Recovery Act
Funding Used for Transportation Infrastructure Projects, but Some Requirements Proved Challenging Gao ID: GAO-11-600 June 29, 2011This report responds to two GAO mandates under the American Recovery and Reinvestment Act of 2009 (Recovery Act). It is the latest report on the uses of and accountability for Recovery Act funds in selected states and localities, focusing on the $48.1 billion provided to the Department of Transportation (DOT) to invest in transportation infrastructure. This report also examines the quality of recipients' reports about the jobs created and retained with Recovery Act transportation funds. This report addresses the (1) status, use, and outcomes of Recovery Act transportation funding nationwide and in selected states; (2) actions taken by federal, state, and other agencies to monitor and ensure accountability for those funds; (3) changes in the quality of jobs data reported by Recovery Act recipients of transportation funds over time; and (4) challenges faced and lessons learned from DOT and recipients. GAO analyzed DOT and recipient reported data; reviewed federal legislation, guidance, and reports; reviewed prior work and other studies; and interviewed DOT, state, and local officials.
As of May 31, 2011, nearly $45 billion (about 95 percent) of Recovery Act transportation funds had been obligated for over 15,000 projects nationwide, and more than $28 billion had been expended. Recipients continue to report using Recovery Act funds to improve the nation's transportation infrastructure. Highway funds have been primarily used for pavement improvement projects, and transit funds have been primarily used to upgrade transit facilities and purchase buses. Recovery Act funds have also been used to rehabilitate airport runways and improve Amtrak's infrastructure. The Recovery Act helped fund transportation jobs, but long-term benefits are unclear. For example, according to recipient reported data, transportation projects supported between approximately 31,460 and 65,110 full-time equivalents (FTE) quarterly from October 2009 through March 2011. Officials reported other benefits, including improved coordination among federal, state, and local officials. However, the impact of Recovery Act investments in transportation is unknown, and GAO has recommended that DOT determine the data needed to assess the impact of these investments. Federal, state, and local oversight entities continue their efforts to ensure the appropriate use of Recovery Act transportation funds, and recent reviews revealed no major concerns. The DOT Inspector General found that DOT generally complied with Recovery Act aviation, highway, and rail program requirements. Similarly, state and local oversight entities' performance reviews and audits generally did not find problems with the use of Recovery Act transportation funds. GAO's analysis of Recovery.gov data reported by transportation grant recipients showed that the number of FTEs reported, number of recipients filing reports, and portion of recipients reporting any FTEs decreased over the past two reporting quarters as an increasing number of projects approached completion or were awaiting financial closeout. The Federal Highway Administration performs automated checks to help ensure the validity of recipient reported data and observed fewer data quality issues than in previous quarters but does not plan to use the data internally. Certain Recovery Act provisions proved challenging. For example, DOT and states faced numerous challenges in implementing the maintenance-of-effort requirement, which required states to maintain their planned level of spending or be ineligible to participate in the August 2011 redistribution of obligation authority under the Federal-Aid Highway Program. In January 2011, DOT reported that 29 states met the requirement while 21 states did not because of reductions in dedicated revenues for transportation, among other reasons. The economically distressed area provision also proved difficult to implement because of changing economic conditions. With regard to the high speed intercity passenger rail and Transportation Investment Generating Economic Recovery (TIGER) grant programs, GAO found that while DOT generally followed recommended grant-making practices, DOT could have better documented its award decisions. GAO updates the status of agencies' efforts to implement its previous recommendations but is making no new recommendations in this report. DOT officials generally agreed with GAO's findings and provided technical comments, which were incorporated as appropriate.
GAO-11-600, Recovery Act: Funding Used for Transportation Infrastructure Projects, but Some Requirements Proved Challenging
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United States Government Accountability Office:
GAO:
Report to the Congress:
June 2011:
Recovery Act:
Funding Used for Transportation Infrastructure Projects, but Some
Requirements Proved Challenging:
GAO-11-600:
GAO Highlights:
Highlights of GAO-11-600, a report to the Congress.
Why GAO Did This Study:
This report responds to two GAO mandates under the American Recovery
and Reinvestment Act of 2009 (Recovery Act). It is the latest report
on the uses of and accountability for Recovery Act funds in selected
states and localities, focusing on the $48.1 billion provided to the
Department of Transportation (DOT) to invest in transportation
infrastructure. This report also examines the quality of recipients‘
reports about the jobs created and retained with Recovery Act
transportation funds.
This report addresses the (1) status, use, and outcomes of Recovery
Act transportation funding nationwide and in selected states; (2)
actions taken by federal, state, and other agencies to monitor and
ensure accountability for those funds; (3) changes in the quality of
jobs data reported by Recovery Act recipients of transportation funds
over time; and (4) challenges faced and lessons learned from DOT and
recipients. GAO analyzed DOT and recipient reported data; reviewed
federal legislation, guidance, and reports; reviewed prior work and
other studies; and interviewed DOT, state, and local officials.
What GAO Found:
As of May 31, 2011, nearly $45 billion (about 95 percent) of Recovery
Act transportation funds had been obligated for over 15,000 projects
nationwide, and more than $28 billion had been expended. Recipients
continue to report using Recovery Act funds to improve the nation‘s
transportation infrastructure. Highway funds have been primarily used
for pavement improvement projects, and transit funds have been
primarily used to upgrade transit facilities and purchase buses.
Recovery Act funds have also been used to rehabilitate airport runways
and improve Amtrak‘s infrastructure. The Recovery Act helped fund
transportation jobs, but long-term benefits are unclear. For example,
according to recipient reported data, transportation projects
supported between approximately 31,460 and 65,110 full-time
equivalents (FTE) quarterly from October 2009 through March 2011.
Officials reported other benefits, including improved coordination
among federal, state, and local officials. However, the impact of
Recovery Act investments in transportation is unknown, and GAO has
recommended that DOT determine the data needed to assess the impact of
these investments.
Federal, state, and local oversight entities continue their efforts to
ensure the appropriate use of Recovery Act transportation funds, and
recent reviews revealed no major concerns. The DOT Inspector General
found that DOT generally complied with Recovery Act aviation, highway,
and rail program requirements. Similarly, state and local oversight
entities‘ performance reviews and audits generally did not find
problems with the use of Recovery Act transportation funds.
GAO‘s analysis of Recovery.gov data reported by transportation grant
recipients showed that the number of FTEs reported, number of
recipients filing reports, and portion of recipients reporting any
FTEs decreased over the past two reporting quarters as an increasing
number of projects approached completion or were awaiting financial
closeout. The Federal Highway Administration performs automated checks
to help ensure the validity of recipient reported data and observed
fewer data quality issues than in previous quarters but does not plan
to use the data internally.
Certain Recovery Act provisions proved challenging. For example, DOT
and states faced numerous challenges in implementing the maintenance-
of-effort requirement, which required states to maintain their planned
level of spending or be ineligible to participate in the August 2011
redistribution of obligation authority under the Federal-Aid Highway
Program. In January 2011, DOT reported that 29 states met the
requirement while 21 states did not because of reductions in dedicated
revenues for transportation, among other reasons. The economically
distressed area provision also proved difficult to implement because
of changing economic conditions. With regard to the high speed
intercity passenger rail and Transportation Investment Generating
Economic Recovery (TIGER) grant programs, GAO found that while DOT
generally followed recommended grant-making practices, DOT could have
better documented its award decisions.
What GAO Recommends:
GAO updates the status of agencies‘ efforts to implement its previous
recommendations but is making no new recommendations in this report.
DOT officials generally agreed with GAO‘s findings and provided
technical comments, which were incorporated as appropriate.
View [hyperlink, http://www.gao.gov/products/GAO-11-600] or key
components. For more information, contact Phil Herr at 202-512-2834 or
herrp@gao.gov.
[End of section]
Contents:
Letter:
Background:
Most Recovery Act Transportation Funds Have Been Obligated and
Expenditures for Infrastructure Continue to Increase, but Long-Term
Outcomes Are Largely Unknown:
Federal, State, and Local Auditors Continue to Review Use of Recovery
Act Funds and No Major Issues Have Been Reported:
Analysis of Seventh Round Recipient Reporting Data Shows Data Quality
Remains Relatively Stable:
Recovery Act Requirements Proved Challenging for DOT and Some States,
Leading to Several Lessons Learned:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
Appendix III: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Status of Recovery Act Transportation Projects, Obligations,
and Expenditures, as of May 31, 2011:
Table 2: Selected Recommendations and Agency Actions from Recent DOT
Office of Inspector General Reports, as of May 31, 2011:
Table 3: Selected Single Audit Findings, Recommendations, and Agency
Actions:
Figures:
Figure 1: Recovery Act Funds Appropriated for DOT programs:
Figure 2: Highway and Transit Obligations, by Project Type:
Figure 3: Examples of Recovery Act Transportation Projects:
Figure 4: FTEs Reported for Highways, Transit, and All Other
Transportation Projects for Quarters Ending December 2009 through
March 2011:
Abbreviations:
Caltrans: California Department of Transportation:
DOT: Department of Transportation:
FAA: Federal Aviation Administration:
FHWA: Federal Highway Administration:
FRA: Federal Railroad Administration:
FTA: Federal Transit Authority:
FTE: full-time equivalent:
MARAD: Maritime Administration:
MassDOT: Massachusetts Department of Transportation:
OIG: Office of Inspector General:
RADS: Recovery Act Data System:
Recovery Act: American Recovery and Reinvestment Act of 2009:
TIGER: Transportation Investment Generating Economic Recovery:
United States Government Accountability Office:
Washington, DC 20548:
June 29, 2011:
Report to the Congress:
The nation's transportation infrastructure plays a vital role in U.S.
economic activity. In response to what is generally believed to be the
country's worst economic downturn since the Great Depression, Congress
enacted the American Recovery and Reinvestment Act of 2009 (Recovery
Act).[Footnote 1] The Recovery Act seeks to, among other things,
preserve and create jobs, promote economic recovery, and invest in
transportation and other infrastructure to provide long-term economic
benefits.[Footnote 2] We have noted that, given the nation's long-term
fiscal challenges, an economic stimulus package should be timely,
targeted, and temporary. The Recovery Act provided more than $48
billion for transportation investments in early 2009 and stipulated
that most funds be obligated by September 30, 2010. The act targeted
the majority of those funds to be channeled through existing aviation,
highway, rail, and transit programs. Some funds were provided for
newly funded competitive grant programs, including the Federal
Railroad Administration's (FRA) high speed intercity passenger rail
program and the Transportation Investment Generating Economic Recovery
(TIGER) grant program, which is administered by the Office of the
Secretary of Transportation.[Footnote 3]
The Recovery Act requires that we conduct bimonthly reviews of how
Recovery Act funds are being used by selected states and localities.
[Footnote 4] The Recovery Act also requires us to report and comment
quarterly on estimates of job creation and retention as reported by
recipients.[Footnote 5] In this report, we focus on the use of
transportation funds and the quality of recipient reports.[Footnote 6]
Specifically, we examined the (1) status, use, and outcomes of
Recovery Act transportation funding nationwide and in selected states;
(2) actions taken by federal, state, and other agencies to monitor and
ensure accountability of Recovery Act transportation funds; (3)
changes in the quality of jobs data reported by Recovery Act
recipients of transportation funds over time; and (4) challenges faced
and lessons learned from the Department of Transportation (DOT) and
recipients. To address these objectives, we reviewed relevant federal
laws and regulations, and federal agency guidance. We also analyzed
DOT data on Recovery Act programs and expenditures as of May 31, 2011,
and determined that the data were sufficiently reliable for our
purposes. We interviewed program officials in DOT's Federal Aviation
Administration (FAA), Federal Highway Administration (FHWA), Federal
Transit Administration (FTA), and Maritime Administration (MARAD), and
we drew on two of our recent reports that discuss the high speed
intercity passenger rail and TIGER grant programs.[Footnote 7] We also
conducted interviews with FHWA division offices and state officials,
including representatives of state audit agencies, in California,
Indiana, Massachusetts, Texas, Virginia, and Washington.[Footnote 8]
We visited Recovery Act-funded projects in selected states. We chose
these states based on a number of criteria, including whether we had
followed them in our prior Recovery Act work, the total Recovery Act
highway funding apportioned to those states, the average obligation
amount per highway project, as well as highway project status in those
states, and geographic dispersion.[Footnote 9] During meetings with
federal, state, and local officials, we discussed expected outcomes
from the expenditure of Recovery Act funds, and challenges and lessons
learned based on their experiences implementing the Recovery Act. In
addition, we assessed Recovery Act transportation grantees' recipient
reports for the quarter ending March 31, 2011, for completeness and
accuracy and found them sufficiently reliable for the purposes of this
report. We also analyzed those transportation grantees' reported full-
time equivalent (FTE) jobs data from October 1, 2009, through March
31, 2011. See appendix I for more information on our scope and
methodology.
Our oversight of programs funded by the Recovery Act has resulted in
more than 100 related products with numerous recommendations since we
began reporting on the Recovery Act.[Footnote 10] This report updates
agency actions in response to recommendations from previous bimonthly
and recipient reporting reviews that have not been fully implemented
(referred to as open recommendations), including our prior
recommendations regarding the use of Recovery Act transportation funds
(see appendix II).
We conducted this work from September 2010 through June 2011, in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
The vast majority of the Recovery Act funding for transportation
programs went to FHWA, FRA, and FTA for highway, road, bridge, rail,
and transit projects. More than half of all Recovery Act
transportation funds were designated for the construction,
rehabilitation, and repair of highways, roads, and bridges (see figure
1). The remaining funds were allocated among other DOT operating
administrations.[Footnote 11]
Figure 1: Recovery Act Funds Appropriated for DOT programs:
[Refer to PDF for image: pie-chart and associated data]
Total DOT Recovery Act funding: $48.1 billion:
Agency totals: Maritime Administration (MARAD): $100 million; 0.2%;
Programs: Assistance to small shipyards: $100 million.
Agency totals: Federal Aviation Administration (FAA): $1.3 billion;
2.7%;
Programs: Grants-in-aid for airport: $1.1 billion; FAA facilities and
equipment: $200 million.
Agency totals: Office of the Secretary of Transportation (OST):
$1.5 billion; 3.1%;
Programs: Transportation Investment Generating Economic Recovery
(TIGER) grants: $1.5 billion.
Agency totals: Federal Transit Administration (FTA): $8.4 billion;
17.5%;
Programs: Transit capital assistance program (TCAP):[A] $6.9 billion;
Fixed guideway infrastructure: $750 million; Capital investment
grants: $750 million.
Agency totals: Federal Railroad Administration (FRA): $9.3 billion;
19.3%;
Programs: High speed and intercity passenger rail: $8.0 billion;
Amtrak: $1.3 billion.
Agency totals: Federal Highway Administration (FHWA): $27.5 billion;
Programs: Highway infrastructure investment:[B[ $27.5 billion.
Source: GAO analysis of DOT data.
