Broadband Data and Development Grant
Program, a competitive, merit-based matching grant program to fund
projects that collect comprehensive and accurate state-level broadband
mapping data, develop state-level broadband maps, aid in the
development and maintenance of a national broadband map, and fund
statewide initiatives directed at broadband planning.
Brownfields Program:
The Recovery Act provides $100 million to the Brownfields Program,
administered by the Office of Solid Waste and Emergency Response within
the Environmental Protection Agency, for cleanup, revitalization, and
sustainable reuse of contaminated properties. The funds will be awarded
to eligible entities through job training, assessment, revolving loan
fund, and cleanup grants.
Capital Improvement Program:
The Department of Health and Human Services' Health Resources and
Services Administration has allocated $862.5 million in Recovery Act
funds for Capital Improvement Program grants to health centers to
support the construction, repair, and renovation of more than 1,500
health center sites nationwide, including purchasing health information
technology and expanding the use of electronic health records.
Child Care and Development Block Grants:
Administered by the Administration for Children and Families within the
Department of Health and Human Services, Child Care and Development
Block Grants, one of the funding streams comprising the Child Care and
Development Fund, are provided to states, according to a formula, to
assist low-income families in obtaining child care, so that parents can
work or participate in education or training activities. The Recovery
Act provides $1.9 billion in supplemental funding for these grants.
Clean Water State Revolving Fund:
The Recovery Act provides $4 billion for the Clean Water State
Revolving Fund, administered by the Office of Water within the
Environmental Protection Agency, to fund municipal wastewater
infrastructure projects. The Recovery Act requires states to use at
least 50 percent of the amount of their capitalization grant to provide
additional subsidization of loans to eligible recipients. In addition,
to the extent there are sufficient project applications, at least 20
percent of the appropriated funds must be designated for green
infrastructure, water efficiency improvements, or other environmentally
innovative projects.
Clean Cities program:
The Department of Energy's Clean Cities program, administered by the
Office of Energy Efficiency and Renewable Energy, is a government-
industry partnership that works to reduce America's petroleum
consumption in the transportation sector. The Department of Energy is
providing nearly $300 million in Recovery Act funds for projects under
the Clean Cities program, which provide a range of energy-efficient and
advanced vehicle technologies, such as hybrids, electric vehicles, plug-
in electric hybrids, hydraulic hybrids and compressed natural gas
vehicles, helping reduce petroleum consumption across the United
States. The program also supports refueling infrastructure for various
alternative fuel vehicles, as well as public education and training
initiatives, to further the program's goal of reducing the national
demand for petroleum.
Community Development Block Grants:
The Community Development Block Grant (CDBG) program, administered by
the Office of Community Planning and Development within the Department
of Housing and Urban Development, enables state and local governments
to undertake a wide range of activities intended to create suitable
living environments, provide affordable housing, and create economic
opportunities, primarily for persons of low and moderate income. Most
local governments use this investment to rehabilitate affordable
housing and improve key public facilities. The Recovery Act includes $1
billion for the CDBG program.
Community Services Block Grants:
Community Services Block Grants (CSBG), administered by the
Administration for Children and Families within the Department of
Health and Human Services (HHS), provide federal funds to states,
territories, and tribes for distribution to local agencies to support a
wide range of community-based activities to reduce poverty. The
Recovery Act appropriated $1 billion for CSBG to become available
immediately.
Community Oriented Policing Services (COPS) Hiring Recovery Program:
The COPS Hiring Recovery Program (CHRP), administered by the Office of
Community Oriented Policing Services within the U.S. Department of
Justice, provides competitive grant funds directly to law enforcement
agencies for the purpose of hiring or rehiring career law enforcement
officers and increasing their community policing capacity and crime-
prevention efforts. CHRP grants provide 100 percent funding for 3 years
for approved entry-level salaries and benefits for newly hired, full-
time sworn officer positions or for rehired officers who have been laid
off, or are scheduled to be laid off on a future date, as a result of
local budget cuts.
Diesel Emission Reduction Act Grants:
The program objective of the Diesel Emission Reduction Act Grants,
administered by the Office of Air and Radiation in conjunction with the
Office of Grants and Debarment, within the U.S. Environmental
Protection Agency (EPA), is to reduce diesel emissions. EPA will award
grants to address the emissions of in-use diesel engines by promoting a
variety of cost-effective emission reduction strategies, including
switching to cleaner fuels, retrofitting, repowering or replacing
eligible vehicles and equipment, and idle reduction strategies. The
Recovery Act appropriated $300 million for the Diesel Emission
Reduction Act grants. In addition, the funds appropriated through the
Recovery Act for the program are not subject to the State Grant and
Loan Program Matching Incentive provisions of the Energy Policy Act of
2005.
Drinking Water State Revolving Fund:
The Drinking Water State Revolving Fund program was established under
the Safe Drinking Water Act (SDWA) Amendments of 1996, which authorizes
the Environmental Protection Agency (EPA) to award capitalization
grants to states, which in turn are authorized to provide low-cost
loans and other types of assistance to public water systems to finance
the costs of infrastructure projects needed to achieve or maintain
compliance with SDWA requirements. The Recovery Act provides $2 billion
in funding for this program, which is administered by the Office of
Water within EPA.
Edward Byrne Memorial Justice Assistance Grant Program:
The Edward Byrne Memorial Justice Assistance Grant (JAG) Program within
the Department of Justice's Bureau of Justice Assistance provides
federal grants to state and local governments for law enforcement and
other criminal justice activities, such as crime prevention and
domestic violence programs, corrections, treatment, justice information
sharing initiatives, and victims' services. JAG funds are allocated
based on a statutory formula determined by population and violent crime
statistics, in combination with a minimum allocation to ensure that
each state and territory receives some funding.
Energy Efficiency and Conservation Block Grants:
The Energy Efficiency and Conservation Block Grants (EECBG),
administered by the Office of Energy Efficiency and Renewable Energy
within the Department of Energy, provides funds through competitive and
formula grants to units of local and state government and Indian tribes
to develop and implement projects to improve energy efficiency and
reduce energy use and fossil fuel emissions in their communities. The
Recovery Act includes $3.2 billion for the EECBG. Of that total, $400
million is to be awarded on a competitive basis to grant applicants.
Title IV-E Adoption Assistance and Foster Care Programs:
Administered by the Administration for Children and Families within the
Department of Health and Human Services, the Foster Care Program helps
states to provide safe and stable out-of-home care for children until
the children are safely returned home, placed permanently with adoptive
families or placed in other planned arrangements for permanency. The
Adoption Assistance Program provides funds to states to facilitate the
timely placement of children, whose special needs or circumstances
would otherwise make placement difficult, with adoptive families.
Federal Title IV-E funds are paid to reimburse states for their
maintenance payments using the states' respective Federal Medical
Assistance Percentage (FMAP) rates.[Footnote 16] Under the Recovery
Act, an estimated additional $806 million will be provided to states to
increase the federal match for state maintenance payments for foster
care, adoption assistance, and guardianship assistance.
Head Start/Early Head Start:
The Head Start program, administered by the Office of Head Start of the
Administration for Children and Families within the Department of
Health and Human Services, provides comprehensive early childhood
development services to low-income children, including educational,
health, nutritional, social, and other services, intended to promote
the school readiness of low-income children. Federal Head Start funds
are provided directly to local grantees, rather than through states.
The Recovery Act provided an additional $2.1 billion in funding for
Head Start, including $1.1 billion directed for the expansion of Early
Head Start programs. The Early Head Start program provides family-
centered services to low-income families with very young children
designed to promote the development of the children, and to enable
their parents to fulfill their roles as parents and to move toward self-
sufficiency.
Homelessness Prevention and Rapid Re-Housing Program:
The Homelessness Prevention and Rapid Re-Housing Program, administered
by the Office of Community Planning and Development within the
Department of Housing and Urban Development, awards formula grants to
states and localities to prevent homelessness and procure shelter for
those who have become homeless. Funding for this program is being
distributed based on the formula used for the Emergency Shelter Grants
program. According to the Recovery Act, program funds should be used
for short-term or medium-term rental assistance; housing relocation and
stabilization services, including housing search, mediation or outreach
to property owners, credit repair, security or utility deposits,
utility payments, and rental assistance for management; or appropriate
activities for homeless prevention and rapid rehousing of persons who
have become homeless. The Recovery Act includes $1.5 billion for this
program.
Increased Demand for Services:
The Department of Health and Human Services' Health Resources and
Services Administration (HRSA) has allocated Recovery Act funds for
Increased Demand for Services (IDS) grants to health centers to
increase health center staffing, extend hours of operations, and expand
existing services. The Recovery Act provided $500 million for health
center operations. HRSA has allocated $343 million for IDS grants to
health centers.[Footnote 17]
Internet Crimes Against Children Initiatives:
Internet Crimes Against Children Initiatives (ICAC), administered by
the Department of Justice, Office of Justice Programs' (OJP) Office of
Juvenile Justice and Delinquency Prevention (OJJDP), seeks to maintain
and expand state and regional ICAC task forces to address technology-
facilitated child exploitation. This program provides funding to states
and localities for salaries and employment costs of law enforcement
officers, prosecutors, forensic analysts, and other related
professionals. The Recovery Act appropriated $50 million for ICAC.