[A] TCAP includes nonurban and urban formula funds, tribal grants,
funds transferred from FHWA, and Transit Investment for Greenhouse Gas
and Energy Reduction grants.
[B] Of the $27.5 billion the Recovery Act made available to FHWA, FHWA
apportioned $26.6 billion to states for highway infrastructure
investment and $105 million for the Puerto Rico highway program. Of
the remaining funds, $550 million was allocated to Federal Lands and
Indian Reservations, $20 million for Highway Surface Transportation
Technical Training, $45 million for the Territorial Highway Program,
and $60 million for the Ferry Boat Discretionary Program, among others.
[End of figure]
DOT administered most Recovery Act funds through existing
transportation programs. For example, highway funds were distributed
under rules governing the Federal-Aid Highway Program generally and
the Surface Transportation Program in particular.[Footnote 12] As a
result, officials at state departments of transportation were familiar
with project eligibility and other federal requirements. Similarly,
transit funds were primarily distributed through established transit
programs, and project sponsors (typically transit agencies) were
familiar with federal grant application processes. FAA distributed
airport funds through the established Airport Improvement Program
structure, and MARAD awarded grants through its existing Assistance to
Small Shipyards Program. DOT established new grant processes to award
high speed intercity passenger rail and TIGER grants. For these
programs, DOT published selection criteria, solicited and reviewed
applications, and awarded grants to applicants that it judged best met
the criteria and complied with legislative and regulatory
requirements.[Footnote 13]
The Recovery Act provided 100 percent federal funding for most
programs, which is a departure from the typical federally funded
transportation programs.[Footnote 14] On the other hand, the Recovery
Act did not alter the 75 percent of project cost the federal
government would typically pay under the Assistance to Small Shipyards
program administered by MARAD.[Footnote 15]
The Recovery Act also included short deadlines for obligating most
transportation funds, and it required preference be given to projects
that could be started and completed expeditiously. Obligating funds in
a timely manner is an important feature of the Recovery Act, as an
economic stimulus package should, as we have previously reported,
include projects that can be undertaken quickly enough to provide a
timely stimulus to the economy.[Footnote 16] For example, Recovery Act
highway and transit funds were to be obligated within 1 year of the
date of apportionment and highway projects which could be completed
within 3 years were to be given priority.[Footnote 17] After the March
2010 1-year obligation deadline for highway funds, states requested
that FHWA deobligate $1.25 million of these funds. We reported that
deobligations from March 2 to June 7, 2010, were requested primarily
because contracts were awarded for less than the original cost
estimates.[Footnote 18] All of these funds were obligated by the
September 2010 deadline. All TIGER funds must be obligated by
September 30, 2011, and all high speed intercity passenger rail funds
must be obligated by September 30, 2012.
The Recovery Act also introduced new requirements for existing
programs to help ensure that funds add to states' and localities'
overall economic activity, and are targeted to areas of greatest need.
For example, the Recovery Act required state governors to certify that
their states would maintain their planned levels of spending for the
types of transportation projects funded by the act, from the date of
enactment--February 17, 2009--through September 30, 2010. The Recovery
Act also required that states give priority to highway projects in
economically distressed areas.[Footnote 19]
State and local agencies, contractors, and others that receive
Recovery Act funds are also required to submit quarterly reports on
the number of jobs created or retained, among other data. These job
calculations are based on the total hours worked divided by the number
of hours in a full-time schedule, expressed in FTEs--but they do not
account for the total employment arising from the expenditure of
Recovery Act transportation funds. That is, the data recipients report
do not include employment at suppliers (indirect jobs) or in the local
community (induced jobs).[Footnote 20] In addition to reporting
quarterly on the numbers of jobs created, states and other recipients
are required to submit periodic reports on the amount of funds
obligated and expended and the number of projects put out to bid,
awarded, or for which work has begun or been completed, among other
things. DOT is required to collect and compile this information for
its reports to Congress that began in May 2009.[Footnote 21] Because
it had not previously collected and reported this type of information,
FHWA established the Recovery Act Data System (RADS) to allow for
better oversight and tracking of Recovery Act transportation projects.
FHWA uses RADS to compile data from states and existing DOT databases
and generates reports to assist states in meeting their Recovery Act
reporting requirements.
Most Recovery Act Transportation Funds Have Been Obligated and
Expenditures for Infrastructure Continue to Increase, but Long-Term
Outcomes Are Largely Unknown:
According to DOT data, as of May 31, 2011, DOT had obligated nearly
$45 billion (about 95 percent) on over 15,000 projects and had
expended more than $28 billion (about 63 percent) of the $48.1 billion
it received under the Recovery Act (see table 1).[Footnote 22] More
than 9,200 of the approximately 15,100 transportation projects have
been completed, including more than 8,100 highway projects and most of
the aviation projects.
Table 1: Status of Recovery Act Transportation Projects, Obligations,
and Expenditures, as of May 31, 2011:
Federal Highway Administration:
Program: Highway infrastructure investment[B];
Number of projects: Awarded: Federal Highway Administration: 12,931;
Number of projects: Completed: Federal Highway Administration: 8,124;
Obligations: Amount: $26.335 billion;
Obligations: Percent obligated[A]: 99.9%[C];
Expenditures: Amount: $19.550 billion;
Expenditures: Percent reimbursed: 74.2%.
Federal Railroad Administration:
Program: High speed intercity passenger rail;
Number of projects: Awarded: Federal Highway Administration: 78;
Number of projects: Completed: Federal Highway Administration: 0;
Obligations: Amount: $5.671 billion;
Obligations: Percent obligated[A]: 71.1%;
Expenditures: Amount: $200 million;
Expenditures: Percent reimbursed: 3.5%.
Program: Amtrak;
Number of projects: Awarded: Federal Highway Administration: 154;
Number of projects: Completed: Federal Highway Administration: 110;
Obligations: Amount: $1.291 billion;
Obligations: Percent obligated[A]: 100.0%;
Expenditures: Amount: $1.291 billion;
Expenditures: Percent reimbursed: 100.0%.
Federal Transit Administration[D]:
Program: Transit capital assistance program (TCAP)[E];
Number of projects: Awarded: Federal Highway Administration: 1,010;
Number of projects: Completed: Federal Highway Administration: 170;
Obligations: Amount: $7.294 billion;
Obligations: Percent obligated[A]: 100.0%;
Expenditures: Amount: $4.567 billion;
Expenditures: Percent reimbursed: 62.6%.
Program: Fixed guideway infrastructure;
Number of projects: Awarded: Federal Highway Administration: 51;
Number of projects: Completed: Federal Highway Administration: 24;
Obligations: Amount: $743 million;
Obligations: Percent obligated[A]: 100.0%;
Expenditures: Amount: $468 million;
Expenditures: Percent reimbursed: 63.0%.
Program: Capital investment grants;
Number of projects: Awarded: Federal Highway Administration: 11;
Number of projects: Completed: Federal Highway Administration: 11;
Obligations: Amount: $743 million;
Obligations: Percent obligated[A]: 100.0%;
Expenditures: Amount: $743 million;
Expenditures: Percent reimbursed: 100.0%.
Office of the Secretary of Transportation:
Program: TIGER grants;
Number of projects: Awarded: Federal Highway Administration: 51;
Number of projects: Completed: Federal Highway Administration: 0;
Obligations: Amount: $1.482 billion;
Obligations: Percent obligated[A]: 98.8%;
Expenditures: Amount: $104 million;
Expenditures: Percent reimbursed: 7.0%.
Federal Aviation Administration:
Program: Grants-in-aid for airports;
Number of projects: Awarded: Federal Highway Administration: 372;
Number of projects: Completed: Federal Highway Administration: 365;
Obligations: Amount: $1.086 billion;
Obligations: Percent obligated[A]: 98.9%[C];
Expenditures: Amount: $1.055 billion;
Expenditures: Percent reimbursed: 97.1%.
Program: FAA facilities and equipment;
Number of projects: Awarded: Federal Highway Administration: 399;
Number of projects: Completed: Federal Highway Administration: 381;
Obligations: Amount: $198 million;
Obligations: Percent obligated[A]: 99.0%;
Expenditures: Amount: $143 million;
Expenditures: Percent reimbursed: 72.2%.
Maritime Administration:
Program: Assistance to small shipyards;
Number of projects: Awarded: Federal Highway Administration: 70;
Number of projects: Completed: Federal Highway Administration: 36;
Obligations: Amount: $98 million;
Obligations: Percent obligated[A]: 100.0%;
Expenditures: Amount: $79 million;
Expenditures: Percent reimbursed: 80.6%.
Programs: Total;
Number of projects: Awarded: Federal Highway Administration: 15,127;
Number of projects: Completed: Federal Highway Administration: 9,221;
Obligations: Amount: $44.941 billion;
Obligations: Percent obligated[A]: 95.0%;
Expenditures: Amount: $28.200 billion;
Expenditures: Percent reimbursed: 62.7%.
Source: GAO analysis of DOT data.
Notes: For information on total federal outlays for all programs
administered by states and localities under the Recovery Act, see
[hyperlink, http://gao.gov/recovery].
[A] The percentage obligated is not based on the total Recovery Act
funds each agency received but on the amount agencies allotted for
distribution to projects. In most cases, this amount was less than the
total amount of Recovery Act funds the agency received because some
funds were set aside for administrative and oversight expenses, as
allowed by the act.
[B] Includes Puerto Rico and Washington, D.C., but not federal lands
projects.
[C] FHWA and FAA initially obligated 100 percent of their Recovery Act
funds for highway infrastructure investments and grants-in-aid for
airports, respectively, but a small percentage of those funds have
been deobligated due to cost underruns as projects have financially
closed out.
[D] Total transit obligations exceed the $8.4 billion apportionment
because of state-requested transfers of highway funds to transit
accounts. States have the option to request that FHWA transfer
Recovery Act highway funds to FTA to address states' public transit
priorities, just as they do under the regular Federal-Aid Highway
Program. Generally, FHWA has the authority pursuant to 23 U.S.C. §
104(k)(1) to transfer funds made available for transit projects to
FTA. FTA data as of March 31, 2011, indicated that states had
requested such transfers, totaling $443 million for 26 projects.
Nearly 45 percent of the transferred funds had been expended.
[E] The Supplemental Appropriations Act of 2009 allowed states to use
up to 10 percent of their Recovery Act transit capital assistance
funds to cover operating expenses in urbanized areas. According to FTA
data, 181 recipients--or approximately 17 percent of Recovery Act
transit recipients from state departments of transportation and
transit agencies used about $193.2 million (about 2.2. percent) of
Recovery Act transit capital assistance funds for operating expenses.
Pub. L. No. 111-32, §1202, 123 Stat. 1859, 1908 (2009).
[End of table]
The rate of expenditure for Recovery Act transportation funds has
varied among programs and states, for several reasons, according to
federal and state officials:
* First, obligation deadlines for newly funded competitive grant
programs such as high speed intercity passenger rail and TIGER are
later, so as of May 31, 2011, a much smaller percentage of those
program funds had been obligated and expended.
* Second, as we have previously reported, the obligation and
subsequent expenditure of highway funds suballocated for metropolitan,
regional, and local use have lagged behind rates for state projects in
some states. FHWA data as of May 31, 2011, indicated that this trend
continued for reimbursements in 24 states, including two of the states
we visited--Virginia and Texas. According to federal and state
transportation officials, federal reimbursement can only occur after
costs are incurred; however, localities varied in their approach to
billing for reimbursement. For example, in California some localities
choose to seek reimbursement for project costs after project
completion in an effort to reduce the administrative costs of frequent
invoicing. In comparison, localities in Indiana and Washington State
bill regularly as expenses are incurred.
* Third, according to FHWA and state officials, northern states
typically tend to have a reduced period of construction activity
during the winter.
* Finally, large or new infrastructure projects may require additional
reviews, such as environmental clearances, prolonging project time
frames.
States and other recipients continue to report using Recovery Act
funds to improve the condition of the nation's transportation
infrastructure, as well as invest in new infrastructure. For example,
according to DOT data, 68 percent of highway funds have been used for
pavement improvement projects, such as resurfacing, reconstruction,
and rehabilitation of existing roadways, and almost 75 percent of
transit funds have been used for upgrading existing facilities and
purchasing or rehabilitating buses (see figure 2). According to FAA
officials, Recovery Act funding was used to rehabilitate and
reconstruct airport runways and taxiways, as well as to upgrade or
purchase air navigation infrastructure such as air traffic control
towers, engine generators, back-up batteries, and circuit breakers.
The Recovery Act grant provided to Amtrak has been used to make
infrastructure improvements and return cars and locomotives to service.
Figure 2: Highway and Transit Obligations, by Project Type:
[Refer to PDF for image: 2 pie-charts]
Highway obligations ($26.2 billion):
Pavement improvement: reconstruction/rehabilitation ($7.1 billion):
27%;
Pavement improvement: resurface ($6.1 billion): 23%;
Pavement widening ($4.7 billion): 18%;
New construction ($1.8 billion): 7%;
Bridge replacement ($1.4 billion): 5%;
Bridge improvement ($1.2 billion): 5%;
New bridge construction ($0.5 billion): 2%;
Other ($3.3 billion): 13%.
Transit obligations ($8.8 billion):
Transit infrastructure ($4.5 billion): 51%;
Vehicle purchase and rehab ($2.0 billion): 23%;
Other capital expenses ($1.0 billion): 11%;
Preventive maintenance ($0.8 billion): 9%;
Rail car purchase and rehab ($0.3 billion): 4%;
Operating assistance ($0.2 billion): 2%.
Source: GAO analysis of DOT data.
Notes: Percentages may not add to 100 because of rounding.
The highway category "other" includes safety projects, such as
improving safety at railroad grade crossings, engineering, right-of-
way purchases, and transportation enhancement projects, such as
pedestrian and bicycle facilities. Highway data are as of June 3, 2011.
Transit obligations include Recovery Act funds that were transferred
from FHWA to FTA. "Transit infrastructure" includes engineering and
design, acquisition, construction, and rehabilitation and renovation
activities. "Other capital expenses" includes leases, training,
finance costs, mobility management project administration, and other
capital programs. Usually, operating assistance is not an eligible
expense for transit agencies within urbanized areas with populations
of 200,000 or more. Most recipients did not use as high a percentage
of funds for operating expenses, in part, because funds had already
been obligated to projects before the Supplemental Appropriations Act
was enacted, according to FTA officials. Transit data are as of May 6,
2011.
[End of figure]
The high speed intercity passenger rail and TIGER programs were newly
funded grant programs, and the Recovery Act allowed additional time
for DOT to develop criteria, publish notices of funding availability,
and award grants. As a result, projects selected for high speed
intercity passenger rail and TIGER were announced about a year after
enactment, and DOT has been making progress obligating Recovery Act
funds for these programs. For example, DOT selected one intercity
passenger rail project to rehabilitate track and provide service from
Portland to Brunswick, Maine, at speeds up to 70 miles per hour.
Another project was selected to initiate the first part of
California's high speed rail system, which envisions service at more
than 200 miles per hour between Los Angeles, San Francisco, and the
Central Valley, and eventually San Diego. DOT TIGER grants funded
projects across different surface transportation modes, including
highways, transit, rail, and ports. For example, the California Green
Trade Corridor/Marine Highway Project is a collaborative effort of
three regional ports in California to develop and use a marine highway
system as an alternative to existing truck and rail infrastructure for
transporting consumer goods and agricultural products.
According to DOT data, a variety of Recovery Act projects have been
completed. For example, FHWA reported that many of the completed
highway projects involve pavement improvement. Completed transit
projects generally included preventive maintenance activities, some
bus purchases, and facility construction, according to FTA. Amtrak had
also completed a variety of projects, including station upgrades,
right-of-way improvements, communications and signaling systems
installations, and aging bridge replacement projects, among other
things. While no high speed intercity passenger rail projects had been
completed as of May 31, 2011, 24 projects were under way, according to
FRA. These projects, which represent more than 70 percent of the
allotted funding, include track and signaling work to improve
reliability and increase operating speeds, improvements to stations,
and the environmental analysis and preliminary engineering required to
advance projects to construction.
States we visited provided numerous examples of infrastructure
improvements and other projects funded by the Recovery Act (see figure
3).
Figure 3: Examples of Recovery Act Transportation Projects:
[Refer to PDF for image: illustrated table with 4 photographs]
Project: Highway infrastructure: Caldecott Tunnel expansion:
Photograph: East entrance excavation of 4th bore;
Location: Oakland, California;
Description: Construction of a 990 meter tunnel (4th bore), which will
include two 12-ft. traffic lanes with a 10-ft. shoulder in addition to
the existing six traffic lanes in bores 1, 2, and 3;
Cost and status:
Recovery Act funds: $176 million (34% expended as of 3/31/11);
Total project cost: $420 million;
Status: Less than 50% complete;
Benefits: The new tunnel will increase capacity and remove bottlenecks.
Project: Transit: Massachusetts Bay Transportation Authority system
upgrades;
Photograph: Silver Line bus stop with new benches, trash barrels, and
heating elements;
Location: Boston, Massachusetts;
Description: Purchase paratransit vans; construct bicycle parking
facilities at transit stations; provide bus stop/service enhancements;
extend Silver Line bus rapid transit service to South Station,
providing direct access to Amtrak, commuter rail, and subway service;
improve ventilation at Back Bay Station and repair fencing along
transit rights of way;
Cost and status:
Recovery Act funds: $26.7 million (51% expended as of 3/31/11);
Total project cost: $26.7 million;
Status: More than 50% complete;
Benefits: The project will enhance services for customers by improving
bus stop amenities; connecting bicycle, bus, and transit modes of
transport; improving safety along transit lines; and providing more
than 100 new paratransit vans.
Project: Grants-in-aid for airports: Paine Field pavement improvements;
Photograph: Northeast view of newly rehabilitated primary runway with
tower in the background;
Location: Everett, Washington;
Description: Rehabilitation of runway 16R/34L and taxiway alpha;
Cost and status:
Recovery Act funds: $11 million (100% expended as of 12/31/10);
Total project cost: $11 million;
Status: Complete;
Benefits: The rehabilitations will allow for safe use of the runway
and taxiway by larger aircraft, such as Boeing‘s new 747-8.
Project: Assistance to small shipyards: Todd Pacific Shipyards[A]
apprenticeship program implementation;
Photograph: Icebreaker ship in dry dock for repairs;
Location: Seattle, Washington;
Description: Implementation of an apprenticeship program for
boilermakers, pipefitters, machinists, electricians, and carpenters;
Cost and status:
Recovery Act funds: $1.9 million (100% expended as of 6/30/10);
Total project cost: $1.9 million;
Status: Complete;
Benefits: The company‘s apprenticeship participation increased from 4
to 54 workers.
Sources: GAO (photographs); Recovery.gov (information); and Caltrans,
Massachusetts Bay Transportation Authority, Paine Field,and Todd
Pacific officials (information).
[A] Since our visit, Todd Pacific Shipyards Corporation has been
renamed Vigor Shipyards, Inc.
[End of figure]
The Recovery Act Helped Fund Transportation Jobs, but Long-Term
Benefits Are Unclear:
Recovery Act funds helped pay for jobs across various transportation
modes. At a time when the construction industry was experiencing
historically high unemployment and many states could not afford to
maintain existing infrastructure, transportation officials we met with
told us that the Recovery Act helped to keep the transportation
industry in operation while allowing states to tackle some of their
infrastructure maintenance priorities. According to data filed by
recipients,[Footnote 23] Recovery Act transportation projects
supported between 31,460 and 65,110 FTEs each reporting quarter from
October 1, 2009, through March 31, 2011. Recipient-reported FTEs,
however, cover only direct jobs funded by the Recovery Act. They do
not include the employment impact of suppliers (indirect jobs) or on
the local community (induced jobs).[Footnote 24] According to DOT
officials, the full impact on indirect and induced employment is
likely to be significant because of supply chain employment effects.
In addition, a certain amount of a project's cost is typically for
materials and equipment, and the remainder pays for labor, reported as
FTEs.[Footnote 25]
The number of transportation FTEs reported has declined over the past
two reporting quarters as construction work on projects has been
completed. On average, highway projects accounted for approximately 63
percent of the transportation FTEs reported from October 1, 2009,
through March 31, 2011. Transit and "other" transportation projects
[Footnote 26] accounted for the remaining approximately 37 percent of
transportation FTEs. However, the relatively low portion of FTEs
reported for transportation projects other than highways and transit
may increase in future quarters as more high speed intercity passenger
rail and TIGER projects get under way. Transportation recipients
reported the highest total FTE count during the quarter ending
September 2010, owing to the large number of projects under way at
that time (see figure 4). During the most recent reporting quarter,
which ended March 31, 2011, the number of transportation FTEs reported
reached its lowest point since recipient reporting began--at about
31,460.
Figure 4: FTEs Reported for Highway, Transit, and All Other
Transportation Projects for Quarters Ending December 2009 through
March 2011:
[Refer to PDF for image: stacked vertical bar graph]
Reporting quarter and date: December 2009;
Highways: 25,850;
Transit: 9,910;
Other: 3,720.
Reporting quarter and date: March 2010;
Highways: 16,600;
Transit: 12,940;
Other: 3,290.
Reporting quarter and date: June 2010;
Highways: 41,260;
Transit: 14,130;
Other: 4,890.
Reporting quarter and date: September 2010;
Highways: 46,360;
Transit: 12,390;
Other: 6,350.
Reporting quarter and date: December 2010;
Highways: 31,570;
Transit: 11,650;
Other: 4,980.
Reporting quarter and date: March 2011;
Highways: 18,170;
Transit: 9,480;
Other: 3,810.
Source: GAO analysis of recipient reported data from Recovery.gov.
Note: "Highways" includes FHWA projects funded for highway planning
and construction. "Transit" includes FTA projects funded with capital
investment grants, metropolitan transportation planning grants,
formula grants (including grants for other than urbanized areas), and
the capital assistance program for reducing energy consumption and
greenhouse gas emissions. "Other" includes projects funded by FAA's
grants-in-aid to airports; FRA's Amtrak grant and the high speed
intercity passenger rail program; MARAD's Assistance to Small
Shipyards Program; and the Office of the Secretary of Transportation's
disadvantaged business bonding assistance program and TIGER grants. We
did not include data from the first reporting quarter in 2009 due to
concerns about comparability.
[End of figure]
In addition to the number of jobs funded by Recovery Act
transportation funds, federal, state, and local officials describe the
following other benefits:
* Better coordination and streamlined processes: DOT officials told us
that the Recovery Act encouraged more efficient ways of working
together at the federal, state, and local levels to select projects.
According to DOT officials, the TIGER competitive grant program
brought together various modal operating administrations to evaluate
grant applications and consider multimodal projects. Generally, state
officials told us that their working relationships with FHWA division
offices and localities have improved while implementing Recovery Act
programs, as has states' and localities' understanding of federal
requirements. Some states improved their internal operational
efficiency, including shortening their project review and approval
processes. For example, the Massachusetts Department of Transportation
(MassDOT) streamlined its 26-step bid process from 120 days to 44 days
by coordinating the review process through regular meetings of key
stakeholders.
* Innovative communication practices: DOT also implemented new ways to
train and communicate with recipients. For instance, FHWA and FTA have
used webinars to distribute guidance and host question-and-answer
sessions to clarify program requirements. Officials said that the
systems they developed to communicate with states have been used to
disseminate guidance to states for non-Recovery Act programs and will
continue to be used in the future.
* Accelerated projects that might have otherwise gone unfunded:
Transportation officials in several states we visited told us that
Recovery Act funds helped reduce backlogs of "shovel-ready" projects.
For example, California funded its entire list of shovel-ready
projects and began work on new construction projects. Other states
reported being able to complete projects that had been planned but
lacked sufficient funding. Specifically, Virginia started construction
of an interchange on the Fairfax County parkway at Fair Lakes--a
project that has been planned since the 1980s when the parkway was
first built; Massachusetts started construction of a bike and
pedestrian footbridge that had been promised as part of the Big Dig
project of the 1990s; and Washington State accelerated work to provide
congestion relief on I-405 and extend a high-occupancy-vehicle lane on
I-5 near Tacoma.
However, the long-term impacts of Recovery Act investments in
transportation are unknown at this point. Some states have efforts
under way to report on Recovery Act benefits. For example, in 2011,
state transportation officials in Washington produced a report that
documented the agency's progress delivering Recovery Act projects
since 2009; the Texas Department of Transportation commissioned a
study by the University of Texas to assess the Recovery Act impacts;
and MassDOT officials established an Office of Performance Management
and Innovation to determine program goals; measure program performance
against those goals; and report publicly on progress to improve the
effectiveness of transportation design and construction, service
delivery and policy decision making. However, federal and state
officials told us that attributing transportation benefits to Recovery
Act funds can be difficult, particularly when projects are funded from
multiple sources and historic performance data are not available for
particular projects.
We recommended that DOT ensure that the results of Recovery Act
projects are assessed and a determination is made about whether these
projects produced long-term benefits, but DOT has not committed to
assessing the long-term benefits of Recovery Act investments in
transportation.[Footnote 27] Specifically, in the near term, we
recommended that FHWA and FTA determine the types of data and
performance measures needed to assess the impact of the Recovery Act
and the specific authority they may need to collect data and report on
these measures. DOT officials told us that they expect to be able to
report on Recovery Act outputs, such as miles of roads paved, bridges
built or repaired, and transit vehicles purchased, which will help
assess the act's impact.[Footnote 28] However, they said that
limitations in DOT's data systems, the costs associated with
conducting such an analysis, and the fact that Recovery Act funds
represented only about 1 year of additional funding for some
transportation programs would make assessing the benefits of Recovery
Act projects difficult. We continue to believe, however, that it is
important for organizations to measure performance to understand the
progress they are making toward their goals and to demonstrate
results, particularly when the funding totals above $48 billion and
most funds were to be spent relatively quickly.
For the Recovery Act high speed intercity passenger rail and TIGER
grant programs, DOT has set broad performance goals and required
recipients to identify potential project benefits. Specifically, FRA
has outlined goals for developing high speed intercity passenger rail
service in its strategic plan and national rail plan and evaluated
grant proposals based on the potential project benefits they listed in
their applications.[Footnote 29] However, the identified goals are
broad--such as improving transportation safety and economic
competitiveness--and do not contain specific targets necessary to
determine how or when FRA will realize intended benefits. DOT also
incorporated performance measures tailored to each TIGER grant awardee
based on the project design and the capacity of the recipient to
collect and evaluate data. DOT is evaluating the best methods for
measuring objectives and collecting data and is working
collaboratively with applicants to weigh options for measuring
performance. As many TIGER projects are just being initiated, the
effectiveness of these measures will not be clear for several years.
Federal, State, and Local Auditors Continue to Review Use of Recovery
Act Funds and No Major Issues Have Been Reported:
Federal, state, and local oversight entities have continued their
efforts to ensure appropriate use of Recovery Act transportation
funds, and recently published reviews have not revealed major
concerns. Since September 2010, the DOT Office of Inspector General
(OIG) has issued three reports on Recovery Act aviation, highway, and
rail programs.[Footnote 30] These reports generally found that DOT had
complied with Recovery Act requirements, and they identified several
areas for improvement (see table 2 for selected OIG recommendations
and DOT's response). The OIG has ongoing Recovery Act oversight work
covering multiple transportation programs, including, for example,
audits of the high speed intercity passenger rail and TIGER programs,
as well as audits of transit and highway programs.[Footnote 31]
Moreover, the OIG continues to investigate criminal and civil
complaints related to Recovery Act transportation funds. As of March
31, 2011, the OIG had 51 open Recovery Act investigations, including
19 cases of false statements, claims, or certifications; 17 cases of
disadvantaged business enterprise fraud; and 1 case of corruption,
among other allegations. According to the Chairman of the Recovery
Accountability and Transparency Board, there has been an extremely low
level of fraud involving Recovery Act funds. For instance, in June
2011, he noted that less than half a percent of all reported Recovery
Act contracts, grants, and loans currently have open investigations,
and to date there have been 144 convictions involving a little over
$1.9 million of total Recovery Act funds for all programs, including
those in the transportation sector.[Footnote 32]
Table 2: Selected Recommendations and Agency Actions from Recent DOT
Office of Inspector General Reports, as of May 31, 2011:
Operating administration: FAA;
Program: Grants-in-aid to airports;
Selected OIG recommendation: Increase transparency by posting on its
Recovery Act Web site specific justifications for why lower-scoring
projects were selected. Comply with Office of Management and Budget
(OMB) guidance by ensuring each Airport District Office applies
sufficient oversight to high-risk grant recipients;
Agency response to recommendations: To increase transparency, the FAA
will post on its Web site additional information about project
selection. FAA stated that it is already in compliance with this
recommendation and will continue to provide enhanced oversight to
Recovery Act projects.
Operating administration: FHWA;
Program: Highway infrastructure investments;
Selected OIG recommendation: Improve national-level data analysis by
using additional methods, such as content analysis, to help identify
national trends and new risks;
Agency response to recommendations: FHWA concurred and has been
conducting tracking and analysis of National Review Team information.
Operating administration: FRA;
Program: Capital grants to Amtrak;
Selected OIG recommendation: Amend the 2009 Recovery Act grant
agreement to make the requirements for waiving the project completion
deadlines less stringent;
Agency response to recommendations: FRA concurred and amended Amtrak's
grant agreement to ensure that Recovery Act funds are well spent, and
not just expended to meet the February 17, 2011, deadline.
Source: GAO analysis of DOT Office of Inspector General reports.