National Endowment for the Arts Recovery Act grants:
The Recovery Act provides $50 million to be distributed in direct
grants by the National Endowment for the Arts to fund arts projects and
activities that preserve jobs in the nonprofit arts sector threatened
by declines in philanthropic and other support during the current
economic downturn.
Neighborhood Stabilization Program 2:
The Neighborhood Stabilization Program (NSP), administered by the
Office of Community Planning and Development within the Department of
Housing and Urban Development, provides assistance for the acquisition
and rehabilitation of abandoned or foreclosed homes and residential
properties, among other activities, so that such properties may be
returned to productive use. Congress appropriated $2 billion in NSP2
funds in the Recovery Act for competitive awards to states, local
governments, and nonprofit organizations.[Footnote 18] NSP is
considered to be a component of the Community Development Block Grant
(CDBG) program and basic CDBG requirements govern NSP.
Recovery Act Assistance to Firefighters Fire Station Construction
Grants:
The Recovery Act Assistance to Firefighters Fire Station Construction
Grants, also known as fire grants or the FIRE Act grant program, is
administered by the Department of Homeland Security, Federal Emergency
Management Agency (FEMA), Assistance to Firefighters Program Office.
The program provides federal grants directly to fire departments on a
competitive basis to build or modify existing non-federal fire stations
in order for departments to enhance their response capability and
protect the communities they serve from fire and fire-related hazards.
The Recovery Act includes $210 million for this program and provides
that no grant shall exceed $15 million.
Recovery Act Impact on Child Support Incentives:
Under title IV-D of the Social Security Act, the Administration for
Children and Families (ACF), within the Department of Health and Human
Services, administers matching grants to states to carry out their
child support enforcement programs, which enhance the well-being of
children by identifying parents, establishing support obligations, and
monitoring and enforcing those obligations. Furthermore, ACF makes
additional incentive payments to states based on their child support
enforcement programs meeting certain performance goals. These
activities are appropriated annually and the Recovery Act does not
appropriate funds for either of them. However, the Recovery Act
temporarily provides for incentive payments expended by states for
child support enforcement to count as state funds eligible for the
matching grants. This change is effective October 1, 2008, through
September 30, 2010.
Transportation Investment Generating Economic Recovery Discretionary
Grants:
Administered by the Department of Transportation's Office of the
Secretary, the Recovery Act provides $1.5 billion in competitive
grants, generally between $20 million and $300 million, to state and
local governments, and transit agencies. These grants are for capital
investments in surface transportation infrastructure projects that will
have a significant impact on the nation, a metropolitan area, or a
region. Projects eligible for funding provided under this program
include, but are not limited to, highway or bridge projects, public
transportation projects, passenger and freight rail transportation
projects, and port infrastructure investments.
Transit Investments for Greenhouse Gas and Energy Reduction Grant
Program:
The Transit Investments for Greenhouse Gas and Energy Reduction
(TIGGER) Grant program, administered by the Federal Transit
Administration within the Department of Transportation, is a
discretionary program to support transit capital projects that result
in greenhouse gas reductions or reduced energy use. The Recovery Act
provides $100 million for the TIGGER program, and each submitted
proposal must request a minimum of $2 million.
Senior Community Service Employment Program:
The Senior Community Service Employment Program (SCSEP), administered
by the Employment and Training Administration within the Department of
Labor, promotes useful part-time opportunities in community service
activities for unemployed low-income persons who are 55 years or older
and who have poor employment prospects. The Recovery Act provides $120
million for SCSEP.
Services*Training*Officers*Prosecutors (STOP) Violence Against Women
Formula Grants Program:
Under the STOP Program, the Office on Violence Against Women within the
Department of Justice, has awarded over $139 million in Recovery Act
funds to promote a coordinated, multidisciplinary approach to enhance
services and advocacy to victims, improve the criminal justice system's
response, and promote effective law enforcement, prosecution, and
judicial strategies to address domestic violence, dating violence,
sexual assault, and stalking.
Supplemental Nutrition Assistance Program (formerly the Food Stamp
Program):
The Supplemental Nutrition Assistance Program (SNAP), administered by
the Food and Nutrition Service within the Department of Agriculture,
serves more than 35 million people nationwide each month. SNAP's goal
is to help low-income people and families buy the food they need for
good health. The Recovery Act provides for a monthly increase in
benefits for the program's recipients. The increases in benefits under
the Recovery Act are estimated to total $20 billion over the next 5
years.