[End of table]
Reviews conducted by auditors in the states that we visited have, in
most cases, reported few significant problems with the use of Recovery
Act transportation funds. State auditors in Massachusetts, for
example, found no material weaknesses at MassDOT in its 2010 Single
Audit. However, in our review of Single Audit reports for selected
states, we found that state auditors identified some inconsistencies
with state oversight of subrecipients and some challenges ensuring
that award documentation met federal requirements (see table 3).
[Footnote 33]
Table 3: Selected Single Audit Findings, Recommendations, and Agency
Actions:
State: California;
Finding: California Department of Transportation (Caltrans) did not
ensure that subrecipients submitted required audit reports and lacked
procedures to impose sanctions;
Recommendation and agency response: Caltrans should continue to
implement policies and procedures to ensure that subrecipients
promptly submit required audit reports and impose sanctions on those
that do not. Caltrans concurred and had drafted new policies and
procedures to ensure that such oversight takes place.
State: Indiana;
Finding: The audit found that the Indiana Department of Transportation
reported in error, on two occasions, amounts of funds passed down to
subrecipients for the Schedule of Federal Financial Assistance, but
the errors had no effect on the department's Recovery Act funds for
the 2009 fiscal year;
Recommendation and agency response: The Indiana Department of
Transportation should follow internal written procedures in preparing
the Schedule of Federal Financial Assistance to help ensure accurate,
current, and complete disclosure of financial results. The Indiana
Department of Transportation did not agree with the finding because it
noted that there was ambiguity surrounding the definition for
subrecipients. However, the department did submit a plan to address
the finding and prevent future reporting discrepancies.
State: Texas;
Finding: Texas Department of Transportation did not consistently
comply with Recovery Act requirements with respect to subrecipients;
Recommendation and agency response: The Texas Department of
Transportation should ensure existing award documentation and award
documentation templates with subrecipients include all required award
notification and information according to federal requirements. The
Texas Department of Transportation stated that current templates
contain applicable compliance requirements and additional steps will
be implemented to ensure that the most current version of each
template is always used.
State: Washington;
Finding: Washington Department of Transportation does not have
adequate controls to ensure that information the Recovery Act required
to be reported for its highway program is accurate;
Recommendation and agency response: The State Auditor recommended that
the Washington Department of Transportation should establish periodic
independent monitoring to ensure that the Recovery Act information is
being reported accurately. The Washington Department of Transportation
did not agree with the audit finding. The State Auditor will review
the status during the next audit.
Source: GAO analysis of selected 2010 Single Audit reports.
[End of table]
We also reviewed performance audit reports of Recovery Act
transportation programs in the states that we visited, and these
reviews, generally, focused on compliance with Recovery Act program
requirements. For example:
* The Massachusetts Office of the State Auditor published several
reports that examined local transit agency controls over receipts and
expenditures of Recovery Act funds and subrecipient monitoring to
ensure compliance with reporting requirements.[Footnote 34] Based on
these reviews, the State Auditor found that each transit authority was
generally in compliance with applicable laws, rules, and regulations
for the areas tested.
* The California State Auditor's evaluation of the state's recipient
reports on jobs created and retained found that the California
Department of Transportation (Caltrans) did not ensure that complete
jobs data were reported for the quarter ending June 30, 2010, and did
not monitor its subrecipients to ensure that they reported the
required data.[Footnote 35] Caltrans officials told us that it is a
challenge to ensure that all local agencies report FTE data because of
turnover at the local level and the challenges associated with
training local staff on the reporting requirements.
Finally, local auditors in states we visited that reviewed compliance
with Recovery Act requirements did not find problems with city use of
Recovery Act transportation funds. These reviews generally found that
cities had taken various oversight actions to monitor the use of
Recovery Act funds. For example, the city auditor of Dallas, Texas,
reported in February 2011, that the city had taken action to implement
internal control processes aimed at ensuring accountability and
transparency of Recovery Act funds. Further, the Dallas city auditor
found that although the recipients and uses of funds were reported
clearly and in a timely manner, other federal requirements proved
challenging for the city and reports were not always submitted
accurately.[Footnote 36] The city auditor of Arlington, Texas, also
found that the city had generally complied with Recovery Act quarterly
reporting and accountability provisions and the city had accurately
calculated jobs created.[Footnote 37] In Virginia, the city auditor of
Virginia Beach examined the city's Recovery Act expenditures for
supporting documentation and concluded that the sampled expenditures
were properly supported, reasonable, and applicable to the purpose of
the grants.[Footnote 38] Another performance audit published in
September 2010 by the Los Angeles Office of the Controller found that
the Los Angeles Department of Transportation made a good faith effort
in establishing processes to help ensure it meets Recovery Act
requirements, but noted areas that could be improved, such as
streamlining contracting processes to ensure that projects are started
as quickly as possible and improving processes for reporting and
billing to Caltrans.[Footnote 39]
Analysis of Seventh Round Recipient Reporting Data Shows Data Quality
Remains Relatively Stable:
To meet our mandate to comment on recipient reports, we continued to
monitor recipient-reported data. For this report, we focused our
review on the quality of data reported by transportation grant
recipients and efforts made by FHWA to validate that data. Using
transportation recipient data from the seventh reporting period, which
ended March 31, 2011, we continued to check for errors or potential
problems by repeating analyses and edit checks reported in previous
reports. We reviewed data associated with 12,443 transportation
recipient reports posted on Recovery.gov for the seventh reporting
quarter.[Footnote 40]
We found few inconsistencies, and we are generally satisfied with the
stability of the data quality. Additionally, our analysis of the data
showed that there was a decrease of 759 recipient reports, or about a
5.7 percent drop from the previous quarter. Likewise, as described
earlier, the total number of FTEs reported has also decreased over the
past two reporting quarters. In the most recent quarter which ended
March 31, 2011, for example, the percentage of prime recipients of
highway funds reporting any FTEs dropped from approximately 51 percent
to approximately 39 percent. DOT officials said that the decreases in
the number of recipients reporting any FTEs is likely due to several
factors, including projects being completed or functionally complete
and awaiting financial closeout. DOT officials noted that decreases in
FTEs could also be due to such factors as a winter shutdown of
projects in colder climates. We also observed a variety of patterns in
the quarterly reporting of FTEs, including consecutive quarters of no
FTE reporting. For example, for the 2010 calendar year, approximately
13.5 percent of the highway recipients and approximately 16.7 percent
of the transit recipients that filed reports each quarter did not
report any FTEs during the year. According to DOT officials, several
additional factors that could extend reporting during periods of low
job activity include projects awaiting final invoice from contractors,
projects delayed in litigation, or recipients' withholding of final
payments to cover periods of maintenance guarantees. They also noted
that projects need to be considered on an individual basis and that
recipients may use Recovery Act funds to purchase materials and use
other funding sources to pay for labor.
DOT Continues to Perform Automated Checks to Help Improve Data but Is
Not Planning to Use Recipient-Reported Data Internally:
Each quarter, FHWA performs quality assurance steps on the data that
recipients provide to FederalReporting.gov and officials reported that
the data quality continues to improve. Based on these reviews and
their interactions with recipients, FHWA officials reported that
recipients now understand the reporting process and each reporting
period has gone better than the previous one. One measure of
recipients' understanding of the reporting process is in the number of
noncompliant recipients.[Footnote 41] According to information
available on Recovery.gov, the number of DOT-related noncompliant
recipients decreased from 37 in the quarter ending September 30, 2010,
to 13 in the quarter ending December 31, 2010, but it increased in the
most recent quarter to 19 noncompliant recipients.[Footnote 42] FHWA
officials told us that they routinely check for noncompliance, notify
noncompliant recipients of the projects that have not been reported,
and follow up with noncompliant recipients to obtain corrective action
plans and ensure that errors are corrected and subsequent reports are
filed on time.
As in previous quarters, FHWA performed a number of automated checks
to help ensure quality of highway and rail recipients' Recovery Act
data. To support recipients' data quality, FHWA asks recipients of
highway and rail Recovery Act funds to report each month into FHWA's
RADS system. FHWA officials conduct two data verification steps in
RADS to assess the quality of data submitted by recipients, including
automated data verification and validation reports.
* The automated data verification tests occur when state departments
of transportation upload monthly data into RADS. If a record does not
satisfy one of FHWA's data verification rules, the state department of
transportation is provided with a brief message listing the record and
what data check failed. Data cannot be uploaded into RADS until the
state department of transportation corrects the error. Examples of
data verification rules include rules such as the federal project
numbers must be entered without dashes or parentheses, and total cost
estimates cannot be less than total Recovery Act estimates for the
particular project.
* The data validation report highlights projects or awards that fail
certain verification rules, such as whether the federal project number
is in FHWA's Financial Management Information System, but not in RADS.
FHWA also applies data checks based on assumptions about expenditures
reported and FTEs reported.
FHWA officials reported they also check data quality for nearly 70
data fields each quarter by comparing the data in each recipient
report against the corresponding RADS data. According to FHWA
guidance, data that do not correspond to the recipient report are
flagged for comment and review. Specifically, RADS runs automated
quality checks to ensure that data provided by states into RADS match
what the states are providing to FederalReporting.gov.[Footnote 43] If
inconsistencies are found, FHWA representatives work with state
transportation officials to resolve discrepancies by requiring states
to amend or justify state-reported data. Some state transportation
officials told us that the number of errors detected in their reports
decreased as the reporting system was refined and guidance issued.
Finally, according to DOT officials, recipient-reported FTE data
provide increased transparency on the use of transportation program
funds, but DOT does not plan to use recipient-reported data internally
for a variety of reasons. For example, recipient-reported data are
only valid on a quarterly basis and cannot be used for monthly or
cumulative analysis. In addition, agency officials told us that they
prefer to use RADS data for most internal analysis because the RADS
data are reported monthly and are more detailed than the recipient-
reported data.
Recovery Act Requirements Proved Challenging for DOT and Some States,
Leading to Several Lessons Learned:
Federal, state, and local transportation officials we contacted
reported that while Recovery Act transportation funds provided many
positive outcomes, they also provided lessons learned that may be
relevant as Congress considers the next surface transportation
reauthorization.
Maintenance-of-Effort and Economically Distressed Area Requirements
Proved Challenging:
Certain Recovery Act provisions not typically required under existing
DOT programs proved challenging for some states to meet. Our ongoing
and past work indicates that it may have been difficult for states to
meet these requirements for a number of reasons, including rapidly
changing state economic conditions and confusion about how to
interpret and apply the new requirements.
* Maintenance of effort. We have reported that there were numerous
challenges for DOT and states in implementing the transportation
maintenance-of-effort provision in the Recovery Act. This provision
required the governor of each state to certify that the state would
maintain its planned level of transportation spending from February
17, 2009, through September 30, 2010, to help ensure that federal
funds would be used in addition to, rather than in place of, state
funds and, thus, increase overall spending. A January 2011 preliminary
DOT report indicated that 29 states met their planned levels of
expenditure, and 21 states did not. States had a monetary incentive to
meet their certified planned level of spending in each transportation
program area funded by the Recovery Act because those that fail would
not be eligible to participate in the August 2011 redistribution of
obligation authority under the Federal-Aid Highway Program.[Footnote
44] States had until April 15, 2011, to verify their actual
expenditures for transportation programs covered by the Recovery Act.
DOT is reviewing this information to determine if any more states met
their planned levels of spending.
The DOT preliminary report summarized reasons states did not meet
their certified planned spending levels, such as experiencing a
reduction in dedicated revenues for transportation due to a decline in
state revenues or a lower-than-expected level of approved
transportation funding in the state budget.[Footnote 45] The
preliminary report also identified a number of challenges DOT
encountered in implementing the provision, such as insufficient
statutory definitions of such terms as what constitutes "state
funding" or how well DOT guidance on calculating planned expenditures
would work in the many different contexts in which it would have to
operate. As a result, many problems came to light only after DOT had
issued initial guidance and states had submitted their first
certifications. DOT issued guidance seven times during the first year
after the act was signed to clarify how states were to calculate their
planned or actual expenditures for their maintenance-of-effort
certifications. The last guidance--issued February 9, 2010--
communicated DOT's decision that the maintenance-of-effort requirement
would be applied to each of the program areas funded by the Recovery
Act, rather than cumulatively for all the programs. The implication of
this decision is that fewer states met the requirement.
DOT invested a significant amount of time and work to ensure
consistency across states on how compliance with the maintenance-of-
effort provision would be certified and reported. As a result, DOT is
well-positioned to understand lessons learned--what worked, what did
not, and what could be improved in the future. DOT and state officials
told us that while the maintenance-of-effort requirement can be useful
for ensuring continued investment in transportation, more flexibility
to allow for differences in states and programs, and to allow
adjustments for unexpected changes to states' economic conditions,
should be considered for future provisions. For example, for the
education maintenance-of-effort requirement, the Recovery Act allows
the Secretary of Education to waive state maintenance-of-effort
requirements under certain circumstances and allows states to choose
the basis they use to measure maintenance of effort.[Footnote 46] The
maintenance-of-effort requirement for transportation programs proved
difficult for states to apply across various transportation programs
because of varying and complex revenue sources to fund the programs.
Many states did not have an existing means to identify planned
transportation expenditures for a specific period, and their financial
and accounting systems did not capture that data. Therefore, according
to DOT and some state officials, a more narrowly focused requirement
applying only to programs administered by state DOTs or to programs
that typically receive state funding could help address the
maintenance-of-effort challenges.
* Consideration of economically distressed areas. Our previous reports
have identified challenges DOT faced in implementing the Recovery Act
requirement that states give priority to highway projects located in
economically distressed areas. For example, while an economically
distressed area is statutorily defined, we found that there was
substantial variation in how some states identified economically
distressed areas and the extent to which some states prioritized
projects in those areas. We reported instances of states developing
their own eligibility requirements for economically distressed areas
using data or criteria not specified in the Public Works and Economic
Development Act.[Footnote 47] Three states--Arizona, California, and
Illinois--developed their own eligibility requirements or interpreted
the special-needs criterion in a way that overstated the number of
eligible counties, and thus the amount of funds, directed to
economically distressed areas.[Footnote 48] Officials in these three
states told us that they did so to respond to rapidly changing
economic conditions. In May 2010, we recommended that DOT advise
states to correct their reporting on economically distressed area
designations, and in July 2010 FHWA instructed its division offices to
advise states with identified errors to revise their economically
distressed area designations. In September 2010, we recommended that
DOT make these data publicly available to ensure that Congress and the
public have accurate information on the extent to which Recovery Act
funds were directed to areas most severely affected by the recession
and the extent to which states prioritized these areas in selecting
projects for funding. In March 2011, DOT posted an accounting of the
extent to which states directed Recovery Act transportation funds to
projects located in economically distressed areas on its Web site, and
we are in the process of assessing these data.
According to officials in most states we visited, state transportation
departments considered the requirement to prioritize projects in
economically distressed areas in addition to other immediate and long-
term transportation goals, as the Recovery Act required. For example,
officials in Washington State said that they considered federally
recognized economically distressed areas as one of several criteria
when selecting projects. Other criteria included state economic data
and projects that would be ready to proceed in a short amount of time.