Wildland Fire Management Program:
The Department of Agriculture's Forest Service administers the Wildland
Fire Management Program funding for projects on federal, state, and
private land. The goals of these projects include ecosystem
restoration, research, and rehabilitation; forest health and invasive
species protection; and hazardous fuels reduction. The Recovery Act
provided $500 million for the Wildland Fire Management program.
Workforce Investment Act Title I-B Grants:
The Workforce Investment Act of 1998 (WIA) programs, administered
primarily by the Employment and Training Administration within the
Department of Labor, provide job training and related services to
unemployed and underemployed individuals. The Recovery Act provides an
additional $2.95 billion in funding for state formula grants for Youth,
Adult, and Dislocated Worker Employment and Training Activities under
Title I-B of WIA. These grants are allocated to states, which in turn
allocate funds to local entities. The adult program provides training
and related services to individuals ages 18 and older, the youth
program provides training and related services to low-income youth ages
14 to 21, and dislocated worker funds provide training and related
services to individuals who have lost their jobs and are unlikely to
return to those jobs or similar jobs in the same industry.
[End of section]
Footnotes: Appendix XVIII: Program Descriptions:
[1] For the Highway Infrastructure Investment program, the U.S.
Department of Transportation has interpreted the term "obligation of
funds" to mean the federal government's commitment to pay for the
federal share of the project. This commitment occurs at the time the
federal government signs a project agreement.
[2] Recovery Act, div. A, title XII, 123 Stat. 206.
[3] Recovery Act, div. A, title XII, § 1201(a).
[4] Fixed guideway systems use and occupy a separate right-of-way for
the exclusive use of public transportation services. They include fixed
rail, exclusive lanes for buses and other high-occupancy vehicles, and
other systems.
[5] Generally, to qualify for funding under the applicable formula
grant program, an urbanized area must have a fixed guideway system that
has been in operation for at least 7 years and is more than one mile in
length.
[6] Metropolitan planning organizations are federally mandated regional
organizations, representing local governments and working in
coordination with state departments of transportation, that are
responsible for comprehensive transportation planning and programming
in urbanized areas. MPOs facilitate decision making on regional
transportation issues, including major capital investment projects and
priorities. To be eligible for Recovery Act funding, projects must be
included in the region's Transportation Improvement and State
Transportation Improvement Programs.
[7] For the Transit Capital Assistance Program and Fixed Guideway
Infrastructure Investment Program, the U.S. Department of
Transportation has interpreted the term obligation of funds to mean the
federal government's commitment to pay for the federal share of the
project. This commitment occurs at the time the federal government
signs a grant agreement.
[8] Recovery Act, div. A, title XII, 123 Stat. 210.
[9] Recovery Act, div. A, title XII, § 1201(a).
[10] Beginning on July 1, 2009, Education awarded the remaining
government services funds to states with approved applications.
[11] Schools identified for corrective action have missed academic
targets for 4 consecutive years and schools implementing restructuring
have missed academic targets for 6 consecutive years.
[12] For the purposes of this report, "Title I" refers to Title I, Part
A of the Elementary and Secondary Education Act of 1965 (ESEA), as
amended.
[13] LEAs must obligate at least 85 percent of their Recovery Act ESEA
Title I, Part A funds by September 30, 2010, unless granted a waiver,
and must obligate all of their funds by September 30, 2011. This will
be referred to as a carryover limitation.
[14] Pub. L. No. 100-77, 101 Stat. 482.
[15] According to the Act, the members of the EFSP National Board are
the Federal Emergency Management Agency (Chair), American Red Cross,
Catholic Charities USA, National Council of Churches of Christ in the
USA, The Salvation Army, The Council of Jewish Federations, Inc., (now
known as the Jewish Federations of North America), and the United Way
of America (now know as United Way Worldwide.)
[16] See Medicaid Federal Medical Assistance Percentage (FMAP)
description earlier in this appendix.
[17] The Recovery Act provided $2 billion to the Health Resources and
Services Administration (HRSA) for grants to health centers. Of this
total, $1.5 billion is for the construction and renovation of health
centers and the acquisition of HIT systems, and the remaining $500
million is for operating grants to health centers. Of the $500 million
for health center operations, HRSA has allocated $157 million for New
Access Point grants to support health centers' new service delivery
sites, and $343 million for Increased Demand for Services grants.
[18] NSP, a term that references the NSP funds authorized under
Division B, Title III of the Housing and Economic Recovery Act (HERA)
of 2008, provides grants to all states and selected local governments
on a formula basis. Under NSP, HUD allocated $3.92 billion on a formula
basis to states, territories, and selected local governments. The term
"NSP2" references the NSP funds authorized under the Recovery Act on a
competitive basis.
[End of Appendix XVIII: Program Descriptions]
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