However, state officials were also uncertain what the economically
distressed area requirement was intended to accomplish, such as
whether it was intended to provide jobs to people living in those
areas or to deliver new infrastructure to those areas. The
economically distressed area provision proved difficult to implement
because of changing economic conditions and the difficulty of
targeting assistance to economically distressed areas, and it is
unclear that it achieved its intended goal.
Obligation Deadlines Ensured That Projects Were Identified Quickly,
but Likely Influenced the Types of Projects Selected in Some States:
We found that the Recovery Act requirement to obligate funds quickly
likely influenced the types of projects selected for funding in some
states. State and local officials we interviewed noted that the
primary factor considered in project selection was to meet Recovery
Act deadlines for obligating funds, which likely limited the types of
projects that were selected for funding.[Footnote 49] Federal and
state officials also noted the tension between the purposes of the
Recovery Act, which included preserving and creating jobs and
promoting economic recovery, and investing in infrastructure to
provide long-term economic benefits, among other Recovery Act goals.
For example, the Recovery Act provided a relatively quick infusion of
federal funding for highway and transit programs, but as we noted
earlier, the majority of projects selected for highway and transit
funding were pavement rehabilitation and bus purchases. State and
local officials told us that to meet the act's obligation deadlines
they prioritized projects that had already progressed significantly
through the project development and design process and could move to
construction. In some cases, state officials told us that this
prohibited other, potentially-higher priority projects from being
selected for funding. As a result, many Recovery Act highway projects
selected for funding did not require extensive environmental
clearances, were quick to design, and were quickly obligated, bid, and
completed. Several states told us that their mix of highway projects
would likely have been different had the obligation deadlines been
longer. For example, officials in California told us that had the
Recovery Act timelines been longer they would have likely pursued more
large-scale projects. According to Texas transportation officials,
projects that had already progressed significantly through the project
development process were preferred. However, transportation officials
in Virginia and Washington State said that the Recovery Act funding
allowed their states to select projects that would meet the obligation
time frames while also addressing state priorities, such as investing
in infrastructure with potential long-term economic impacts and
addressing preservation and safety needs.
Better Documentation Could Reduce Challenges to the Integrity of
Selection Decisions for High Speed Intercity Passenger Rail and TIGER
Grant Programs:
We have reported that allocating federal funding for surface
transportation based on performance in general, and directing some
portion of federal funds on a competitive basis to projects of
national or regional significance in particular, can more effectively
address certain challenges facing the nation's surface transportation
programs. In our recent reports on the high speed intercity passenger
rail and TIGER programs, we found that while DOT generally followed
recommended grantmaking practices, DOT could have documented more
information about its award decisions.[Footnote 50] Both the high
speed intercity passenger rail and TIGER programs represent important
steps toward investing in projects of regional and national
significance through a merit-based, competitive process. We noted a
natural tension between providing funds based on merit and performance
and providing funds on a formula basis to achieve equity among the
states. A formula approach can potentially result in projects of
national or regional significance that cross state lines and involve
more than one transportation mode not competing well at the state
level for funds. Given that the Recovery Act was intended to create
and preserve jobs and promote economic recovery nationwide, Congress
believed it important that TIGER grant funding be geographically
dispersed. As we noted in our recent report discussing the TIGER grant
program, when Congress considers future DOT discretionary grant
programs, it may wish to consider balancing the goals of merit-based
project selection with geographic distribution of funds and limit, as
appropriate, the influence of geographic considerations.
Agency Comments:
We provided a draft of this report to DOT for review and comment. DOT
generally agreed with our findings and provided technical comments,
which we incorporated as appropriate.
We are sending copies of this report to congressional committees with
responsibilities for transportation issues, the Secretary of
Transportation, and the Director of the Office of Management and
Budget. The report will also be available at no charge on the GAO Web
site at [hyperlink, http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-2834 or herrp@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions
to this report are listed in appendix III.
Signed by:
Phillip R. Herr:
Director, Physical Infrastructure:
Congressional Committees:
The Honorable Daniel K. Inouye:
Chairman:
The Honorable Thad Cochran:
Vice Chairman:
Committee on Appropriations:
United States Senate:
The Honorable Harold Rogers:
Chairman:
The Honorable Norman D. Dicks:
Ranking Member:
Committee on Appropriations:
House of Representatives:
The Honorable Joseph I. Lieberman:
Chairman:
The Honorable Susan M. Collins:
Ranking Member:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
The Honorable Darrell E. Issa:
Chairman:
The Honorable Elijah Cummings:
Ranking Member:
Committee on Oversight and Government Reform:
House of Representatives:
The Honorable Barbara Boxer:
Chairwoman:
The Honorable James M. Inhofe:
Ranking Member:
Committee on Environment and Public Works:
United States Senate:
The Honorable John L. Mica:
Chairman:
The Honorable Nick J. Rahall:
Ranking Member:
Committee on Transportation and Infrastructure:
House of Representatives:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
The objectives of this report were to determine the (1) status, use,
and outcomes of the American Recovery and Reinvestment Act of 2009
(Recovery Act)[Footnote 51] transportation funding nationwide and in
selected states; (2) actions taken by federal, state, and local
agencies to monitor and ensure accountability of Recovery Act
transportation funds; (3) changes in the quality of jobs data reported
by Recovery Act recipients of transportation funds over time; and (4)
challenges faced and lessons learned from the Department of
Transportation (DOT) and recipients.
To address these objectives, we obtained and analyzed data provided to
us from the Federal Aviation Administration (FAA), Federal Highway
Administration (FHWA), Federal Transit Administration (FTA), and
Maritime Administration (MARAD), as well as data we obtained from the
operating administrations' Recovery Act Web sites. For the highway and
transit programs, these data included the amount of funds obligated
and the amount reimbursed by FHWA and FTA through May 31, 2011. These
data also included funds awarded by project type, outlays for all
regular Federal-Aid Highway Program funds through September 2010, and
maintenance-of-effort certification data. For the aviation programs,
FAA provided a listing of airport improvement and facilities and
equipment grants, including award data, project amount, project
description, and project completion dates. For the small shipyard
grants, MARAD provided us with data for each grant, including award
amount, project description, amount obligated, and outlays to date. We
assessed the reliability of the program data we used by reviewing DOT
documentation and Inspector General reports on DOT's financial
management system and interviewing knowledgeable DOT officials about
the quality of the data and controls in place to ensure data accuracy.
We determined the data were sufficiently reliable for our purposes.
In addition, to familiarize ourselves with all the transportation
programs and track their ongoing status, we reviewed program
documentation, both publicly available online and internal documents
provided by the agencies; reviewed prior GAO reports on the Recovery
Act transportation programs; and reviewed reports published by the DOT
Office of Inspector General (OIG). We also interviewed DOT officials
from FAA, FHWA, FTA, MARAD, and the Office of the Secretary who were
involved in managing Recovery Act programs. During these interviews,
we discussed the status of expenditures, challenges facing states or
recipients in spending the funds, and the expected impacts from the
funds. We also met with representatives from the American Association
of State Highway and Transportation Officials.
We conducted site visits to six states: California, Indiana,
Massachusetts, Texas, Virginia and Washington. In each of the states,
we met with representatives of the FHWA division office, state
department of transportation, and a local metropolitan planning
organization. We also visited Recovery Act transportation projects in
each state, except Virginia. In several of these states, we met with
officials representing Governors' offices overseeing Recovery Act-
funded programs. Our criteria for selecting these states included
total FHWA funding available, number of projects selected and average
obligation per project. Our selected states represent about 25
percent, or $6.9 billion of the $27.5 billion, available to states for
Recovery Act highway investments, and we selected states with a range
of allotted funding, including four that were above the national
average and two that were below it. We also considered the Recovery
Act highway project status and selected states with a range of
underway and completed projects. In selecting our state sample, we
also considered geographic dispersion and a mix of more and less
populous states, as well as obtaining a mixture of states GAO had
previously tracked as part of our prior Recovery Act oversight
(California, Massachusetts, and Texas) and states that we had not
visited previously to discuss Recovery Act transportation issues
(Indiana, Virginia, Washington). This selection of states enabled us
to maintain continuity on issues that GAO had previously reported on,
such as economically distressed areas, and to speak with
transportation officials who were able to provide fresh perspectives
on the lessons learned from the Recovery Act transportation experience
in their state.
To determine the actions, if any, federal, state, and local oversight
entities were taking to monitor and ensure accountability of Recovery
Act transportation funds, we reviewed OIG reports on various Recovery
Act transportation topics and interviewed OIG staff to learn more
about their findings and coordinate our audit work. In each of the six
states we visited, we contacted state auditors to learn about any
efforts at the state level to monitor Recovery Act transportation
funding. In those states where the state auditor had conducted
performance audits on Recovery Act transportation programs, we
interviewed state audit representatives to better understand their
ongoing oversight work, challenges faced by recipients in using funds
and transportation-related audit findings, and any lessons learned. We
also reviewed Single Audit reports for fiscal year 2010 in each of our
six sample states. At the local level, we reviewed reports prepared by
local government auditors for the six states we visited. We obtained
these reports from the Association of Local Government Auditors' Web
site.
The recipient reporting section of this report responds to the
Recovery Act's mandate that we comment on the estimates of jobs
created or retained by direct recipients of Recovery Act funds. For
our review of the seventh submission of recipient reports, covering
the period January 1 to March 31, 2011, we continued our monitoring of
errors or potential problems by repeating many of the analyses and
edit checks reported in our six prior reviews covering the period
February 2009 through December 31, 2010.[Footnote 52] To examine how
the quality of jobs data reported by recipients of Recovery Act
transportation funds has changed over time, we compared the seven
quarters of recipient reporting data that were publicly available at
Recovery.gov on April 30, 2011.[Footnote 53] We performed edit checks
and other analyses on the transportation recipient-reported data which
included matching DOT-provided funding data from the Financial
Management Information System with recipient-reported funding data and
reviewing FTE reporting patterns. Our match showed a high degree of
agreement between DOT recipient funding information and the
information reported by recipients directly to FederalReporting.gov.
We also examined the reliability of recipient-reported data, and we
reviewed FHWA's efforts to ensure reliability of the recipient-
reported data by comparing it with data contained in DOT's Recovery
Act Data System (RADS). Our assessment activities included reviewing
documentation of system processes, conducting logic tests for key
variables, and assessing data for out-of-range values. We reviewed
agency documentation for the RADS and FHWA's guidance for validating
recipient-reported data in that system. We also reviewed a February
2010 OIG report assessing the Recovery Act recipient data oversight at
DOT and other agencies.[Footnote 54] In general, we consider the data
used to be sufficiently reliable for purposes of this report. The
results of our FTE analyses are limited to the transportation programs
and time periods reviewed and are not generalizable to FTE reporting
for any other program.
To update the status of open recommendations from previous bimonthly
and recipient report reviews, we obtained information from agency
officials on actions taken in response to recommendations.
We conducted this performance audit from September 2010 to June 2011
in accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Status of Prior Open Recommendations and Matters for
Congressional Consideration:
In this appendix, we update the status of agencies' efforts to
implement the 26 open recommendations, and 2 newly implemented
recommendations from our previous bimonthly and recipient reporting
reviews.[Footnote 55] Recommendations that were listed as implemented
or closed in a prior report are not repeated here. Lastly, we address
the status of our Matters for Congressional Consideration.
Department of Energy:
Open Recommendations[Footnote 56]
Given the concerns we have raised about whether program requirements
were being met, we recommended in May 2010 that the Department of
Energy (DOE), in conjunction with both state and local weatherization
agencies, develop and clarify weatherization program guidance that:
* clarifies the specific methodology for calculating the average cost
per home weatherized to ensure that the maximum average cost limit is
applied as intended.
* accelerates current DOE efforts to develop national standards for
weatherization training, certification, and accreditation, which is
currently expected to take 2 years to complete.
* develops a best practice guide for key internal controls that should
be present at the local weatherization agency level to ensure
compliance with key program requirements.
* sets time frames for development and implementation of state
monitoring programs.
* revisits the various methodologies used in determining the
weatherization work that should be performed based on the
consideration of cost-effectiveness and develops standard
methodologies that ensure that priority is given to the most cost-
effective weatherization work. To validate any methodologies created,
this effort should include the development of standards for accurately
measuring the long-term energy savings resulting from weatherization
work conducted.
In addition, given that state and local agencies have felt pressure to
meet a large increase in production targets while effectively meeting
program requirements and have experienced some confusion over
production targets, funding obligations, and associated consequences
for not meeting production and funding goals, we recommended that DOE
clarify its production targets, funding deadlines, and associated
consequences while providing a balanced emphasis on the importance of
meeting program requirements.
Agency Actions:
DOE generally concurred with these recommendations and has made some
progress on implementing them. For example, to clarify the methodology
for calculating the average cost per home, DOE has developed draft
guidance to help grantees develop consistency in their average cost
per unit calculations. The guidance further clarifies the general cost
categories that are included in the average cost per home. DOE
anticipates issuance of the guidance in June 2011.
DOE has also taken steps to address our recommendation that it develop
and clarify guidance to generate a best practice guide for key
internal controls. DOE distributed a memorandum dated May 13, 2011 to
grantees reminding them of their responsibilities to ensure compliance
with internal controls and the consequences of failing to do so. This
memo is currently under internal review and DOE anticipates it will be
released in May 2011.
Open Recommendations[Footnote 57]
To better ensure that Energy Efficiency and Conservation Block Grant
(EECBG) funds are used to meet Recovery Act and program goals, we
recommended in April 2011 that DOE, take the following actions:
* Explore a means to capture information on the monitoring processes
of all recipients to make certain that recipients have effective
monitoring practices.
* Solicit information from recipients regarding the methodology they
used to calculate their energy-related impact metrics and verify that
recipients who use DOE's estimation tool use the most recent version
when calculating these metrics.
Agency Actions:
DOE generally concurred with these recommendations, stating that
"implementing the report's recommendations will help ensure that the
Program continues to be well managed and executed." DOE also provided
additional information on steps it has initiated or planned to
implement. In particular, with respect to our first recommendation,
DOE elaborated on additional monitoring practices it performs over
high dollar value grant recipients, such as its reliance on audit
results obtained in accordance with the Single Audit Act and its
update to the EECBG program requirements in the Compliance Supplement
to OMB Circular No. A-133. However, these monitoring practices only
focus on larger grant recipients, and we believe that the program
could be more effectively monitored if DOE captured information on the
monitoring practices of all recipients. With respect to our second
recommendation, DOE officials said that in order to provide a
reasonable estimate of energy savings, the program currently reviews
energy process and impact metrics submitted each quarter for
reasonableness, works with grantees to correct unreasonable metrics,
and works with grantees through closeout to refine metrics. In
addition, DOE officials said that they plan to take a scientific
approach to overall program evaluation during the formal evaluation
process at the conclusion of the program, which will occur in December
2012. However, DOE has not yet identified any specific plans to
solicit information from recipients regarding the methodology they
used to calculate their energy-related impact metrics or to verify
that recipients who use DOE's estimation tool use the most recent
version when calculating.
Environmental Protection Agency:
Newly Implemented Recommendation[Footnote 58]:
We recommended that the Environmental Protection Agency (EPA)
Administrator work with the states to implement specific oversight
procedures to monitor and ensure subrecipients' compliance with the
provisions of the Recovery Act-funded Clean Water and Drinking Water
State Revolving Fund (SRF) program.
Agency Actions:
In part in response to our recommendation, EPA provided additional
guidance to the states regarding their oversight responsibilities,
with an emphasis on enhancing site-specific inspections. Specifically,
in June 2010, the agency developed and issued an oversight plan
outline for Recovery Act projects that provides guidance on the
frequency, content, and documentation related to regional reviews of
state Recovery Act programs and regional and state reviews of specific
Recovery Act projects. We found that EPA regions have reviewed all 50
states' Clean and Drinking Water SRF programs at least once since the
Recovery Act was enacted, and have generally carried out the oversight
instructions in EPA's plan. For example, regional officials reviewed
files with state documents and information to ensure proper controls
over Davis-Bacon, Buy American, and other Recovery Act requirements.
Regional staff also visited one drinking water project in every state,
but did not meet this goal for clean water projects due to time and
budget constraints. We also found that EPA headquarters officials have
been reviewing the regions' performance evaluation reports for states,
and the officials said that they implemented a 60-day time frame for
completing these reports. In the nine states that we reviewed in this
report, program officials described their site visits to projects and
the use of the EPA inspection checklist (or state equivalent),
according to EPA's oversight plan. State officials told us that they
visit their Recovery Act projects at least once during construction
and sometimes more frequently depending on the complexity of the
project. We consider these agency actions to have addressed our
recommendation.
Department of Health and Human Services: Office of Head Start:
Open Recommendation[Footnote 59]:
To oversee the extent to which grantees are meeting the program goal
of providing services to children and families and to better track the
initiation of services under the Recovery Act, we recommended that the
Director of the Office of Head Start (OHS) should collect data on the
extent to which children and pregnant women actually receive services
from Head Start and Early Head Start grantees.
Agency Actions:
The Department of Health and Human Services (HHS) disagreed with our
recommendation. OHS officials stated that attendance data are
adequately examined in triennial or yearly on-site reviews and in
periodic risk management meetings. Because these reviews and meetings
do not collect or report data on service provision, we continue to
believe that tracking services to children and families is an
important measure of the work undertaken by Head Start and Early Head
Start service providers.
Open Recommendation[Footnote 60]:
To help ensure that grantees report consistent enrollment figures, we
recommended that the Director of OHS should better communicate a
consistent definition of "enrollment" to grantees for monthly and
yearly reporting and begin verifying grantees' definition of
"enrollment" during triennial reviews.
Agency Actions:
OHS issued informal guidance on its Web site clarifying monthly
reporting requirements to make them consistent with annual enrollment
reporting. While this guidance directs grantees to include in
enrollment counts all children and pregnant mothers who have received
a specified minimum of services, it could be further clarified by
specifying that counts should include only those children and pregnant
mothers. According to HHS officials, OHS is considering further
regulatory clarification.
Open Recommendation[Footnote 61]:
To provide grantees consistent information on how and when they will
be expected to obligate and expend federal funds, we recommended that
the Director of OHS should clearly communicate its policy to grantees
for carrying over or extending the use of Recovery Act funds from one
fiscal year into the next.
Agency Actions:
HHS indicated that OHS will issue guidance to grantees on obligation
and expenditure requirements, as well as improve efforts to
effectively communicate the mechanisms in place for grantees to meet
the requirements for obligation and expenditure of funds.
Open Recommendation[Footnote 62]:
To better consider known risks in scoping and staffing required
reviews of Recovery Act grantees, we recommended that the Director of
OHS should direct OHS regional offices to consistently perform and
document Risk Management Meetings and incorporate known risks,
including financial management risks, into the process for staffing
and conducting reviews.
Agency Actions:
HHS reported that OHS is reviewing the risk management process to
ensure it is consistently performed and documented in its centralized
data system and that it has taken related steps, such as requiring the
Grant Officer to identify known or suspected risks prior to an on-site
review.
Newly Implemented Recommendation[Footnote 63]:
To facilitate understanding of whether regional decisions regarding
waivers of the program's matching requirement are consistent with
Recovery Act grantees' needs across regions, we recommended that the
Director of OHS should regularly review waivers of the nonfederal
matching requirement and associated justifications.
Agency Actions:
HHS reports that it has taken actions to address our recommendation.
For example, HHS reports that OHS has conducted a review of waivers of
the nonfederal matching requirement and tracked all waivers in the Web-
based data system. HHS further reports that OHS has determined that
they are reasonably consistent across regions.
Department of Housing and Urban Development:
Open Recommendation[Footnote 64]:
Because the absence of third-party investors reduces the amount of
overall scrutiny Tax Credit Assistance Program (TCAP) projects would
receive and the Department of Housing and Urban Development (HUD) is
currently not aware of how many projects lacked third-party investors,
we recommended that HUD should develop a risk-based plan for its role
in overseeing TCAP projects that recognizes the level of oversight
provided by others.
Agency Actions:
HUD responded to our recommendation by saying it will identify
projects that are not funded by the HOME Investment Partnerships
Program (HOME) funds and projects that have a nominal tax credit
award. However, HUD said it will not be able to identify these
projects until it could access the data needed to perform the
analysis, and it does not receive access to those data until after
projects have been completed. HUD currently has not taken any action
on this recommendation because it only has data on the small
percentage of projects completed to date. It is too early in the
process to be able to identify projects that lack third-party
investors. The agency will take action once they are able to collect
the necessary information from the project owners and the state
housing finance agencies.
Department of Labor:
Open Recommendations[Footnote 65]:
To enhance the Department of Labor's (Labor) ability to manage its
Recovery Act and regular Workforce Investment Act (WIA) formula grants
and to build on its efforts to improve the accuracy and consistency of
financial reporting, we recommended that the Secretary of Labor take
the following actions:
* To determine the extent and nature of reporting inconsistencies
across the states and better target technical assistance, conduct a
one-time assessment of financial reports that examines whether each
state's reported data on obligations meet Labor's requirements.
* To enhance state accountability and to facilitate their progress in
making reporting improvements, routinely review states' reporting on
obligations during regular state comprehensive reviews.
Agency Actions:
Labor agreed with both of our recommendations and has begun to take
some actions to implement them. To determine the extent of reporting
inconsistencies, Labor awarded a contract in September 2010 to perform
an assessment of state financial reports to determine if the data
reported are accurate and reflect Labor's guidance on reporting of
obligations and expenditures. Since then, Labor has completed
interviews with all states and is preparing a report of the findings.
To enhance states' accountability and facilitate their progress in
making improvements in reporting, Labor has drafted guidance on the
definitions of key financial terms such as "obligations," which is
currently in final clearance. After the guidance is issued, Labor
plans to conduct a systemwide webinar and interactive training on this
topic to reinforce how accrued expenditures and obligations are to be
reported.
Open Recommendation[Footnote 66]:
Our September 2009 bimonthly report identified a need for additional
federal guidance in defining green jobs and we made the following
recommendation to the Secretary of Labor:
* To better support state and local efforts to provide youth with
employment and training in green jobs, provide additional guidance
about the nature of these jobs and the strategies that could be used
to prepare youth for careers in green industries.
Agency Actions:
Labor agreed with our recommendation and has begun to take several
actions to implement it. Labor's Bureau of Labor Statistics has
developed a definition of green jobs which was finalized and published
in the Federal Register on September 21, 2010. In addition, Labor
continues to host a Green Jobs Community of Practice, an online
virtual community available to all interested parties. As part of this
effort, in December 2010, Labor hosted its first Recovery Act Grantee
Technical Assistance Institute, which focused on critical success
factors for achieving the goals of the grants and sustaining the
impact into the future. The department also hosted a symposium on
April 28-29, 2011, with the green jobs state Labor Market Information
Improvement grantees. Symposium participants shared recent research
findings, including efforts to measure green jobs, occupations, and
training in their states. In addition, the department released a new
career exploration tool called "mynextmove" [hyperlink,
http://www.mynextmove.gov] in February 2011. This Web site includes
the Occupational Information Network (O*NET) green leaf symbol to
highlight green occupations. Furthermore, Labor's implementation study
of the Recovery Act-funded green jobs training grants is still
ongoing. The interim report is expected in late 2011.
Executive Office of the President: Office of Management and Budget:
Open Recommendation:
To leverage Single Audits as an effective oversight tool for Recovery
Act programs, we recommended that the Director of the Office of
Management and Budget (OMB):
1. provide more direct focus on Recovery Act programs through the
Single Audit to help ensure that smaller programs with higher risk
have audit coverage in the area of internal controls and compliance;
[Footnote 67]
2. take additional efforts to provide more timely reporting on
internal controls for Recovery Act programs for 2010 and beyond;
[Footnote 68]
3. evaluate options for providing relief related to audit requirements
for low-risk programs to balance new audit responsibilities associated
with the Recovery Act;[Footnote 69]
4. issue Single Audit guidance in a timely manner so that auditors can
efficiently plan their audit work;[Footnote 70]
5. issue the OMB Circular No. A-133 Compliance Supplement no later
than March 31 of each year;[Footnote 71]
6. explore alternatives to help ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner;[Footnote 72] and:
7. shorten the timeframes required for issuing management decisions by
federal agencies to grant recipients.[Footnote 73]
Agency Actions:
(1) To provide more direct focus on Recovery Act programs through the
Single Audit to help ensure that smaller programs with higher risk
have audit coverage in the area of internal controls and compliance,
the OMB Circular No. A-133, Audits of States, Local Governments, and
Non-Profit Organizations 2010 Compliance Supplement (Compliance
Supplement) required all federal programs with expenditures of
Recovery Act awards to be considered as programs with higher risk when
performing standard risk-based tests for selecting programs to be
audited.[Footnote 74] The auditor's determination of the programs to
be audited is based upon an evaluation of the risks of noncompliance
occurring that could be material to an individual major program. The
Compliance Supplement has been the primary mechanism that OMB has used
to provide Recovery Act requirements and guidance to auditors.
[Footnote 75] One presumption underlying the guidance is that smaller
programs with Recovery Act expenditures could be audited as major
programs when using a risk-based audit approach. The most significant
risks are associated with newer programs that may not yet have the
internal controls and accounting systems in place to help ensure that
Recovery Act funds are distributed and used in accordance with program
regulations and objectives. Since Recovery Act spending is projected
to continue through 2016, we believe that it is essential that OMB
provide direction in Single Audit guidance to help to ensure that
smaller programs with higher risk are not automatically excluded from
receiving audit coverage based on their size and standard Single Audit
Act requirements.
In May 2011, we spoke with OMB officials and reemphasized our concern
that future Single Audit guidance provide instruction that helps to
ensure that smaller programs with higher risk have audit coverage in
the area of internal controls and compliance. OMB officials agreed and
stated that such guidance is included in the 2011 Compliance
Supplement which was to be issued by March 31, 2011. On June 1, 2011,
OMB issued the 2011 Compliance Supplement which contains language
regarding the higher-risk status of Recovery Act programs,
requirements for separate reporting of findings, and a list of
Recovery Act programs to aid the auditors. We will continue to monitor
OMB's efforts to provide more direct focus on Recovery Act programs
through the Single Audit to help ensure that smaller programs with
higher risk have audit coverage in the area of internal controls and
compliance.
(2) To address the recommendation for taking additional efforts to
encourage more timely reporting on internal controls for Recovery Act
programs for 2010 and beyond, OMB commenced a second voluntary Single
Audit Internal Control Project (project) in August 2010 for states
that received Recovery Act funds in fiscal year 2010.[Footnote 76]
Fourteen states volunteered to participate in the second project. One
of the project's goals is to achieve more timely communication of
internal control deficiencies for higher-risk Recovery Act programs so
that corrective action can be taken more quickly. Specifically, the
project encourages participating auditors to identify and communicate
deficiencies in internal control to program management 3 months sooner
than the 9-month time frame currently required under OMB Circular No.
A-133. Auditors were to communicate these through interim internal
control reports by December 31, 2010. The project also requires that
program management provide a corrective action plan aimed at
correcting any deficiencies 2 months earlier than required under
statute to the federal awarding agency. Upon receiving the corrective
action plan, the federal awarding agency has 90 days to provide a
written decision to the cognizant federal agency for audit detailing
any concerns it may have with the plan. Each participating state was
to select a minimum of four Recovery Act programs for inclusion in the
project.
We assessed the results of the first OMB Single Audit Internal Control
Project for fiscal year 2009 and found that it was helpful in
communicating internal control deficiencies earlier than required
under statute. We reported that 16 states participated in the first
project and that the states selected at least two Recovery Act
programs for the project. We also reported that the project's
dependence on voluntary participation limited its scope and coverage
and that voluntary participation may also bias the project's results
by excluding from analysis states or auditors with practices that
cannot accommodate the project's requirement for early reporting of
control deficiencies. Overall, we concluded that although the
project's coverage could have been more comprehensive, the analysis of
the project's results provided meaningful information to OMB for
better oversight of the Recovery Act programs selected and information
for making future improvements to the Single Audit guidance.
OMB's second Single Audit Internal Control Project is in progress and
its planned completion date is June 2011. OMB plans to assess the
project's results after its completion date. The 14 participating
states have met the milestones for submitting interim internal control
reports by December 31, 2010 and their corrective action plans by
January 31, 2011. By April 30, 2011, the federal awarding agencies
were to provide their interim management decisions to the cognizant
agency for audit. We discussed the preliminary status of these interim
management decisions with OMB officials and, as of May 24, 2011, only
1 of the 10 federal awarding agencies had submitted some management
decisions on the auditees' corrective action plans as required by the
project's guidelines. On May 24, 2011, officials from the cognizant
agency for audit, HHS, reemphasized to the federal awarding agencies
their responsibilities for providing management decisions in
accordance with the project's due dates. In our review of the 2009
project, we noted similar concerns that federal awarding agencies
submitted management decisions on proposed corrective actions in an
untimely manner and made recommendations in this area, which are
discussed later in this report. We will continue to monitor the status
of OMB's efforts to implement this recommendation and believe that OMB
needs to continue taking steps to encourage timelier reporting on
internal controls through Single Audits for Recovery Act programs.
(3) We previously recommended that OMB evaluate options for providing
relief related to audit requirements for low-risk programs to balance
new audit responsibilities associated with the Recovery Act. OMB
officials have stated that they are aware of the increase in workload
for state auditors who perform Single Audits due to the additional
funding to Recovery Act programs and corresponding increases in
programs being subject to audit requirements. OMB officials stated
that they solicited suggestions from state auditors to gain further
insights to develop measures for providing audit relief. However, OMB
has not yet put in place a viable alternative that would provide
relief to all state auditors that conduct Single Audits. For state
auditors that are participating in the second OMB Single Audit
Internal Control Project, OMB has provided some audit relief by
modifying the requirements under Circular No. A-133 to reduce the
number of low-risk programs to be included in some project
participants' risk assessment requirements.
OMB is taking initiatives to examine the Single Audit process. OMB
officials have stated that they have created a workgroup which
combines the Executive Order 13520--Reducing Improper Payments Section
4 (b) Single Audit Recommendations Workgroup (Single Audit Workgroup),
and the Circular No. A-87--Cost Principles for State, Local, and
Indian Tribal Governments Workgroup (Circular No. A-87 Workgroup). The
Single Audit Workgroup is comprised of representatives from the
federal audit community; federal agency management officials involved
in overseeing the Single Audit process and programs subject to that
process; representatives from the state audit community; and staff
from OMB. OMB officials tasked the Single Audit Workgroup with
developing recommendations to improve the effectiveness of Single
Audits of nonfederal entities that expend federal funds in order to
help identify and reduce improper payments. In June 2010, the Single
Audit Workgroup developed recommendations, some of which are targeted
toward providing audit relief to auditors who conduct audits of
grantees and grants that are under the requirements of the Single
Audit Act. OMB officials stated that the recommendations warrant
further study and that the workgroup is continuing its work on the
recommendations. OMB officials also stated that the Circular No. A-87
Workgroup has also made recommendations which could impact Single
Audits and that the workgroups have been collaborating to ensure that
the recommendations relating to Single Audit improvements are
compatible and could improve the Single Audit process. The combined
workgroups plan to issue a report to OMB by August 29, 2011. We will
continue to monitor OMB's progress to achieve this objective.
(4)(5) With regard to issuing Single Audit guidance in a timely
manner, and specifically the OMB Circular No. A-133 Compliance
Supplement, we previously reported that OMB officials intended to
issue the 2011 Compliance Supplement by March 31, 2011.[Footnote 77]
In December 2010, OMB provided to the American Institute of Certified
Public Accounts (AICPA) a draft of the 2011 Compliance Supplement
which the AICPA published on its Web site. In January 2011, OMB
officials reported that the production of the 2011 Compliance
Supplement was on schedule for issuance by March 31, 2011. OMB issued
the 2011 Compliance Supplement on June 1, 2011. We spoke with OMB
officials regarding the reasons for the delay of this important
guidance to auditors. OMB officials stated that its efforts were
refocused toward priorities relating to the expiration of several
continuing resolutions[Footnote 78] that temporarily funded the
federal government for fiscal year 2011, and the Department Of Defense
And Full-Year Continuing Appropriations Act, 2011, which was passed by
the Congress in April 2011, averting a governmentwide shutdown. OMB
officials stated that, as a result, although they had taken steps to
issue the 2011 Compliance Supplement by the end of March, such as
starting the process earlier in 2010 and giving agencies strict
deadlines for program submissions, they were only able to issue it on
June 1, 2011. We will continue to monitor OMB's progress to achieve
this objective.
(6)(7) In October 2010, OMB officials stated that, based on their
assessment of the results of the project, they had discussed
alternatives for helping to ensure that federal awarding agencies
provide their management decisions on the corrective action plans in a
timely manner, including possibly shortening the time frames required
for federal agencies to provide their management decisions to grant
recipients.[Footnote 79] However, OMB officials have yet to decide on
the course of action that they will pursue to implement this
recommendation. OMB officials acknowledged that the results of the
2009 OMB Single Audit Internal Control Project confirmed that this
issue continues to be a challenge. They stated that they have met
individually with several federal awarding agencies that were late in
providing their management decisions in the 2009 project to discuss
the measures that the agencies will take to improve the timeliness of
their management decisions. Earlier in this report, we discussed that
preliminary observations of the results of the second project have
identified that several federal awarding agencies' management
decisions on the corrective actions that were due April 30, 2011, have
also not been issued in a timely manner.
In March 2010, OMB issued guidance under memo M-10-14, item 7,
[hyperlink,
http://www.whitehouse.gov/sites/default/files/omb/assets/memoranda_2010/
m1014.pdf] that called for federal awarding agencies to review reports
prepared by the Federal Audit Clearinghouse regarding Single Audit
findings and submit summaries of the highest-risk audit findings by
major Recovery Act program, as well as other relevant information on
the federal awarding agency's actions regarding these areas. In May
2011, we reviewed selected reports prepared by federal awarding
agencies that were titled Use of Single Audit to Oversee Recipient's
Recovery Act Funding. These reports were required by memo M-10-14 for
reports from the Federal Audit Clearinghouse for fiscal year 2009. The
reports were developed for entities where the auditor issued a
qualified, adverse, or disclaimer audit opinion. The reports
identified items such as (1) significant risks to the respective
program that was audited; (2) material weaknesses, instances of
noncompliance, and audit findings that put the program at risk; (3)
actions taken by the agency; and (4) actions planned by the agency.
OMB officials have stated that they plan to use this information to
identify trends that may require clarification or additional guidance
in the Compliance Supplement.
OMB officials also stated that they are working on a metrics project
with the Recovery Accountability and Transparency Board to develop
metrics for determining how federal awarding agencies are to use
information available in the Single Audit and which can serve as
performance measures. We attended a presentation of the OMB Workgroup
that is working with the Recovery Accountability and Transparency
Board in developing the metrics project in May 2011 and note that it
is making progress. OMB officials have stated that the metrics could
be applied at the agency level, by program, to allow for analysis of
Single Audit findings, along with other uses to be determined. One
goal of the metrics project is to increase the effectiveness and
timeliness of federal awarding agencies' actions to resolve single
audit findings. We will continue to monitor the progress of these
efforts to determine the extent that they improve the timeliness of
federal agencies' actions to resolve audit findings so that risks to
Recovery Act funds are reduced and internal controls in Recovery Act
programs are strengthened.
Department of Transportation:
Open Recommendations[Footnote 80]:
To ensure that Congress and the public have accurate information on
the extent to which the goals of the Recovery Act are being met, we
recommended that the Secretary of Transportation direct FHWA to take
the following two actions:
* Develop additional rules and data checks in the Recovery Act Data
System, so that these data will accurately identify contract
milestones such as award dates and amounts, and provide guidance to
states to revise existing contract data.
* Make publicly available--within 60 days after the September 30,
2010, obligation deadline--an accurate accounting and analysis of the
extent to which states directed funds to economically distressed
areas, including corrections to the data initially provided to
Congress in December 2009.
* Agency Actions:
In its response, DOT stated that it implemented measures to further
improve data quality in the Recovery Act Data System, including
additional data quality checks, as well as providing states with
additional training and guidance to improve the quality of data
entered into the system. DOT also stated that as part of its efforts
to respond to our draft September 2010 report in which we made this
recommendation on economically distressed areas, it completed a
comprehensive review of projects in these areas, which it provided to
GAO for that report. DOT recently posted an accounting of the extent
to which states directed Recovery Act transportation funds to projects
located in economically distressed areas on its Web site, and we are
in the process of assessing these data.
Open Recommendation[Footnote 81]:
To better understand the impact of Recovery Act investments in
transportation, we believe that the Secretary of Transportation should
ensure that the results of these projects are assessed and a
determination made about whether these investments produced long-term
benefits. Specifically, in the near term, we recommended that the
Secretary direct FHWA and FTA to determine the types of data and
performance measures they would need to assess the impact of the
Recovery Act and the specific authority they may need to collect data
and report on these measures.
Agency Actions:
In its response, DOT noted that it expected to be able to report on
Recovery Act outputs, such as the miles of road paved, bridges
repaired, and transit vehicles purchased, but not on outcomes, such as
reductions in travel time, nor did it commit to assessing whether
transportation investments produced long-term benefits. DOT further
explained that limitations in its data systems, coupled with the
magnitude of Recovery Act funds relative to overall annual federal
investment in transportation, would make assessing the benefits of
Recovery Act funds difficult. DOT indicated that, with these
limitations in mind, it is examining its existing data availability
and, as necessary, would seek additional data collection authority
from Congress if it became apparent that such authority was needed.
DOT plans to take some steps to assess its data needs, but it has not
committed to assessing the long-term benefits of Recovery Act
investments in transportation infrastructure. We are therefore keeping
our recommendation on this matter open.
Matters for Congressional Consideration:
Matter[Footnote 82]:
To the extent that appropriate adjustments to the Single Audit process
are not accomplished under the current Single Audit structure,
Congress should consider amending the Single Audit Act or enacting new
legislation that provides for more timely internal control reporting,
as well as audit coverage for smaller Recovery Act programs with high
risk.
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter[Footnote 83]:
To the extent that additional coverage is needed to achieve
accountability over Recovery Act programs, Congress should consider
mechanisms to provide additional resources to support those charged
with carrying out the Single Audit Act and related audits.
We continue to believe that Congress should consider changes related
to the Single Audit process.
Matter[Footnote 84]:
To provide housing finance agencies (HFA) with greater tools for
enforcing program compliance, in the event the Section 1602 Program is
extended for another year, Congress may want to consider directing the
Department of the Treasury to permit HFAs the flexibility to disburse
Section 1602 Program funds as interest-bearing loans that allow for
repayment.
We continue to believe that Congress should consider directing the
Department of the Treasury to permit HFAs the flexibility to disburse
Section 1602 Program funds as interest-bearing loans that allow for
repayment.
[End of section]
Appendix III: GAO Contact and Staff Acknowledgments:
GAO Contact:
Phillip R. Herr, (202) 512-2834 or herrp@gao.gov:
Staff Acknowledgments:
In addition to the contact named above, Thomas Beall, Jonathan Carver,
Andrew Ching, John Healey, Sharon Hogan, Thomas James, Bert Japikse,
Delwen Jones, Heather MacLeod, SaraAnn Moessbauer, Josh Ormond, Carol
Patey, Beverly Ross, Jonathan Stehle, and Pamela Vines made key
contributions to this report.
[End of section]
Footnotes:
[1] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[2] As of June 3, 2011, the Department of the Treasury had paid out
$217.5 billion in Recovery Act funds for use in states and localities
to promote economic recovery. For updates, see [hyperlink,
http://gao.gov/recovery].
[3] Recovery Act, div. A, title XII, 123 Stat., 203. The high speed
intercity passenger rail and TIGER grant programs are discretionary
grant programs. Traditionally, federal surface transportation funding
has been primarily delivered through formula grant programs based on
distributions prescribed by federal statute. In a discretionary grant
program, agency officials generally have the authority to determine
which eligible grant applicant will receive awards and how much each
will be awarded.
[4] Recovery Act, div. A, title IX, § 901(a)(1), 123 Stat., 191.
[5] Recovery Act, div. A, title XV, § 1512(e), 123 Stat., 287. The
reports submitted quarterly by recipients are referred to as
"recipient reports."
[6] This month we are also reporting on the status and use of Recovery
Act funds for the clean and drinking water state revolving fund
programs (see GAO, Recovery Act: Funds Supported Many Water Projects,
and Federal and State Monitoring Shows Few Compliance Problems,
[hyperlink, http://www.gao.gov/products/GAO-11-608] (Washington, D.C.:
June 29, 2011). We last reported on the use of Recovery Act
transportation funds in May 2011 and September 2010. See GAO, Recovery
Act: Use of Transportation Funds, Outcomes, and Lessons Learned,
[hyperlink, http://www.gao.gov/products/GAO-11-610T] (Washington,
D.C.: May 4, 2011) and Recovery Act: Opportunities to Improve
Management and Strengthen Accountability over States' and Localities'
Uses of Funds, [hyperlink, http://www.gao.gov/products/GAO-10-999]
(Washington, D.C.: Sept. 20, 2010). We continue, as in prior rounds,
to perform edit checks and analyses on all prime recipient reports to
assess data logic and consistency and identify unusual or atypical
data.
[7] GAO, Intercity Passenger Rail: Recording Clearer Reasons for
Awards Decisions Would Improve Otherwise Good Grantmaking Practices,
[hyperlink, http://www.gao.gov/products/GAO-11-283] (Washington, D.C.:
Mar. 10, 2011) and Surface Transportation: Competitive Grant Programs
Could Benefit from Increased Performance Focus and Better
Documentation of Key Decisions, [hyperlink,
http://www.gao.gov/products/GAO-11-234] (Washington, D.C.: Mar. 30,
2011).
[8] Previously, we examined the use of Recovery Act funds in 16 states
and the District of Columbia. For this study, we selected 3 states
that we had previously tracked--California, Massachusetts, and Texas--
and 3 states that we had not previously tracked--Indiana, Virginia,
and Washington. These 6 states represent about 29 percent of the U.S.
population and received approximately one-quarter of the highway funds
made available through the Recovery Act.
[9] While we assessed Recovery Act funds for all transportation
programs, we chose to focus primarily on the status of Recovery Act
highway funds because they represented about 57 percent of the total
Recovery Act funding available to DOT.
[10] See [hyperlink, http://www.gao.gov/recovery/related-products/]
for related GAO products.
[11] The total amount of Recovery Act funds allocated to each program
does not equal the total funds distributed. Most operating
administrations, as allowed by the Recovery Act, retained a small
percentage of the funds for oversight and administrative costs, and
some fund allocations included set asides for other programs or
activities. The Recovery Act also provided $20 million for salaries
and expenses at the DOT Office of Inspector General to monitor DOT's
Recovery Act programs and $20 million for a bonding assistance program
for disadvantaged business enterprises.
[12] The majority of federal-aid highway infrastructure funding is
distributed through seven major programs, often referred to as core
highway programs. These programs are the Surface Transportation
Program, National Highway System Program, Interstate Maintenance
Program, Highway Bridge Program, Highway Safety Improvement Program,
Congestion Mitigation and Air Quality Improvement Program, and the
Equity Bonus Program.
[13] Another new competitive grant program was established to award
funds to public transit agencies for capital investments to reduce
either a transit system's greenhouse gas emissions or energy
consumption.
[14] For example, the maximum federal fund share under the existing
Federal-Aid Highway Program is generally 80 percent, and the regular
Airport Improvement Program requires recipients to provide a match
ranging from 5 to 25 percent.
[15] 46 U.S.C. § 54101(e)(1).
[16] GAO, Physical Infrastructure: Challenges and Investment Options
for the Nation's Infrastructure, [hyperlink,
http://www.gao.gov/products/GAO-08-763T] (Washington, D.C.: May 8,
2008).
[17] The Secretary of Transportation was to withdraw and redistribute
to eligible states any amount that was not obligated by March 2, 2010,
for highway infrastructure and by March 5, 2010, for public transit.
[18] See [hyperlink, http://www.gao.gov/products/GAO-10-999].
[19] Economically distressed areas are defined by the Public Works and
Economic Development Act of 1965, as amended. 42 U.S.C. § 3161. To
qualify as an economically distressed area, the area must (1) have a
per capita income of 80 percent or less of the national average; (2)
have an average unemployment rate that is, for the most recent 24-
month period for which data are available, at least 1 percent greater
than the national average; or (3) be an area the Secretary of Commerce
determines has experienced or is about to experience a "special need"
arising from actual or threatened severe unemployment or economic
adjustment problems resulting from severe short-or long-term changes
in economic conditions.
[20] Therefore, both the data reported by recipients and other
macroeconomic data and methods are necessary to gauge the overall
employment effects of the stimulus. The employment effects in any
state will vary with labor market stress and fiscal conditions.
[21] DOT issued subsequent reports in September 2009 and May 2010. See
DOT Secretary of Transportation, Section 1201 (c) 180-Day Report
(Washington, D.C., Sept. 30, 2009) and DOT Secretary of
Transportation, Section 1201 (c) One-Year Report (Washington, D.C.,
May 7, 2010).
[22] Programs administered by DOT and funded by the Recovery Act
typically required DOT review and approval of proposed projects
submitted by the states or other applicants, resulting in an
obligation of federal funds. States or other recipients then solicited
and selected contractors to perform the work. Federal funds are
expended when the state or other intended recipient submits invoices
for completed work.
[23] The reliability of recipient reported data and efforts taken by
DOT and state officials to ensure data quality, as well as changes in
the quality of recipient reported data over time, are discussed later
in this report.
[24] For further discussion of FTE data limitations, see GAO, Recovery
Act: Recipient Reported Jobs Data Provide Some Insight Into Use of
Recovery Act Funding, but Data Quality and Reporting Issues Need
Attention, [hyperlink, http://www.gao.gov/products/GAO-10-223]
(Washington, D.C.: Nov. 19, 2009). For further discussion of Recovery
Act contract and grant recipients' unpaid federal tax information, see
GAO, Recovery Act: Thousands of Recovery Act Contract and Grant
Recipients Owe Hundreds of Millions in Federal Taxes, [hyperlink,
http://www.gao.gov/products/GAO-11-485] (Washington, D.C.: Apr. 28,
2011).
[25] For additional information on estimates of FTEs funded by the
Recovery Act, see the Congressional Budget Office, Estimated Impact of
the American Recovery and Reinvestment Act on Employment and Economic
Output from October 2010 Through December 2010 (Washington, D.C.:
February 2011).
[26] "Other" transportation projects include projects funded by FAA's
grants-in-aid to airports; FRA's Amtrak grant and the high speed
intercity passenger rail program; MARAD's Assistance to Small
Shipyards Program; and the Office of the Secretary of Transportation's
disadvantaged business bonding assistance program and TIGER grants.
[27] GAO, Recovery Act: States' and Localities' Uses of Funds and
Actions Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010).
[28] FHWA officials have begun developing a geospatial interface to
integrate information from Recovery Act projects with information
contained in its Highway Performance Monitoring System and its
National Bridge Inventory, but they expected that this effort would
take several years.
[29] DOT, Vision for High-Speed Rail in America (Washington, D.C.,
Apr. 2009); FRA, Preliminary National Rail Plan (Washington, D.C.,
Oct. 2009); and FRA, National Rail Plan-Moving Forward: A Progress
Report (Washington, D.C, Sept. 2010).
[30] DOT, Office of Inspector General, FAA Fulfilled Most ARRA
Requirements in Awarding Airport Grants, AV-2011-53 (Feb. 17, 2011);
Amtrak Made Significant Improvements in Its Long-Term Capital Planning
Process, CR-2011-036 (Jan. 27, 2011); and Actions Needed to Strengthen
the Federal Highway Administration's National Review Teams, MH-2011-
027 (Jan. 6, 2011).
[31] For additional information on the OIG's ongoing audits, see DOT,
Office of Inspector General, Ensuring ARRA Funds Are Spent
Appropriately to Maximize Program Goals, CC-2011-025 (May 4, 2011).
[32] The Honorable Earl E. Devaney, Chairman, Recovery Accountability
and Transparency Board, Testimony before the Committee on Oversight
and Government Reform, U.S. House of Representatives, June 14, 2011.
[33] Congress passed the Single Audit Act, as amended, 31 U.S.C. ch.
75, in 1996 to promote, among other things, sound financial
management, including effective internal controls, with respect to
federal awards administered by nonfederal entities. A Single Audit
consists of (1) an audit and opinion on the fair presentation of the
financial statements and 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; and (3) an audit and an
opinion on compliance with applicable program requirements for certain
federal programs.
[34] Massachusetts Office of the State Auditor, Greater Attleboro
Taunton Regional Transit Authority for the period July 1, 2009 through
June 30, 2010, 2010-1007-3R (Mar. 18, 2011); Brockton Area Transit
Authority for the period July 1, 2009 through September 30, 2010, 2010-
0881-3R (Mar. 18, 2011); Independent State Auditor's Report on the
Montachusett Regional Transit Authority's Use of American Recovery and
Reinvestment Act Funds, March 1, 2009 to March 31, 2010, 2010-1038-3R
(Oct. 19, 2010).
[35] California State Auditor, Bureau of State Audits, High Risk
Update - American Recovery and Reinvestment Act of 2009: The
California Recovery Task Force and State Agencies Could Do More to
Ensure the Accurate Reporting of Recovery Act Jobs, 2010-601 (Dec. 21,
2010).
[36] City of Dallas, Office of the City Auditor, Audit of American
Recovery and Reinvestment Act of 2009: October 1, 2009 to September
30, 2010, 011-007 (Feb. 4, 2011).
[37] City of Arlington, Tex, Office of the City Auditor, American
Recovery and Reinvestment Act Audit, 10-08 (Dec. 17, 2010).
[38] City of Virginia Beach, Office of the City Auditor, American
Recovery and Reinvestment Act Expenditure Audit (Feb. 2, 2011).
[39] City of Los Angeles, Office of the Controller, ARRA Performance
and Financial Audit of the Department of Transportation (Sept. 16,
2010).
[40] According to Recovery.gov, recipients reported on 201,779 awards
across multiple program areas, and the Recovery Act funded
approximately 571,383 FTEs during the quarter beginning January 1,
2011, and ending March 31, 2011.
[41] Noncompliant recipients are those recipients of Recovery Act
funds that have not complied with the act's requirement to report
quarterly about the status of their awards. Each reporting quarter, a
list of noncompliant recipients is provided to the Recovery
Accountability and Transparency Board by the Office of Management and
Budget and the list is certified by the federal agencies.
[42] The number of repeat DOT-related noncompliant recipients--those
that have not filed reports for at least two reporting quarters--
decreased from six in the quarter ending December 31, 2010, to zero in
the quarter ending March 31, 2011.
[43] FTA officials also provide guidance and technical assistance to
prime recipients and run a series of about 50 automated data quality
checks to ensure that data provided by recipients is accurate,
complete, and timely. FTA officials said that recipient report
completion rates have been near 100 percent each quarter.
[44] As part of the Federal-Aid Highway Program, FHWA assesses the
ability of each state to have its apportioned funds obligated by the
end of the federal fiscal year (September 30) and adjusts the
limitation on obligations for federal-aid highway and highway safety
construction programs by reducing it for some states and increasing it
for others. In fiscal year 2010, $1.3 billion of obligation limitation
was available to states for redistribution.
[45] As of February 17, 2009, many states did not yet have an enacted
budget for fiscal year 2010 and in response to anticipated changes in
available funding, state legislatures adopted reduced budgets.
[46] See GAO, Recovery Act: Planned Efforts and Challenges in
Evaluating Compliance with Maintenance of Effort and Similar
Provisions, [hyperlink, http://www.gao.gov/products/GAO-10-247]
(Washington, D.C.: Nov. 30, 2009).
[47] In response to a recommendation we made, FHWA, in consultation
with the Department of Commerce, issued guidance on August 24, 2009,
that provided criteria for states to use for designating special-need
areas for the purpose of Recovery Act funding. 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. FHWA issued "questions and answers"
on November 12, 2009, to further address implementation questions.
[48] As part of our Recovery Act oversight, we previously tracked the
uses of and accountability for Recovery Act funds in 16 states,
including Arizona, California, and Illinois, and the District of
Columbia.
[49] In addition to the deadlines for obligating Recovery Act
transportation funds, states could also select projects to be funded
using regularly appropriated or apportioned funds (i.e., funds from
non-Recovery Act federal sources), which also were available to be
obligated.
[50] [hyperlink, http://www.gao.gov/products/GAO-11-234] and
[hyperlink, http://www.gao.gov/products/GAO-11-283].
[51] Pub. L. No. 111-5, 123 Stat. 115 (Feb. 17, 2009).
[52] As with the prior rounds, these checks and analyses were
performed on all prime recipient reports and were done to assess data
logic and consistency and identify unusual or atypical data. For this
seventh round of reporting, we continued to see similar results with
minor variations in the number or percentage of reports appearing
atypical or showing some form of data discrepancy.
[53] We selected for analysis those prime recipients who entered the
Catalog of Federal Domestic Assistance numbers for Recovery Act
transportation programs.
[54] DOT, Office of Inspector General, Recovery Act Data Quality:
Errors in Recipient Reports Obscure Transparency (Washington, D.C.,
Feb. 23, 2010).
[55] GAO, Recovery Act: As Initial Implementation Unfolds in States
and Localities, Continued Attention to Accountability Issues Is
Essential, [hyperlink, http://www.gao.gov/products/GAO-09-580]
(Washington, D.C.: Apr. 23, 2009); Recovery Act: States' and
Localities' Current and Planned Uses of Funds While Facing Fiscal
Stresses, [hyperlink, http://www.gao.gov/products/GAO-09-829]
(Washington, D.C.: July 8, 2009); Recovery Act: Funds Continue to
Provide Fiscal Relief to States and Localities, While Accountability
and Reporting Challenges Need to Be Fully Addressed, [hyperlink,
http://www.gao.gov/products/GAO-09-1016] (Washington, D.C.: Sept. 23,
2009); Recovery Act: Recipient Reported Jobs Data Provide Some Insight
into Use of Recovery Act Funding, but Data Quality and Reporting
Issues Need Attention, [hyperlink,
http://www.gao.gov/products/GAO-10-223] (Washington, D.C.: Nov. 19,
2009); Recovery Act: Status of States' and Localities' Use of Funds
and Efforts to Ensure Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-231] (Washington, D.C.: Dec. 10,
2009); Recovery Act: One Year Later, States' and Localities' Uses of
Funds and Opportunities to Strengthen Accountability, [hyperlink,
http://www.gao.gov/products/GAO-10-437] (Washington, D.C.: Mar. 3,
2010); Recovery Act: States' and Localities' Uses of Funds and Actions
Needed to Address Implementation Challenges and Bolster
Accountability, [hyperlink, http://www.gao.gov/products/GAO-10-604]
(Washington, D.C.: May 26, 2010); Recovery Act: Opportunities to
Improve Management and Strengthen Accountability over States' and
Localities' Uses of Funds, [hyperlink,
http://www.gao.gov/products/GAO-10-999] (Washington, D.C.: Sept. 20,
2010); Recovery Act: Head Start Grantees Expand Services, but More
Consistent Communication Could Improve Accountability and Decisions
about Spending, [hyperlink, http://www.gao.gov/products/GAO-11-166]
(Washington, D.C.: Dec. 15, 2010); and Recovery Act: Energy Efficiency
and Conservation Block Grant Recipients Face Challenges Meeting
Legislative and Program Goals and Requirements, [hyperlink,
http://www.gao.gov/products/GAO-11-379] (Washington, D.C.: Apr. 7,
2011).
[56] [hyperlink, http://www.gao.gov/products/GAO-11-379], 48-50.
[57] [hyperlink, http://www.gao.gov/products/GAO-11-379], 36-47.
[58] [hyperlink, http://www.gao.gov/products/GAO-10-604], 246-247.
[59] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[60] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[61] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[62] [hyperlink, http://www.gao.gov/products/GAO-11-166], 39.
[63] [hyperlink, http://www.gao.gov/products/GAO-10-604], 184.
[64] [hyperlink, http://www.gao.gov/products/GAO-10-999], 189.
[65] [hyperlink, http://www.gao.gov/products/GAO-10-604], 244.
[66] [hyperlink, http://www.gao.gov/products/GAO-09-1016], 78.
[67] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[68] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247.
[69] [hyperlink, http://www.gao.gov/products/GAO-09-829], 127.
[70] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247.
[71] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[72] [hyperlink, http://www.gao.gov/products/GAO-10-604], 247-248.
[73] [hyperlink, http://www.gao.gov/products/GAO-10-999], 194.
[74] Congress passed the Single Audit Act, as amended, 31 U.S.C. ch.
75, to promote, among other things, sound financial management,
including effective internal controls, with respect to federal awards
administered by nonfederal entities. The Single Audit Act requires
states, local governments, and nonprofit organizations expending
$500,000 or more in federal awards in a year to obtain an audit in
accordance with the requirements set forth in the act. A Single Audit
consists of (1) an audit and opinions on the fair presentation of the
financial statements and the Schedule of Expenditures of Federal
Awards; (2) gaining an understanding of and testing internal control
over financial reporting and the entity's compliance with laws,
regulations, and contract or grant provisions that have a direct and
material effect on certain federal programs (i.e., the program
requirements); and (3) an audit and an opinion on compliance with
applicable program requirements for certain federal programs.
[75] In addition to the annual edition of the Compliance Supplement,
OMB may issue Compliance Supplement addendums during the year to
update or provide further Recovery Act guidance.
[76] OMB's second project is similar to its first Single Audit
Internal Control project which started in October 2009. Sixteen states
participated in the first project. We assessed the results of the
project and reported them in GAO-10-999.
[77] The Compliance Supplement is updated annually. The 2010
Compliance Supplement was issued in July 2010 and is applicable to
audits of fiscal years beginning after June 30, 2009.
[78] Continuing resolutions (also known as "CRs") are appropriations
acts that provide budget authority for federal agencies, specific
activities, or both to continue in operation when Congress and the
President have not completed action on the regular appropriations acts
by the beginning of the fiscal year. A CR may be enacted for the full
year, up to a specified date, or until regular appropriations are
enacted.
[79] The project's guidelines called for the federal awarding agencies
to complete (1) performing a risk assessment of the internal control
deficiency and identify those with the greatest risk to Recovery Act
funding and (2) identifying corrective actions taken or planned by the
auditee. OMB guidance requires this information to be included in a
management decision that the federal agency was to have issued to the
auditee's management, the auditor, and the cognizant agency for audit.
[80] [hyperlink, http://www.gao.gov/products/GAO-10-999], 187-188.
[81] [hyperlink, http://www.gao.gov/products/GAO-10-604], 241-242.
[82] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[83] [hyperlink, http://www.gao.gov/products/GAO-09-829], 128.
[84] [hyperlink, http://www.gao.gov/products/GAO-10-604], 251.
[End of section]
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